Tag Archives: Sedgwick county government

Letter to County Commissioners Regarding AirTran Subsidy

March 18, 2005

Board of Sedgwick County Commissioners

Dear Commissioner:

I am writing to explain my opposition to Sedgwick County funding the AirTran subsidy.

My primary reason for opposing this subsidy is that it distorts the market process through which individuals and businesses decide how to most productively allocate capital.

Aside from that, it seems to me that the argument that many Fair Fares supporters make is flawed. They are grossly — I would say even speciously — overstating the importance of the airport to our local economy.

As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. Through correspondence With Mr. Steve Flesher, air service development director for the city of Wichita, I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of the employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating.

To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or it may be that someday Cessna or Bombardier will ask Sedgwick County for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

An article I wrote titled Stretching Figures Strains Credibility provides more information, including a link to the Center for Economic Development and Business Research study.

I would be happy to speak to the County Commission as a group if you think they would be interested.

I thank you for your time and consideration.

Sincerely,

Bob Weeks

SB 58 Testimony from Kansas Taxpayers Network

More testimony opposing SB 58, the bill to allow Sedgwick County to increase its sales tax to pay for the downtown arena.


Testimony Opposing SB 58
By Karl Peterjohn, Executive Director, Kansas Taxpayers Network

SB 58 is a flawed bill that should either be re-drafted or defeated in its current form, Let me outline the major problems with this legislation.

1) This bill does not address the serious flaws already contained within KSA 12 187 that cry out for correction. This is a grossly non uniform statute that should be made, uniform covering all local government units. Today, cities may, and some already have, opt out of this statute using their home rule powers because of this statute’s non uniform condition. County home rule requires a change in statutes for the lid on local sales taxes (see KSA 19 101a). At some point in time the cities may opt out of this statute in a way that negates any requirement for voter approval at an election. It will be a sad day for Kansas government when the voter approval requirement within this statute gets voided within a municipality. This is only a matter of when, not a matter of if

It may surprise this committee that the Kansas Taxpayers Network (KTN) supports removing this local sales tax Ed under limited circumstances. The circumstances are straightforward. KTN strongly supports requiring voter approval before taxes are raised. KTN has repeatedly testified in front of both legislative tax committees in support of this principle. We strongly urge this committee to broaden this voter approval requirement to extend to city, county, and local property tax millage hikes. KTN would also like to see a requirement added to this statute that would extend this principle of voter approval of tax hikes to extend to all local taxes. Currently, Missouri, Colorado, and Oklahoma require voter approval before property taxes can be raised in those three states. In Colorado and Missouri this requirement for voter approval currently covers all local taxes.

This would correct the pro tax raising bias that exists in current law. Local sales tax hike proponents raise local sales taxes in a way I’ll describe ‘in three words: “carrot and stick.” The “carrot” approach to raising sales taxes is how Sedgwick County originally got their 1 cent local sales tax 20 years ago, “Vote for this local sales tax and we’ll lower your property tax.” That’s how Pottawatomie County got their local sales tax raised last year.

The “stick” approach was used by arena proponents in narrowly getting voter approval during the advisory vote November 2, 2004 in Sedgwick County. “If you don’t vote for this temporary sales tax hike we’ll raise your property taxes.” Arena proponents’ flyers and advertising said, “Vote No. And a 20 year property tax buys a facelift for the aging Kansas Coliseum… ” So it all comes down to: higher sales or higher property taxes would the condemned prefer to be hung or shot?

2) SB 58 is a slap in the face for taxpayers by making an advisory vote retroactively into a binding vote. This is an affront to the rule of law. The county knew they had no authority to raise the local sales tax under current state law. Now they want you to retroactively provide them with this approval. I wrote an editorial ‘in the Wichita Eagle last August that publicly informed them that they had no legal authority under Kansas law to impose this tax. They arrogantly proceeded anyway and now want the legislature to grant retroactive authorization.

Now I’m not saying that you can’t add retroactivity into Kansas tax law. That has occurred in the past nationally and fairly recently. In 1993 then President Clinton proposed adding retroactive provisions to federal tax code as part of his tax raising bill. This was enacted, it was litigated and the U.S. Supreme Court ruled that retroactive tax law was constitutional. This was bad federal tax law in 1993 and Kansas should not adopt this retroactively principle in 2005.

Now let me demonstrate how a taxpayer would be a second class citizen in Kansas if you enact SB 58 in its current form. If I decided as a citizen that I would no longer be bound by the portions of the tax law I’d like to see changed, and then proceeded to ignore the law, I would be in violation of the law and could be penalized under this law. Apparently, that is not a problem if the legal entity happens to be a local government, like Sedgwick County in Kansas. If I then had the arrogance to proceed to ask you as legislators to retroactively change state law to help me out of my own violation of state law, you would not take my request seriously. Today, you are taking the county’s request very seriously and if recent press reports are correct, a majority of you have already decided to vote for this bill. If this bill passes it will clearly establish the fact that taxpayers are second or perhaps even third class citizens behind local units of government in Kansas.

This bill would be a gross violation of the rule of law in this state. In fact, the legislature rarely provides retroactive provisions in state law and usually enacts statutes that only take effect at a future date.

3) Since the November 2 vote was advisory *in nature, the fact that arena opponents were outspent is an abuse of taxpayer funds but is not critical under current Kansas law. Arena opponents raised over $20,000 in private funds in the unsuccessful advisory election November 2, 2004. We were outspent by a greater than 2 to I margin by city, county, and state funded tax dollars spent by tax funded organizations.

This included city property taxes, city hotel/motel taxes, county tax funds, and state turnpike and regents tax dollars. This statute should be amended to ban the use of state and local tax funds in tax referendum elections. It is now clear that Kansas has already descended upon the slippery slope where tax dollars are being spent to promote higher taxes.

4) If the legislature does not act upon SB 58 or any similar legislation then one of two events will occur. The county could follow the usual practice and get KSA 12 187 changed so a binding election could occur. The city of Wichita, which also strongly backs this tax hike, could exercise their home rule option in this matter or also seek a change in this statute to hold a binding election in the future. The rule of law could be preserved even if this important principle is contained within this flawed and non uniform statute.

SB 58 is flawed and should be rejected by this committee. KTN has intentionally not discussed the merits of the downtown arena since that is an issue for a binding election and not for this committee or the legislature to consider. The legislature must make state law for all the citizens and all of the local units. SB 5 8 makes a bad statute worse.

A better approach would be to extend the principle of voter approval of local sales taxes to cover all local taxes in Kansas. Then you could remove the caps, terminate the “carrot and sticks,” tax raising strategy, delete the non uniformities, and allow the Kansas economy to begin to be able to compete with our neighboring states that have already empowered their citizens with mandatory tax referendums at the ballot box.

Legislative Delegation, Saturday February 5, 2005

On Saturday February 5, 2005 I attended the meeting of the local legislative delegation regarding the arena tax. Representative Tom Sawyer chaired the meeting. The audience wrote questions on notecards, and Representative Brenda Landwehr read them. To the best of my recollection, the people allowed to answer questions were Sedgwick County Commissioner Tom Winters, Sedgwick County Assistant County Manager Ron Holt, Sedgwick County Director of Finance Chris Chronis, Wichita Mayor Carlos Mayans, and Wichita Downtown Development Corporation President Ed Wolverton. All of these are arena supporters. No one with an opposing view was allowed to speak, except for near the end when Kansas Taxpayers Network Executive Director Karl Peterjohn spoke from the audience for a moment.

The news that was made during this event was that it was totally scripted by arena supporters, and except for Mr. Peterjohn’s brief remarks from the audience, there was no balance.

I created a handout for the legislators. A link to it is here.

From John Todd: Testimony regarding Senate Bill No. 58

February 3, 2005

Members
Senate Assessment and Taxation Committee
State Capitol
Topeka, Kansas 66612

Subject: Testimony in OPPOSITION TO SENATE BILL #58 (Sales Tax Increase For The Proposed Wichita/Sedgwick County Arena).

My name is John Todd. I am a self-employed real estate broker from Wichita, and I come before you in opposition to the enabling legislation that would allow Sedgwick County to raise the local sales tax 1% to fund a new Downtown Arena.

The reason why I am here in opposition to this government driven plan is my basic belief that individuals know best how to spend their own money, and that they should be allowed the freedom to spend the fruit of their own labor as they wish, and not as government dictates, particularly when it involves mandatory spending for an elective entertainment venue like the proposed downtown arena.

If the need for a Downtown Arena were market driven, the private sector would already be building it, and the taxpayers would be left out of the loop. Obviously, it is not, and so the proponents want the taxpayers to build it and absorb the losses. I believe their plan calls for over $20 million in operational losses. This does not count the business property that will be taken off the tax rolls for a county owned facility. If the Wichita Eagle’s pre-election numbers of $40 million in property value was correct, those losses in real estate taxes could amount to $1 million more in lost taxes per year, and I would bet that that shortfall will be spread back over the other real estate property taxpayers.

How did we ever get the idea that the road to prosperity is built on government spending and the heavy taxation of our people? How far from the truth can this be?

Anyone who has read the Eagle in recent months can attest to the massive number of so called “economic development” projects in downtown Wichita that are losing money, and that the taxpayer is being asked to cover. One only needs to read of the $1.00 per year 99 year leases that are being awarded for the millions of dollars taxpayer owned land and the $7 million dollars needed to lure a second or third choice anchor retailer downtown to grow disenchanted with local government’s ability to “manage” anything, particularly if it is related to real estate development.

And why should anyone be concerned with these boondoggles? We can’t continue to take $184.5 million here and $140 million there, and $100 million yonder out of our economy and hope to favorably compete with other cities, counties, and states in our region.

There are numerous excellent examples of free market economics at work in our city. One only needs to look north and south on Rock Road in Wichita to observe the benefits of this privately funded system that expands the tax base, creates jobs, and is indeed true “economic growth”, and best of all, the taxpayer is not liable if any of these business ventures fail. Will a 1% sales tax that will remove $184.5 million from the Sedgwick County economy hurt these local businesses? Absolutely! And according to an article in the March 2001 issue of “FedGaxette,” published by the Federal Reserve Bank of Minneapolis entitled “Stadiums and convention centers as community loss leaders” contains this quote:

“Current research indicates that stadiums and arenas have a particularly bad track record when it comes to delivering on promises of community economic windfalls. University researchers Mark Rosentraub and Mark Swindell found that three decades worth of studies ‘lead to the inescapable conclusion that the direct and indirect economic impacts of sports teams and the facilities are quite small’ and do not create much in the way of new jobs or economic development.”

The proponents of this Bill here today will tell you that 52% of the voters voted for the arena. That is true; however, they ignore the fact that our County elected officials were less than forthcoming in advising voters that the arena vote was an advisory election only, and is not binding. The County is not authorized to raise sales taxes without first obtaining legislative approval prior to any vote. Sedgwick County broke state law! The legislature is now faced with the dilemma of passing enabling legislating, and making it retroactive to the November 2, 2004 election and calling that election binding. This is wrong, and you should not let it happen. At the very least, if you pass the enabling legislation, a subsequent public vote should be required before allowing the County to raise the sales tax.

Before you pass this Bill into law, several matters need to be considered.

1. Is the $184.5 million dollar price tag excessive?

2. What is the real impact of taking $184.5 million dollars out of the private economy in terms of retailer profits and potential job losses?

3. The arena vote was won by a narrow margin. Rural Sedgwick County voters voted against the arena as did voters in the less affluent neighborhoods. Perhaps the sales tax should be optional at the check out stand. Those who want to pay the arena tax could and those who don’t could simply ‘opt out’.

4. What will happen to the Sedgwick County economy if the Legislature or the Supreme Court mandates a statewide sales tax to meet the Court’s requirements for school financing?

5. What is the specific location for the proposed arena? Who owns the land? Is the land going to cost $1.00 per square foot or $20.00 per square foot? And is the $20 million for land acquisition going to cover the actual cost, or will it be double or triple that amount? Would not an astute “private” investor already own the land or control the price under an option to purchase contract? If the Legislature allows the County to fill its checkbook, will not the price of land double or triple?

6. No one knows what the proposed arena will look like since it has not been designed. Should not the taxpayers have known what they are voting for?

7. Before you authorize giving the Sedgwick County Commission a blank check with $184.5 million of taxpayer money deposited in it, perhaps you need to consider placing some “controls” over how they spend the money?

8. Will the people who contributed to the pro arena campaign be allowed to bid on the construction work, participate in the design work, earn commissions for the sale/purchase of the land, or will these be considered a “conflict of interest”?

9. Will the Sedgwick County commissioners be required to explain why they voted for a $55 million dollar renovation for the Kansas Coliseum and then decided that it was too expensive? What did they do with the long-term capital improvement fund(s) that should have been earmarked for this project? And how do they explain that only $25 million in private funds were needed to renovate a similar size arena at Wichita State University? Does it always cost the public sector twice the amount to do the work as the private sector? Perhaps we need to enlist the business acumen of the private sector to build the arena for half of the proposed cost?

10. Perhaps our voters need better information in order for them to make an informed decision regarding a new arena or a renovated Coliseum? Property taxes were made an issue in the arena campaign. Many votes expressed their frustration to me that they were not given the opportunity to vote for “none of the above”, and since they were more opposed to property taxes than sales taxes, they were forced to vote for the arena. Perhaps the legislature needs to enact legislation requiring a public vote before local governments can raise local property taxes?

11. Are not government directed projects like the arena the antitheses of the free market system? Does anyone else tire of working until April or May of each year to pay his or her taxes? Is government really the answer?

Too many questions need to be answered before you decide pass this Bill into law. A non-binding public vote for a downtown arena in 1993 failed to pass by a wide margin. Since the 1993 vote was ignored, you have the necessary precedence and current state law on your side to ignore this vote, and at the very least amend this Bill to require another public referendum.

Thank you for allowing me to speak. I would be glad to answer questions.

Sincerely,

John R. Todd

Written testimony regarding Senate Bill No. 58 (Wichita downtown arena tax)

Written testimony of Bob Weeks regarding Senate Bill No. 58, an act concerning sales taxation; relating to countywide retailers’ sales tax in Sedgwick County.

February 3, 2005

Members
Senate Assessment and Taxation Committee
State Capitol
Topeka, Kansas 66612

Honorable Senators:

Thank you for allowing me to present this written testimony.

I realize that the voters in Sedgwick County voted for the arena sales tax increase. I believe, however, there is ample reason why you should vote against the tax. The idea of the taxpayer-funded arena came about so fast in the summer of 2004 that there was little thought given to the underlying issues. I wish to present what my research has uncovered.

WSU Study Not Complete

On of the main arguments advanced for having all the residents of Sedgwick County pay to build the arena was a study prepared by the Center for Economic Development and Business Research at Wichita State University. The study claimed a large economic benefit from the arena. It is because of this economic benefit that arena supporters say the entire community should pay to build the arena. This study, however, is incomplete in two important areas: its lack of depreciation accounting, and it ignores the substitution effect.

No Depreciation Accounting

Government Accounting Standards Board Statement 34 requires governments to account for the cost of their assets, usually by stating depreciation expense each year. Through a series of email exchanges with Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, I have learned that the WSU Center for Economic Development and Business Research was not aware of this requirement when they prepared their study. Mr. Wolverton admitted this after checking with the study authors. Furthermore, Mr. Chris Chronis, Chief Financial Officer of Sedgwick County, in an email conversation told me that the county will take depreciation expense for the downtown arena. I do not know what a figure for depreciation expense would be, but it would likely be several million dollars per year, and it would materially and substantially change the arena’s financial footing.

No Substitution Effect Allowed For

In a television new story reported by Mr. Erik Runge of KWCH Television on October 25, 2004, I was interviewed, and I mentioned the substitution effect. This is the term used to describe what research has found: that much of the new economic activity such as bars and restaurants that might appear around a downtown arena would be bars and restaurants that have moved from other parts of the city. There is little or no new economic activity, just movement of existing activity. Mr. Runge interviewed Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, who said “In WSU’s report they felt like there definitely could be some substitution effect.” The reporter explained “But how much was never studied. Downtown development backer Ed Wolverton says mostly due to time restraints.”

These two glaring omissions of materially important facts by the WSU study should warn us to question its other findings. Other than the report on KWCH, I saw no reporting of these two matters.

Claimed Economic Benefit is Not Realized

Arena supporters say that everyone should pay to build and operate the arena because it will generate economic impact that everyone will benefit from. The economic benefit claimed by arena supporters, however, has not been found to materialize in other cities. In the March 2001 issue of “FedGazette,” published by the Federal Reserve Bank of Minneapolis, an article titled “Stadiums and convention centers as community loss leaders” contains this quote:

“Current research indicates that stadiums and arenas have a particularly bad track record when it comes to delivering on promises of community economic windfalls. University researchers Mark Rosentraub and Mark Swindell found that three decades worth of studies ‘lead to the inescapable conclusion that the direct and indirect economic impacts of sports teams and the facilities are quite small’ and do not create much in the way of new jobs or economic development.”

In a paper titled “Professional Sports Facilities, Franchises and Urban Economic Development” (UMBC Economics Department Working Paper 03-103) by Dennis Coates and Brad R. Humphreys of the University of Maryland, Baltimore County we find this quote:

“Siegfried and Zimbalist (2000) recently surveyed the growing literature on retrospective studies of the economic impact of sports facilities and franchises on local economies. The literature published in peer-reviewed academic journals differs strikingly from the predictions in ‘economic impact studies.’ No retrospective econometric study found any evidence of positive economic impact from professional sports facilities or franchises on urban economies.”

Arena Tax Requires Everyone to Subsidize the Interests of a Few

Since, as current research has found, arenas do not generate the positive economic impact that their supporters claim, the arena tax instead becomes the public as a whole subsidizing the leisure activities of a relatively small number of people. The people who do use the arena, moreover, are quite easy to identify: they purchase tickets to events, or they pay to rent the arena. It is these people who should pay the full cost of the arena construction and operation.

Local Officials Not Entirely Truthful

Sedgwick County Commissioners stated that if the downtown arena sales tax did not pass, they would borrow money to renovate the Kansas Coliseum. If we do the math on the figures they quoted, that is to borrow $55 million and pay it back at $6.1 million a year for 20 years, we find that the interest rate is 9.17%, which is a terribly high interest rate for a government to pay. The county commissioners told us they were ready to pay this much if the arena tax didn’t pass.

I wrote to Sedgwick County Commissioner Tom Winters, asking him for an explanation. He replied that the interest rate is really 7.5% for this reason: To the $55.3 million cost of the renovations, we must add $6.5 million for capitalized interest during the construction period, and $.9 million for debt issuance costs. So yes, Commissioner Winters is correct about the 7.5% rate, but this also means that the cost of the Coliseum renovations should be stated as $62.7 million instead of $55 million. But even 7.5% interest is too high to pay.

What is troubling is that local government officials are not being truthful with the public.

Unintended Economic Effects

A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.

In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.

The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, the supply curve shifts to the left, and less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.

Workers in these sectors, should the sales tax increase take effect, may want to reconsider their career plans. How many retail and service workers can make the transition to construction work is unknown. It is certain, however, that when workers lose their jobs it imposes benefits costs on the government — and the taxpayers.

The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is a somewhat larger. Our sales tax will last 2.5 times as long, and our proposed arena is about three times as expensive. How these factors will impact the number of jobs is unknown, but I feel that the number of jobs lost in Sedgwick County in retail and services will be larger that what Pulaski County experienced.

It is interesting to note that the authors of this study, while measuring a positive net economic impact for the Alltel Arena, make this conclusion:

“The primary reason for this positive economic impact is that the state of Arkansas contributed $20 million to the construction of the arena. As a result, the economic impact of building the arena in Pulaski County is greater than it would be if the county had funded the arena by itself. A vast majority of the jobs that will be created will be in the service sector that frequently offers lower wages than jobs in other sectors of the economy.”

The proposed downtown Wichita arena does not have the advantage of having 40% of its cost paid for by outsiders. It may be that we feel even more strongly the negative impacts of the sales tax.

The Difference Between a Publicly-Owned and Privately-Owned Arena

Instead of the government building an arena, suppose that arena supporters, along with those who voted yes for the sales tax and anyone else who wants to, formed a corporation to build and own an arena.

Instead of having paid taxes to the government, arena supporters would be investors and they would own something: their shares in the arena. They would have the pride and responsibility that comes with ownership. They would have a financial stake in its success. Even taxpayer-funded arena opponents might see merit in investing in a local business rather than paying taxes to a government.

Instead of government bureaucrats deciding what the people of our town want and need, a privately owned arena would be subject to the guidance and discipline of free markets. It would either provide a valuable service to its customers and stay in business, or it would fail to do that and it would go out of business. Governments do not have such a powerful incentive to succeed.

Instead of the bitter feelings dividing this town over the issue of a taxpayer-funded arena and other perceived governmental missteps, the arena corporation would act in the best interests of its shareholders and customers. Even if it didn’t, it wouldn’t be the public’s business, because after all, the corporation is formed of private individuals investing their own money.

When individuals invest in an arena they are nurturing the virtues of investment, thrift, industry, risk-taking, and entrepreneurship, Wichita having an especially proud tradition of the last. There is nothing noble about a politician taxing and spending someone else’s money on projects like a downtown arena, or a renovated Kansas Coliseum for that matter.

At this time in our town we have a chance to let private initiative and free markets work, or we can allow the government to continue to provide for us in ways that few seem truly satisfied with. Writing about a public utility in England that was transferred to private enterprise, economist John Blundell observed:

“When it was ‘public’ it was very private. Indeed, it was totally captured by a small band of bureaucrats. Even members of Parliament struggled to find out what was going on. No proper accounts were produced, and with a complete lack of market signals, managers were clueless as to the correct course to take. The greatest casualty was a lack of long-term capital investment.

Now it is ‘private’ and very public. Not just public in the sense of open, but also in the sense of accountable directly to its shareholders and customers. Copious reports and accounts are available and questioning citizens will find their concerns taken very seriously indeed.”

If we allow the government instead of private enterprise to build a new arena or to renovate the Kansas Coliseum, this is the opportunity we lose.

Abuse Of Tax Funds Must Stop

The following is from the Kansas Taxpayers Network. It shows how government-funded organizations participated in the campaign to increase Sedgwick County taxes.

Taxpayers’ funds are being used to promote higher taxes in Kansas. Tax funds are also being used to lobby for higher taxes (see VI. and 1. above). This is an egregious mess that the legislature should stop. Tax funds are also used for “informational” campaigns by taxpayer funded groups. This includes a variety of local units like school boards but is not limited to any local units.

How bad is this problem? Public campaign donation and expense records show that $45,907.85 was contributed to the “Vote Yea” committee from organizations that are partially or fully funded by tax funds. Here’s how the money is broken down in this advisory election:

1) Greater Wichita Convention and Visitors Bureau contributed $10,000. The Greater Wichita Convention and Visitors Bureau is almost entirely funded by the City of Wichita through its hotel/motel bed tax. In 2004 budgeted expenditures were $1,122,510.

2) Greater Wichita Sport Commission contributed $25,000. The Sports Commission operates out of the Convention and Visitors Bureau offices. City, county, and state tax funds in the form of $5,000 a year memberships finance this office. The state funds pay for Wichita State University’s membership.

3) Wichita Downtown Development Corporation contributed $2,324. This city sponsored organization for helping downtown is primarily funded with a four mill city property tax within its downtown area boundaries.

4) Kansas Turnpike Authority contributed $3,583.85. This contribution by a state organization listed an “Inkind” contribution of a “loaned executive,” for the “vote yea” campaign.

5) The Hyatt Regency Wichita contributed $5,000. The Hyatt Regency operates this city owned and money losing hotel adjacent to the Wichita Century II complex. Since this corporation has a contract to operate this hotel this is another city related and funded contribution, albeit through this back door donation.

These five contributions were more than twice the entire amount of the vote no campaign that spent just over $21,000 in their unsuccessful effort to defeat this advisory proposal. This spending does not include $5,000 more in 5016 funds for the tax hike campaign. Similar charitable donations in tax elections have also been reported in northeast Kansas. All these tax and 5016 expenditures should cease. However, these contributions and expenditures were probably a good deal less than the money spent by tax funded organizations to lobby the legislature. Some of these local units register as lobbyists (see lobbyist list for cities, counties, schools, and other entities) and some do not, like lobbyists for Regents Institutions.

Tax funds are being misused to litigate for higher taxes. School districts that spend tax funds to sue the state over school finance are biting the hand that feeds them and already provides the bulk of their entire budgets. The state school finance formula should have an adjustment to penalize school districts that are suing the state over school finance. The perpetual school litigation machinery needs to be turned off at the statehouse.

Letter to Kansas Legislators regarding Sedgwick County arena tax

January 25, 2005

Dear Senator or Representative:

I am writing to express my opposition to the legislature granting Sedgwick County the authority to raise its county-wide sales tax in order to fund the proposed downtown Wichita arena.

I realize that the voters in Sedgwick County voted for the tax. Still, I believe there is ample reason why you should vote against the tax.

The primary reason is that the idea of the arena came about so fast in the summer that there was little thought given to the underlying issues. The Center for Economic Development and Business Research at Wichita State University produced a study showing a large positive economic impact for a downtown arena. I found much academic research that showed otherwise, that taxpayer-funded facilities such as the proposed downtown Wichita arena rarely live up to their expectations, and instead become a burden on the taxpayers. I also uncovered the fact that the WSU study was flawed in that it omitted important factors such as depreciation, the accounting for which is now required by Government Accounting Standards Board Statement 34. Incredibly, the CEDBR at WSU was not aware of this requirement when they prepared the study that was used to promote the economic benefit of the proposed arena. They admitted this when I called it to their attention.

Thus, what is presented as an economic boon for all the people instead becomes the county as a whole subsidizing the interests of a few.

I presented my findings to many news outlets in Wichita, but there was little interest. Because I experienced such resistance to my message I started a website, the “Voice for Liberty in Wichita.” It is located at wichitaliberty.org. Much of the research I uncovered is posted there. As an example I am enclosing an article that I recently wrote. It is based on what was found to happen in Pulaski County, Arkansas (Little Rock), when they built an arena funded in part by taxpayers.

I would be happy to provide you with any additional information that I can.

Thanking you in advance for your time,

Bob Weeks

Guest post: The Sedgwick County Downtown Arena Sales Tax

(It has been suggested that the following message, which I have sent as email to all Kansas State Senators and Representatives, may be of interest to you.

The article, as written and sent, does contain some minor inaccuracies, both in fact and in interpretation; but this merely shows that those of us who relied on the Wichita Eagle, my primary news source, for information prior to the arena tax vote were denied needed information and were, probably deliberately, given false, incomplete, and/or misleading information. I have made no effort to update it since a week or two after the election.

John A. Robinson
Wichita, KS)

The Kansas Legislature will be asked soon to approve a special sales tax for construction of a Downtown Arena in Wichita.

The recent “Arena Vote” in Wichita is a classic example of an election rigged by special interests, and does not represent an informed consent of the people of Wichita and Sedgwick County.

A vote was taken approximately a year prior to this vote in which the people of Wichita voted NOT to build a “downtown arena.” A main reason for the failure to support such a construction in that vote was the almost total inability of those favoring the arena to provide verifiable information in support of their claims that an arena would “do great things for Wichita,” a complete lack of any assessment of adverse related effects, denial, without examination, of any and all obvious problems, and a total lack of any coherent PLAN for the proposed arena. Those advocating this project were essentially unable to demonstrate that they had the best interests of the people of the community in mind, and made it clear that their real objective was their own personal profit and interest.

The people of Wichita voted NO to a downtown arena.

Subsequent to that vote, in which Wichita rejected the “arena,” the special interests who wanted one made NO EFFORT to respond to objections to the previous proposal. They made NO EFFORT to develop and show to the people any new plan for what was to be built, where it would be placed, how traffic and parking would be addressed, what REAL economic benefit the community could expect, and what REAL costs would be incurred.

They simply decided they didn’t like the result of that vote, and decided to take another one and get a different result.

Instead of examining the need, costs, and benefits, of their “plan” the special interests who favored the arena for their own personal gain determined that they “only needed about 15% more votes.” They did an apparently accurate assessment of what specific demographic groups would likely vote blindly for their “party place” if they could get them to vote, and could “work up enough enthusiasm.” It was perhaps also of interest that as persons not previously inclined to vote, their major demographic group, principally young college students, would be unlikely to affect any “substantive issues” affecting their other interests.

Very shortly before the election, a SINGLE announcement was made that “one of the County Commissioners” had talked to the Mayor, and the Mayor decided he was in favor of “the downtown arena.” No reason for the change in the mayor’s position was ever offered to the public, but “The Mayor is in favor of the Arena” became a slogan for the campaign.

Almost immediately, the extortionist threat was advanced by a County Commissioner that failure to vote for the Arena would mean a permanent and burdensome property tax. No substantiation for this claim was ever provided, but it was repeated incessantly.

Those with special interest, and intent to profit (or profiteer) from the arena, appeared with a “war chest” of several hundred thousand dollars a very few weeks before the election. They sponsored a few “pep rallies” at which they repeated their “the arena will be great” slogans, their “the mayor wants it” and their extortionate lie that “it’s already been decided that property taxes will go up if you vote against it.” By carefully refusing to offer any PLAN for examination, they made it difficult for more rational persons to speak against their campaign, simply because there was nothing to object to. Any objection was met with “that’s not part of our plan,” and couldn’t be countered since THERE WAS NO PLAN.

By appearing, unexpected, fully funded and organized at the last minute, they forclosed any opportunity for competing opinions to organize, fund, and carry out any effective counter campaign. It must be assumed, from the unexplained “instant switch” to favor of the arena that City and County officials were aware of and/or part of this plan to “silence the opposition.”

The “pep rallys” were well attended by those profiteers who wanted the arena, and were carefully advertised and “pushed” to the selected demographic groups that they had chosen to get the few votes needed to “vote their way.”

At NO TIME during this campaign was there EVER any discussion of what they planned to do, what other things would be affected, exactly how much it would cost, or what the peripheral impacts on the community would be and how they would be handled.

During the campaign, there was no discussion of a “plan” because there WAS NO PLAN. The entire campaign was based on “lets have a party.” The astonishingly large turnout for this election was ENTIRELY the result of a well funded, well planned recruitment of carefully selected groups likely to vote for the result that the “Arena Interests” wanted.

The threat to raise property taxes, made by the one “interested” Co. Commissioner, was clearly only for publicity. It was based on the costs to renovate the existing Colliseum, but it was never revealed whether, or how, the plans for the Colliseum would change if the arena was approved. It SPECIFICALLY was not revealed that those making this pseudo-plan fully intended the complete demolition of the Colliseum if the arena was approved. Since the Colliseum would compete with “their” arena, they have obviously decided, without consulting the public, that it will be demolished. NO SUGGESTION of any alternative use will be considered. THEY DO NOT HAVE PUBLIC APPROVAL TO DEMOLISH THE COLLISEUM.

Immediately after the election (less than two weeks) it was announced that the “arena plan” would “require cost estimates” for the demolition of the Colliseum. The people were NEVER given the choice of whether to find alternative use for the Colliseum, and were never told that DEMOLISHING the Colliseum was part of the “plan.” If it was part of the “arena plan,” the failure to have in hand an estimate of this major cost is only one more indication that THERE WAS NO PLAN EXCEPT FOR PROFIT FOR A FEW SPECIAL INTERESTS.

The passage of this “tax approval” was obtained by carefully selecting a demographic group susceptible to false and misleading publicity, massive publicity based on “let’s have a party,” false and misleading claims about fictitious benefits, vague but cheerful promises that “everything will be wonderful,” blatent lies, distortions, and mistruths bordering on extortion, and willful concealment of the “real” intent of those pushing the arena.

A physician who lies to a patient in order to get permission for a questionable procedure would not be likely to get by with an “informed consent” defense of his malpractice. This vote for the “arena tax” DOES NOT REPRESENT THE INFORMED CONSENT OF THE PEOPLE.

The Legislature should NOT APPROVE this tax. To do so is to reward EXTORTION by the persistent special interests who continue to believe they have a “right” to take whatever they want from the people as long as “they’ve got a good lie.”

Personal Observation:

The announcement that “the mayor is in favor of the arena” was made by the County Commissioner who “visited the mayor.” The Commissioner was not named in that report, and has not been clearly identified in the few subsequently published reports. So far as has been reported in the Wichita Eagle, my prinicipal source of local news, the mayor never appeared to publicly affirm his change in opinion about the arena. No explanation for his change in position has been published. Given the frequency with which he freely commented on city government and was quoted in local news, it is also noteworthy that since that announcement there have been NO REPORTS of his existence or of any participation in the affairs of the city.

Given the potential impact on the City of Wichita and on Sedgwick County, it would be reasonable that the news should be full of plans and analyses of the Arena; but the ONLY substantive report in the Wichita Eagle has been a rather weakly stated “The VOTE is OVER, shut up and take it” in one masthead editorial. “Opinion Line” comments, a feature of the Eagle, have contained the same terse “The Vote Passed, Shut Up and Take It” at approximately 2-day intervals since the election; but NO SUBSTANTIVE NEGATIVE COMMENTS have been published in the same column.

The Mayor and the Wichita Eagle, have been effectively SILENCED, whether by coercion or by collusion, on this matter.

Historical Note:

When Kellogg Avenue (US 54 Highway) was paved through the middle of Wichita in the 50’s, our public officials yielded to Cronyism and at the demand of the “special interests” in “Downtown Wichita” refused to make it a throughway. For nearly 50 years Wichita contended with 23 stoplights in a stretch of about 10 miles of what should have been a major trafficway. Since they made it impossible to travel conveniently between the East and West sides of town on that trafficway, major traffic flow continued through the downtown, at densities which required removal of all on-street parking, a maze of one way streets, and significant deterioration of road surfaces, never maintained, of most of the downtown area. Due to the high traffic densities diverted through the downtown, it was impossible to stop and do business there. By yielding to the “special interests,” they KILLED the downtown as a place of business.

For more than 50 years, our “leaders” have come up with one plan after another to “save” a downtown that IS DEAD so far as the majority of the people of this community are concerned. They have done so at the expense of other parts of the city, and at the expense of the community as a whole.

We have a “pretty” walkway along the side of the river, a few garish “art works” and have already dumped millions into “saving downtown” with subsidies for empty hotels and “startup money” for “botique shops” and bars. We have good hotels and motels, adquate for any visible needs, OUTSIDE the downtown area, but they get no support, and are ignored by our “planners.” This all for the benefit of the half dozen commissioners who meet “downtown,” the owners of the empty hotels “downtown,” the lawyers who wish to be near the courthouse “downtown,” and a whole lot of drunks who frequent the overpriced bars that would not exist “downtown” without frequent infusions of City Bond money.

In the meantime, half our city population is required to traverse the “Big Ditch” in fewer than a dozen traffic lanes twice daily, because Wichita cannot afford improvements to major traffic arteries “until we finish saving downtown.” Our tapwater occasionally STINKS because we can’t afford proper treatment until “we finish saving downtown.” We truck our trash out of state, because special interests must be placated who object to every plan for disposal. We can’t recycle with our trash, because special interests believe it will reduce their profitable trash service. We can’t have a beer at a neighborhood bar because the subsidized “entertainment” downtown has driven most of them out of business or very close to it.

Once again, by carefully selecting “which of the people to survey,” by whipping up enthusiasm with a selected minority demographic, and by concealing their intent from the population at large, the Council got the answer they wanted; but it IS NOT THE INFORMED CONSENT OF THE PEOPLE. IT IS A FRAUD. IT IS EXTORTION.

It is a rigged election, bought and paid for, by special interests, with the cooperation of City and County officials. A vote was taken, and ignored. A vote was RIGGED, bought and paid for, and should be ignored by the Legislature.

They are asking to DOUBLE the city sales tax. Not a trivial action. A vote for this tax will make it very much more difficult to ask for additional sales tax if a need for additional school funding is determined to exist.

There is no tyranny like the tyranny of a rigged “democratic election.”

Please VOTE NO to the Sedgwick County Arena Sales Tax.

John A. Robinson
Wichita, KS 67218

Prepare for sales tax-induced job effects now

Collecting the sales tax to pay for the downtown Wichita arena may produce unintended consequences.

A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.

In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.

The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, the supply curve shifts to the left, and less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.

Workers in these sectors, should the sales tax increase take effect, may want to reconsider their career plans. How many retail and service workers can make the transition to construction work is unknown. It is certain, however, that when workers lose their jobs it imposes benefits costs on the government — and the taxpayers.

The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is a somewhat larger. Our sales tax will last 2.5 times as long, and our proposed arena is about three times as expensive. How these factors will impact the number of jobs is unknown, but I feel that the number of jobs lost in Sedgwick County in retail and services will be larger that what Pulaski County experienced.

It is interesting to note that the authors of this study, while measuring a positive net economic impact for the Alltel Arena, make this conclusion:

“The primary reason for this positive economic impact is that the state of Arkansas contributed $20 million to the construction of the arena. As a result, the economic impact of building the arena in Pulaski County is greater than it would be if the county had funded the arena by itself. A vast majority of the jobs that will be created will be in the service sector that frequently offers lower wages than jobs in other sectors of the economy.”

The proposed downtown Wichita arena does not have the advantage of having 40% of its cost paid for by outsiders. It may be that we feel even more strongly the negative impacts of the sales tax.

The leadership of our local government officials regarding the downtown Wichita arena

It is clear that our local government leaders want a downtown arena in Wichita. Just read their remarks in the Wichita Eaglenewspaper. Since the Sedgwick County Commission has promised that they will proceed with renovation of the Kansas Coliseum if the downtown arena vote fails, it is in their interest to make the Coliseum renovation option look as bad as possible. In my opinion, they’ve done a pretty good job of this.

If you do the math on what it costs to borrow $55 million, paying it back at $6.1 million a year for 20 years, the interest rate is 9.17%, which is a terribly high interest rate for a government to pay. Yet, if we believe the county commissioners, they are ready to pay this much if we don’t agree to the arena.

Arena supporters cite economic benefit to the community as a reason to build the downtown arena, and they concede no such benefit is likely near a renovated Coliseum. Yet they are willing to spend millions there if we don’t give them a downtown arena.

Arena supporters cast the Coliseum renovation in the worst possible light. Consider a homebuyer who just bought a $100,000 home, financing it at 5% for 30 years. The total payments would be about $193,000. Do these people, having just bought the $100,000 home, go about saying they just moved into a $193,000 home? Of course they don’t. The total financed cost, to be sure, is an important fact, and a bad financing decision is a handy fact for arena supporters to use as they portray the Coliseum renovations in the worst possible light.

Arena supporters claim that there are only two decisions, the new downtown arena or the renovation of the Coliseum. Framing the debate this way, especially when one decision outcome is so distasteful, is a good strategy for downtown arena supporters to use, but not good public policy.

The Sedgwick County Commission has said that if the downtown arena fails, Coliseum renovation will start. We, as the citizens of Sedgwick County, should not allow this coercion to affect our decision on the downtown arena. We do not have to stand for this type of bad government.

Local government officials as downtown Wichita arena advocates

Kansas Attorney General Opinion 93-125 deals with “the use of public funds to promote or advocate a governing body’s position on a matter which is before the electorate.” In its summary, it states “However, public funds may be expended to educate and inform regarding issues to be voted on by the electorate.”

Our local government leaders, especially the Sedgwick County Commission and the Mayor of Wichita, are leading what they term the “educational effort” to get out the facts about the proposed downtown arena. I would suggest, however, that their effort is hardly educational, as they readily admit their preference, and little or no information about criticism or alternatives is to be found. On the Sedgwick County website, for example, there are no opposing viewpoints to be found. The only alternative to the downtown arena is the renovation of the Kansas Coliseum, which is portrayed as an unwise choice.

On two television shows, Sedgwick County Commissioner Ben Sciortino wore a “Vote Yea” polo shirt.

From an editorial by Phillip Brownlee, published in the Wichita Eagle on September 5, 2004: “If the plan is to pass, city and county elected officials — supported by business leaders — must continue their strong leadership and high-profile support for the arena.”

It has also been shown that some of the financial contributors to the “Vote Yea” campaign are funded by taxpayers.

A public or private arena in downtown Wichita, which is desirable?

Image what our town could be like if the downtown arena in Wichita vote fails and the county commissioners put aside for a moment their plans for the renovation of the Kansas Coliseum.

Suppose, instead, that arena supporters, along with those who would vote yes for the sales tax and anyone else who wants to, formed a corporation to build and own an arena.

Instead of having paid taxes to government, arena supporters would be investors. They would own something: their shares in the arena. They would have the pride and responsibility that comes with ownership. They would have a financial stake in its success. Even taxpayer-funded arena opponents might see merit in investing in a local business rather than paying taxes.

Instead of politicians and bureaucrats deciding what the people of our town want and need, a privately owned arena would be subject to the guidance and discipline of markets. It would either provide a valuable service to its customers and stay in business, or it would fail to do that and it would go out of business. Governments do not have such a powerful incentive to meet the needs of their constituents.

Instead of the bitter feelings dividing this town over the issue of a taxpayer-funded arena and other perceived governmental missteps, the arena corporation would act in the best interests of its shareholders and customers. Even if it didn’t, it wouldn’t be the public’s business, because after all, the corporation is formed of private individuals investing their own money.

When individuals invest in an arena they are nurturing the virtues of investment, thrift, industry, risk-taking, and entrepreneurship, Wichita having an especially proud tradition of the last. There is nothing noble about politicians spending someone else’s money on projects like a downtown arena, or a renovated Kansas Coliseum for that matter.

At this time in our town we have a chance to let private initiative and free markets work, or we can allow government to continue to provide for us in ways that few seem truly satisfied with. Writing about a public utility in England that was transferred to private enterprise, economist John Blundell observed:

When it was “public” it was very private. Indeed, it was totally captured by a small band of bureaucrats. Even members of Parliament struggled to find out what was going on. No proper accounts were produced, and with a complete lack of market signals, managers were clueless as to the correct course to take. The greatest casualty was a lack of long-term capital investment.

Now it is “private” and very public. Not just public in the sense of open, but also in the sense of accountable directly to its shareholders and customers. Copious reports and accounts are available and questioning citizens will find their concerns taken very seriously indeed.

If we allow the government instead of private enterprise to build a new arena or to renovate the Kansas Coliseum, this is the opportunity we lose.