A look at actual spending on Kansas highways, apart from transfers.
When we look at actual spending on Kansas roads and highways, we see something different from what is commonly portrayed. Kansas Department of Transportation publishes a Comprehensive Annual Financial Report that details spending in four categories. These figures represent actual spending on roads and highways, independent of transfers to or from the highway fund.
For fiscal year 2018, which ended June 30, 2018, spending on two categories (Maintenance and Modernization) rose slightly from the year before, while spending on the categories Preservation and Expansion and Enhancement fell.
For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2018 totaled $528.234 million. That’s down 28 percent from $736.781 million the year before, and up from a low of $698.770 million in fiscal 2010.
Again, these are dollars actually spent on highway programs. A common characterization of the way Kansas government is funded is called “robbing the bank of KDOT.” To the extent that characterization is accurate, there is a separate line item titled “Distributions to other state funds” that holds these values. It appears in the nearby table. A chart shows sales tax distributions from the general fund to KDOT, and transfers from KDOT. The two values tack closely over history, and in 2018 were nearly identical values.
Many also criticize Kansas government for slashing highway spending, letting our roads crumble. While total spending on these four programs has been falling (after adjusting for inflation), the decline, until recent years, is minor compared to the hysterical claims of those with vested interests in more government, and especially highway, spending.
Kansas law specifies how much sales tax revenue is transferred to the highway fund. Here are recent rates of transfer and dates they became effective: 1
July 1, 2010: 11.427%
July 1, 2011: 11.26%
July 1, 2012: 11.233%
July 1, 2013: 17.073%
July 1, 2015: 16.226%
July 1, 2016 and thereafter: 16.154%
A nearby chart shows the dollar amounts transferred to the highway fund from sales tax revenue. In 2006 the transfer was $98.914 million, and by 2018 it had grown to $530.765 million.
One of the most important charts shows state spending per-pupil, adjusted for inflation. It shows the total of state and local spending, which is useful because in 2015 the state made a change in the way revenue is allocated between state and local sources. It also shows base state aid per pupil, which is an important number as it is the starting point for the school funding formula.
Why is total state and local spending higher than base state aid? The answer is weightings. These are amounts that are added to the base to pay for things like at-risk children, English language learners, and other items. The value of weightings has grown over time, so as base state aid has generally fallen, total spending has generally risen.
A second chart shows the ratio of total state and local spending to base state aid.
This is not simply a technical matter. In discussions of school policy, sometimes only the base aid figure is used. As it has fallen, some formulate an argument that school spending has been cut. That is easily refuted by looking at total state and local spending.
Of note, base state aid was not used in school years 2016 and 2017, which explains the gap in some of the series.
I’ve gathered these charts and others and present them in a presentation. Use arrow keys to move through the charts. Click here to access.
Following, articles that address some of the topics I presented:
Industrial revenue bonds in Kansas: Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to avoid paying property and sales taxes.
Wichita TIF projects: some background: Tax increment financing disrupts the usual flow of tax dollars, routing funds away from cash-strapped cities, counties, and schools back to the TIF-financed development. TIF creates distortions in the way cities develop, and researchers find that the use of TIF means lower economic growth.
In this episode of WichitaLiberty.TV: Republican Party candidate for Kansas governor and current Secretary of State Kris Kobach joins Bob and Karl to explain why he should be our next governor. View below, or click here to view at YouTube. Episode 211, broadcast September 30, 2018.
What is the importance of agriculture to the Kansas economy?
United States Representative Roger Marshall said: “My district is the largest ag-producing congressional district in the country, with 60 percent of the economy being ag related. Forty percent of the Kansas economy is ag related.” 1
The Kansas Hospital Association argues: “In Table 5, the total income impact of health care services resulted in an estimated $19.4 billion for the economy. Thus, health care is directly or closely related to about 11.6 percent of the state’s total income.” 2
The Kansas Department of Transportation produced a study that finds: “In 2017, $20.6 billion in annual economic benefit was supported by aviation and aviation-related activities in Kansas, supported nearly 91,300 jobs, and generated more than $4.4 billion in annual payroll.” 3 $20.6 billion is 14.9 percent of the $138.328 billion Kansas economy.
The nonalcoholic beverage industry says: “With a direct economic impact of $2.0 billion.” Then “Factoring in this retail impact further broadens the economic reach of the nonalcoholic beverage industry by an additional $1.7 billion beyond what our industry generates directly.” 4 The total of $3.7 billion is about 2.7 percent of the Kansas economy. That’s coming just from nonalcoholic beverages.
We can easily find other examples of industry groups emphasizing their importance to the Kansas economy. But these findings are almost always exaggerated, especially in the case of agriculture.
For example, the Kansas Department of Agriculture says “Using the most recent IMPLAN data available (2015) adjusted for 2017, 65 agriculture, food, and food processing sectors were analyzed to determine their overall contribution to the Kansas economy. These 65 sectors have a total direct output of approximately $47.9 billion and support 125,714 jobs in Kansas.” 5 The document says this is 31.6 percent of Kansas GDP.
Direct output is defined in the same document in this paragraph: “Direct, indirect, and induced effects sum together to estimate the total economic contribution in the state. Direct effects capture the contribution from agricultural and food products. Indirect effects capture the economic benefit from farms and agricultural businesses purchasing inputs from supporting industries within the state. Induced effects capture the benefits created when employees of farms, agricultural businesses, and the supporting industries spend their wages on goods and services within the state.”
Adding indirect and induced effects results in $67,461,102,358 ($67.5 billion) in economic contribution, which the Department of Agriculture says is 44.5 percent of Kansas economic output, also called gross domestic product (GDP).
It is true that agricultural workers spend money like anyone else. They spend on food, shelter, taxes, recreation, cars, clothing, and other things. Therefore, an agriculture industry support group might say “Farmers keep small town Kansas restaurants in business, providing jobs for restaurant workers.”
Then, a restaurant industry support group might say “By buying meats and produce locally, restaurants keep Kansas farmers in business.”
All this is true. But we need to be careful when counting contributions to the whole. Here, when farmers eat at restaurants, that is counted as induced effects of agriculture contributing to Kansas GDP. But, the restaurant industry counts the production and serving of these meals as its own direct output to Kansas GDP.
Similarly, when the restaurant buys food from a farmer, the purchase counts as indirect effects of the restaurant industry as they purchase inputs and contribute to Kansas GDP. The farmer, of course, considers that as his direct output, again contributing to Kansas GDP.
This economic activity is good and natural, and the more, the better. But we can’t count it twice when allocating GDP to industries.
Consider the industry category “Dog and cat food manufacturing,” said by the Department of Agriculture to employ 2,183.7 people in Kansas, producing $3,125,350,139 ($3.1 billion) in contribution to the Kansas GDP. That’s 2.2 percent of Kansas GDP. Should all the output of this industry be considered part of Kansas agriculture? The manufacturing industry counts this as part of its contribution to GDP. It’s true that the inputs to the manufacturing are agricultural products, but we don’t know if they are ag products that are produced in Kansas and should be counted as part of Kansas GDP.
The nearby table shows that for 2017, agriculture counted for 3.2 percent of the Kansas economy. For the period 1997 to 2017, it was 2.7 percent. There are many industry groups with greater output than agriculture.
How are the GDP numbers for agriculture inflated to 44.5 percent? IMPLAN, that’s how. It is an economic model used to estimate contributions of economic activity to the larger economy. 6
It’s true that when an industry produces economic activity, it spawns other economic activity. These are the indirect and induced effects that IMPLAN produces. But these numbers are hugely inflated. When considering all industries, economic activity is counted more than once.
When it suits their needs, industry groups, like other special interest groups, use IMPLAN to boost their importance. Consider manufacturing, which at 16.4 percent of GDP is the second-largest industry in Kansas. When manufacturing companies appeal to state or local government for subsidies, they use IMPLAN or related mechanisms to inflate their importance. Almost everyone does this. It’s standard procedure.
Except: When multiple industries the same indirect and induced economic activity, such analysis becomes meaningless. If we added up the IMPLAN-calculated value of each industry to the Kansas economy, we’d end up with a value several times larger than the actual value. This is what the Kansas Department of Agriculture has done. We expect this behavior from companies or local economic development agencies when they appeal for economic development incentives and other forms of special treatment. They need to inflate their importance to gullible government bureaucrats and elected officials. But government agencies should not do this.
On the other hand, what is the harm in overstating the importance of an industry? The harm is that policy decisions are made using false evidence.
For August 2018, more jobs in Kansas, and a nearly unchanged labor force. Wichita jobs also rose.
Data released this week from the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving jobs picture for Kansas in August 2018.
Over the year (August 2017 to August 2018), the Kansas labor force is down slightly, while up slightly over the past three months. These changes are small, all being in the range of 0.1 percent or less.
The number of unemployed persons continues to fall, declining by 1.4 percent from July to August. The unemployment rate was 3.3 percent in August, down from 3.6 percent from one year ago, and from 3.4 percent in July.
The number of Kansas nonfarm jobs for August 2018 rose by 1.9 percent over last August, adding 26,600 jobs. This is using seasonally adjusted data, and the non-adjusted figure is larger at 29,900.
From July 2018 to August, jobs in Kansas rose by 3,600, which is 0.3 percent.
This release also provided some data for metropolitan areas. For the Wichita MSA, here are employees on nonfarm payrolls, not seasonally adjusted:
August 2017: 291,300
July 2018: 294,500
August 2018: 296,000 (up 4,700 jobs, or 1.6 percent over the year)
Comparing July 2018 to August 2018 isn’t meaningful using this data, as it is not adjusted for seasonality.
In this episode of WichitaLiberty.TV: Independent candidate for Kansas governor Rick Kloos joins Bob and Karl to explain why he should be our next governor. View below, or click here to view at YouTube. Episode 210, broadcast September 23, 2018.
In this episode of WichitaLiberty.TV: Libertarian Party candidate for Kansas governor Jeff Caldwell joins Bob and Karl to explain why he should be our next governor. View below, or click here to view at YouTube. Episode 209, broadcast September 16, 2018.
Kansas has more state government employees per resident than most states, and the trend is rising.
Each year the United States Census Bureau surveys federal, state, and local government civilian employees. 1 The amount of payroll for a single month (March) is also recorded. In this case, I’ve made the data for state government employees available in an interactive visualization.
For 2016, Kansas had 17.90 full-time equivalent state government employees per thousand residents. This ranked 15th among the states. These employees resulted in payroll cost of $979 per resident, which is 21st among the states.
Nearby is an example from the visualization showing state government employment count (full-time equivalent) per thousand residents for Kansas and some nearby states. It shows total employment, and in addition, education employment and hospital employment. (Since nearly all employees in Kansas elementary and secondary schools are employees of local government, not the state, the employees shown are working in higher education. See below for visualizations of local government employees.)
Two things are evident: The level of employment in Kansas is generally higher than the other states, and the trend in Kansas is rising when many states are level or declining. This data counters the story often told, which is that state government employment has been slashed.
If we look at data for state and local government employees, the conclusions are nearly the same.
Click here to learn more and access the visualization.
Among nearby states, Kansas collects a lot of taxes, on a per-resident basis.
The United States Census Bureau collects data from the states regarding tax collections. Some data is available for each quarter subdivided by category.
From the first quarter of 2011 to the first quarter of 2018, Kansas and its local governmental units collected an average of $681 per quarter per resident in taxes. Of nearby states and a few others, Arkansas and Iowa had higher values, and Iowa is higher by only one percent.
Some states had lower values, such as Colorado at $565 per quarter per resident (17.0 percent less than Kansas), Texas and Missouri both at $486 (28.6 percent less), and Florida at $470 (31.0 percent less).
To learn more about this visualization and create your own, click here.
In this episode of WichitaLiberty.TV: Independent candidate for Kansas governor Greg Orman joins Bob and Karl to explain why he should be our next governor. View below, or click here to view at YouTube. Episode 208, broadcast September 9, 2018.
Kansas has nearly the highest number of local government employees per resident, compared to other states.
For all local government employees, Kansas had 50.59 per thousand residents in 2016, higher than all states (and areas) but the District of Columbia and Wyoming. These employees had an annual payroll of $2,141.16 per resident. Ten states were higher.
Considering elementary and secondary education, Kansas had 30.03 such employees per thousand residents. This was higher than all states but Vermont and Wyoming. The payroll for these employees was $1,150.85 per resident, with eleven states above Kansas.
Kansas is a small state in terms of population. Might small states have higher needs for employees on a per-resident basis? A plot of employees vs. population shows nearly no relationship between the two.
These are local government employees only. State and federal government employees are not included.
Of note, Hawaii has no local employees in elementary and secondary education, as it has one school district which is run by the state. 1
The source of this data is the United States Census Bureau. I’ve gathered it and placed in in an interactive visualization. Click here to learn about the visualization and use it to make your own charts and tables.
In this episode of WichitaLiberty.TV: Wichita talk radio pioneer Joseph Ashby shares his thoughts on the upcoming Kansas primary election. We cover the Secretary of State, Governor, and Sedgwick County Commission. View below, or click here to view at YouTube. Episode 204, broadcast August 4, 2018.
In the first quarter of 2018, the Kansas economy grew at the annual rate of 0.5 percent in real terms, slowing from the previous quarter.
In the first quarter of 2018, the Kansas economy grew at the annual rate of 0.5 percent in real (inflation-adjusted) dollars, according to statistics released today by Bureau of Economic Analysis, a division of the United States Department of Commerce. GDP for the quarter was at the annual rate of $161,551 million.
This is a decline in the rate of growth from the fourth quarter of 2017, when the rate was 2.3 percent.
The first quarter numbers put Kansas in 47th position among the states, with only Arkansas, Idaho, and North Dakota posting lower numbers. Quarterly GDP can be volatile, as shown in the nearby chart.
For Kansas, industries that differed markedly from the state average include:
Agriculture, forestry, fishing, and hunting, down by 1.08 percent.
Wholesale trade, down by 0.13 percent.
Management of companies and enterprises, up by 0.07 percent.
Administrative and support and waste management and remediation services, unchanged.
Educational services, up by 0.01 percent.
Arts, entertainment, and recreation, down by 0.03 percent.
Accomodation and food services, down by 0.03 percent.