The Securities and Exchange Commission found that Kansas mislead bond investors. It ordered the state to implement reforms, which it has.
According to a press release from the Securities and Exchange Commission, the State of Kansas “failed to disclose that the state’s pension system was significantly underfunded, and the unfunded pension liability created a repayment risk for investors in those bonds.”
This refers to a series of eight debt, or bond, issues in 2009 and 2010. Collectively they were worth $273 million. The SEC press release explains:
According to the SEC’s order against Kansas, the series of bond offerings were issued through the Kansas Development Finance Authority (KDFA) on behalf of the state and its agencies. According to one study at the time, the Kansas Public Employees Retirement System (KPERS) was the second-most underfunded statewide public pension system in the nation. In the offering documents for the bonds, however, Kansas did not disclose the existence of the significant unfunded liability in KPERS. Nor did the documents describe the effect of such an unfunded liability on the risk of non-appropriation of debt service payments by the Kansas state legislature. The SEC’s investigation found that the failure to disclose this material information resulted from insufficient procedures and poor communications between the KDFA and the Kansas Department of Administration, which provided the KDFA with the information to include in the offering materials.
“Kansas failed to adequately disclose its multi-billion-dollar pension liability in bond offering documents, leaving investors with an incomplete picture of the state’s finances and its ability to repay the bonds amid competing strains on the state budget,” said LeeAnn Ghazil Gaunt, chief of the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit. “In determining the settlement, the Commission considered Kansas’s significant remedial actions to mitigate these issues as well as the cooperation of state officials with SEC staff during the investigation.”
In other words, Kansas had a grossly underfunded state pension system, and did not adequately disclose that to potential purchasers of new state debt. The full text of the order gives more detail as to how Kansas was an outlier among the states, not only in the magnitude of its problem, but in its lack of disclosure:
Kansas’s practice of not disclosing the underfunded status of KPERS became increasingly inconsistent with the practice of most states issuing municipal securities, which generally provided disclosure in their CAFRs or the body of their Official Statements regarding the financial health of their pension funds. By 2008, with the exception of Kansas, the overwhelming majority of the Official Statements for state-level bond issuances at a minimum disclosed the UAAL or funded ratios of the associated state-level pension plans, particularly if those plans were significantly underfunded.
Here’s what this means to public policy:
First, the Kansas Public Employee Retirement System (KPERS) was in terrible financial condition, compared to other states.
Second, Kansas did not adequately disclose that to potential investors, according to the SEC.
Third, reforms have been implement to the satisfaction of the SEC.
Fourth, the SEC was quite critical of the Kansas Department of Administration, or KDA.
Fifth, the head of KDA at the time was Duane Goossen. On his blog his biography contains: “[Goossen] was appointed by Sebelius in 2004 to concurrently serve as Secretary of the Kansas Department of Administration, the agency that manages state facilities, accounting, information services and employee programs.”
Although retired from state government, Goossen maintained a role in public affairs as former Vice President for Fiscal and Health Policy at Kansas Health Institute, and now authors a blog concerning issues related to the Kansas budget.
BIG SUBSIDIES: Kansas has forked over millions in tax breaks since 2009, but new research says it has been ineffective at accomplishing its main goal: Creating new jobs.
OSAWATOMIE, Kan. — By the time theMcQueeny Group signed up for tax breaks through Kansas’ primary economic development engine, vice president Rod Slump said the business was already looking to make a move.
Like numerous other firms who have relocated to Kansas to take advantage of PEAK benefits, Overland Park-based McQueeny Group has been handed thousands in tax breaks for creating new jobs — more than $160,000 since 2011, according to the Kansas Department of Commerce.
The state contends McQueeny’s relocation from the Crossroads near downtown Kansas City, Mo., has brought 15 jobs to Kansas, though Slump said only two or three were new to the company after the move.
PEAK allows an employer to retain 95 percent of the payroll tax for creating jobs that pay at or above the county median wage, with the goal of spurring new hiring. In the last two years alone, the program has granted more than $28 million in tax breaks, according to annual reports prepared by the state.
But Slump told Kansas Watchdog all PEAK did was help make the relocation decision easier.
“It’s hard for us to tie creation of jobs to that, as much as it was a business opportunity,” Slump said.
New research suggests McQueeny Group is the rule, not the exception.
“It looks like there’s no evidence that PEAK incentives work in the sense of job creation any way we cut this,” said Nathan Jensen, associate professor of political science at Washington University in St. Louis, who compared data between numerous companies to see if the tax breaks had any real-world effect. “Doing this over and over again, you kind of come up with the same result.”
Through statistical research, Jensen discovered that PEAK tax breaks had little to no effect on whether a company created new jobs.
“They’re just incentivizing firms that are already going to expand and relocate,” Jensen said, noting that issues with incentives are hardly restricted to the Sunflower State. “Most of the data is that about two-thirds to three-fourths of firms that get an incentive, globally, were basically getting an incentive to do what they were going to do anyway.”
Jensen compared companies of similar size and industry, examining the job creation figures from 2006 and onward; PEAK was signed into law in 2009. For each of the 72 PEAK firms examined, Jensen matched them with five comparable firms in Kansas that didn’t receive PEAK tax breaks.
Then he did it again.
Jensen said what he found was incredibly unsurprising.
Not only is there no statistical link between PEAK benefits and job creation, Jensen also wrote the “PEAK program is disproportionately used to attract investment from across the (Missouri) border.”
Despite noting that PEAK played a minimal role in Mcqueeny Group’s job creation, Slump disagreed it doesn’t help fuel new jobs, contending the tax breaks free up funds for additional hiring.
While Jensen’s findings are damning enough, he said more information is still needed to see whether PEAK is worth the massive taxpayer support it has received since its inception. Information such as when a firm applied for PEAK benefits and when tax breaks were awarded, as well as tracking which firms were rejected from the program, would go a long way toward determining the value of PEAK, Jensen noted.
More than anything, Jensen would just like to see a little transparency.
“It’s the sort of thing I think should just be on a website,” he said.
Currently, the Kansas Department of Commerce only makes PEAK data available through an open records request. Darla Price, PEAK program director, told Kansas Watchdog she couldn’t say why the information wasn’t posted online; decisions like that aren’t made at her level, she said.
Dan Lara, deputy secretary for public affairs for the state commerce department, said the agency is considering allowing greater levels of transparency regarding the PEAK program, but has yet to make an actual decision.
The Docking Institute of Public Affairs at Fort Hays State University all but confirmed the ineffectiveness of the program after surveying PEAK firms last year. Respondents admitted that 75 percent of new hires would have happened whether or not they received the tax breaks. However, the report justifies the massive program by simply stating that, hey, jobs are jobs.
“(A)ll of the new employees hired by PEAK firms relocating to Kansas represent additional jobs for the State, regardless of whether they would have been hired without the PEAK Program,” the Docking report stated.
The results are in, and the news isn’t good: Kansas continues to plummet in state spending transparency rankings, and it barely squeaked by with a grade of D-minus, according to a report by the U.S. Public Interest Research Group.
Travis Perry of Kansas Watchdog reports that governmental agencies fear that fulfilling records requests will cost too much and eliminate a necessary revenue stream. But there are solutions that may not be under consideration. For example, instead of supplying accident reports singly as they are requested, law enforcement agencies could simply make all such reports available. I can hear the objections, such as it will cost too much for each agency to maintain a website for the purposes of making reports available. But each agency doesn’t have to establish and maintain a website. The state (or someone else) could easily and inexpensively establish a website for the purpose of distributing such documents. Or, this sounds like a good project for the trade associations that officials join, and for which taxpayers pay membership dues and fees.
Lobbyist says lower open records fees could threaten Kansans’ safety
COST CONSCIOUS: Opponents of a bill targeted at reducing the cost of acquiring public documents say it will eliminate a necessary revenue stream for many Kansas government entities.
By Travis Perry | Kansas Watchdog
TOPEKA, Kan. — According to Kansas law enforcement lobbyist Ed Klumpp, too much government transparency could be a bad thing.
Firing a verbal warning shot Wednesday morning against legislation sponsored by Pittsburg Republican Sen. Jacob La Turner, Klumpp said Senate Bill 10, which would lower the cost of accessing government documents in the Sunflower State, has the potential to dramatically affect public safety.
In contention is a provision within La Turner’s bill that would require public entities to provide free of charge either the first hour of staff time or 25 copies, whichever comes first, to individuals requesting public documents.
Klumpp suggested that preventing law enforcement agencies from charging for the most commonly requested documents, such as accident reports, would eliminate a key source of revenue to avoid diverting resources from elsewhere.
“It’ll be fewer dollars to buy police equipment, fewer dollars to put into investigations,” Klumpp told members of the House Federal and State Affairs committee.
LaTurner called the assumption utterly ridiculous, and stated that document retrieval fees have been a veritable cash cow for public entities for years.
“They’ll say anything to hold onto their funding sources, no matter how unfair,” LaTurner said.
The 90 minutes of testimony offered to House lawmakers in the Old Supreme Court Room took on an adversarial flair, with media and private citizens facing off against county and local government officials.
Doug Anstaett, executive director of the Kansas Press Association, said he has seen time and again how public entities have used excessive fees to effectively close off public documents.
“If a private citizen cannot afford the record, it’s a closed record,” Anstaett said.
In that same vein, Albert Rukwaro, a journalist and Topeka resident formerly of Kenya, cautioned state lawmakers by pointing to widespread issues in his country of origin.
“One of the leading causes of runaway corruption in government and lack of accountability is when citizens don’t have access to information in the government sector,” Rukwaro said. “America’s democracy and transparency are a beacon of light to the world. Please don’t dim it.”
Elected officials from cash-strapped Kansas counties argue it’s a matter of fiscal feasibility.
Anna Morgan-Stanley, register of deeds for Jewell County, said the vast majority of requests she receives would fall under reduced fee requirements laid out in LaTurner’s bill. Last year, Stanley said she collected just over $2,000 in document retrieval fees, and that for Jewell County it’s about survival.
“When we are unable to recoup the costs of the copies and the staff time we’re providing them, that puts a burden on our already financially burdened general fund,” Stanley told lawmakers.
Republic County register of deeds Peggy Frint echoed similar sentiments. While proponents suggested the reduced cost measures would encourage governments to make more information available online, Frint said she simply doesn’t have the funds to accomplish such a feat.
“I realize that $1,200 in copy fees for a county is not much, but it’s better than nothing, and we need all the help we can get to put into our general fund,” Frint said.
Opponents stated that capping costs for individuals would simply impose the fees on the broader public.
“Somebody is going to pay. These costs don’t just go away,” Klumpp said. “Either it’s the people requesting the copy or the taxpayers across the community.”
Committee chair Rep. Steve Brunk, R-Wichita, closed the meeting by musing how it’s not too different from distributing the cost of public infrastructure.
“I understand there are certain roads in my city that I will never drive on, but my tax dollars will go to repair those roads,” Brunk said.
Senate Bill 10 was approved by the Kansas Senate 33-7 on Feb. 27. In addition to providing some open records free of charge, LaTurner’s bill would also limit the hourly fee a government could charge for various services, such as legal review by an attorney at no more than $60 per hour. See more details here.
Following is news coverage and reaction to the Kansas school finance lawsuit Luke Gannon, et al v. State of Kansas.
Press release from Kansas Supreme Court
The court declared certain school funding laws fail to provide equity in public education as required by the Kansas Constitution and returned the case to Shawnee County District Court to enforce the court’s holdings. The court further ordered the three-judge panel that presided over the trial of the case to reconsider whether school funding laws provide adequacy in public education — as also required by the constitution. … The court set a July 1, 2014, deadline to give the Legislature an opportunity to provide for equitable funding for public education. If by then the Legislature fully funds capital outlay state aid and supplemental general state aid as contemplated by present statutes, i.e., without withholding or prorating payments, the panel will not be required to take additional action on those issues. But if the Legislature takes no action by July 1, 2014, or otherwise fails to eliminate the inequity, the panel must take appropriate action to ensure the inequities are cured.
Court Orders Kansas Legislature to Spend More on SchoolsNew York Times
Kansas’s highest court ruled on Friday that funding disparities between school districts violated the state’s Constitution and ordered the Legislature to bridge the gap, setting the stage for a messy budget battle in the capital this year. … Most of the attention in the case, Gannon v. Kansas, had been focused on the trial court’s order to raise base aid per student to $4,492, a 17 percent increase over the current level, to provide an adequate education for all Kansas students. On Friday, the Supreme Court held that the district court had not applied the proper standard to determine what constituted an adequate funding level and asked the lower court to re-examine that issue. “Regardless of the source or amount of funding, total spending is not the touchstone for adequacy in education” under the State Constitution, the decision read.
Kansas must heed court’s call for fairer school fundingKansas City Star.
The Kansas Supreme Court’s school finance ruling Friday cast a bright light on the Legislature’s willful failure to meet its funding obligations to poorer school districts and their students. The state’s duty to promote equity in public education is well established. A previous court ruling ordered legislators to provide payments to districts with low tax bases to help lessen the gap between them and districts that can more easily raise money through property taxes. But in 2010 the Legislature cut off equalization money meant to help poorer districts with capital needs. A year later, lawmakers even amended a statute to excuse themselves from providing money for that purpose through 2017. They also reduced and prorated supplemental payments to help less wealthy districts meet day-to-day needs.
Court declares Kansas’ school funding levels unconstitutionalLos Angeles Times
The Kansas Supreme Court has ruled that the state’s current levels of school funding are unconstitutional, and ordered the Legislature to provide for “equitable funding for education” by July 1. The long-anticipated ruling was a victory for education advocates in the state, but it may be a short-lived one as the Legislature has vowed to defy court orders on the subject. … According to an analysis by the Center on Budget and Policy Priorities, Kansas is spending 16.5% less per student, or $950 per pupil, on education in 2014 than it did in 2008.
Kansas Supreme Court finds inequities in school funding, sends case back to trial courtWichita Eagle
The Kansas Supreme Court found some unfairness — but not necessarily too few dollars — in the state’s funding of schools and sent a mammoth school-finance case back to a lower court for further action. The court found disparities between districts to be unconstitutional and set a July 1 deadline for lawmakers to address that. But it stopped short of saying the state is putting too few dollars in the pot, leaving that issue for another day. … Both school advocates and Republican lawmakers declared partial victory in the wake of the ruling in the lawsuit brought by the Wichita school district and others against the state. But they offered strikingly different interpretations of the decision.
KS Supreme Court: Legislators made ‘unconstitutional’ school funding choicesKansas Watchdog
In a long-awaited decision, the Kansas Supreme Court on Friday ruled that state lawmakers created “unconstitutional” and “unreasonable wealth-based disparities” by withholding certain state aid payments to public schools. … While the Supreme Court unanimously upheld a lower court decision regarding the state’s failure to equitably disburse capital outlay and supplemental general payments to Sunflower State schools, it stopped short of issuing a decree for specific funding to meet the Legislature’s constitutional requirement to provide an “adequate” education.
Governor Sam Brownback and legislative leadership outline opportunity for progress following Kansas Supreme Court Ruling on Education Funding (full press release)
Today Governor Sam Brownback, joined by Attorney General Derek Schmidt, Senate President Susan Wagle and House Speaker Ray Merrick and other legislators responded to the Kansas Supreme Court ruling on the Gannon vs Kansas case. “We have an opportunity for progress,” Governor Brownback said. “My commitment is to work with legislative leadership to address the allocation issue identified by the court. We will fix this.” The court has set out steps for the legislature to end the lawsuit by July 1, 2014. It affirms the Constitutional requirement for education to be “adequate” and “equitable.” “Our task is to come to resolution on capital outlay funding and local option budgets before July 1,” said Senate President Wagle. “We now have some clarity as we work toward resolution of issues that began years ago under prior administrations.”
Davis comments on Gannon ruling
The court today made it clear that the state has not met its obligation to fund Kansas schools in equitable way. It is time to set it right and fund our classrooms.
Kansas Policy Institute
Statement from Dave Trabert, the president of Kansas Policy Institute, in response to Gannon v. State of Kansas:
“We’re encouraged that the Court ruled that total spending cannot be used to measure adequacy. This is especially important because spending is currently based on deliberately-inflated numbers in the old Augenblick & Myers report. To this day, no one knows what it costs for schools to achieve required outcomes while also making efficient use of taxpayer money. “The next step in helping each student succeed while acting responsibly with taxpayer money is to model a K-12 Finance Commission on the KPERS Study Commission. The Legislature and Governor Brownback should determine what schools need to achieve required outcomes while organized and operating in a cost-effective manner, including appropriate equity measures, and fund schools accordingly.”
Americans for Prosperity-Kansas
The Kansas chapter of the grassroots group Americans for Prosperity released the following statement in response to the Kansas Supreme Court’s school finance decision handed down today:
“For years, those demanding more education spending have ignored anything other than the base state aid per pupil which is only part of overall education funding,” said AFP-Kansas State Director Jeff Glendening. “We are pleased that the Supreme Court has specifically directed that ‘funds from all available resources, including grants and federal assistance, should be considered,’ and that ‘total spending is not the touchstone for adequacy.’
“In light of the Court’s ruling that ‘adequacy’ of education is determined by student outcomes rather than spending, and adopted standards similar to those adopted by the legislature in 2005, now is the time to consider how we are spending education dollars.
“Kansans are spending more than an average of $12,700 per student, and K-12 education currently makes up more than half of our state budget. Despite that, less than 60 percent of education dollars actually make it into the classroom. To meet the educational standards set out by the Legislature and Supreme Court, and give every Kansas child the opportunity they deserve, we must do better.
“We know that the discussion of school finance is not over, and will continue to play out in the courts as the Supreme Court sent the issue of ‘adequacy’ back to the District Court. It’s our hope that the lower court will carefully look at student outcomes and local spending decisions, rather than automatically demanding more state spending, and recognize its role in the constitutionally-defined separation of powers.”
Kansas National Education Association
We are disappointed that today’s announcement by the Kansas State Supreme Court prolongs a resolution of the school finance issue. It didn’t deal directly with the current critical need in Kansas public schools. Together, the citizens of Kansas made sacrifices at a time when the state and national economy were in crisis. During that time Kansans came together and dealt with staggering cuts to education, believing the promise of full restoration to public school funding once the state economy had rebounded.
Kansas Supreme Court rules in school finance case Kansas Health Institute
Kansas’ top court today released its long-awaited decision in the school finance case and while the ruling settled little for now, both sides in the litigation said they found things to like about it.
Attorney General Derek Schmidt, whose office defended the state in Gannon v. State of Kansas, said he didn’t believe the mixed decision would necessarily require the Legislature to spend more on K-12 schools, though that would be one option for making the state’s school finance formula constitutional again. … But representatives of the school districts that took to court claiming state aid dollars have been unequal and inadequate said they felt confident they would win the remainder of their points at retrial and that the Legislature would need to authorize an added $129 million in K-12 spending by July 1 to meet the standards spelled out in the unanimous decision. “We are not concerned about this. All of our proof at trial was presented using the correct standard that the court now directs to be used,” at retrial, said John Robb an attorney for the four public school districts that sued the state.
Kansas Supreme Court issues ruling on school finance Wichita Public Schools
The Kansas Supreme Court issued its ruling on the school finance lawsuit on March 7. It upholds the concept that the legislature must adequately fund schools in Kansas and that the funding must be distributed equitably. It requires the Kansas Legislature to fund capital outlay and Local Option Budget equalization by July 1, 2014. That means immediate increases in some state funding for education. … “Overall, we think this is a great ruling for Wichita and Kansas kids,” said Lynn Rogers, BOE member. “It upholds the concept that the State of Kansas is responsible for adequately and equitably funding our students’ education.” Rogers said that the lawsuit is for all Kansas students and that they deserve a quality education regardless of where they live in the state. “The education we provide is the foundation for our workforce and the future of Kansas,” said Superintendent John Allison. “If we don’t give our students a quality education now, we will pay for it in the future.”
Both the House and Senate broadcast audio of their proceedings. But you must listen live, as the broadcasts are not made available to the public in any other way. It would be exceedingly simple to make these past broadcasts available to the public. It could be done at no cost on YouTube, and at little cost at other sites specifically tailored to host audio. As a side benefit, at YouTube the recordings would be transcribed by machine, giving a rough transcript of the proceedings. (I use the adjective “rough,” as if you have viewed these transcripts, they vary widely in accuracy. But they still have value.)
Broadcasting video of House and Senate proceedings would be a large step that would probably have a large cost. But archiving the audio and making it available provides nearly all the benefit of video, and at very little additional cost.
Kansas Legislative Research Department (KLRD) has many documents that are useful in understanding state government and the legislature. This agency’s home page is Kansas Legislative Research Department. Of particular interest:
Kansas Legislative Briefing Book. This book’s audience is legislators, but anyone can benefit. The book has a chapter for major areas of state policy and legislation, giving history, background, and explanations of law. In some years the entire collection of material has been made available as a single pdf file, but not so this year. Contact information for the legislative analysts is made available in each chapter. The most recent version can be found on the Reports and Publications page. So far a version for 2014 is not available. (Update: The 2014 version is here.)
Kansas Fiscal Facts. This book, in 124 pages (for 2011), provides “basic budgetary facts” to those without budgetary experience. It provides an overview of the budget, and then more information for each of the six branches of Kansas state government. There is a glossary and contact information for the fiscal analysts responsible for different areas of the budget. This document is updated each year. The most recent version can be found on the Reports and Publications page.
Legislative Procedure in Kansas. This book of 236 pages holds the rules and explanations of how the Kansas Legislature works. It was last revised in November 2006, but the subject that is the content of this book changes slowly over the years. The direct link is Legislative Procedure in Kansas, November 2006.
How a Bill Becomes Law. This is a one-page diagram of the legislative steps involved in passing laws. The direct link is How a Bill Becomes Law.
Summary of Legislation. This document is created each year, and is invaluable in remembering what laws were passed each year. From its introduction: “This publication includes summaries of the legislation enacted by the 2011 Legislature. Not summarized are bills of a limited, local, technical, clarifying, or repealing nature, and bills that were vetoed (sustained).” 204 pages for 2011. The most recent version can be found on the Reports and Publications page.
Legislative Highlights. This is a more compact version of the Summary of Legislation, providing the essentials of the legislative session in 12 pages for 2011. The most recent version can be found on the Reports and Publications page.
Kansas Tax Facts. This book provides information on state and local taxes in Kansas. The most recent version can be found on the Revenue and Tax page.
Kansas Register. From the Kansas Secretary of State: “The Kansas Register is the official state newspaper. This publication provides a wide range of information such as proposed and adopted administrative regulations, new state laws, bond sales and redemptions, notice of open meetings, state contracts offered for bid, attorney general opinions, and many other public notices.” The Register is published each week, and may be found at Kansas Register.
AVERAGE: In a recent study of economic freedom in North America, Kansas ranked in the middle of the pack nationwide, but trails most surrounding states.
OSAWATOMIE, Kan. — The Sunflower State scored middle of the pack in a recent study of economic freedom in North America, and while policy analysts sayKansas is trending in the right direction, the state still has some ground to cover.
“In terms of what Kansas needs to do to improve, it’s pretty clear, you start from the bottom,” Trabert said. “The biggest thing it can do is deal with the fact that we have a lot more government in Kansas than we need, and this is just one of the latest (studies) to point that out.”
The Fraser report looked at things such as how much the government contributes to the overall state economy and workforce, levels of tax revenue, minimum wage laws and labor union density, among other factors.
Kansas ranked in the second-highest quartile in terms of economic freedom based on data collected from 2011. While that’s encouraging, the fact loses some of its luster when you consider that the only surrounding state to rank lower was MissouriOklahoma ranked 17th out of all states, compared to Kansas’ 23rd place ranking. Nebraska and Colorado joined Delaware, Texas, Nevada, Wyoming, South Dakota, Georgia,Utah and Illinois to be named the 10 “most free” states.
Trabert said based on a review of census data provided by the Bureau of Labor Statistics, Kansas saw a 21.5 percent increase in population between 1980 and 2011, while at that same time local government employment has increased 62.7 percent.
Dave Trabert, Kansas Policy Institute
“It’s kind of across the board,” he said. “Kansas, the structure itself, we have a lot more government than most states.”
Only looking at cities, counties and townships, Trabert said, nationwide the average is about 8,066 residents per government. In Kansas, that figure is significantly lower, clocking in at around 1,445 state residents per government — and that’s not even counting school districts or numerous other, smaller government entities. Kansas’ figures are five times the national average.
While the study knocks Kansas for its 2011 tax rates, Gov. Sam Brownback’s tax plan signed into law the following year, which decreases income tax rates, will likely improve the state’s placement in future studies.
Still, the rankings of surrounding states give Trabert cause for concern.
“People have been voting with their feet for a long time, and that’s going to continue to happen,” he told Kansas Watchdog.
OSAWATOMIE, Kan. — It’s over, done, finalized, finito. With the final days and hours of 2013 ticking to a close, we figured it’s a good time for reflection on what the last 12 months have brought the Sunflower State.
So, without further delay, Kansas Watchdog presents its Top 10 stories of 2013.
1. Wayward welfare dollars
An in-depth investigation into howKansans spend hundreds of thousands of dollars in government welfare money came to a shocking conclusion: a striking number of transactions appear to be going toward anything but the basic necessities. From casinos and liquor stores to smoke shops and even strip clubs, Kansas Watchdog uncovered more than $43,000 in transactions at shady ATM locations around the state. To make matters worse, all this only took place over a three-month period.
Fun fact: Did you know the Kansas Capitol is capable of broadcasting live video online of some of the Legislature’s most important committee meetings? Don’t beat yourself up over it. A striking number of lawmakers don’t know, either. It’s the end result of years of apathy that has led the state to be one of only 11 nationwide that do not stream some form of live video. If some kid in the middle of nowhere can attract global eyeballs with nothing more than a camera phone, what’s keeping the Kansas Legislature off the air?
Here’s a shocking revelation: politics sway candidate commentaries, and Kansas is no exception. Gov. Sam Brownback’s pick for the Kansas Court of Appeals is a prime example of this, after the situation prompted his Democratic gubernatorial challenger to switch sides on his stance to oppose the new nominee. And how could we forget that, in their rush to criticize the conservative governor, Kansas Democrats conveniently forgot thatKathleen Sebelius did almost the exact same thing only a few years earlier.
And as long as we’re on the topic of judicial nominees, how about we turn the spotlight on a few other critics of Brownback’s decision? Namely theLeague of Women Voters and Justice At Stake, both of which claim to be nonpartisan organizations while simultaneously accepting large sums of cash from George Soros’ liberal nonprofits, the Tides Foundation and Open Society Institute.
Ever wonder just how much work goes into calculating the cost of a legislative proposal? Not that much, apparently. While state agencies claim they don’t pad their figures, government critics charge them with doing just that, and a close inspection of a few cost estimates only bolsters the case. Should it cost $17,000 for the state to put online a spreadsheet of data it already has? What about $20,000 for a program agency officials say could have been absorbed in-house? Yea, we thought so too.
How much should Kansas spend to lock up individuals whose only crime is drug related? While lawmakers are struggling to figure out what that figure should be, the reality is that Kansas drops about $42 million annually to keep these men and women in prison. To make matters worse, state law enforcement statistics suggest it’s overwhelmingly because of Kansas continues to wage war against marijuana.
Remember the media flurry surrounding the implosion of Hostess, one of America’s most iconic snack food manufacturers? Well here’s something you probably missed. According to the government, former employees were knocked out due to foreign trade pressure, and for that deserve extra benefits above and beyond standard unemployment insurance. But everything uncovered by Kansas Watchdog seems to point to the contrary. Curious? So were we.
If you’re looking for the nuttiest story of the year, look no further. The City ofLawrence, Kansas’ liberal bastion, only months ago brought us the headache-inducing mandate that city residents are not, in fact, capable of policing their own safety. Rather, officials passed a ban on front porch couches, despite the fact that local and nationwide statistics suggest it’s less of an issue than advocates would have folks believe.
A Wichita-area school came under fire earlier this year after students and parents were greeted on the first day of school with a large display outlining the five pillars of the Islamic faith. The matter prompted emotions of all scope and size, and landed the school squarely in the national spotlight.
The legislative session is a busy time for any elected official, but some are less (or more) busy than others, it seems. After Kansas lawmakers headed for home in June, Kansas Watchdog took an in-depth peek at how they faired in the preceding months, and what we found was jaw-dropping. In all, seven members of the House of Representatives had missed more votes than all other members of the House combined.
According to the Heritage report, the average premium for a 27-year-old Sunflower State resident will rise from $87.40 to $200.14, a massive 129 percent bump. This gives Kansas the unfortunate privilege of boasting the sixth-highest increase for young people nationwide.
The news gets slightly better for other groups, but not by much. Average premiums for a 50-year-old adult could increase from $198 to $341.08 (72.3 percent increase), while a family of four may see an increase from $553.92 to $676.05 (22 percent increase).
“Many families and individuals will face this reality as they apply for coverage, and the implications of experiencing sticker shock are important to consider if enough people choose not to sign up for coverage for various reasons,” policy analyst Drew Gonshorowski wrote in the Oct. 16 report.
The massive increase in premiums for young people should be especially concerning, as they’re the one group Obamacare can’t afford to do without. The successful implementation of the Affordable Care Act depends heavily on the young and healthy signing up to help pay for the elderly and infirm.
It’s important to note the Heritage study compares premium prices straight-up, not including government subsidies designed to decrease the cost to low-income individuals and families.
“This analysis represents the change in unsubsidized rate levels,” Gonshorowski wrote. “The purpose of this research is to provide further details on the changing premium levels across the country.”
The issue of third-party money involvement has been a concern to many, with Democrats and moderate Republicans railing against “special interest” money, frequently referring to the Kansas Chamber of Commerce and Americans for Prosperity. The claim is that these organizations are attempting to buy an election.
Thanks to Earl Glynn’s reporting in Kansas Watchdog, we see that both sides have PACs that funnel money to, or advocate in favor of, candidates. In the case of moderate Republicans, we see that the Senate Leadership Committee PAC has received contributions from special interest groups, and then funneled that money in favor of moderate Republicans. Senate President Steve Morris controls this PAC.
A large contributor to Morris’ PAC is Kansas National Education Association (KNEA), the teachers union. This is a special interest groups that advocates for the interests of teachers, not students and taxpayers.
Another contributor is Kansas Contractors PAC. Its job is to get the state to spend as much as possible on roads and highways, without regard to whether these are needed or wanted.
Casino money makes its way to the PAC, too. The existing casinos in Kansas would like to see competition prohibited.
There are more special interest groups contributing in favor of moderate candidates, including labor unions, perhaps the most highly specialized interest group of all.
Contrast these special interests with groups like Americans for Prosperity. I have supported AFP for many years because AFP promotes economic freedom, which is good for everyone, not just for certain groups. While the Kansas Chamber is more focused on business, a thriving business climate in Kansas is good for everyone — consumers, workers, taxpayers, and government coffers. We don’t have this now in Kansas. Instead, we have low private sector job creation at the expense of government jobs.
Some are concerned about the influence of PAC spending, and also that of third parties that spend in favor of, or in opposition to, candidates. These are independent expenditures. They’re not supposed to be coordinated with the candidate or campaigns. Some of the most misleading and harshly negative ads come from these groups, instead of from the candidates’ campaigns.
This level of separation allows candidates to disavow or distance themselves from these ads. A solution is to allow larger donations to be made directly to the candidates. In this way, the campaign is responsible for the advertisements and can’t shift blame to someone else.
Watchdog reporter at Pachyderm. This Friday (May 18th) the Wichita Pachyderm Club features Paul Soutar, Reporter for Kansas Watchdog, speaking on “The evolution of journalism and how the new media empowers citizens.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On May 25th: Ron Estes, State Treasurer of Kansas, speaking on “A report from the Kansas Treasurer.” … On June 1st: Gary Oborny, Chairman/CEO Occidental Management and Real Estate Development, CCIM Designated member of the Storm Water Advisory Board to the City of Wichita, speaking on “What is the economic impact of EPA mandates on storm water quality in Wichita?”
Koch = big oil?Politico: “The Koch brothers have an unlikely ally in the war of words with their liberal adversaries: the nation’s journalistic fact-checkers. Both The Washington Post’s Fact Checker blog and the nonpartisan site FactCheck.org have dinged critics of David and Charles Koch in recent weeks for referring to the billionaire brothers as Big Oil. Why? Because Koch Industries’ business interests extend well beyond the company’s involvement in petroleum refining and other oil-based operations. And while no corporate midget, the company isn’t anywhere near as big as true oil giants like ExxonMobil. ‘So even if all of Koch Industries’ revenues came from its refining business — which they do not — they would still be a fraction of the revenues of the companies that actually represent ‘Big Oil,” the FactCheck.org critique read.” More at Fact-checkers and Kochs’ ‘Big Oil’. Another example of how facts don’t get in the way of Koch critics. Or try For New York Times, facts about Kochs don’t matter.
Economic freedom. Why does the political left criticize Charles and David Koch? In the following video from last year, Koch Industries CEO and board chairman Charles G. Koch explains the principles of economic freedom, something that he and David Koch have worked to advance for many years. These principles, according to Koch, include private property rights, impartial rule of law, free trade, sound money which reduces boom and bust cycles, and a small and limited government. These principles are good for everyone, I should add, including those currently at the bottom of the economic ladder.
We aren’t Greece … yet. “Once again, Greece finds the international community questioning its ability to pay its debts. Default and an exit from the Euro Zone (or countries which share the Euro as a common currency) threatens on the horizon. Here in the U.S., we face high debts and have a lowered credit rating due to Washington’s inability to agree on deficit reduction. Just how alike are our two nations?” An infographic from Bankrupting America explains.
When government pays, government controls. Although most liberals would not admit this, it sometimes slips through: When government is paying for our health care, government then feels it must control our behavior. The Wichita Eagle’s Rhonda Holman provides an example of this, when she wrote in a blog post about Kansas relaxing its smoking ban: “Especially with Medicaid costs swallowing up the state budget, lawmakers should be discouraging smoking, not accommodating more of it.”
The moral case for capitalism. “Two main charges are typically marshaled against capitalism: it generates inequality by allowing some to become wealthier than others; and it threatens social solidarity by allowing individuals some priority over their communities. … Capitalism does allow — and perhaps even requires — inequality. Because people’s talents, skills, values, desires, and preferences vary and because of sheer luck, some people will be able to generate more wealth in a free-enterprise system than others will; inequality will result. But it is not clear that we should worry about that. … If you could solve only one social ill — either inequality or poverty — which would it be? Or suppose that the only way to address poverty would be to allow inequality: Would you allow it? … More by James R. Otteson in An Audacious Promise: The Moral Case for Capitalism at the Manhattan Institute.
Funding pet projects without earmarks. Wonderful! While this plan still relies on government to some degree, it is largely voluntary, which is the direction we need to steer things. “There is a creative workaround that allows funds to flow to those prized pet projects: a commemorative coin bill.” Read more at Heritage Action for America.
Harm of taxes. In introducing the new edition of Rich States, Poor States, authors Arthur Laffer and Stephen Moore explain the importance of low taxes. “Barack Obama is asking Americans to gamble that the U.S. economy can be taxed into prosperity. That’s the message of his campaign for the Buffett Rule, which raises income-tax rates on millionaires to a minimum of 30%, and for the expiration of the Bush tax cuts. He wants to raise the highest income tax rate by 20%, double the rate on capital gains, add a new 3.8% tax on all capital earnings, and nearly triple the dividend tax rate. All this will enhance “economic efficiency,” insists a White House economic report. As for those who disagree, says President Obama, they’re just pushing “the same version of trickle-down economics tried for much of the last century. … But prosperity sure didn’t trickle down.” Mr. Obama needs a refresher course on the 1920s, 1960s, 1980s and even the 1990s, when government spending and taxes fell and employment and incomes grew rapidly.” More in the Wall Street Journal at Laffer and Moore: A 50-State Tax Lesson for the President: Over the past decade, states without an income levy have seen much higher growth than the national average. Which state will be next to abolish theirs?
Role of prices. Prices convey information more accurately and efficiently than any centralized organization — such a government. It provides a, well, automatic mechanism for adjusting to the changes in the world, changes which happen every day, and even every minute. Sometimes we may not like the information that price signals are sending, but they represent the truth. Daniel J. Smith of Troy University explains in this video from LearnLiberty.org, a project of the Institute for Humane Studies: “Why are prices important? Prof. Daniel J. Smith of Troy University describes the role that prices play in generating, gathering, and transmitting information throughout the economy. Information about the supply and demand of different goods are dispersed among different buyers and sellers in an economy. Nobody has to know all this dispersed information; individuals only need to know the relative prices. Based on the simple information contained in a price, people adjust their behavior to account for conditions in supply and demand, even if they are unaware of that information.”
The Sedgwick County Commission will decide Wednesday whether to give a consortium of South Central Kansas governments and organizations broad control over community planning funded by a federal grant and based on a United Nations agenda.
The Regional Economic Area Partnership (REAP) Consortium for Sustainable Communities seeks to implement a Regional Plan for Sustainable Development (RPSD) for South Central Kansas.
REAP’s application for a federal grant said the plan will “provide an overall vision and commitment for sustainable growth in South Central Kansas. The RSPD will provide goals, strategies, and action steps to support that vision. Specifically, that RPSD will create a regional integrated transportation, housing, air quality and water infrastructure plan that aligns federal resources and provides for sustainable development and resources (fiscal, human and capital) to support our economic centers.‘
Much of the language and goals of sustainable communities grants reflect the goals of the U.N.’s Agenda 21, a global environmental agenda for the 21st century revealed at the 1992 U.N. Conference on Environment and Development in Rio de Janeiro.
Agenda 21 is a comprehensive framework for global, national and local action aimed at improving environmental equality through massive changes in how resources are consumed and allocated.
According to Sustainable Development in the 21st century (SD21), a December 2011 UN review of implementation of Agenda 21, “Achieving greater equity requires a significant reduction in consumption by industrialized countries.”
Another inconvenient fact is that if the Canadian oil is not sold to the U.S., it will be sold to and consumed in China. If we are concerned about greenhouse gas emissions leading to climate change, it should be noted that it doesn’t matter where the greenhouse gases are produced. The effect is worldwide. But as we know, the radical environmental movement cares nothing for facts in their war on capitalism and human progress.
Facts Refute Environmentalist Claims About Keystone XL Pipeline
Protesters are gathering on the Wichita State University campus this weekend for a Sierra Club-sponsored Occupy Koch Town protest against the Keystone XL oil pipeline and Koch Industries, Inc. Koch and its subsidiaries are involved in a wide array of manufacturing, trading and investments including petroleum refining and distribution.
Many Keystone XL opponents have focused on Koch, claiming its Flint Hills Resources Canada subsidiary’s status as an intervener in the regulatory approval process in Canada proves Koch is a party to the pipeline project. Keystone XL would carry petroleum from Canadian oil sands to the U.S. Gulf coast.
In a Jan. 25 House Energy and Commerce Committee hearing, California U.S. Rep. Henry Waxman, D-District 30, demanded that the Koch brothers, Charles and David, or a representative of Koch Industries appear before the committee to explain their involvement in the pipeline.
Philip Ellender, president of Koch Cos. Public Sector, which encompasses legal, communication, community relations and government relations, responded to Waxman on a Koch Industries website:
Koch has consistently and repeatedly stated (including here, here, here, and here) that we have no financial interest whatsoever in the Keystone pipeline. In addition, this fact has been verified by TransCanada’s CEO here.
Russ Girling, CEO of TransCanada, owner and builder of the Keystone pipelines, addressed criticism of the pipeline and supposed collusion with the Koch brothers in a Nov. 1 conference call to discuss TransCanada’s earnings. “I can tell you that Koch (Industries Inc.) isn’t a shipper and I’ve never met the Koch brothers before.”A March 2010 document from Canada’s National Energy Board (NEB) approving the pipeline does not mention Koch or its subsidiary, Flint Hills Resources Canada, on any of its 168 pages.
The report does note that on June 16, 2009, TransCanada Corporation became the sole owner of the Keystone Pipeline System, acquiring ConocoPhillips’ interest in the pipeline.
A map of the existing Keystone and planned Keystone XL pipelines shows that Koch’s two refineries in the 48 contiguous states at Pine Bend, Minn., and Corpus Christi, Texas, are not on or near the pipeline routes. Koch also has a refinery in North Pole, Alaska.
Koch does have substantial interests in Canadian oil though, including the thick oil sands mined in Alberta. Those interests are precisely why Flint Hills Resources Canada requested intervener status in the pipeline approval process in 2009.
Critics have claimed that statement is a smoking gun proving Koch is a party to the pipeline or will benefit from its construction.
Greg Stringham, Canadian Association of Petroleum Producers (CAPP) vice president of markets and oil sands, told KansasWatchdog, “Their intervention itself is not a trigger that says aha, they have a commercial interest or are a shipper on this pipeline.”
The US Legal, Inc. definitions website says an intervener is, “A party who does not have a substantial and direct interest but has clearly ascertainable interests and perspectives essential to a judicial determination and whose standing has been granted by the court for all or a portion of the proceedings.”
US Legal, Inc. provides free legal information, legal forms and help with finding an attorney for the stated purpose of breaking down barriers to legal information.
Stringham said anyone — business, organization or individual — can be an intervener in NEB regulatory proceedings as long as they can show some potential impact, good or bad, from the proposed action. “Then they make a decision whether they’re going to actively engage through evidence and cross examination or whether they’re just there for interest, to get materials and monitor the situation.”
Like Koch, Stringham said CAPP is an intervener in the pipeline approval process, because the pipeline will have a direct impact on the Canadian oil market. Stringham said:
The fact that it’s an intervention for interest does not mean that there is a financial ownership or shipping interest. It’s really to make sure that they understand what’s going on in the process and that they have some connection to the project that can be either positive and beneficiary or potentially negative to them. That’s why I believe Koch has intervened in this process.
The Canadian pipeline company Enbridge, Inc.; Marathon Oil Corp. and Britain’s oil giant BP are also among the 29 interveners in the pipeline application. So is the environmental activist organization Sierra Club.
Keystone XL would compete with the Enbridge pipeline that carries the thick bitumen oil from Hardisty, Alberta, for delivery to Koch’s Pine Bend, Minn., refinery. If supplies prove insufficient for both pipelines, Stringham said, Koch could be at a competitive disadvantage since it is not a shipper on the Keystone pipelines.
The National Energy Board’s approval document noted:
Keystone XL shippers have indicated that they are seeking competitive alternatives, and by providing access to a new market, Keystone XL would be expanding shipper choice. The Board places considerable weight on the fact that Keystone XL shippers have made a market decision to enter into long-term shipping arrangements negotiated through a transparent competitive process. New pipelines connecting producing regions with consuming regions change market dynamics in ways that cannot easily be predicted.
What’s been left out of the ferocious debate over the pipeline, however, is the prospect that if President Obama allows a permit for the Keystone XL to be granted, he would be handing a big victory and great financial opportunity to Charles and David Koch, his bitterest political enemies and among the most powerful opponents of his clean economy agenda.
Former U.S. Solicitor General Theodore Olsen, in a Wall Street Journal op-ed, highlighted the political dimension of attacks on the Kochs and recent attempts to compel their testimony before Congress.
When Joseph McCarthy engaged in comparable bullying, oppression and slander from his powerful position in the Senate, he was censured by his colleagues and died in disgrace. “McCarthyism,” defined by Webster’s as the “use of unfair investigative and accusatory methods to suppress opposition,” will forever be synonymous with un-Americanism.
In this country, we regard the use of official power to oppress or intimidate private citizens as a despicable abuse of authority and entirely alien to our system of a government of laws. The architects of our Constitution meticulously erected a system of separated powers, and checks and balances, precisely in order to inhibit the exercise of tyrannical power by governmental officials.
Market and environmental realities
Canada produces about 2.7 million barrels of oil per day with about 1.6 million going to the United States. “About a million of that comes from the oil sands,” Stringham said. “All of that moves through the existing pipeline systems.”
Two Kansas refineries, the Holly Frontier refinery in El Dorado and National Cooperative Refinery Association’s facility in McPherson, refine Canadian oil, including from oil sands, delivered over existing pipelines.
With or without the Keystone XL, oil from Canada’s oil sands will continue to go to markets, according to Stringham. “We have been investigating a number of alternatives. Keystone XL clearly is the most direct route to get to the gulf coast and that’s why the market really spoke up and said this is what we want,” he said.
He said Canada’s oil market is looking at diverse opportunities beyond the United States. “We are looking to the West Coast, which could move it on to tankers. We looked at Asia, it is one of the options, but once it gets to the West Coast, it can also move to the California market,” he said.
Stringham said a proposal for Enbridge to build a pipeline carrying oil to the West Coast has more than 4,000 interveners.
Occupy Koch Town promotional materials say they’ll also protest against the Kansas Policy Institute. KPI helped launch KansasWatchdog.org in 2009 but is no longer affiliated with this site.
Members of the joint Commerce and Economic Development Committees expressed concern that a forensic audit of the Kansas Bioscience Authority was not broad enough and that deliberate deletion of data from a KBA computer left questions unanswered.
On Wedesday James Snyder, managing partner for BKD’s Forensics and Valuation Services, told the committee that while his firm was hired and paid by KBA, Kansas Governor Sam Brownback’s administration was heavily involved. Secretary of Agriculture Dale Rodman served as the main contact for the Brownback Administration, although Caleb Stegall, the governor’s chief lawyer, and Steve Anderson, the Budget Director, also participated.
Snyder told the committee the audit process was designed to avoid a situation where after the final report was released, people would ask why certain facts were not considered or covered. “This process was specifically designed to avoid that, and it worked pretty well,” he said.
The Kansas Legislature created the KBA in 2004 and gave it $581 million to bring bioscience research and jobs to Kansas. KBA has been under fire for expenses and salaries paid to top executives and for giving grants to fund projects out of state.
Any disputes about the report’s contents were ironed out by January, but on Sunday, the day before the report was to be released, Rodman raised a difference of opinion over a possible conflict of interest involving former KBA board member Angela Kreps. Snyder characterized this as the only difference of opinion, and that it was a narrow and minor one.
Committee chair, Sen. Susan Wagle, a Wichita Republican, recognized that BKD’s position was “difficult,” as the firm was hired and paid by KBA, but it was also in frequent communication with the Brownback Administration. Snyder said the administration was involved in an oversight role, and also in defining the scope of the audit.
Senator Ty Masterson, an Andover Republican, expressed concern over possible deletion of computer files and that BKD could only “dive into that which you had, that you were provided.” BKD’s timeline of the audit showed that KBA leadership was apprised of an audit on March 10th, 2011. The next day CEO Tom Thornton accessed a computer hard drive on KBA’s network. The drive was accessible to only four people and held personnel records and confidential company information.
BKD was hired on April 11th, a fact Masterson said he found “fascinating” because KBA used a 30-day rolling backup scheme that would not have retained files deleted on or before March 10. The time lag from March 11th to April 11th means that if information was deleted from the J-Drive, it was not available to the BKD audit team.
The timing of this is “highly suspect,” Masterson said.
Snyder said the audit team had access to much information and that BKD received everything they asked for, but Masterson pointed out that we don’t know what might have been missing. Thornton’s personal laptop computer was erased or “wiped” days after the audit was called for in a way that made it impossible for the computer forensic team to recover the deleted data.
Snyder said that the committee should have high confidence in the audit’s findings and that the number of people and computers the team had access to was in many cases “extraordinary.” He also said that core KBA business records had integrity and there was no reason to suspect these systems had been compromised.
Masterson quoted from page 133 of the audit report: “Our analysis found 301 payments without a contract, including 102 payments that violated KBA’s Contract Policy. The total contract cost involved totaled $1,219,271.81 in payments without a contract, including $571,828.20 in payments which violated Contract Policy.”
Masterson noted that there’s no indication anything was technically illegal, but that the purview of the committee went beyond that. “Why do we put policies in place? It’s so that we can show best practice, best stewardship. You have shown over 300 violations of policy … I don’t know how we can paint this in the light that this is instilling confidence, and that it is clearing the air.”
Masterson also said that the best case seems to be that there was unethical management combined with inadequate oversight. He said there is the possibility of a coordinated cover up of behavior that could potentially be illegal.
Snyder answered that over time they observed “increasing sophistication” of board participation and compliance with procedures and that there had also been changes initiated by the board that offered protection.
Wagle said she received faxes from KBA employees expressing concern that the Senate Commerce Committee received altered documents. “It became very apparent that we could not rely on the information we were receiving,” she said. She asked Snyder if it was possible that documents were altered or erased so BKD did not see them.
Snyder said that although one expense report was altered, there was no indication of a “systematic issue” of alterations or erasures.
Wagle and Snyder disagreed over the extent of BKD’s contact with Wagle contending that it did not constitute an “interview” as claimed in the audit report.
Democratic Senator Tom Holland asked Snyder two questions relating to whether KBA has business policies and procedures in place to effectively run the organization, and has KBA consistently followed these? Snyder answered yes, with very few exceptions. “We found a very high level of compliance.”
Republican Senator Chris Steineger of Kansas City asked a series of questions regarding the mission of the KBA, which is, according to KBA “advancing Kansas’ leadership in bioscience” as well as creating investment and jobs in Kansas. Steineger expressed concern that much of KBA’s funding is spent on overhead, such as lawyers, architects, office buildings, travel, and dining.
Steineger distributed a series of calculations based on KBA data in the audit that he said reveals that KBA made $265 million in commitments resulting in 1,347 jobs for a cost of $196,808 per job created.
Steineger showed that removing the largest company from the mix — Quintiles, which created 1,000 jobs for a KBA contribution of $3.5 million — the remaining jobs cost more than $750,000 each.
Senator Jeff Longbine, an Emporia Republican, mentioned that there had been criticism of the KBA for insider activities among board members, conflicts of interest, cronyism, and fraud and asked Snyder if these accusations were true. Snyder said these generalized accusations were not true, although there was one instance where there was “some technical violation of a conflict of interest rule.” He said that KBA is not “fraught with fraud or self-dealing.”
The audit report also noted that KBA made regular use of executive sessions not open to the public and that, “No notes or recordings are made of Executive Sessions. This is a common business practice. Therefore, information discussed in Executive Session was not available for BKD’s review and could not be considered with regard to the findings of this report.”
In response to another question, Snyder said that no changes were recommended to the Kansas Economic Growth Act, the legislation that created the KBA. There were some recommendations to KBA board policies and procedures.
Wagle also noted that conflict of interest rules don’t really resolve conflicts. Generally, if KBA board members disclose that they have a conflict of interest — such as a company they have financial ties to getting a grant — they can refrain from voting to satisfy the rules. “To me, I don’t know if it’s okay with the people of Kansas,” Wagle said.
The joint hearing will continue tomorrow with a presentation from Rodman.
Year in review, Wichita Liberty-style.Here it is: A selection of stories that appeared on Voice for Liberty in 2011. Was it a good or bad year for the causes of economic freedom, individual liberty, limited government, free markets, and civil society?
Patriots New Years Eve. Larry Halloran of Wichita — South Central KS 912 Group is sponsoring for the second time a “Patriots New Years Eve”: Taking time to relax in the company of Patriots as we dedicate ourselves to the important work ahead in 2012. This event is New Year’s Eve from 6:00 pm to 11:00 pm at the Hawthorn Suites located at 2405 N. Ridge Road, Wichita, KS 67205, telephone (316) 729-5700. The potluck dinner starts just after 6:00 pm, followed by guest speaker Bob Weeks at 8:00 pm. This is a family-friendly event, and no alcohol is served or allowed. Despite that, I still plan to attend. RSVP to LarryHalloran@aol.com.
Legislators to hear from citizens. The South-Central Kansas Legislative Delegation will be taking public comments Tuesday January 3rd at 7:00 pm in the Jury Room of the Sedgwick County Courthouse, 525 N. Main in Wichita. (Use the north entrance to the courthouse). This is your opportunity to let local legislators know your wishes on issues that will be considered during the 2012 legislative session. In the past, each person wishing to talk has been limited to between three and five minutes depending on the number of people wishing to speak. There is usually the requirement to sign up as you enter if you want to speak.
California’s redevelopment nightmare to end. In Kansas, they’re called tax increment financing districts, and in California, they’re about to end. A press release from the Institute of Justice notes: “In a landmark victory for private property owners in the Golden State, the California Supreme Court today upheld a statute abolishing the nearly 400 redevelopment agencies across the state. The court also struck down a law that would have allowed these agencies to buy their way back into existence. The final outcome of the case is that, in 2012, California’s decades-long redevelopment nightmare will finally come to an end. California redevelopment agencies have been some of the worst abusers of eminent domain for decades, violating the private property rights of tens of thousands of home, business, church and farm owners.” Besides eminent domain abuse, the high cost of the redevelopment agencies was a factor, with 12 percent of California property taxes being diverted to what are know as TIF districts in Kansas. … The City of Wichita still views tax increment financing as a wise investment, with one such district authorized for creation this month.
Growth will heal nation’s economy. From Kansas Watchdog: While most economists are predicting something between a long, slow recovery and the impossibility of repairing an economy buried in debt, entrepreneur Louis Woodhill believes the U.S. can come roaring back in just one or two years — with the right actions. “We probably need 25 million new jobs to get to full employment from here,” he said. “But basically it could be done in a year or two at the outside if you did everything right.” His recovery formula focuses on growing the gross domestic product. “If Vince Lombardy had been an economist instead of a football coach, he would have said economic growth is not the most important thing, it’s the only thing,” Woodhill said. … The full story is at Louis Woodhill: Prescription for Growth Will Heal Nation’s Economy.
Assumptions about capitalism.Burton W. Folsom in The Myth of the Robber Barons: “This shallow conclusion dovetails with another set of assumptions: First, that the free market, with its economic uncertainty, competitive stress, and constant potential for failure, needs the steadying hand of government regulation; second, that businessmen tend to be unscrupulous, reflecting the classic cliché image of the ‘robber baron,’ eager to seize any opportunity to steal from the public; and third, that because government can mobilize a wide array of forces across the political and business landscape, government programs therefore can move the economy more effectively than can the varied and often conflicting efforts of private enterprise. But the closer we look at public-sector economic initiatives, the more difficult it becomes to defend government as a wellspring of progress. Indeed, an honest examination of our economic history — going back long before the twentieth century — reveals that, more often than not, when government programs and individual enterprise have gone head to head, the private sector has achieved more progress at less cost with greater benefit to consumers and the economy at large.” … Folsom goes on to give examples from the history of steamships, railroads, and the steel and oil industries that show how our true economic history has been distorted. Concluding, he writes: “Time and again, experience has shown that while private enterprise, carried on in an environment of open competition, delivers the best products and services at the best price, government intervention stifles initiative, subsidizes inefficiency, and raises costs. But if we have difficulty learning from history, it is often because our true economic history is largely hidden from us. We would be hard pressed to find anything about Vanderbilt’s success or Collins’s government-backed failure in the steamship business by examining the conventional history textbooks or taking a history course at most colleges or universities. The information simply isn’t included.” … Folsom’s book on this topic is The Myth of the Robber Barons: A New Look at the Rise of Big Business in America.
Resources on Austrian economics. The prolific and best-selling author Thomas E. Woods, Jr. has compiled a very useful collection of resources regarding Austrian economics. In an essay by Lew Rockwell that Woods refers to, we can learn the essence of the Austrian way: “It is not a field within economics, but an alternative way of looking at the entire science. Whereas other schools rely primarily on idealized mathematical models of the economy, and suggest ways the government can make the world conform, Austrian theory is more realistic and thus more socially scientific. Austrians view economics as a tool for understanding how people both cooperate and compete in the process of meeting needs, allocating resources, and discovering ways of building a prosperous social order. Austrians view entrepreneurship as a critical force in economic development, private property as essential to an efficient use of resources, and government intervention in the market process as always and everywhere destructive.” Concluding his essay, Rockwell wrote: “The future of Austrian economics is bright, which bodes well for the future of liberty itself. For if we are to reverse the trends of statism in this century, and reestablish a free market, the intellectual foundation must be the Austrian School.” … Woods’ collection is at Learn Austrian Economics.
Boeing tanker and Wichita. News reports from this morning’s press conference held by U.S. Representative Mike Pompeo of Wichita indicate that Boeing will not use Wichita as the finishing plant for work on the new air refueling tanker project. It was thought that this work would require 7,500 jobs in Wichita. Political and union leaders speak of holding Boeing accountable to what they believe was a promise Boeing made to Wichita, but I don’t know how they can do that. … Pompeo’s press release states: “… the work will be done in Washington state. Until very recently, it had been my expectation based on representations made to all Kansans, personally to me and my office, and to the United States Air Force, that Boeing would create 7,500 aviation jobs in our great state should Boeing prevail in the tanker bid. We now know that Boeing intends to walk away from that promise, which severely jeopardizes the future of the over 2000 aviation jobs currently held by Boeing employees in Kansas. … Boeing fought a long and fierce battle to build the KC-46A Tanker and secured the largest defense contract in the history of the world. Over a decade Boeing won, then lost and then once again emerged victorious over its competitor EADS. Kansas aviation workers were at the very core of Boeing’s effort that entire time. During that competition, Boeing stressed — both publicly and in its formal final bid proposal submitted to the United States Air Force — that its Wichita, Kansas facility would be critical to building the next generation tanker. For years, Kansas’ elected political leadership worked diligently to secure a contract award for Boeing. In short, Kansas workers and Kansas political leaders were central to the Air Force’s decision to select Boeing over EADS. To remove Kansas from the tanker project not only violates a public trust, but it creates risk to taxpayers and to our fighting forces. … I urge the company’s leaders to do all that they can to honor the Boeing name and to take all steps available to do right by the hard-working, talented people who build the world’s greatest airplanes here in Kansas.”
Wichita school dress code. The Wichita Eagle reports on a new dress code for teachers at USD 259, the Wichita public school district: “Mark Jolliffe, principal at Wilbur Middle School and president of the local administrators group, said the guidelines are intended to ‘enhance our professional position, and model for our students, staff and community’ the importance of professional dress.” Teachers continually complain that they are, in fact, professionals, but are not treated as such. I wonder: What does it say when you have to be told how to dress at work? What the community ought to be worried about is a school district that spends time on issues like this while students continue to receive a substandard education. … Furthermore, the mode of dress of schoolteachers ought to be something that parents decide through a market-based selection process. Those parents who believe that their children are best served by schools where the teachers dress nicely (and perhaps the students are in uniform) could choose schools like this, if we had school choice. Also, parents who believe their children would thrive in a more casual environment could select schools with this characteristic, but again, only if we had school choice.
Kansas legislator briefing book. A very useful publication produced by Kansas Legislative Research Department is now available in a 2012 edition. Its target is legislators, but anyone who is interested in understanding state government will find the 2012 Legislator Briefing Book useful. The section on education, for example, has an explanation of the Kansas school funding formula, complete with descriptions and values for the weightings that determine how much state funding districts receive.
Velvet Revolution voice has died. “Vaclav Havel, the playwright who led the Velvet Revolution that ended communism in Czechoslovakia, has died at 75. … Vaclav Havel helped Czechoslovakia make the transition from one of the most repressive Communist regimes to one of the most successful post-Communist countries.” More from David Boaz at Vaclav Havel, RIP.
Open records in Wichita. “The Wichita City Council approved a $2 million payment to the city’s convention and visitors’ bureau, GO Wichita, despite objections to the lack of transparency in how GO Wichita handles taxpayer money. The Kansas Open Records Act requires that entities receiving public money be subject to the law’s transparency provisions, but one of these provisions states that if such an organization files an annual financial statement, it has complied with the law. At issue is whether a one- or two-page financial report listing total revenues and expenditures can substitute for public access to more detailed records regarding specific expenditures of public funds.” More from Paul Sourtar of Kansas Watchdog at City of Wichita Spends $2 million, Rebuffs Citizen’s Transparency Request.
Cellulosic ethanol. The Wall Street Journal notes the debacle of cellulosic ethanol production and government involvement. This is ethanol produced from “wood chips and stalks or switch grass,” said President George W. Bush in 2006, also stating that “Our goal is to make this new kind of ethanol practical and competitive within six years.” So what has happened? “When these mandates were established, no companies produced commercially viable cellulosic fuel. But the dream was: If you mandate and subsidize it, someone will build it. Guess what? Nobody has. Despite the taxpayer enticements, this year cellulosic fuel production won’t be 250 million or even 25 million gallons. Last year the Environmental Protection Agency, which has the authority to revise the mandates, quietly reduced the 2011 requirement by 243.4 million gallons to a mere 6.6 million. Some critics suggest that even much of that 6.6 million isn’t true cellulosic fuel.” … the Journal cites a recent report by National Academy of Sciences that states “currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel.” The $132.4 million loan guarantee for a cellulosic plant near Hugoton in southwest Kansas is noted. (More about that at Kansas and its own Solyndra.) … Concluding, the Journal writes: “To recap: Congress subsidized a product that didn’t exist, mandated its purchase though it still didn’t exist, is punishing oil companies for not buying the product that doesn’t exist, and is now doubling down on the subsidies in the hope that someday it might exist. We’d call this the march of folly, but that’s unfair to fools.” See The Cellulosic Ethanol Debacle.
Overcriminilization. A new paper from Paul Larkin of of Heritage Foundation reports on the difficulties facing legislative solutions to the problem of overcriminilization. The abstract of the paper Overcriminalization: The Legislative Side of the Problem reads: “The past 75 years in America have witnessed an avalanche of new criminal laws, the result of which is a problem known as “overcriminalization.” This phenomenon is likely to lead to a variety of problems for a public trying to comply with the law in good faith. While many of these issues have already been discussed, one problem created by the overcriminalization of American life has not been given the same prominence as others: the fact that overcriminalization is a cause for (and a symptom of) some of the collective action problems that beset Congress today. Indeed, Congress, for a variety of reasons discussed in this paper, is unlikely to serve as a brake on new, unwarranted criminal laws, let alone to jettison broad readings of those laws by the courts. Therefore, the key to curbing overcriminalization is the American public: It is the people who, if made aware of the legislative issues that enable overcriminalization, could begin to head off such laws before the momentum for their passage becomes overwhelming.” … The conclusion to the report emphasizes the role of the people: “The legislative dynamic is not likely to serve as a brake on new, unwarranted criminal laws, let alone to jettison broad readings of those laws by the courts. The public needs to head off such laws before the momentum for their passage becomes overwhelming. And that can happen only if the public is aware of the legislative side of this problem.”
No Wichita Pachyderm. This week and next week (December 23rd and 30th) the Wichita Pachyderm club will not meet due to the holidays. Upcoming speakers: On January 6th: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On January 13th: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … On January 20th: Sedgwick County Commissioner Karl Peterjohn.
Stevens, Pachyderm President, honored. At last week’s meeting of the Wichita Pachyderm Club, President John Stevens received the “Tough Tusk Award.” In presenting the award, club Vice President John Todd remarked: “Once in awhile a local leader comes along who deserves recognition. From time to time The Wichita Pachyderm Club recognizes these special people. Today it is my pleasure to recognize one of our own who deserves special recognition. The Wichita Pachyderm Club awards committee would like to recognize our club President John Stevens as the recipient of our club’s ‘Tough Tusk Award’ as sponsored by the National Federation of Pachyderm Clubs. … He is a retired business owner who now spends his time volunteering with SCORE counseling small business owners and entrepreneurs. John also works as a community activist through his participation in city and neighborhood organizations. He is a past Wichita Park Board Commissioner and serves on boards and committees for Wichita Independent Neighborhoods. … In 2008 John was elected the precinct committeeman for the 101st precinct in Wichita. He has worked as a volunteer in local campaigns and has run as the Republican candidate for the 86th Kansas House of Representatives seat, concerned that Republican values, attitudes, and principles are not being represented in the 86th District. He continues to work toward having a Republican in the 86th House seat. … John has served as President of the Wichita Pachyderm Club for the past three years. Through the Pachyderm Club he is able to facilitate educating citizens about our government, our leaders and the Republican Party. … John says he is addicted to progress, and I can tell you that he works tirelessly for the betterment of The Wichita Pachyderm Club.” … I will add: Thank you, John Stevens, for a job well done.
Occupiers and crony capitalism. “They’re rightfully angry at what’s happening in the United States today. But unfortunately they have confused capitalism and crony capitalism, and they’ve misdiagnosed the cause of their frustration.” That’s Chris Coyne of George Mason University speaking of the Occupy Wall Street protesters. He explains in more detail in the following short video. This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.
Wichita City Council. The Wichita City Council this week considers two items of interest. Spirit AeroSystems will ask for $15 million in IRBs. Spirit will purchase the bonds itself. It will receive a property tax exemption for ten years and exemption from sales tax. No dollar amount is given for the value of the exemptions. … Then, Southfork Investment LLC, a group headed by Jay Maxwell, is asking for the formation of a new tax increment financing (TIF) district. This item, if the council approves, will set December 6 as the date for a public hearing. The vote to form the district would be taken then. … According to city documents, the project is near 47th Street South and I-135. It is planned for 50 acres and one million square feet of retail, hotel, restaurants and office space. For comparison, Towne East Square has slightly less than 1.2 million square feet of space. There will be a medical park on an additional 22 acres. … It appears that all the TIF financing will be pay-as-you go, which is a recent revision to the Kansas TIF law. No bonds would be sold. Instead, the increment in property tax would be refunded to the developer as it is paid. There’s also a joining of TIF and special assessments, where TIF revenue will be used to pay special assessment taxes. … Only a simply majority vote is needed to form the TIF district after the December 6 public hearing. There will have to be redevelopment plans approved after that, and those require a two-thirds majority. Sedgwick County and USD 259, the Wichita public school district each may pass ordinances objecting to the formation of the district. Sedgwick County did that regarding the Save-A-Lot TIF last year, and that project went ahead, despite the claims of the developer that TIF was necessary. USD 259 Superintendent John Allison has recently stated that the school district would not be participating in the formation of TIF districts in the future, as they lose revenue. This will be the first test of that. In 2008 John Todd and I testified that the district should not agree to the formation of a TIF district because of the lost revenue. Officials assured us that the Kansas school finance formula held them harmless, and it didn’t matter if a TIF district was formed. … There will also be a community improvement district (CID) with an additional sales tax of one cent per dollar. … As always, the agenda packet is available at Wichita city council agendas.
Crony capitalism. The Occupy Wall Street protests, as well as the group that protested against Koch Industries on Saturday, seem to be opposed to capitalism. Their efforts would be better directed against business specifically, or crony capitalism in particular. There’s a huge difference. Capitalism is a system of absolute respect for property rights and free exchange in free markets. As Tom G. Palmer wrote in his introduction to the recently-published book The Morality of Capitalism, “Indeed, capitalism rests on a rejection of the ethics of loot and grab.” … As for free markets and enterprise Milton Friedman explained that business is not always in favor: “The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.” Even one liberal New York Times columnist realizes this, as did Nicholas D. Kristof when he recently wrote “But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.” Kristof goes on to explain that capitalism means the freedom to fail as well as succeed: “Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.” … While most want more regulation on Wall Street and banks, I think that it’s impossible for government to write effective regulations. Instead, markets — if allowed to work — provide the most effective regulation: if you fail, you fail. It’s as simple as that. But George W. Bush gave a bailout, and Barack Obama has followed along. The Dodd-Frank banking regulations, for example, make “too big to fail” an explicit policy.
Kansas pensions. Do we know the true magnitude of Kansas’ unfunded pension problem? Do we want to know? Perhaps not, writes Paul Soutar at Kansas Watchdog: “Even though taxpayers in the rest of America eventually may find out what public pensions really cost them, Kansas school accounting practices and the way school retirement is funded may let school districts avoid reporting the true cost of district employee pensions. Some estimates show the unfunded actuarial liability of the Kansas Public Employees Retirement System will more than double from its current official $8.3 billion based on optimistic assumptions to more than $20 billion using the more realistic calculations.” The full story is School Districts May Get to Dodge Accounting Rules on Pensions . … State Budget Solutions, in a recent report (Report reveals aggregate state debt exceeds $4 trillion) made similar findings, writing that our unfunded pension liability is $21.8 billion, well over twice as high as the numbers used by most official sources. The difference: “The AEI figures estimate how large public pension liabilities would be if states used private sector market-valuation methods.” In other words, the real world.
Global economics to be discussed in Wichita. This week’s meeting (November 4th) of the Wichita Pachyderm Club features Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club Upcoming speakers: On November 11th: Sedgwick County Commission Members Richard Ranzau and Jim Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?” … On November 25th there will be no meeting.
Progress, or not. Today’s Wichita Eagle carries a letter that laments the jobs lost due to self-serve checkout lanes, online bill payment, online banking, and online reservation services. Concluding, the letter asks readers to “consider how many jobs could be saved if all of us stopped demanding immediate service or answers.” This reminded me of a recent column by Donald J. Boudreaux, commenting on similar remarks by U.S. Rep. Barbara Lee (D-CA). He wrote: “Fred Barnes reports in the Weekly Standard that you refuse to use computerized checkout lanes at supermarkets (“Boneheaded Economics,” Oct. 24). As you — who are described on your website as ‘progressive’ — explain, ‘I refuse to do that. I know that’s a job or two or three that’s gone.’ Overlooking the fact that you overlook the lower prices on groceries made possible by this labor-saving technology, I’ve some questions for you: Do you also avoid using computerized (‘automatic’) elevators, riding only in those few that still use manual elevator operators? Do you steer clear of newer automobiles equipped with technologies that enable them to go for 100,000 miles before needing a tune-up? I’m sure I can find for you, say, a 1972 Chevy Vega that will oblige you to employ countless mechanics. Do you shun tubeless steel-belted radial tires on your car — you know, the kind that go flat far less often than do old-fashioned tires? No telling how many tire-repairing jobs have been destroyed by modern technology-infused tires. Do you and your family refuse flu shots in order to increase your chances of requiring the services of nurses and M.D.s — and, if the economy gets lucky and you and yours get seriously ill, also of hospital orderlies and administrators? Someone as aware as you are of the full ramifications of your consumption choices surely takes account of the ill effects that flu shots have on the jobs of health-care providers. You must, indeed, be distressed as you observe the appalling amount of labor-saving technologies in use throughout our economy. It is, alas, a disturbing trend that has been around for quite some time — since, really, the invention of the spear which destroyed the jobs of some hunters.”
Business and politics. We often hear that government should be run like a business. But the two institutions are entirely different, explains Burton Folsom: “The differences between business and politics, however, is where our focus needs to be. In business, you hire people with your profits to make and sell your product. With those jobs, your employees earn money, spend money, and thereby create other jobs by their demand for houses, cars, iPhones, and household products. Wealth expands, new entrepreneurs get new ideas for products to make, and, if society is free, it becomes prosperous. In politics, you do hire people to run your campaigns and your administration once you’re in office; you do sometimes dole out jobs to build highways, snoop on business, or run the IRS. But almost all of those jobs require other people’s money (i.e. tax dollars) to continue. They take money out of the economy. For example, the jobs created by the Justice Department to check on the trading practices of corporations, the jobs created by the agriculture department to interact with farmers, or the thousands of jobs created to bring trillions of tax dollars each year to Washington are all jobs that take wealth out of the private sector. Looked at this way, the jobs created in business are the productive jobs, the ones that create wealth and give us the thousands of choices we enjoy in breakfast cereal, cars, clothes, and houses. By contrast, each job created in the political class subtracts a job that could be continued or created in the private sector.” … More at The Difference between Business and Politics.
Government job creation.Reason editor Matt Welch introduces the magazine’s November issue, which contains articles on free-market job creation. After citing the litany of failures, he concludes: “Such persistence in the face of repeated failure suggests that some powerful myths continue to hold sway among politicians and many of the people they represent. Among the most stubborn of these is the notion that passing a bill to fix a problem is the same as actually fixing the problem. This assumption — which reaches its illogical conclusion during times of national panic, when do-something busybodies like Michael Bloomberg will say that it doesn’t matter what Washington does, it just needs to do something — is oblivious to the law of unintended consequences, to the reality of corporatist lobbying, and to the limitations of government power.” … Then having done something, government is oblivious to what it has actually done: “A curious flip side to the myth of government omnipotence is near-complete incuriosity about government side effects. That is, people remain convinced that the state can and should look a problem squarely in the eye and fix it, but they are rarely moved by daily examples of the harm caused by earlier fixes.”
Wichita City Council. Tomorrow the Wichita City Council considers these items: The city will consider revisions the ordinances governing municipal court bondsmen. The agenda packet reports “Currently, six departments are involved in the licensing and oversight of bail bondsmen.” The goal, says the city, is a more efficient process. … Johnson Controls asks the city for a forgivable loan of $42,500. It is proposed that Sedgwick County do the same. The State of Kansas is contributing $1,168,000 through various programs. Worldwide, Johnson Controls has 137,000 employees, sales of $39,080,000,000, and profits of $1,540,000,000. Yet, corporate welfare is still required, it seems. … As always, the agenda packet is available at Wichita city council agendas.
Kansas tax plans. “In the coming months, Brownback and state legislators are expected to deal with at least three major proposals to change Kansas’ tax structure.” More from Kansas Reporter at Competing tax plans head for Kansas Legislature .
Repealer on tour. “Government regulation is costing businesses valuable time and opportunities and denying state and local government millions in tax revenue from business activity and development, according to business leaders speaking at the ‘Drowning in Regulation’ tour stop in Wichita Wednesday.” The event was part of the Office of the Repealer seeking input from Kansans. More, including video, from Kansas Watchdog at Legislators Hear Examples of Businesses Drowning in Regulations. The Repealer (Dennis Taylor, Secretary of Kansas Department of Administration) will make a public appearance in Wichita on Tuesday, November 1st at 11:30 am, in the Wichita Public Library Patio Room (223 S. Main).
Zuckerman on Obama. James Freeman of the Wall Street Journal interviews Mortimer Zuckerman, who is a Democrat and an Obama voter. He has been openly critical of President Barack Obama and his leadership, and that again is expressed in this article. Zuckerman told of the real unemployment numbers: “Mr. Zuckerman says that when you also consider the labor-force participation rate and the so-called ‘birth-death series’ that measures business starts and failures, the real U.S. unemployment rate is now 20%.” … Zuckerman is pessimistic about the Obama Administration, writes Freeman. An example: “At that time he supported Mr. Obama’s call for heavy spending on infrastructure. “But if you look at the make-up of the stimulus program,” says Mr. Zuckerman, ‘roughly half of it went to state and local municipalities, which is in effect to the municipal unions which are at the core of the Democratic Party.’ He adds that ‘the Republicans understood this’ and it diminished the chances for bipartisan legislating.”
The fall of California. “California has long been among America’s most extensive taxers and regulators of business. But it had assets that seemed to offset its economic disincentives: a sunny climate, a world-class public university system that produced a talented local work force, sturdy infrastructure that often made doing business easier, and a record of spawning innovative companies. No more. In surveys, executives regularly call California one of the country’s most toxic business environments, while the state has become an easy target for economic development officials from other states looking to lure firms away.” Reasons: “a suffocating regulatory climate,” “California taxes are high and hit employers and employees hard,” and “the state’s legal environment is a mess.” Complete article by Steve Malanga of the Manhattan Institute for Policy Research in the Wall Street Journal at How California Drives Away Jobs and Business: The Golden State continues to incubate cutting-edge companies in Silicon Valley, but then the successful firms expand elsewhere to avoid the state’s tax and other burdens.
Public Sector Inc. Speaking of the Manhattan Institute, its project PublicSectorInc is a great resource for learning more aboout the issues of public sector employment. Says the site: “PublicSectorInc.org is a one-stop-shop for the latest news, analysis and research about the issues facing the public sector and the American taxpayer. It provides a national forum to probe problems and develop solutions at the state and local level. With a critical focus on the urgent topics of pension reform, employee compensation, bargaining and retirement health benefits for public employees, PublicSectorInc.org is shaping the national debate unfolding in state capitals and city halls across America.” … An example article of value is Valuing Job Security as a Public Employee Benefit.
Markets and trade help all.James Otteson explains the motivations and concerns of Adam Smith, one of the earliest economists and author of The Wealth of Nations. In a short video, Otteson explains: “One of the main concerns is … how do we raise the estates of the least among us? He’s deeply concerned about the poor in society.” Continuing: “His investigation of centuries of data … shows that, empirically, the way to help people who are the least among us, the bottom rungs economically of society, is by allowing for commerce: free trade, free migration, limited government. To the extent that you can encourage those policies, their estates will be raised tremendously. … What he’s interested in is those people at the bottom, and his endorsement of markets and of trade is because he thinks they’ll help the people at the bottom, not because they’ll help the people who are already rich.” Over the centuries since Smith, we’ve learned many times that economic freedom is good for everyone, especially the poor. … The video is from LearnLiberty.org, a project of Institute for Humane Studies.
Wichita city leaders too cozy with developers? Yesterday I participated in a KAKE Television news story where I explained the need for pay-to-play laws in Wichita and Kansas. These laws generally restrict officeholders from participating in votes or activities that would enrich their campaign contributors. In the story I said “What I, and some of my political allies object to, is what is happening in plain sight: In that there is a relatively small group of people — and their spouses and people who work at their companies — who regularly contribute to a wide variety of city council members, both political liberals and political conservatives, because they know that they are going to be coming to the city council and asking for taxpayer money.” Officeholders and the developers who contribute deny there is a connection between contributions and votes. Curiously, these developers generally don’t make contributions to school board members, county commissioners, state legislators, or federal representatives. Actually, it’s not so curious: It’s primarily the Wichita City Council that is able to vote to give them money. I would say the contributors are acting rationally. … If there is no connection between contributions and votes or consideration, there should be no problem in getting the council to agree to some form of pay-to-pay law for Wichita. An example is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.” … KAKE correspondent Deb Farris reported that Wichita Mayor Carl Brewer doesn’t look at the list of campaign contributors. I wonder: does he send thank you letters to his contributors? … Video and story at Wichita City Leaders Too Cozy With Developers?
Obama economic strategy questioned. This year’s Nobel prize in economics went to Thomas J. Sargent of New York University and Stanford University’s Hoover Institution, and Christopher A. Sims of Princeton University. In its reporting, the Wall Street Journal explained (A Nobel for Non-Keynesians: People’s expectations about government policy make it difficult for officials to affect the economy in the ways they intend to): “The Swedish economists announcing the award emphasized, correctly, the importance of Messrs. Sargent’s and Sims’s thinking about the role people’s expectations play in economic decision making and the larger economy. But what they failed to mention is that their work has also offered empirical evidence that the school of thought known as Keynesian economics — which believes that government can turn a flagging economy around with the right combination of fiscal ‘stimulus’ (generally government spending) and monetary policy — is fallible.” In further explanation, the Journal writes: “One of Mr. Sargent’s key early contributions, along with University of Minnesota economist Neil Wallace, was the idea that people’s expectations about government fiscal and monetary policy make it difficult for government officials to affect the economy in the ways they intend to. If, for example, people get used to the Federal Reserve increasing the money supply when unemployment rises, they will expect higher inflation and will adjust their wage demands higher also. The result: The lower unemployment rate that the Fed was trying to achieve with looser monetary policy won’t happen. This conclusion was at odds with the Keynesian model, which dominated economic thinking from the late 1930s to the early 1970s. The Keynesian model posited a stable trade-off between inflation and unemployment.” The 1970s however, saw stagflation — both high unemployment and high inflation at the same time, a danger that some feel will grip us in the near future. Keynesianism, of course, is the basis of the economic policy of President Barack Obama and the reason why the economy has not recovered. … While these economists worked on national economies, does the theory of rational expectations apply to state and local governments, meaning that it is very difficult for local government officials to micro-manage their economies through intervention? I think so.
Public vs. private. One of the curious statements in Rhonda Holman’s Sunday Wichita Eagle editorial (Say ‘no’ to naysayers, October 9, 2011) was where she wrote of the “crowds increasingly assembling downtown for concerts and events.” Curious because not long ago she begrudgingly realized the cool down at the Intrust Bank Arena, writing: “Intrust Bank Arena’s strong performance during its inaugural year of 2010 couldn’t last. And it didn’t.” (Make case for arena, August 19, 2100 Wichita Eagle) I don’t know if these two editorials are at odds with each other. … I have noticed one downtown Wichita venue that seems to have a lot of concerts, that being the Orpheum Theater. That venue doesn’t suffer from government genesis and ownership as does the arena, although the arena’s management is in the hands of the private sector. As part of its restoration the Orpheum may qualify for historic preservation tax credits, a government spending program that I oppose. That subsidy, if obtained, is quite small compared to the total taxpayer funding of the arena.
Kansas tax policy. Several news outlets have reported on how hard Kansas state officials are working on crafting a new state tax policy. That worries me. The best tax policy is one that is simple and fair to all. The more tax policy is worked on, the more likely it is to contain measures designed to manage the behavior of people and business firms. This would be a continuation of the conceit that the state can manage economic growth, and contrary to the concepts of economic dynamism for Kansas, where fertile ground is created for all companies.
Petition drive is on. Last Friday citizen activists started the petition drive to give the people of Wichita a chance to vote on crony capitalism or free markets. See Our Downtown Wichita (motto: “Limited government and free markets in Downtown Wichita benefit everyone. Centralized planning and crony capitalism benefit only a few.”) for more information.
Kansas education scores mixed. From Kansas Reporter: “Kansas students’ performance on reading and math proficiency improved for the 11th consecutive year, according to Kansas State Department of Education’s latest State Report Card for schools released Tuesday. Some 87.6 percent of the students tested turned in scores in the top three of five performance levels for reading and 84.7 percent achieved similar scores in math. But two other performance yardsticks show different results. Statewide Kansas test scores on ACT college entrance exams, which are averaging 22 points out of a perfect 36, have been flat for the past five years. … Most Kansas statewide reading, writing and math scores on the National Assessment of Educational Progress, or NAEP, tests have changed little since 2000, according to the U.S. Education Department, which counts the test results as the broadest national measure of how school systems compare state by state. ‘Fourth-grade math tests have improved significantly, but that’s about it,; said Arnold Goldstein, program director for the federal Education Department’s National Center for Education Statistics.” Complete story on Kansas Reporter at Kansas education scores proved mixed picture of schools’ success.
Kansas gas wells appraisals. Some Kansas counties use different methods of gas well valuation for tax purposes, writes Paul Soutar in Kansas Watchdog: “The method used to appraise the tax value of gas wells in Stevens County is ‘not correct or appropriate’ according to a report commissioned for Stevens County and released at their latest meeting. The method is or has been used for at least nine years, possibly since the early 1990s, in nine Southwest Kansas counties covering much of the Hugoton gas field, the ninth highest producing field in the U.S. in 2010.” … The complete investigate report is at Report Says Gas Well Appraisal Method ‘Not Correct or Appropriate’.
Lieutenant Governor in Wichita. This week’s meeting (October 14th) of the Wichita Pachyderm Club features Lieutenant Governor Jeff Colyer, M.D. speaking on “An update on the Brownback Administration’s ‘Roadmap for Kansas’ — Medicaid Reform” … Upcoming speakers: On October 21st: N. Trip Shawver, Attorney/Mediator, on “The magic of mediation, its uses and benefits.” … On October 28th: U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, speaking on “Spending battles in Washington, D.C.” … On November 4th: Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” … On November 11th: Sedgwick County Commission Members Richard Ranzau and James Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?”
Urban renewal. “The goal was to replace chaotic old neighborhoods with planned communities.” Planned by government, that is, with all the negatives that accompany. The fascinating video from Reason.tv is titled The Tragedy of Urban Renewal: The destruction and survival of a New York City neighborhood. Its introduction reads: “In 1949, President Harry Truman signed the Housing Act, which gave federal, state, and local governments unprecedented power to shape residential life. One of the Housing Act’s main initiatives — “urban renewal” — destroyed about 2,000 communities in the 1950s and ’60s and forced more than 300,000 families from their homes. Overall, about half of urban renewal’s victims were black, a reality that led to James Baldwin’s famous quip that “urban renewal means Negro removal. … The city sold the land for a token sum to a group of well-connected Democratic pols to build a middle-class housing development. Then came the often repeated bulldoze-and-abandon phenomenon: With little financial skin in the game, the developers let the demolished land sit vacant for years.”