“What may look like economic growth on the surface ends up being, upon closer scrutiny, an expensive exercise in the rearrangement of existing business activity.”
Kansas Policy Institute has released a report examing economic development in Wichita. Titled “Perspectives on Economic Development Incentives and Economic Growth in Wichita,” it presents much information specific to Wichita, and specifically two STAR bond districts: Riverwalk and K-96/Greenwich Road. There is also material on economics and economic development in general.
The main takeaway, according to KPI, is “… two of Wichita’s leading development projects, driven by economic development incentives, did not improve job creation.” Instead, the report concludes: “To summarize, and to reiterate, two prominent government-incentivized economic development projects do not show evidence of promoting net-new economic growth. At best, the projects redirected or redefined growth that would have happened without the subsidized intervention into the natural flow of commerce within the City of Wichita.”
KPI president James Franko said, “The research aims to help the Wichita community understand the limits of incentive-driven development as we hope for a post-pandemic recovery and evaluate flagship development such as Century II.”
One difficulty in performing this type of analysis is access to data. Franko noted, “The access to this data is in desperate need of reform. It’s troubling that a more thorough analysis of other incentives is all but impossible. We should be judging every taxpayer dollar spent on actual outcomes, not simply the aspirations of those asking for the money.”
Of note, a conclusion made by Hall, the author, is consistent with his earlier findings, which is that new firms are the dominant driver of growth:
Nevertheless, the “big take-away” still holds for the Wichita metro area (using the firm-level data). Without the birth of new firms, Wichita would lose jobs in many more years than it would gain jobs from older firms represented in the data: New firm entry (age-zero firms) plays a dominant role in the on-going process of job creation. In other words, economic development is inherently a trial-and-error process; a numbers game that occasionally produces a break-away business that drives regional economic growth.
In other work, Hall has explained that new firms are distinct from small businesses.
This is an important work. Over coming weeks I’ll explore the report, its data, and its recommendations in more detail.
Regulation reform could jump-start Kansas economy after COVID
By Michael Austin.
The COVID-19 outbreak has not only posed a severe public health risk, but actions to combat it now risk a global economic collapse. With nearly half of all Kansas hourly jobs gone, the Kansas Department of Labor is overwhelmed processing unemployment claims. Roughly 40 percent of Kansas small businesses are shuttered, with more than half of them saying they are weeks away from closing permanently.
Kansans need a pathway through this economic disaster. Will we come back stronger than ever before, or fall deep into an economic depression? To paraphrase our state maxim, we can reach for the stars and find better days ahead if we follow the common-sense path.
First, Kansas needs occupational licensing reform, with the most excellent examples of success from Gov. Laura Kelly herself. In March, Kelly waived some licensure requirements, making it easier for physicians to work in Kansas. This fantastic move needs expansion, not a reversal once the virus passes.
From nurses to HVAC technicians, all licensed professionals should be able to work as soon as they cross the border. Good licensing reform protects the public, encourages movement into Kansas, and provides Kansas young adults with a flexible career path.
Kansas needs regulatory reform. Due to the statewide stay-at-home order and voluntary action, countless Kansas businesses shut their doors to “flatten the curve.” Pulling back regulations can prime them to reopen them quickly.
The Kansas Department of Commerce could create a one-stop-shop for all state applications and fees. KDHE and local agencies can fast track the reopening of restaurants with a history of reliable inspections. It takes four and a half weeks to read Kansas state regulations one time (assuming reading 40 hours a week). Allowing businesses to open doors quickly, when public safety allows, gives Kansans precisely what they need to get back to work.
Our leaders must also realize that we need a financially solvent government that encourages the Kansas spirit more than ever. That’s not an invitation for more stimulus, and issuing more debt to Kansans. Such methods didn’t work in 1932 and 2008, and it won’t work today. Kansas policymakers should work to simultaneously grow the rainy day fund while lowering the tax burden on Kansans. That means enforcing performance-based budgeting, matching tax dollars to specific improvements in Kansans’ lives. It also means passing the tax windfall, which rewards Kansas for their donations and gifts during the public health crisis. Finally, restore honesty in property taxation, so Kansans don’t lose their homes when times already are trying.
The COVID-19 outbreak is not a crisis to be seized upon. Any Kansans policy must focus on “flattening the curve” today. Tomorrow, however, we’ll need different guidelines to jump-start the recovery.
Kansas — and America — will recover. The next decade can be better than the last if we give families and businesses the flexibility to grow stronger. Whether the difficulties last for six weeks or six months, our nation’s founders gave us the blueprint to make striving for the stars possible.
Michael Austin is director of the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute.
An op-ed in the Wichita Eagle regarding school choice prompts uninformed and misinformed comments.
An op-ed written by James Franko appearing in the Wichita Eagle explains the importance of the Kansas Tax Credit for Low Income Students Scholarship Program. This is a program that awards scholarships to students to attend schools of choice. It is a small program. For the school year ending in 2018, 292 students received scholarships totaling $675,892.63. This represents one of every 9,606 dollars spent on Kansas schools. For each group of 1,632 Kansas students, one received a tax credit scholarship. Yet, this program is seen as a threat to existing public schools.
Following is Franko’s editorial, followed by some comments left by Wichita Eagle readers.
Tax credit programs give parents power over their children’s education
Education in Kansas has evolved dramatically since settlers plowed out a life on the Plains. The one-room schoolhouse is gone and the local community coming together to hire a young woman to teach are left to the Little House stories that I read with my kids. Education is now a political debate where decisions are increasingly made far away from families, teachers and local communities.
While certainly well-intended, people in Topeka and Washington, D.C., are making decisions, demanding paperwork and setting standards that remove parents and teachers from the driver’s seat. Our teachers and other educators deserve our admiration. But we’ve all heard a teacher lament “teaching to the test” or that money that doesn’t seem to reach the classroom.
A recent column about school choice (“How school choice works in Kansas,” Nov. 29 Eagle) seems to confuse what public education is intended to be with what it currently is. Schools — public, private, and home — are tremendous parts of our community. They make our society vibrant as a by-product of preparing children to succeed.
Dr. Sharon Iorio’s concern about expanded tax credit programs undermining public education gets it backward. The free association of people choosing a private school is equally important to “the bond that holds together our society…” as is a choice to send a child to a public school. The point is that tax credit programs, which are different from vouchers, put parents back in the primary role of educating their children. Kansas’ tax credit scholarships help low-income students attending the lowest-performing schools in our state. It is almost paradoxical, but there is evidence from around the country that achievement increases in public schools when school choice is an option.
America and Kansas have always been a patchwork of communities and cultures. This is what makes a road trip so great. We get to experience the different flavors of American life, many of them from our immigrant history. Expanding private school choice enhances and protects this diversity by allowing parents to decide where their children are educated. Local educators and parents will decide what education looks like in a community. This is in contrast to a one-size-fits-all approach taken when standards are dictated, tests are mandated and policies are implemented from afar.
One approach captures the diversity of our communities and helps improve achievement for all students. The other homogenizes a rich community life and too often leaves student achievement stagnant.
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Following, some comments from Eagle readers. These comments show how much there is to learn about the actual Tax Credit for Low Income Students Scholarship Program.
Who qualifies for scholarships?
What people think: “The Kochs, err, KPI, wants private vouchers because it gives money to the wealthy to help pay for their expensive private schools.”
“The tax credit idea mostly benefits religious schools.”
“It’s a regressive tax meant for the 1%.”
First, the guidelines from KSDE state: “An educational scholarship shall not exceed $8,000 per eligible student.” Expensive private schools cost more than this, but there are many private schools that do not. Also, $8,000 is less than the state spends on each student.
Further, the scholarship program is limited to students who are “eligible for free lunch and attends a Title I Focus School or Title I Priority School.” This means a student from a low-income family.
Still further, students over the age of six must have attended a public school in the year prior to receiving a scholarship. Students currently enrolled in private schools of any type, including church schools, are not eligible for a scholarship. 1
Parents already have choice
What people think: “You have always had, in fact anyone, freedom to choose where to send their child to school. Be it private or public.”
This is cruel. The people who need school choice the most — poor children in inner-city schools — simply can’t afford tuition at even the most inexpensive private schools. Thinking like this ensures a permanent underclass cut off from private schools or even good public schools.
Who gets the tax credits?
What people think: “Tax credit is only if you make enough to apply for it and I have yet to see any of these minoritys and poor demanding school choice.”
“When one can get 100% of their tax credit refunded and another family only gets a portion of their tuition refunded due to a low tax rate your playing a KPI pretend game without the facts.”
These writers believe that the parents of scholarship students receive tax credits. Anyone who contributes to a scholarship-granting organization may receive a tax credit. Since scholarships are limited to students from low-income families, it’s not likely these families are able to make a contribution and receive a tax credit. Also, the writer who mentioned tax rates is confusing tax deductions with tax credits.
Education only for those who can afford one
What people think: “Right now people have the ability to get a free education. Under the Koch’s dream land, education would be reserved for those who could afford it.”
Somehow, there are people who think that the goal of companies like Koch Industries and others is to have a poorly-educated population. But companies spend much time and effort recruiting educated and qualified employees to work in scientific laboratories, deal with complicated financial and accounting matters, drive innovation through information technology and other means, deliver health care, and perform numerous other tasks that benefit from a competent education.
Then, don’t these companies want customers to buy their stuff? People with better educations earn more, buy more, and invest more. Companies want more of these people, not fewer.
Without taxes and public schools, there will be no learning
What people think: You don’t like paying taxes? You don’t like living where people can read and write? Go live in the woods.”
In both the Wichita Public School System and the State of Kansas, the proportion of students testing at Level 1 rose. That’s bad. The proportion of students testing at Level 3 or better declined. That’s bad, too. 2
The writer seems to think that public schools are teaching students to read and write. Despite a large influx of spending this year, test scores have fallen. A population of people can’t read and write is becoming larger.
Kansas and Wichita school performance reports. Click for larger.
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Notes
“Eligible students must meet the following criteria: (1) eligible for free lunch and attends a Title I Focus School or Title I Priority School; or (2) has previously received a scholarship under this program and has not graduated from high school or reached 21 years of age. 56(d)(1)(A)-(B) AND Eligible students are required to reside in Kansas while receiving a scholarship and be enrolled in a public school in the year prior to receiving the scholarship or be eligible to be enrolled in a public school, if under the age of six. 56(d)(2) and 56(d)(3)(A)-(B).” Kansas State Department of Education. Tax Credit for Low Income Students Scholarship Program Guidelines. Available at https://www.ksde.org/Portals/0/School%20Finance/Action%20Items/TCLISS%20Program–Guidelines.doc. ↩
“Kansas assessment results are now reported in four levels. Level 1 indicates that a student shows a limited ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 2 indicates that a student shows a basic ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 3 indicates that a student shows an effective ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 4 indicates that a student shows an excellent ability to understand and use the English Language arts skills and knowledge needed for college and career readiness.” Kansas State Department of Education, Kansas Report Card. ↩
By Michael Austin
Director, Sandlian Center for Entrepreneurial Government
With a new Kansas Governor-elect and State Legislature, Kansans voted to make a change. Despite many elections however, the Kansas economy has been slowing for the past 40 years. While the new administration cites government as the solution to this problem, history shows that government is primarily the cause. Kansans need of a new way of thinking. They won’t get that from a Democrat or Republican as governor.
Kansas has had a storied life in celebrating freedom and improving its quality of life. Through our abolitionist beginnings to creative developments in industry, Kansas led in economic freedom with Wichita at its center. Legendary Wichitan entrepreneur Colby Sandlian got started in the 1950s, noticing permits for single-family homes averaging 150 a week. At the time, local government zoning staff had fewer than 10 employees. Today, Wichita averages around 45 permits a week with a local government zoning staff of near 50 individuals. While other factors have been at play in Wichita, economic vitality and government bureaucracy seem to have an opposing relationship.
Kansas families are nearly $12,000 poorer than the national average with 172,000 fewer available jobs. Like Wichita, with this sluggish growth, Kansas has more government jobs than the national average. Government is essential to a civilized society, but it can only act through taxes taken from Kansans. The bigger the government, the bigger the burden on families and commerce.
Kansans can’t keep up with inflation because government growth limits employers’ ability to attract qualified employees. Kansas government growth also creates and supports monopolies; forcing low-income consumers to pay higher prices for goods and services. Worst of all, Kansas government growth forces around 10,000 Kansans a year to abandon the state. Other states and countries that provide similar governmental services with fewer taxes entice Kansans to leave. This is likely to get worse under an ObamaCare expansion and record government spending growth, financed with high taxes.
We can give Kansans tools to demand their government return more choices and change course. For this reason, the Kansas Policy Institute created the Sandlian Center for Entrepreneurial Government. It captures the observation above and the entrepreneurial spirit needed to make Kansas a better place to live and work.
Reversing economic immobility, we will show where Kansas is headed if government taxes and spends. We’ll advise how government can better listen to Kansans, helping them keep more of what they earn while enacting the best policy to grow private wages and jobs. We’ll provide pathways to sensible regulations, ensuring public safety and encouraging new innovative businesses to keep prices low for Kansans. Most importantly, we’ll teach public organizations to provide better services at a better price to reverse the trend of out-migration seen in Kansas and Wichita.
For Kansans to live closer to the American dream, they need a responsive government that allows more opportunities and ensures their tax dollars are spent wisely. Politicians come and go, but the principles that can make this a reality never change.
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Michael Austin, Sandlian Center for Entrepreneurial GovernmentMichael Austin is the Director of the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute. In this role he is responsible for educating public organizations and the public on taxes and budget, using economic research to turn government inefficiencies into effective policy solutions. Before joining the Sandlian Center, Michael served as an economist in various roles of Kansas state government. As an adviser to former Kansas Governor Sam Brownback, Michael’s work made him the first to discover the drop in commodity and energy prices that plagued Kansas and the region, later termed “The Rural Recession.” Most recently as Chief Economist in the Kansas Department of Revenue, his research and presentation on the Federal Tax Cuts and Jobs Act, and its effects on Kansans jumpstarted discussions ensuring it will be a key concern in the upcoming Kansas legislative session.
Michael is a New York City transplant, living with his wife and two children in the Lawrence Area. Michael is a Washburn University School of Business Scholar earning his Bachelor of Business Administration and double majored in management and economics. Michael also graduated from the University of Kansas’s Department of Economics with a Master of Arts with honors. Email Michael at Michael.Austin@kansaspolicy.org.
In this episode of WichitaLiberty.TV: The end of a Sedgwick County Commission election, the Wichita Eagle editorializes on school spending and more taxes, and Wichita Mayor Jeff Longwell seems misinformed on the Wichita economy. View below, or click here to view at YouTube. Episode 207, broadcast August 26, 2018.
Article: Wichita Eagle argues for higher taxes: The Wichita Eagle editorial board wants higher taxes. Relying on its data and arguments will lead citizens to misinformed and uninformed opinions.
Article: The Wichita Mayor on employment: On a televised call-in show, Wichita Mayor Jeff Longwell is proud of the performance of the city in growing jobs.
Recently Kansas Policy Institute, along with Americans for Prosperity and Kansas Chamber of Commerce, held a series of briefings for candidates for the Kansas Legislature. The presentations in Wichita were recorded, and are available as follows:
What Was Really the Matter with the Kansas Tax Plan. KPI President Dave Trabert spoke on the reality and myths of the state’s tax plan. Click here to view at YouTube.
Kansas K-12 Education Spending and Achievement. KPI President Dave Trabert spoke on K-12 education spending and achievement. Click here to view.
Medicaid Expansion. Melissa Fausz, a senior policy analyst with Americans for Prosperity, spoke about Medicaid expansion. Click here to view.
Kansas Chamber Legislative Update. Eric Stafford, vice president of government affairs for the Kansas Chamber of Commerce, spoke on the legislative process in Kansas. Click here to view.
Property Taxes. KPI President Dave Trabert spoke on property taxes in Kansas. Click here to view.
In this episode of WichitaLiberty.TV: Dave Trabert of Kansas Policy Institute joins Bob and Karl to discuss his new book What Was Really the Matter with the Kansas Tax Plan –- The Undoing of a Good Idea. View below, or click here to view at YouTube. Episode 186, broadcast March 3, 2018.
What Was Really the Matter with the Kansas Tax Plan
New Book Outlines Tax Lessons from Kansas “Experiment”
Tax relief opponents have repeatedly pointed to the 2012 Kansas tax plan as their primary example of why tax cuts do not work. But, other states like North Carolina, Indiana, and Tennessee contemporaneously, and successfully, cut taxes. What was different about the Kansas experience?
The answer to that question is multi-dimensional according to a new book from Kansas Policy Institute, entitled What Was Really the Matter with the Kansas Tax Plan — The Undoing of a Good Idea. The book covers the six years between the conception of Brownback’s tax cuts in 2011, the tax package being signed into law in 2012 and later repealed with the largest tax hike in state history in 2017. It documents the many mistakes that occurred, a toxic political undercurrent, and several unrelated economic circumstances that negatively impacted the budget and multiple misconceptions along the way.
Author and KPI president Dave Trabert says, “Much of what went wrong was avoidable. We hope citizens and legislators across the nation can learn from the mistakes made in Kansas as they strive to create the best path forward for everyone to achieve prosperity with lower taxes.”
The final chapter of the book is “Lessons Learned” and includes these big lessons:
Don’t cut revenue and increase spending.
Explain why tax relief is necessary (i.e., what are the consequences of not reducing the tax burden).
Develop a comprehensive plan to balance the budget on less tax revenue, with room for the unpredictable but inevitable misfortunes (like plummeting oil and farm commodity prices).
Have the right systems in place, including performance-based budgeting and a reliable revenue estimating process.
To ensure that lawmakers have this information as they work in statehouses around the country, nearly 8,000 complimentary copies are being distributed to every state legislator across the country in partnership with The Heartland Institute.
Danedri Herbert, an experienced journalist currently writing for the online publication “The Sentinel,” co-authored the book and former U.S. Senator Tom Coburn of Oklahoma wrote the Foreword. Coburn writes, “This is a very important book, not only for state and national legislators who try to represent citizens instead of special interests, but also for taxing and spending watchdogs in the press and those involved with good government citizen activist groups.”
What Was Really the Matter with the Kansas Tax Plan is published by Jameson Books, Inc. and copies will be available on Amazon.
Trabert concludes, “Kansas could have successfully cut taxes as other states have done. The undoing of a very good idea—allowing citizens to keep more of their hard-earned money—gets to the crux of the serious state and national challenges we face: policy takes a back seat to politics. The efforts of many elected officials are not on solving problems in ways that create the best path forward for all Americans to achieve prosperity, but on maintaining and consolidating power.”
The answer to that question is multi-dimensional according to a new book from Kansas Policy Institute, entitled What Was Really the Matter with the Kansas Tax Plan — The Undoing of a Good Idea. The book covers the six years between the conception of Brownback’s tax cuts in 2011, the tax package being signed into law in 2012 and later repealed with the largest tax hike in state history in 2017. It documents the many mistakes that occurred, a toxic political undercurrent, and several unrelated economic circumstances that negatively impacted the budget and multiple misconceptions along the way.
