Voice For Liberty

Tag: Sedgwick county government

  • 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.