Voice For Liberty

Tag: Richard Ranzau

Sedgwick County Commissioner Richard Ranzau

  • Wichita on corporate welfare, again

    Yesterday’s award of $2.5 million by the City of Wichita to aircraft manufacturer Hawker Beechcraft to ward off a threatened move to Louisiana stands out as an example of corporate welfare given for its own sake, and not in response to any real threat.

    Hawker will also ask Sedgwick County for the same amount, in addition to receiving $40 million in credits and incentives from the State of Kansas.

    It was widely reported that Hawker had received an offer, said by some to be worth as much as $400 million, to move to Louisiana. But that offer was not a valid threat of Hawker leaving Kansas, as in a December 2010 television news report, Louisiana’s governor said “they couldn’t guarantee the number of jobs that would have been required for them to come here.”

    Further evidence of the payment being corporate welfare for its own sake is lack of a cost-benefit analysis that usually accompanies such matters. Generally, the city justifies spending on economic development by citing a cost-benefit analysis performed by Wichita State University. By giving up some tax revenue or making a payment, the city feels it will gain even more tax revenue in the future. But no such numbers were cited as justification for this payment to Hawker Beechcraft.

    Speaking from the bench, new council member James Clendenin (district 3, south and southeast Wichita) said “At the end of 10 years, I don’t think anyone wants to have to go this process again.” He asked economic development director Allen Bell if there was a process in place so that we wouldn’t be blindsided, so that we could “come up with solutions ahead of time.” A streamlining of the corporate welfare, so to speak. Bell said there is such an effort: IDEA (Industrial Development and Expansion Assistance), plus informal discussions between high level city officials and businesses.

    Council Member Michael O’Donnell (district 4, south and southwest Wichita) brought out the fact that although it has been widely reported that the agreement requires Hawker to keep employment at 4,000 or more, it’s not until employment falls below 3,600 that clawback provisions become triggered. O’Donnell said he wanted to protect these 400 jobs, but Bell said the agreement was negotiated between Hawker and the State of Kansas (under former governor Mark Parkinson), and that O’Donnell was correct. O’Donnell expressed his concern: “I think that we definitely need to get the word out that we’re voting for something that could be 3,601 jobs and not 4,000 jobs like’s been sold to us and the public. … I think that’s problematic when we’re dealing with multi-millions of dollars.”

    Two members of the public addressed the council on this matter, including myself based on my remarks in Hawker Beechcraft to receive subsidy from Wichita City Council.

    In a lecture delivered to Clinton Coen, a young man who spoke against the Hawker incentive, Mayor Brewer spoke of the “employment rate [sic] before the recession” at Cessna, which the mayor cited as 12,000 employees, noting that there are only 6,000 today. The mayor said “That’s part of what contributed to this,” but did not make a connection between the decline in employment at Cessna and requirement of the subsidy being offered to Hawker. Cessna, by the way, received approval of similar incentives from the state and local governments for an expansion to be made in Wichita, but the declining aviation market led Cessna to cancel the expansion and the incentives.

    The mayor also mentioned how we lost 1,500 jobs from one company because another state paid the company $1 million per job. The mayor did not mention the company, and inquiries to the mayor’s office and the city’s information office and staffers could not produce an answer. The mayor might have been referring to a 2008 offer by North Carolina to Spirit Aerosystems to build a plant there. That deal, as reported by the Triangle Business Journal, was an offer worth up to $250 million for employment expected to reach 1,031 within six years. That’s about $242,000 per job — a long way from a million. Furthermore, the report listed Jacksonville, not Wichita, as the main competition for the plant, even through Spirit is headquartered in Wichita.

    The mayor also lectured Coen, as he has to others, about “philosophies or a theory” one may have concerning economic development, and how it is easy to say the things Coen did “if you really truly don’t know.” He also mentioned the threat of losing the entire company, not only to Louisiana, which he said is not the only competition, but the entire world.

    All council members except O’Donnell voted for the measure.

    Hawker as Wichita corporate citizen

    At the city council meeting, I noted that the Hawker Beechcraft campus, although entirely surrounded by the city of Wichita, is not itself within the city limits. Apparently this does not limit the ability of Wichita to spend its citizens’ money on Hawker, but no one on the council or staff wanted to tackle that issue at the meeting.

    Being outside the city limits of Wichita, Hawker pays no property tax to the city, as confirmed by examining tax records maintained by the Sedgwick County Treasurer’s Office.

    Aviation summit

    In his lecture to Coen, the mayor mentioned the recent aviation summit held by Kansas Governor Sam Brownback in Wichita. At that event, the attitude of the industry towards government assistance was clear: much is demanded.

    Lynn Nichols, who is President of the Wichita Metro Chamber of Commerce and also owner of an aviation service business, answered several questions, including one asking which state incentives and tax and regulatory polices are important?

    Nichols listed the sales tax exemption on aircraft service, repair, and modification; business expensing on capital expenditures; and reasonable and practical compliance policies from the Kansas Department of Health and Environment. Then, he added: “And of course, we can’t wait for Secretary [of Commerce Pat] George’s new cookie jar with his proposed economic development discretionary deal-closing fund. So we support you on that one, Secretary.”

    The choice of language by Nichols — “cookie jar” — was found to be offensive by Sedgwick County Commissioner Richard Ranzau, and he commented on that at a recent commission meeting:

    Overall, the tone of the summit was that the Kansas aviation industry is dependent on support and incentives from state and local governments. Without that, industry leaders said it will be difficult to survive or resist offers to move to other states.

    But as we saw yesterday at the Wichita City Council, perceived threats need not be credible in order to extract taxpayer funds in the form of corporate welfare. The taxpayer-funded cookie jar is open for business.

  • Kansas and Wichita quick takes: Monday February 28, 2011

    Elections tomorrow. On Tuesday voters across Kansas will vote in city and school board primary elections. Well, at least a few will vote, as it is thought that only nine percent of eligible voters will actually vote. Many of those may have already voted by now, as advance voting is popular. For those who haven’t yet decided, here’s the Wichita Eagle voter guide.

    Kansas schools can transfer funds? A recent legislative update by Kansas Representative Bob Brookens, a Republican from Marion, tells readers this about Kansas school finance: “Most school districts in our area braced for this possibility by taking advantage of a law passed last year by the legislature; the new provision allowed schools this one time to transfer funds from certain other areas to their contingency reserve fund, just in case the state had a budget hole in fiscal year 2011; and most of the school districts around here moved all they were allowed to.” Thing is, no one can seem to remember the law Brookens refers to. There were several such laws proposed, but none made their way through the legislature to become law.

    Ranzau stand on federal funds profiled. New Sedgwick County Commission member Richard Ranzau has taken a consistent stand against accepting federal grant funds, as explained in a Wichita Eagle story. While his efforts won’t presently reduce federal spending or debt, as explained in the article by H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs at Wichita State University (“Those funds are authorized, they’re budgeted, they’re appropriated, and (a) federal agency will commit the funds elsewhere.”), someone, somewhere, has to take a stand. While we usually think about the federal — and state — spending problem requiring a solution from the top, spending can also be controlled from the bottom up. Those federal elected officials who represent Sedgwick County and are concerned about federal spending — that would be Representative Mike Pompeo and Senators Jerry Moran and Pat Roberts — need to take notice and support Ranzau. Those serving in the Kansas legislature should take notice, too.

    Kansas legislative chambers don’t agree. Kansas Reporter details the problems conferees from the House of Representatives and Senate face coming to agreement on the rescission bill. Funding for special education seems the problem. The rescission bill makes cuts to spending so that the current year’s budget balances. More at House, Senate can’t agree how to fund special ed.

    Citizens, not taxpayers. A column in the McPherson Sentinel argues that we should think of ourselves as “citizens,” not merely “taxpayers.” The difference, as I read the article, is that a citizen is involved in government and public policy: “It takes work, hard work, to make this system work.” Taxpayers, on the other hand, just pay and expect something back: “‘Look at how much I paid,’ these people cry. ‘Give me my money’s worth!’” The writer makes the case that government “is not a simplistic fiscal transaction” and that citizens must participate to make sure that government does good things with taxes. … The writer gets one thing right. Meeting the needs of the country is complex. Where I don’t agree with the writer is that government is the best way — or even a feasible way — to meet the needs of the country. A method already exists: people trading voluntarily in free markets, guided by profit and loss, with information conveyed by an unfettered price system. Government, with its central planning, its lack of ability to calculate profit and loss, and inevitable tendency to become captured by special interests, is not equipped for this task.

    Kansas Economic Freedom Index. This week I produced the first version of the Kansas Economic Freedom Index: Who votes for and against economic freedom in Kansas? for the 2011 legislative session. Currently I have a version only for the House of Representatives, as the Senate hasn’t made many votes that affect economic freedom. The index now has its own site, kansaseconomicfreedom.com.

    Increasing taxes not seen as solution. “Leaving aside the moral objection to tax increases, raising taxes won’t in fact solve the problem. For one thing, our public servants always seem to find something new on which to spend the additional money, and it isn’t deficit reduction. But more to the point, tax policy can go only so far, given the natural brick wall it has run into for the past fifty years. Economist Jeffrey Rogers Hummel points out that federal tax revenue ‘has bumped up against 20 percent of GDP for well over half a century. That is quite an astonishing statistic when you think about all the changes in the tax code over the intervening years. Tax rates go up, tax rates go down, and the total bite out of the economy remains relatively constant. This suggests that 20 percent is some kind of structural-political limit for federal taxes in the United States.’” From Rollback: Repealing Big Government Before the Coming Fiscal Collapse by Thomas E. Woods, Jr. Hummel’s article may be read at Why Default on U.S. Treasuries is Likely.

  • In Wichita, start of a solution to federal spending

    At the Sedgwick County Commission, newly-elected commissioner Richard Ranzau voted three times against the county applying for grants of federal funds, showing a possible way that federal spending might be brought under control.

    During the meeting, Ranzau asked staff questions about where the funding for the grant programs was coming from, which, of course, is the federal government, sometimes routed through the Kansas Department of Commerce. Sometimes local spending is required by these grants.

    In opposing the programs, Ranzau said that federal government spending is too high. Also, our level of debt is too high, and that the cost of these spending programs is passed on to future generations. He also didn’t see where the U.S. Constitution authorizes activity like the commission — in partnership with the federal government — is considering undertaking.

    Ranzau offered an alternative: if the commission believes these projects are important to us as a community, we could pay for them ourselves and pay for them now.

    Commissioner Jim Skelton argued that if we don’t apply for and receive this money, the federal government will spend it anyway, and someone else will receive it. “I think we can end up screwing our constituency by opposing this on the philosophy that our government is too big.”

    He said he doesn’t agree with the “rampant spending of stimulus money” and would like to see it end, but he didn’t see how refusing this money would make a difference.

    Constitutional basis questioned

    During discussion, Skelton asked county counselor Richard Euson a question: “Can you tell me about the constitutionality of this issue? How on earth can this happen if it’s not constitutional?”

    Euson was flummoxed by the question, and admitted that he was not prepared to answer the question. This is not to be held against the county’s attorney, as questions like this are rarely asked — an indication of the novelty of Ranzau’s position and how infrequently elected officials and staff consider questions such as the fundamental role of government and its level of involvement.

    The job of a commissioner, according to Norton

    In discussion about one grant program, Commissioner Tim Norton asked a question designed to make sure that Ranzau knew that the project was located in his district. On a grant for a transportation plan, Norton again asked a question designed to make sure that Ranzau knew whose district this plan would serve, referring to former commissioner Kelly Parks’ support of the program.

    These questions by Norton highlight the problem with district-based representation, where representatives of districts are expected to bring as much government largess as possible back to their districts. At the federal level this problem is illustrated by the earmarking process. Locally, we see that Sedgwick County Commissioners are assumed to be in favor of any project that benefits their districts, regardless of the overall worth of the project or its cost.

    A bottom-up solution to federal spending?

    At a town hall meeting on Saturday, I asked Kansas fourth district Congressman Mike Pompeo, who represents all of Sedgwick County, about his opinion of ground-up opposition to federal spending and debt, rather than waiting for Congress and the President to solve the problem from the top down.

    Pompeo didn’t answer the question directly, but said that from now on, each law passed by Congress will have a section that states the constitutional authority for the legislation. He also said that the federal government is involved in many areas that it should not be involved in, adding “So many times the question is ‘should we reduce this agency’s budget by three percent,’ and the proper question is ‘why does this agency exist?’”

    While the new U.S. House of Representatives is full of enthusiasm for cutting spending, here we see an example of just how difficult cutting spending will be. Local governments are addicted to grants like the three discussed above. A congressman who voted to cut programs like these will hear from the affected constituents, and would also likely hear from the Sedgwick County staff who are advocates for these projects and spending. If more elected officials would vote against these programs, that would make it easier for Congress to cut off the flow of spending.

    We should also remember that Ranzau offered an alternative: fund the programs ourselves. The problem is that we are funding them ourselves, through the roundabout trip of tax dollars going to Washington, which then sends them back, in this case in the form of grants with many conditions and restrictions on the way the money can be spent. So Skelton is correct: the federal government will spend the money anyway. But to go along means that the hole is dug deeper. More crudely, the federal government says: implement this program in our way, because you’ve already paid for it, and you don’t want to piss away your taxes somewhere else.

    Perhaps a coalition of forward-thinking local government officeholders like Ranzau and U.S. Congressmen like Pompeo can join together to bring the spending under control. It will take courage, especially from the local officeholders.