Tag Archives: Sedgwick county government

In Sedgwick County, New Technology vs. Old School

I was one of the two campaign co-managers for Karl Peterjohn’s successful campaign for the Republican nomination for Sedgwick County Commissioner, third district. As such I was invited to the election night party where we watched the returns roll in.

I had my laptop computer with me, connected to the outside world by a wireless network connection. Several others did the same. We all were viewing the Sedgwick County Election Office’s website. Every once in a while we’d hit the refresh button to see if new returns were posted. Not really new or advanced technology at all; just something that many people have today.

A lone small television sat in the corner, its poor reception more static than anything else. Not many people watched. A Wichita Eagle reporter covering the event remarked he’d not seen a return-watching party like this, where the computers, rather than television, were the focus.

The next day we learned of a party where Sedgwick County Commissioner Tom Winters (our opponent) and friends were gathered. They were relying on television to get election results. The Wichita Eagle reporter there had her computer, and upon seeing on the election office website that all votes were counted, and that Tom Winters had lost, she told the party the sad (for them) news. Commissioner Dave Unruh didn’t believe it, and insisted on seeing the results on a television screen before he’d believe his colleague had lost. Then, “Unruh tossed a napkin on a bar table when he learned of Winters’ loss.” (Peterjohn overwhelms Winters in county race, Wichita Eagle, August 6, 2008)

But where, Commissioner Unruh, do you suppose the television stations get their data?

Link to Wichita Eagle photograph: Old school politicians watching election returns.

Predictions of Downtown Wichita Arena’s Success are Premature

Several Wichita Eagle editorials in recent weeks have mentioned the success of the Intrust Arena being built in downtown Wichita.

Success, I might ask, at doing what?

The fact that the arena structure is rising is evidence of only the smallest measure of competence by Sedgwick County officials. Having entrusted them with some two hundred million dollars, it’s the least we can expect.

We won’t know the success or failure of this arena for five to ten years.

Sedgwick County Taxpayer Relief?

This was received from a friend, and was also printed in the Wichita Eagle. The writer accuses the Sedgwick County Commission of doing something “questionable.” He is being much too kind to the commission with his choice of words.

I read with great interest “Sedgwick County budget halts jail plans” (July 17 Eagle). What really caught my eye was the opening sentence, stating that this was a “move that would save taxpayers money.”

Why all of a sudden, after taking our tax money for two years for this purpose, did Sedgwick County Commission Chairman Tom Winters decide that we “can’t build our way out of a jail problem”? Why was this not discussed and concluded before commission members asked for a raise in the mill levy by 2.5 mills back in 2006 (for the aviation training school as well as the jail expansion), at an annual cost of $28.75 on a $100,000 home?

Since the money was not used for the purpose intended, shouldn’t the taxpayers be reimbursed for the taxes paid so far? Instead, I guess we are supposed to be overjoyed at the 1 mill that is to be given back to us now.

This is very questionable — taking money and not using it for the intended purpose and then giving back only a portion of our money taken.

I believe that every one of the county commissioners should be replaced just as soon as possible with new blood, and, I hope, with people who will think before they act and will do things honestly and above reproach.


No New Sedgwick County Sales Tax Without Property Tax Elimination: Taxpayer Protection is Needed

A press release from the Peterjohn for County Commissioner campaign

23 July 2008

The Wichita Eagle’s lead story July 23 mentions a new county proposal to raise a new local sales tax to cover a variety of new spending programs. A variety of new or expanded county spending projects were mentioned in this article.

There is a history of trying to shift taxes. Sometimes this has been done to intentionally raise additional revenue (see 1992 statewide tax hike) or to shift from property to sales tax (1984 in Sedgwick County) and expand other spending. Sadly, the net effect in almost all of these case has been expanding tax revenues for government. This is a reason why we need to proceed carefully and with a detailed plan.

“There should not be any new local sales tax until the following steps occur,” said Karl Peterjohn, candidate for the 3rd district county commission seat. “First, any new local sales tax should eliminate the county’s current 31.3 mill property tax. By my rough estimate this would require a sales tax of approximately 1.5-to-1 5/8 cents to be revenue neutral for the county. At the same time protection must be provided to taxpayers to prevent property taxes from rising again.”

“Voter protection can be provided by a requirement that all county taxes receive voter approval before being raised. The county cannot raise sales taxes without voter approval. This protection for taxpayers must also be provided for all other new or existing county taxes too,” said Peterjohn.

“Second, the county must go to the state to receive authorization before it could implement this tax shift from property to sales (or tax on capital to one on consumption). That can’t happen until the 2009 legislature. I believe that a county wide sales tax that eliminates the existing county mill levy would be a net positive for economic growth in our community by cutting total property taxes by over 25% for most taxpayers in our county.

“Many businesses currently seek property tax abatements due to the high level of property taxes in our county. Eliminating the county’s property taxes would be very economically stimulative and would provide an overall property tax reduction for all homeowners, farmers, and businesses. Roughly 10-to-15% of retail sales in this county occur from purchases made by folks who do not live in Sedgwick County,” Peterjohn said.

“Sadly, there are a number of cases where shifting from property to sales taxes has provided a permanent increase in sales taxes and only temporary property tax relief. One example is just up the road in Shawnee County. That is why it is imperative that any new local sales tax hike contain ironclad provisions to protect county taxpayers. It is also imperative that we should eliminate the county’s property tax with any new local sales tax proposal.”

Donations to the campaign can be mailed to the address listed below. A paypal account is available to accept on line donations at the karlpeterjohn.com campaign web site. There is a limit of $500 per person or business for contributions made until the August 5 primary.

Peterjohn for County Commissioner
PO Box 8734
Wichita, 67208

Discolsure: I am one of the campaign co-managers for this candidate.

Wichita Eagle Voter Guide Responses

I am running for Republican precinct committeeman. The Wichita Eagle sent me a request to answer some questions to appear in a voter’s guide. These are the questions asked (to the best of my recollection; I didn’t record the text of the questions and now I can no longer log in to the system to see them) and my responses.

1. What do you believe should be in the party’s platform?

I believe the Republican party has strayed from its commitment to individual liberty, limited government, and free markets. The party should commit itself to nurturing economic prosperity by reducing government control of the economy. We should allow people to decide how to best spend and invest their time, money, and talents. By reducing the intrusiveness of government, we can create a laboratory of economic freedom in Wichita that would restore Wichita’s tradition of entrepreneurship.

2. What is your position on social issues?

Government should relinquish its monopoly on the financing of education by allowing school choice through tax credits. Parents would then have more control over the education of their children. Government’s ability to take private property through eminent domain should be severely restricted. All elected officials should be subject to term limits. Governments should respond to citizen requests for records in a reasonable way.

3. What is your position on fiscal issues?

Voter approval should be required for all tax increases. Governments should pledge to limit their increases in spending to the inflation rate plus population growth. The use of tax increment financing (TIF) districts and tax abatements should be eliminated. Giveaways such as the interest-free loan to the Old Town Warren Theater must be stopped. We should be careful that trading a higher sales tax rate for property tax relief doesn’t lead to more taxes overall.

Wichita School District Economic Impact

In February 2008, Janet Harrah of the Center for Economic Development and Business Research at Wichita State University produced a report titled “Wichita Public Schools: Impact Analysis Operations Impact, Bond Impact and Success Measures.” This report painted a glowing picture of the USD 259 (Wichita, Kansas public school district) bond issue in 2000. The district uses it to promote the success of the 2000 issue, and to promote the proposed bond issue that may be voted on sometime in 2008. The study may be viewed at the CEDBR website here.

The author of the study told me that the Wichita school district paid $1,500 for this study. Usually, research such as this that is purchased by the customer is treated as just that: something bought because it suits the customer’s needs. Since the customer controls what is done with the product, it is certain that if this study had produced a result that didn’t show a fantastically positive benefit for Wichita school district spending, the school board would not have released it to the public. But as we shall see, the way this study is structured guarantees a positive result. Also, the price of $1,500 is astonishingly low for a study of some 28 pages with three authors.

Perhaps the primary problem with this study is that it treats the cost of the bond issue as though it doesn’t exist. The study presents evidence of the benefits of school district spending, but mentions only in passing school district taxation:

An opportunity cost exists for the use of public funds for education. If public funds were not used to provide public education, they would be available for alternative use. Estimating the potential economic impact of alternative uses of these opportunity costs was beyond the scope of this analysis. (Page 6)

It is the lack of analysis of these “alternative uses” that is most important. Actually, not much analysis is required. All that is needed is to recognize that when money is paid to the Wichita public schools, that money is not available for other spending. It means that when a construction worker is hired to build a Wichita school, that construction worker isn’t working on something else in Wichita. It cannot be any other way. As Henry Hazlitt explained in his classic work Economics in One Lesson:

Therefore for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $1,000,000 taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project.

The study also uses the technique of the “multiplier,” which is to say that spending by the school district causes other spending to happen, and other jobs are therefore created. But the construction worker, whether working on a school building or a shopping mall, is paid the same and spends his wages in the same way. The multiplier effect is the same.

This study also analyzes the impact of the bond issue (and ongoing operations) on local governments such as the City of Wichita and Sedgwick County. From page 6: “These measures view the taxing entities’ expenditures as a public investment. Public benefits are measured by tax collections. If public benefits exceed public costs then the rate of return is greater than 100 percent and the benefit-cost ratio is greater than 1.”

These rates of return can be fantastic. For Wichita and Sedgwick County, their rate of return for the 2000 bond issue is over 1,000%! By way of explanation the study states: “These ROI percentages for the city and county are relatively high since these jurisdictions derive significant benefits from increased sales tax collections as a result of the District’s payroll, while incurring very few costs.”

The problems with this analysis are these: First, the taxing entities’ investment is raised by taxing their residents. Second, the public benefits, as explained above, are the taxes that the government collects. It is as though we tax ourselves so that we can pay even more taxes, all this to feed the machinery of government. And if you believe in limited government and personal liberty, it is not a benefit to pay more taxes.

While it is true that the City of Wichita derives benefits from Wichita school district spending, the city’s benefits are funded by taxes paid to the school district. It is only by considering these local governmental entities to be separate from each other that this fantastic rate of return on “investment” is possible. If the total cost of government is considered, the picture is different.

These defects and omissions — not realizing that tax funds could be spent elsewhere if not sent to government, not realizing that benefits that government receives are the taxes that people pay, and separating government into compartments that play off each other to create artificial returns — need to recognized as we read this report.

Sedgwick County trash franchising: on the road to economic perdition

I received this letter to Sedgwick County (Kansas) Commissioner David Unruh “over the transom” and I thought it merited reading by the general public. The author speaks of the “road to economic perdition.” I had to use the dictionary to refresh my memory of the exact meaning of the word “perdition.” While that term seems at first to be a little strong, I believe that trash franchising, like a ban on smoking, is just the first step in the plans of our local government officials. If politicians and newspaper editorialists can convince us that we require the force of government to take care of something as simple as picking up the trash — something that works very well already – it’s an easy jump to the next level of control. So perdition seems appropriate.

The May 21 Wichita Eagle reported that you and a number of other commissioners want to impose some sort of franchise on trash collection by cities operating in the area where Sedgwick County is responsible for trash disposal with state authorities. The Eagle quotes you as supporting a government franchise monopoly by haulers in specific areas as well as uniform terms for collection of residential refuse.

Before joining the commission I know that you were a businessman in the car repair business. Since government monopolies and uniformity in service is apparently preferable to free markets and open competition I hope that you will want to extend government into providing uniform monopoly in car repair as well as other private sector businesses. If the county’s goal is ending duplication of services and allegedly “wasteful” competition what basis do you have for only limiting franchising to trash hauling?

It is very clear to even the most casual consumer that there is significant variations in pricing among the folks repairing automobiles just like there are in the trash hauling business. There is a lack of uniformity in people getting their cars repaired too.

I must also note that an Unruh repair shop near 13th St. W. and Maize Rd. is only a short distance away from Westlink Auto Service. Having two firms competing for customers is obviously as duplicative and excessive as multiple trash firms going down the same street to collect refuse.

We have a similar situation nearby where two instances of two separate firms selling groceries are located on adjacent corners at 21st W and Maize Rd. (Walmart and Dillons) as well as Maize Rd. and W. Central (Aldi and Dillons).

Government monopolies have also a proven track record of performance. There is a name for this when university students study 20th century governments where these types of restrictions are commonplace.

Look how Wichita water and sewer rates have performed in the last few years and how it now appears likely that the city will be once again raising these rates significantly soon. Municipal power plants that dot many small Kansas towns also have a similar track record of costly performance for the citizens who have to pay the rates.

The City of Wichita got out of the trash hauling business in the late 1970’s for a reason. Establishing private/public franchise monopolies is a power that should be exercised very cautiously and carefully and has failed in the past. However, if you are going to expand local government’s roles in establishing ways of eliminating duplication of services and wasteful competition, you should fully understand where this road to economic perdition leads.

Trash Franchising in Wichita and Sedgwick County

Currently both Sedgwick County and Wichita are considering trash franchising.

On the surface, “franchising” sounds like a good thing. It sounds like someone’s opening a new Subway sandwich shop.

But what trash franchising does is to grant a monopoly to one (or sometimes a few) service providers for specific geographic areas. Under franchising, people living in an area will have either no choice, or perhaps limited choice, in choosing who picks up their trash. Rates will also be set by government.

The effect of this is that the profit motive for trash haulers is dramatically modified. Under franchising, trash companies have guaranteed customers paying mandated rates. What is the likely effect of this? I refer to Walter E. Williams, who said this: “Here’s Williams’ law: Whenever the profit incentive is missing, the probability that people’s wants can be safely ignored is the greatest.”

The use of the term “franchising” glosses over the consequences of a government mandate of who customers may choose to do business with. Citizens need a better term that accurately describes what our government is considering. Unfortunately, I am having trouble coming up with such a term, so I am asking you for help.

So far I have these terms: “mandatory service provider selection,” “choice elimination,” “enforced selection,” and “trash service reduction program.”

As you see, none of these terms are very artful. So please help me. You may email your suggestions to bob.weeks@gmail.com, or leave them as a comment to this article. Comments may be anonymous.

No Recycling Mandates in Sedgwick County, Please

Remarks delivered at a public hearing for the Sedgwick County solid waste management plan, April 24, 2008. Sedgwick County, Kansas, home to the City of Wichita, is considering a mandatory household recycling program. Or, perhaps people won’t be forced to recycle, but they will be required to pay for the cost burden that recycling places on communities.

You may listen to this article in audio form by clicking here.

The economist Frederich Hayek tells us that the price system communicates all the information we need to know about the relative value of things. The price system allows people who don’t know each other to coordinate their activities in the most effective and efficient way possible. The price system is truly a miracle.

If you want to see what happens when the price system is not allowed to work, usually because a government attempts to manage prices, just look at the former Soviet Union and other planned economies. The economist Thomas Sowell relates this story:

The last premiere of the Soviet Union, Mikhail Gorbachev, is said to have asked British Prime Minister Margaret Thatcher: How do you see to it that people get food? The answer was that she didn’t. Prices did that. And the British people were better fed than those in the Soviet Union, even though the British have never grown enough food to feed themselves in more than a century. Prices bring them food from other countries.

The price system can do its work only when free people trade with each other freely under a system where property rights are respected. Any attempt by governments to manage prices leads to inefficiencies that manifest themselves as shortages, waiting lines, surpluses, and black markets. The emergence of these problems lead to calls for even more government interventionism to fix the very problem the government caused by interfering with the price system. It can be a never-ending cycle.

How does this apply to recycling in Sedgwick County?

In some cases the price system tells us that recycling is a beneficial use of resources. About 75% of automobiles are recycled, and used cardboard is often recycled in commercial settings. That’s because the price paid for these recycled items is high enough that, in these contexts, recycling can be profitable. That’s the price system at work. It tells us that the best use of an old car is to recycle it, and the same goes for cardboard boxes at the grocery store.

A household setting is different. Households usually have to pay to engage in recycling. The prices that recyclers can get for these recycled goods doesn’t cover the cost of collecting them from households, as evidenced by the fact that in Wichita households must pay someone to pick up recyclables. That’s the price system at work again. Its sober assessment is that in the context of households, recycling is a waste of resources. That waste can be tremendous. Orange County, Florida, for example, spends roughly $3 million per year to collect recyclable goods from households, but sells them for only $56,000.

What about running out of landfill space? If landfill space were truly scarce, the price system would tell us so, because landfill operators — if there is a free market for landfills — could charge high prices for accepting trash. But evidently, they can’t.

So the price system tells us sometimes recycling is a good use of resources, and sometimes it isn’t.

A mandatory recycling program or one where people have to pay fees even if they don’t actually recycle their household goods amounts to the government attempting to override the price system. It is attempting to manage the price system through government interventionism. These policies, should Sedgwick County implement them, will cause citizens to suffer the same inefficiencies that all planned economies have demonstrated, if on a smaller scale.

Downtown Wichita (Intrust) arena groundbreaking

On Tuesday December 4, 2007, Sedgwick County hosted the formal groundbreaking ceremony for the downtown Wichita arena. While local government leaders and news media hailed the event as a transforming event in the history of Wichita, this writer does not share their enthusiasm.

The building of this arena is government interventionism at its worst. Stakeholders in the arena, such as Bob Hanson of the Greater Wichita Area Sports Commission, demonstrate the harm of rent seeking, as they seek to obtain, at taxpayer expense, a large and expensive playhouse for their pleasure. Supporters dressed their arguments for the arena in the language of public goods and economic development. But Henry Hazlitt and others have explained that the money spent on the arena is money that wasn’t spent somewhere else, with the attendant loss of jobs and economic activity somewhere else. (See my review of Economics in One Lesson and Prepare for Sales Tax-Induced Job Effects Now, also printed in The Wichita Eagle.) As local governments consider an expensive plan for development of the surrounding area, that money — just like the money collected through the sales tax — is money that citizens won’t be spending somewhere else of their own choosing.

Even the most basic economic arguments given for the arena were flawed. I found out that the estimated operating budget for the arena was defective, as officials were not aware of, or did not care to disclose, the proper government accounting standards the arena would be required to use. (See Arenas’ Financial Statements Not Complete and WSU Study on Downtown Wichita Arena Not Complete.)

Government, too, is not qualified to build and own assets like this arena. Consider the status of the Kansas Coliseum, which having opened in 1978 is only 29 years old. Yet three years ago we were told that it required extensive renovation for continued use, that poor condition being the stick used to promote the downtown arena. (Century II, not much older, is often described in the same terms.) So can you spot the irony in Sedgwick County Commission Chairman Dave Unruh’s statement at the groundbreaking? “I think probably most everyone here…will have a story they can tell their children and grandchildren on how they had a part in changing the profile and character of our community.” If this new arena suffers the same fate as the Coliseum, one generation from now we’ll be building another.

Further, government and its officials are not allowed to campaign for the arena as they did. Kansas Attorney General Opinion 93-125 states: “…public funds may not be used to promote or advocate the position of a governing body on a matter which is before the electorate.” If you examine news media accounts of the debate before the election in November 2004, you will see that our local government officials and their quasi-governmental surrogates were working in full force for the passage of the arena and its tax, in direct violation of this regulation. See Government Funds Promoting Downtown Wichita Arena.

Finally, by building a government arena, we lose the opportunity to have a privately-owned arena. A private arena, you say? Wouldn’t it have to be owned by greedy capitalists, only seeking to exploit our town just to earn a profit? But in the absence of government coercion or intervention, a business can earn a profit only by meeting customers’ needs, and doing that efficiently. Governments and their bureaucrats do not have this powerful motivating factor. The absence of the computation of profit and loss means that we will never know whether the resources spent on the arena were spent wisely. See A Public or Private Downtown Wichita Arena, Which is Desirable?.

More taxes for Wichitans

More Taxes For Wichitans
By Karl Peterjohn, Kansas Taxpayers Network

Expanding gambling in Sedgwick County will lower taxes and provide “…tax relief…,” according to casino advocates’ campaign flyer. This claim is preposterous in light of the soaring property tax hikes and spending expansion plans being generated by local government in our community.

Historically it is also ridiculous when taxes in general and property taxes in particular rose following the passage of the state lottery in the 1980s. Gambling proponents campaign does raise some key questions for this community’s tax status and overall fiscal climate.

In 2006 Sedgwick County commissioners unanimously raised their mill levy 2.55 mills despite a public outcry and uproar opposing this hike. Two commissioners were then removed from office in the 2006 elections because of the county’s property tax hike. This mill levy increase was on top of soaring property tax appraisals that provide additional taxes for the county’s proposed $386.5 million budget a 5.8 percent hike.

The City of Wichita’s 2008 proposed budget is $495.62 million and this is an increase of over $100 million from the 2006’s $390.1 million. City spending is soaring with a two-year increase of 27 percent and an increase over last year’s revised budget of slightly less than 15 percent. There are a large number of new spending proposals pending at city hall too including $24.5 million for the county’s arena project and $290 million to remodel Century II in a few years.

The Wichita public schools are now proposing a two mill property tax hike (many other Wichita area public school districts are also seeking more property taxes too). This is on top of the $24.6 million increase in state tax funds for USD 259. USD 259 plans to hire 163 new employees for a school district with a gradually declining enrollment.

Despite having an opportunity to place this issue before voters August 7, none of the districts decided to let voters have a say in deciding the fate of school tax hikes. Once again, Wichita area voters were disenfranchised. I don’t recall hearing any of the school board or Wichita municipal candidates running in last April’s election campaigning on a platform of raising property taxes in particular or backing tax hikes in general at our public forums.

Wichita public schools had massive spending growth over the last few years. The district’s first budget over $300 million was in 2000-01. The first $400 million budget was in 2005-06. The first official $1/2 billion school budget is this year (but if all tax funds were included this actually took place two years ago).

If additional tax funds from Washington and pension tax funds from Topeka are added these figures are much larger. The official USD 259 proposed budget is just under $516 million but if the “off budget” tax dollars are included this figure grows to $577 million.

If all tax funds are included and enrollment remains the same as last year, spending will be close to $13,000 per FTE pupil annually. If only the “official” spending figures are used the spending will be over $11,600 per FTE pupil annually in Wichita.

In our community government growth is on tax steroids while the private sector struggles with the same growing energy, health insurance, and utility costs that are the justifications being used to raise taxes. Big government in Wichita puts us at a competitive disadvantage compared to similar sized communities in our neighboring states where voters decide the fate of tax increases. This increases the risk and uncertainty for Wichita firms, while it limits economic growth in our community.

Testimony supporting an arena re-vote

From Karl Peterjohn, Executive Director Kansas Taxpayers Network

We need to correct the flawed downtown arena proposal’s mistakes. Since the legislature authorized the county sales tax for the downtown arena it has become abundantly clear that the case against proceeding with the flawed arena project has been made. Enclosed with this testimony is a copy of the 2004 flyer used in that election campaign that shows that the critics of this proposal were correct on the key points in this project.

Here are key points why there should be a revote:

1) The 2004 cost estimates for the downtown arena project at $184.528 million were inaccurate (see county’s Sept. 1, 2004 arena document). The county now projects $201 million and that is likely to grow. In addition, new reports indicate that there is an effort to have the city fund $108 million in additional infrastructure changes for the arena and the area around it.

If the 1 cent sales tax was used entirely for property tax relief, the county’s mill levy could be dropped by roughly 20 mills or roughly 65 percent of the current mill levy.

If you divided the total county and city costs ($201 M + $108 M), that’s almost $700 per person or over $2,700 for a family of four. That’s excessive.

2) There is no anchor tenant for this facility. The Kansas Coliseum rarely sells out. With the same shows and sports franchises, why build a larger facility?

3) There is inadequate parking for this facility. Adding necessary parking will drive the cost of this project even higher.

4) Downtown arena advocates threatened voters with higher property taxes if they did not vote for the sales tax. Sadly, the county property tax mill levy was raised roughly six percent last year and two incumbent commissioners were defeated in their reelection bids as a result.

5) A privately owned and funded arena in Park City is likely to be built and opened well before the downtown arena project is completed. One of the current users of the coliseum will move to this new private facility.

In 1993, Wichita city voters rejected a proposed downtown arena project by better than a 2-to-1 margin. In 2004 voters narrowly, by a 52-to-48 percent margin, approved the downtown arena at $184.5 million. Since then, more realistic cost data about the increased price for a downtown arena has become available.

Let the people vote again on the following four point proposal:

The county will not proceed with the flawed downtown arena project. The roughly $200 million in sales tax revenue that has been raised will be put to the following uses: 1) The Britt Brown Arena will be remodeled with roughly ¼ of the funds generated by the current 1 cent arena sales tax; 2) The current costs that have been incurred in land acquisition, designs, and other contractual costs will be paid with these funds; 3) The remaining sales tax revenue balances will be used to pay down the county’s mill levy (that should be well over ½ of the entire amount raised so far). In addition, the county will seek state authorization to continue the existing 1 cent countywide sales tax with the proviso that it be used entirely to reduce county property taxes. That would provide a reduction of about 65% of the county’s property tax mill levy; 4) All future county mill levy increases must be submitted to voters and approved at a referendum election in the same way that local sales tax increases are approved.

Eliminating this large a portion of the county’s mill levy will provide Sedgwick County businesses, taxpayers, and citizens with a significant comparative advantage over other Kansas counties by reducing this tax on assets as well as reducing the uncertainty concerning future property tax hikes. This will take us one step towards becoming more competitive with progressive states where all tax hikes have to receive voter approval: Colorado, Missouri, and Oklahoma.

Wichita downtown arena project’s failing finances

Arena Project’s Failing Finances
Critics And Tax Hike Opponents Were Right

From Kansas Taxpayers Network

“The arena critics are being proven right,” said Karl Peterjohn, Executive Director of the Kansas Taxpayers Network, the oldest taxpayer organization in Kansas. “As the leading opponent of the 2004 downtown arena project in Wichita, it is becoming increasingly clear that this project is in major trouble.”

“In 2004 KTN’s Vote NO flyer warned, ‘Key details about the arena such as location, parking, and design, are not known’,” Peterjohn said. “Our vote NO flyer also warned, ‘With a $184.5 million price tag and no guarantee of events, the arena is a huge gamble with taxpayers money. Half of the events at the Kansas Coliseum (12,000 seats) have less than 3,000 people attend’.” Now the “guaranteed $184.5 million price tag,” is history and the total cost for this deeply flawed project continues to grow and critical details remain up in the air.

“In our final item urging county voters to reject the sales tax hike to fund the arena, KTN’s flyer warned, ‘The build it and they will come syndrome sounds good but the money spent would be better utilized in YOUR pocket’,” Peterjohn said. “If the county’s sales tax for the arena was used to lower the county’s property tax, we could reduce the county’s mill levy by over 60 percent or roughly 20 mills for the duration of this tax.”

The arena tax hike was narrowly approved by just over 50 percent of voters in November, 2004. “If the voters had another chance at the arena issue at the ballot box, and taking the tax money that has already been collected and not yet spent, to be used to lower county property taxes and refunded to taxpayers, the downtown arena project would be terminated by the people,” Peterjohn said.

Arena tax hike advocates succeeded in forcing voters to approve this sales tax increase with the not-so-veiled threat that a property tax hike would otherwise occur. Sedgwick County commissioners unanimously approved a large property tax hike, in August 2006, funding higher county spending in addition to the arena sales tax hike.

Two of the three incumbent county commissioners seeking reelection in 2006 lost their seats in large part due to their support for raising property taxes in particular and all county taxes in general. The two incumbents, commissioners Burtnett and Sciortino, were defeated by challengers, Parks and Welshimer, who signed KTN’s Taxpayer Protection Pledge promising not to raise county taxes.

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

(From October, 2004)

Image what our town could be like if the Wichita downtown arena vote fails and Sedgwick 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.

Sedgwick County surrenders key tax advantage

Sedgwick County Surrenders Key Tax Advantage
By Karl Peterjohn, Executive Director, Kansas Taxpayers Network

Spirit Aerosystems CEO Jeff Turner defended the massive spending hike that was used as the primary justification for the county’s 8.8 percent property tax hike in his editorial August 9, 2006. Turner’s support for this increased government spending ignored some important ramifications behind this economically destructive vote.

Sedgwick County has an important fiscal advantage over 19 other Kansas counties. Sedgwick County has no community college and hence no community college property tax. That property tax is a major reason why this levy makes the total tax burden higher in Butler, Cowley, and Reno counties. The Wichita Area Technical College is becoming this community’s community college. This will mean increasing pressure to raise property taxes. This would be in addition to the current 1.5 mills left over from the old Wichita University days that the county charges.

Sadly, the Sedgwick County commission seems intent on creating another tax dependent entity here in this community. If Jeff Turner, Spirit Aerosystems and Turner’s former company Boeing want to promote property tax hikes, that is certainly their prerogative.

It is a public record that Boeing tied as the largest donor for the 2000 Wichita school bond issue with a five figure donation and Raytheon was the largest corporate donor in support of the Local Option Budget property tax hike for Wichita during that 1997 property tax referendum. Cessna’s CEO Jack Pelton spoke out in support of the county’s spending plans that required this property tax hike August 9.

On the other hand, when the news cameras are generally gone, these aircraft companies return to the city or the county and seek sizable, often 100 percent property tax abatements. So a small or medium sized business gets to pay a much higher proportion of say $100,000 worth of their commercial property than the largest public businesses in this community. This is not fair.

This distorts the overhead costs shifting the fiscal burden from the taxpayer subsidized onto the businesses without the tax breaks. It also shifts this burden onto homeowners and other taxpayers. Special tax breaks provides the subsidized firms with lower overhead costs so they can afford pay more for employees too. That places small and medium sized firms that lack the political clout and leverage, at a hiring disadvantage as well. If the non tax abated firms have out-of-state competitors their extra overhead costs hurts their ability to compete. However, tax abatements are a big help in cyclical industries that are in perpetual “hiring and firing” cycles and need to pay more because of this employment instability.

There is certainly a need for qualified workers for many Wichita area businesses. This $40 million county spending hike, that is well above per foot construction costs, ignores a bigger question. How much spending in the government school establishment is enough? Property tax hike advocates are ignoring the fact that well over $3/4 billion in taxes are going to be spent on the 10 public school districts in this county in 2006-07. This figure is growing rapidly in the age of judicial edicts and Montoy.

2004 Census data indicates that Kansas has the 14th highest property taxes in all 50 states as well as the highest property taxes per capita in our five state region. Soaring appraisals have been the primary cause of this situation but the county’s rising mill levy without getting voter approval is an insult to every county voter. In 1997 almost 90 percent of county voters wanted to retain the property tax lid on local government. County officials helped kill the property tax lid in 1999 and now will not let voters decide this property tax hike at the ballot box. Creating a new level of local government in Sedgwick County with higher property taxes will hurt and hinder overall economic growth here.

Government Charity in Sedgwick County

At the July 25, 2006 Sedgwick County Commission meeting, during the public hearing on the proposed 2007 Sedgwick County budget, a speaker said this in support of funding for mental health services: “I agree with the previous presenter and I’d be willing to forego a few cheeseburgers this year so that if I need to pay more taxes to help provide services, I’m willing to do that.”

It hardly seems necessary to remind this speaker that she may give whatever she wants of her time and money to any organization she wants. She doesn’t need the Sedgwick County Commission to do it for her.

This speaker may be thinking that if she agrees to pay a little more in taxes to support her cause, then everyone else will have to pay more, too. In this way, her small additional sacrifice is leveraged by the additional taxes everyone else must pay.

In fact, many people think this way. Everyone has their own ideas of what the government should do, and if by paying just a little more in taxes myself I can get the government to tax everyone else, why, that’s quite a good deal for me and my pet project!

The problem is that this government activity is wrong. The economist Walter E. Williams makes the case succinctly:

Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.

It doesn’t matter how noble the cause. To take from one and give to another is wrong, even if it is to provide food or medical services to truly needy people.

Furthermore, this government “charity” deprives us of our ability to give true charity ourselves, and in the process, makes us less happy than we could be. Arthur C. Brooks, associate professor at Syracuse University’s Maxwell School of Public Affairs, in a commentary in the December 8, 2005 Wall Street Journal titled “Money Buys Happiness” tells us this:

In fact there is another explanation for unchanging happiness levels over time which is rather less supportive of income redistribution. As incomes rise, so generally do levels of government revenues and spending, and there is evidence that these forces work against personal income on the overall level of happiness. For example, a $1,000 increase in per capita income is associated with a one-point decrease in the percentage of Americans saying they are “not too happy.” At the same time, a $1,000 increase in government revenues per capita is associated with a two-point rise in the percentage of Americans saying they are not too happy. In other words, not only can money buy happiness, but it may be that the government can tax it away as well.

Mr. Brooks also tells us that donating money and time — that is, the giving of charity — illustrates the link between money and happiness: “Givers of charity earn substantial mental and physical health rewards, even more than do the recipients of charity — empirical evidence that it is indeed more blessed to give than to receive.”

The operative idea is “to give.” When government takes by taxation, it is not giving.

Eminent Doman and the Downtown Wichita Arena

Thank you to John Todd for this excellent material.

Testimony in Opposition to the County’s use of Eminent Domain for the Arena Project.

Dear Commissioners:

My name is John Todd. I am a real estate broker and developer and I come before you in opposition to the County’s proposed use of eminent domain for the downtown arena footprint.

On August 25, 2004 and prior to the arena vote in November of that year, I presented testimony before this Commission questioning the wisdom of building a downtown arena without knowing the exact location of the parcel(s) of land the project would be located on. I asked the questions, does the Commission know the exact location of the arena project? Is the needed land for sale? Are the property owners willing to selling their land? And, most importantly, has the County secured a contract option to purchase the needed land with an exact purchase price? I believed then and now that the taxpaying public needed to know the answers to those questions before making a decision on a $184.5 million dollar project in the voting booth. From what I have been reading in the news recently, it seems apparent to me now that County officials failed in their “due diligence” responsibility to the citizens of this county by not securing the land for the arena in advance, and should now be willing to authorize another “non-binding” or perhaps a “binding” and final public vote on the arena project.

There is precedence for another vote since a “non-binding” no vote in 1992 was ignored by local officials, and perhaps a third and perhaps this time a “binding” vote could be used to settle this matter for good, with the express stipulation that any sales tax money collected for the arena to date be used to reduce property taxes in the county through a reduced mil levy over the next 2 or 3 years. As you will recall, the fear of higher property taxes was the primary argument proponents for the arena used in securing their thin 48% to 52% yes vote in 2004. Perhaps the prospect of property tax reduction would appeal to the voters. And another vote on an arena could give the county commission an opportunity to avoid the confrontational use of their eminent domain power to involuntarily strip 22 property owners of their land and in some cases businesses.

I oppose the County’s use of their eminent domain power to correct the due diligence responsibilities to the citizens of Sedgwick County they missed when they failed to secure the arena footprint land in advance of any public vote for funding on the project.

Secure private property rights are the bedrock for all of our other rights. Eminent domain abuse damages people’s faith in their own government, and people who are not secure in their own possessions cannot plan for their own future. A healthy economy is best achieved when individuals are free to use their own resources as they see fit. When government decides how the individual uses his property, the resultant system works poorly because it necessitates the use of coercion. The protection of private property rights is therefore essential to a healthy economy.

Nobel Prize winning economists Milton Friedman says, “In an economically free society, the fundamental function of government is the protection of private property and the provision of a stable infrastructure for a voluntary exchange system. When a government fails to protect private property, takes property itself without full compensation, or establishes restrictions (and follows policies) that limit voluntary exchange, it violates the economic freedom of its citizens.”

Remarks to Wichita City Council Regarding the AirTran Subsidy on July 11, 2006

Mr. Mayor, Members of the City Council:

You may recall that I have spoken to this body in years past expressing my opposition to the AirTran subsidy. At that time we were told that the subsidy was intended to be a short-tem measure. Today, four years after the start of the subsidy, with state funding planned for the next five years, it looks as though it is a permanent fixture.

Supporters of the subsidy have made a variety of claims in its support: that the subsidy and the accompanying Fair Fares program are responsible for $4.8 billion in economic impact, that being a pioneer in subsidizing airlines is equivalent to the role that Kansas played in the years immediately prior to the Civil War, and that we would have a mass exodus of companies leaving Wichita if the subsidy were to end.

I believe there is no doubt that fares are lower than what they would be if not for the subsidy. That points to the subsidy’s true achievement: government-imposed price controls. Its effect is to force many airlines to price their Wichita fares lower than they would otherwise. If it didn’t do that, there would be no reason to continue the subsidy.

Economists tell us — and human behavior confirms — that when the price of any good is held lower than it would be in a free market, the result is a reduction in the quantity supplied.

We see this happening. Earlier this year the Wichita Eagle reported that there are fewer daily flights supplied to and from Wichita, from 56 last year to 42 at the time of the article. It has been explained that the financial woes of Delta and NWA are to blame for this reduction. This is demonstrably false, as NWA recently added a daily flight to Wichita, and both airlines have added (and dropped) flights on many routes while in bankruptcy. Furthermore, even though in bankruptcy, theses airlines still desire to operate as profitably as possible.

Now we learn that the legacy airlines — those established, older airlines that take pride in their comprehensive nationwide networks of routes — are revising their strategies. A Wall Street Journal article from earlier this year (“Major Airlines Fuel a Recovery By Grounding Unprofitable Flights” published on June 5, 2006) tells us that the legacy airlines are beginning to look at the profitability of each route and flight. They are not as interested as they have been in providing flights just for the sake of having a complete nationwide network.

When we couple this change in airline strategy with our local price controls, I believe that we in Wichita are in danger of losing more service from the legacy airlines. If AirTran — a new-generation airline with low labor costs — can’t earn a profit on its Wichita route at the fares it charges, how can the legacy airlines be expected to do so? And if they can’t earn a profit on a flight to or from Wichita, and if they are beginning to scrutinize the profitability of each flight, can we expect them to continue providing service in Wichita?

No government has ever been able to successfully impose price controls without the people suffering harmful consequences. As economist Thomas Sowell wrote in a 2005 column:

Prices are perhaps the most misunderstood thing in economics. Whenever prices are “too high” — whether these are prices of medicines or of gasoline or all sorts of other things — many people think the answer is for the government to force those prices down.

It so happens there is a history of price controls and their consequences in countries around the world, going back literally thousands of years. But most people who advocate price controls are as unaware of, and uninterested in, that history as I was in the law of gravity.

Prices are not just arbitrary numbers plucked out of the air or numbers dependent on whether sellers are “greedy” or not. In the competition of the marketplace, prices are signals that convey underlying realities about relative scarcities and relative costs of production.

Those underlying realities are not changed in the slightest by price controls. You might as well try to deal with someone’s fever by putting the thermometer in cold water to lower the reading.

This is my fear, that someday I will open the newspaper and learn that American, United, Delta, Northwest, or Continental has reduced or even ceased service to and from Wichita. That day, when it becomes difficult to travel to or from Wichita at any price, that is the day we will feel the harm the subsidy causes.

On a personal level, my job as software engineer requires me to make from ten to twenty airline trips each year. Some of the places I travel to — Jackson, Mississippi and Lexington, Kentucky, for example — are not served by AirTran. If I am not able to travel there, no matter what the price, I will either have to find a different job or move from Wichita.

Mr. Mayor and Council Members, I urge you to reconsider your support of the AirTran subsidy. Even though the legislature and governor have agreed to pay for most of the subsidy, I believe the subsidy is not in our long-term interest. We need to let the price system, operating in a free market, do its job in guiding the allocation of scarce resources for both producers and consumers. The result may be more expensive fares. The alternative, which is the very real possibility of greatly reduced service to and from Wichita, is much more harmful.

Other Voice For Liberty in Wichita articles on this topic:

The AirTran Subsidy and its Unseen Effects
As Expected, Price Controls Harm Wichita Travelers
AirTran Subsidy Is Harmful
Wichita City Council Meeting, April 19, 2005
Wichita Eagle Says “AirTran Subsidies Foster Competition”
AirTran Subsidy Remarks
The Downside of Being the Air Cap by Harry R. Clements. This article makes a striking conclusion as to why airfares in Wichita were so high.
Letter to County Commissioners Regarding AirTran Subsidy
Open Letter to Wichita City Council Regarding AirTran Subsidy
Stretching Figures Strains Credibility

What to do with others’ money

Writing from Pittsburgh, Pennsylvania

In a June 20, 2006 Wichita Eagle editorial, Rhonda Holman writes about the WaterWalk project in Wichita.

Evidently there is controversy over the public not knowing the name of the “destination restaurant” that is being courted and favored with a gift of $1 million. To me, the controversy is not the identify of the restaurant or when and how the city should conduct its negotiations, but that we are paying for a restaurant to be built.

We are not lacking for fine restaurants in Wichita. On both the east and west sides of town (and other parts, too), many excellent restaurants have been opened recently, and more are being built as I write. The Eagle has even reported on their astonishment at how many there are.

The problem is, I believe, that these restaurants were not built where Ms. Holman and our local government leaders feel they should have been built. But that’s not a problem, except to her and them.

The people who built these restaurants did so by investing their own money, or the money that others entrusted to them. These people did so voluntarily. They presumably built their restaurants where they thought they could earn the best return on their investment. And having invested several million dollars of their own money in the restaurant, they have a strong incentive to make the restaurant a success.

But that’s not good enough for Ms. Holman. Evidently she does not appreciate the sacrifice that people have made in order to accumulate the funds needed to make these spectacular investments. She may not be aware of — or maybe she does not respect or value — the tremendous effort and work it takes to run a successful restaurant.

Just because these people did not build their restaurants where she (and our local government leaders) thought they should have been built, she wants to tax them — and the rest of us, too — and give the proceeds of that tax to a new competitor.

Is this the type of behavior by our local government and our town’s leading newspaper that is likely to lead to other new private investment?

Ms. Holman’s editorial stance, along with the actions of our local government leaders, constitute a slap in the fact for those who have been foolish enough (we can now conclude this) to invest money in any industry in which the government is likely to set up their competitor.

This harmful attitude is summarized in this plea to get the WaterWalk project moving faster, “… so that citizens not only can see where their money is going but also soon start enjoying more of their investment.”

Making an investment, I might remind Ms. Holman, is something that people do voluntarily because they believe it is in their interest.

The WaterWalk project and the new downtown restaurant are being paid for by taxes. The expenditure is being made to serve the interests of politicians, subsidized developers, and people like Ms. Holman who believe they know best what to do with others’ money. There is a tremendous difference between the two.