Voice For Liberty

Tag: Wichita Chamber of Commerce

  • Union Station development drains taxes from important needs

    Testimony of John Todd to the Wichita City Council, October 7, 2014.

    I want to complement the Union Station LLC group for tackling an important redevelopment project in downtown Wichita.

    I am troubled however, by the developer’s request for $17.3 million in Tax Increment Finance (TIF) funding for his project because it diverts increases in future property tax revenues away from the public treasury and back to the developer for 20 years. Under current taxing levies this means that roughly one-third or $5 million plus of future Union Station property tax revenues would be diverted from the City of Wichita needed for public safety items like police and fire protection, and the building of public infrastructure. Plus, roughly one-third or $5 million plus would be diverted from the Sedgwick County treasury needed to provide for our Court System, the maintenance of property ownership records, the Sheriff’s office and detention center. The last one-third or $5 million plus would be diverted from Wichita Public Schools needed for the education of our children.

    Drain, waterThe diversion of future property tax revenues away from local governmental treasuries should concern every taxpaying citizen when one considers the many needs for these funds. On the city level, $5 million over 20 years could go a long way towards funding needed street maintenance and repairs, or providing the revenue needed for a viable public bus system, and finding a long-term solution to our cities’ future water needs. Sedgwick County could use $5 million to re-open the Judge Riddel Boys Ranch that helps turn boy’s lives around and makes our community a safer place to live and play by reducing recidivism and crime. And, just think of how many teachers could be hired with $5 million to prepare our young people for productive lives and jobs.

    I am of the opinion that Mr. Gary Oborny has the track record to prove that he is one of the most creative and exceptional real estate developers in the City of Wichita and that he possesses the professional talents needed to make the Union Station project work without TIF public funding.

    I believe at some point downtown redevelopment needs to be market driven, stand on its own, and pay taxes into the city treasury like other city development projects do.

    Today, you have the opportunity to exercise your leadership skills in achieving this transformation. I urge you to seize it.

  • How much Wichita sales tax is paid by visitors?

    How much Wichita sales tax is paid by visitors?

    Part of the sales pitch for the proposed Wichita sales tax is that part is paid by visitors. But there are big differences in opinion as to how much.

    The proposed 1-cent sales tax FAQIn a “frequently asked questions” document produced by the City of Wichita in September, there is a section titled “How much of the sales tax is paid by visitors to Wichita?” The city’s answer is: “The State of Kansas estimates that 13% of sales taxes paid in the Wichita area are paid by non-residents based on a report at www.ksrevenue.org/pullfactor.html. This means that the City would collect an estimated $51.7 million in sales taxes (of the total $397.6 million) from non-residents.”

    But at the “Yes Wichita” website, there is a different claim: “If we fund a new water source through a sales tax instead of water bills or property taxes, visitors and tourists will pay the sales tax, reducing the burden of this cost to Wichitans by about one-third.”

    So which is it? 13 percent, or 33.3 percent? Why does “Yes Wichita” use a figure 2.5 times the city’s?

    I’ve asked in the past that “Yes Wichita” show its calculations and assumptions. Here’s another opportunity.

  • Again, Wichita policies are fluid

    Again, Wichita policies are fluid

    Wichita city hall promises policies that are clear, predictable and transparent, except when they’re not.

    On July 22, 2104, a presentation to the Wichita City Council sought to assure the council and public that a proposed jobs fund created with money collected by the proposed sales tax would have policies that govern the spending of funds: “GWEDC – Finds businesses to expand, recruit, follows established policies for retention/recruitment.”

    But there’s a problem. It’s difficult for governments to establish policies that will satisfy everyone. How do we know today what we’ll need five or ten years down the road? When governments change policies to fit particular circumstances, taxpayers are rightfully concerned that the alterations are to suit the needs of special people — the cronies that feed from the city hall trough of taxpayer money. When you couple in what public choice theory tells us, which is that the cronies who want money from government have a much stronger motive to succeed than the bureaucrats are motivated to protect citizens and taxpayers, we can have trouble.

    This has happened before in Wichita. Last year when a project didn’t meet the (supposedly) required benefit-cost ratio, the city simply said that it didn’t apply in that case. See Wichita’s policymaking on display.

    Now, Wichita seeks to modify its policies again in response to the wants and desires of one person.

    Here’s the background you need to know. When the city passed a downtown development incentives policy in 2011, here’s what the city said was its goal: “The business plan recommends the development of a prudent public investment policy that is clear, predictable and transparent, maximizes public investment and enhances market-driven development.” (emphasis added)

    The meeting minutes contained further elucidation: “Scott Kneibel Planning Department stated the purpose of the policy is to put in place something that is clear and predictable in terms of how the public would invest in downtown projects through partnership with the private sector. Stated that sort of statement by this governing body has not been made to date. Stated that is the purpose of this policy so that developers will know what types of investments the City of Wichita is interested in making and how the City of Wichita will make those decisions.” (emphasis added)

    But as in the past, we find city proposing the change the standards in the middle of the game. Here’s an excerpt from the agenda packet for Tuesday’s meeting, in which a large incentive package for the redevelopment of Union Station may be considered: “In the opinion of the evaluation team, the established criteria do not adequately address projects such as Union Station where the requested incentives do not involve City debt.”

    For this project we see that city policy is being modified on the fly to meet the circumstances of a particular project. This is not necessarily bad. Entrepreneurship demands flexibility. But the city promises policies that are clear, predictable and transparent, and city officials say Wichita has a transparent, open government.

    Can you imagine conscientious developers who want to invest in downtown Wichita, but after studying the city’s policies, realize their projects don’t conform to the city’s published standards? How many moved on to other cities, not realizing that our standards can be altered and waived?

    As Wichita voters consider the value to give to promises from city hall, they should consider these episodes when the city promises there will be “established policies” for the spending of economic development funds generated by the proposed sales tax.

  • WichitaLiberty.TV: The proposed one cent per dollar Wichita sales tax

    WichitaLiberty.TV: The proposed one cent per dollar Wichita sales tax

    In this episode of WichitaLiberty.TV: Considering the proposed Wichita sales tax, looking at unmet maintenance needs, claims that we have few economic development incentives, the cost of the sales tax to families, the taxes already going to the transit system, and the bad choice the city gives us for water. View below, or click here to view at YouTube. Episode 61, broadcast October 5, 2014.

  • Wichita sales tax does little to close maintenance gap

    Wichita sales tax does little to close maintenance gap

    The proposed Wichita sales tax does little to close the city’s delinquent infrastructure maintenance gap. Despite this, there are rumors of another sales tax next year for quality of life items.

    Earlier this year the steering committee for the Wichita/Sedgwick County Community Investments Plan delivered a report to the Wichita City Council. The report contains facts that are very relevant to the proposed Wichita one cent per dollar sales tax. Voters will decide on this in November.

    Community Investments Plan document, February 2014
    Community Investments Plan document, February 2014. Click for larger version.
    The most important thing Wichita voters need to know that the city is delinquent in maintaining the assets that taxpayers have purchased. The cost to remedy this lack of maintenance is substantial. On an annual basis, Wichita needs to spend $180 million on infrastructure depreciation/replacement costs. Currently the city spends $78 million on this, the presentation indicates.

    The “cost to bring existing deficient infrastructure up to standards” is given as an additional $45 to $55 million per year.

    How does this relate to the proposed sales tax? Of the funds the sales tax is projected to raise over five years, $27.8 million is allocated for street maintenance and repairs. That’s $5.6 million per year.

    Wichita/Sedgwick County Community Investment PlanSubtract that from what the Community Investments Plan says we need to spend on deficient infrastructure, and we’re left with (roughly) $40 to $50 million per year in additional spending on deficient infrastructure. Remember, that’s on top of ongoing infrastructure depreciation/replacement costs.

    Does the proposed sales tax do anything to address those needs? No, it doesn’t.

    So what about the deficiency? Is it likely that Wichitans will be asked to provide additional tax revenue to address the city’s deficient infrastructure? So far, city hall hasn’t asked for that, except for recommending that Wichita voters approve $5.6 million per year for streets from a sales tax.

    But if we believe the numbers in the Community Investments Plan, we should be prepared for city hall to ask for a lot more tax revenue. That is, if the city is to adequately maintain the things that taxpayers have paid to provide.

    It gets even worse.

    Wichita has unmet maintenance requirements, and many wants on top of that.
    Wichita has unmet maintenance requirements, and many wants on top of that.
    Earlier this year the city council considered various proposals for spending a new source of tax money. Four survived the discussion and will be the recipient of sales tax funds, if Wichita voters approve. Those needs are a new water supply, jobs and economic development, transit, and street maintenance and repair.

    There were proposals that did not make the cut for the proposed sales tax, generally in the category of “quality of life” facilities. These include a new convention center, new performing arts center, new central library, newly renovated Lawrence-Dumont Stadium, renovation of the Dunbar Theater, renovation of O.J. Watson Park, and help for the homeless.

    Evidently there are many who are not happy that these proposals will not receive sales tax money. Rumors afloat that groups — including city officials — are plotting for another sales tax increase to fund these items.

    People are rightly concerned that even though the proposed Wichita sales tax ordinance specifies an end to the tax in five years, these taxes have a way of continuing. The State of Kansas recently had a temporary sales tax. It went away, but only partly. The Kansas state sales tax rate we pay today is higher than it was before the start of the “temporary” sales tax.

    But the people who want to spend your tax dollars on these “quality of life” items aren’t content to wait five years for the proposed sales tax to end. They are plotting to have it start perhaps one year from now.

    These are things that Wichita voters need to consider: There is a backlog of maintenance, and there is appetite for more tax revenue for more spending. Even if the sales tax passes, these remain unfulfilled.

  • Wichita water projections from 2008

    Wichita water projections from 2008

    Do you get the feeling that Wichita’s promises and projections regarding water are quite, well, fluid?

    Wichita's Future Water-Supply Plan Moves Ahead (excerpt)Six years ago a Wichita city news release stated “Through the ASR project, Wichita will receive the water it needs through the year 2050 …” (“Wichita’s Future Water-Supply Plan Moves Ahead,” July 3, 2008)

    But now, Wichitans are told there is a water crises, and the way to solve it is by voting for a sales tax of one cent per dollar. Either that, or the city will meet the crisis by borrowing money and having water users pay an extra $221 million in interest on a $250 million project.

    Perhaps the city’s 2008 news release was based on overly-optimistic engineering. Perhaps the claim of being able to meet our water needs through 2050 is based on all four phases of ASR being completed.

    Now, the most recent city documents promise much less: “A new water supply is expected to delay the year (with no conservation) in which drought protection for a 1% drought is provided. This date is projected to be 2030.”

    Do you get the feeling that the city’s promises and projections regarding water are quite, well, fluid? Do you remember that eleven years ago then-Mayor Bob Knight was told we had sufficient water for the next 50 years?

    An adequate water supply is vitally important. But we are not in a crisis. We had plenty of water this year. Cheney Reservoir has been full most of the year, although currently a little less than full as it’s been dry the last month or so.

    Wichita’s water crisis — to the extent it exists — does not need to be solved in a rush. The risks of making big-dollar mistakes are too high to hurry.

    Speaking of the ASR project: At a time of heightened interest in ASR, the project’s website has been abandoned. Readers will find language like Phase II “will be complete by the end of 2011.” The last newsletter was for December 2011.

    The first years of operation of Phase II of ASR have not been a total success. Maybe that’s why there’s been no news.

    Cheney Reservoir 2014-09-29

  • Wichita Water Task Force findings presented

    Karma Mason, President of iSi Environmental, presents the Water Task Force Findings from the Wichita Chamber of Commerce during the Wichita Water Conference on July 17, 2014. Kansas Policy Institute organized the conference as an educational and discussion opportunity before citizens vote on a one cent per dollar sales tax increase to fund water infrastructure and other spending by the City of Wichita.

    Key advice: “Conservation planning is not the same as drought planning.”

    View below, or click here to view at YouTube. The presentation shown is contained within this document.

  • Stuck in the box in Wichita, part two

    Stuck in the box in Wichita, part two

    Wichitans are threatened with shutdown of the city’s bus system if voters don’t approve a sales tax. We need out-of-the-box thinking here.

    In November Wichita voters will decide whether to create a sales tax of one cent per dollar. Part of the funds would be directed to the Wichita transit system.

    In another example of “either/or” thinking, members of the Wichita Transit board floated the idea that if the sales tax doesn’t pass, we’ll shut down the entire system. The Wichita Business Journal reported “The rhetoric surrounding the November sales tax referendum heated up on Friday, when reports surfaced that some Wichita Transit advisory board members think the system should be shuttered if the sales tax fails.”

    City hall pushed back. The official city position is that without a sales tax, there would be service reductions of 25 percent. But the shutdown threat was made and reported. It will undoubtedly have an effect on some people.

    This is another example of the false choices Wichita city hall presents to Wichitans. Another is either pass the sales tax or we’re going to borrow money for a new water supply and you’ll pay a lot of interest.

    Why does city hall give us such a limited range of choices? Why would members of the Wichita Transit board seed rumors that are so far away from the city’s official position?

    Uber drivers in Wichita, September 18, 2014, 7:06 pm
    Uber drivers in Wichita, September 18, 2014, 7:06 pm
    Aren’t there other ways to provide transit in Wichita? One new choice in Wichita is the Uber ridesharing service. Its arrival increases transit options in Wichita. Will city hall allow Uber to stay in Wichita?

    In some cities so-called “dollar vans” are operated by private industry in competition with city-owned traditional transit. Would Wichita city hall allow such services here?

    Both Uber and “dollar vans” are, in my opinion, not compatible with Wichita’s existing laws and regulations. I fully expect the city to crack down on Uber soon. We’re then left with “big empty buses” and traditional taxi service as our transit choices, and perhaps higher taxes too.

  • Stuck in the box in Wichita, part one

    Stuck in the box in Wichita, part one

    To pay for a new water supply, Wichita gives voters two choices and portrays one as bad. But the purportedly bad choice is the same choice the city made over the last decade to pay for the last big water project. We need out-of-the-box thinking here.

    In November Wichita voters will decide whether to create a sales tax of one cent per dollar. By far the largest intended purpose of the funds is to create a new water supply.

    Set aside for a moment the question whether Wichita needs a new water source. Set aside the question of whether ASR is the best way to provide a new water source. What’s left is how to pay for it.

    City of Wichita information on proposed sales tax
    City of Wichita information on proposed sales tax
    To pay for a new water source, the city gives us two choices: Either (a) raise funds through the sales tax, or (b) borrow funds that Wichitans will pay back on their water bills, along with a pile of interest.

    As you can see in the nearby chart prepared by the city, the costs are either $250 million (sales tax) or $471 million (borrow and pay interest). The preference of the city is evident: sales tax. The “Yes Wichita ” group agrees.

    Here’s what is happening. City hall gives us two choices. It’s either (a) do what we want (sales tax), or (b) we’ll do something that’s really bad (borrow and pay interest). Wichitans shouldn’t settle for this array of choices.

    Are there other alternatives for raising $250 million for a new water source? Of course there are. The best way would be to raise water bills by $250 million over five years. In this way, water users pay for the new water supply, and we avoid the long-term debt that city council members and “Yes Wichita” seem determined to avoid.

    Water bills would have to rise by quite a bit in order to raise $50 million per year. But it’s important to have water users pay for water. The benefit of having water users pay for a new water source is that water users will become acutely aware of the costs of a new water supply. That awareness is difficult to achieve. Many citizens are surprised to learn that the city has spent $247 million over the past decade on a water project, the ASR program.

    It will be easier to let people know how much a new water supply costs and how it affects them personally when its cost appears on their water bills. The money that is collected through water bills can be placed in a dedicated fund instead of flowing to the city’s general fund. Then, after the necessary amount is raised, water bills can be immediately adjusted downwards. That’s more difficult to do with a sales tax.

    If we pay for a new water supply through a general retail sales tax, the linkage between cost and benefit is less obvious. There is less transparency, and ultimately, less accountability. And we need more accountability. Eleven years ago former mayor Bob Knight was assured that the city had adequate water for the next 50 years. Since then we’ve spent $247 million on the ASR project. Yet, the city says there is a water crisis that demands passage of a sales tax.

    Speaking of accountability: Last week the city issued $147,391,828 in long-term bonds to permanently finance short-term bonds used to pay for phase II of the ASR project. That’s right. The ASR project, which by any account has been under-performing, was largely paid for with borrowed funds.

    If borrowing to pay for a new water supply is bad, was it also bad to borrow to pay for ASR? Who do we hold accountable for that decision?