Tag Archives: Wichita Eagle

Wichita city government

In Wichita, revision of water history

1 Comment

In 2014 Wichita voters rejected a sales tax which would have provided $250 million to spend on a water project. What were the city’s concerns?

A recent Wichita Eagle article has ignited some revising of history regarding Wichita’s water infrastructure. 1 The article is grim, starting with, “Next time water comes out of your tap, don’t take it for granted. Wichita’s only water treatment plant could fail at any moment.” The article reports on the poor condition of Wichita’s existing water infrastructure, particularly the central water plant.

Wichita recently dealt with spending on a water project. That was in 2014, when the city asked voters to decide on a one cent per dollar sales tax for five years. Of the estimated $400 million the tax would raise, $250 million was earmarked towards water infrastructure. Since voters did not endorse the tax, some have blamed voters for the city’s current problems regarding water infrastructure.

Here, for example, is a social media exchange on Monday. The first person wrote, referring to Wichita Public Works Director Alan King, “Mr King is only now sounding a warning when he knew 8 years ago there was a problem?”

A second person responded: “Wrong Wrong Wrong. King has been yelling about this since he got here. Remember the temporary sales tax for the water where the citizens obeyed the Billionaire and his million dollars that said we can take the risk?”

To understand the errors in the second person’s comment, we need to understand the meaning of “for the water” and “the risk.” City documents have the answer.

A Wichita city white paper from May 2014 cites a community survey, concluding, “Wichitans have ranked a reliable water supply as their most important priority.” 2 The city interpreted citizens’ concerns are requiring protection from drought: “Protecting water sources during periods of drought is an important part of long-term water supply planning.” The paper presented “two options meet the goal of providing water for community growth and drought protection.” One option was using water from El Dorado Reservoir, and the second was expanding the ASR system. This paper does not mention the condition of existing water infrastructure.

On May 27, 2014 City Manager Robert Layton presented to the city council a “Strategic Plan Follow Up,” providing information about the possible uses of the proposed city sales tax. 3 For water issues, the only consideration was drought protection.

In July 2014, the city prepared a document titled “Strategic Plan Implementation Timetable.” 4 Regarding water, the activity needed was:

1. Develop a plan that addresses:
A. New water sources
B. Conservation strategies
C. Reuse opportunities for industry
D. Emphasize water as a priority with the State and Congressional delegation
E. Work with area communities to ensure water is also a priority for them

The long-term objective for water was: “Secure sufficient capacity from two identified options to provide water that supports the long-term growth of Wichita while protecting water users from future droughts. Implement cost-effective conservation strategies that complement water source capacity.”

Under measurements of success there were these items:

Year of final protection in a 1% drought without additional conservation efforts (target is 2030).
Variance in firm yield compared to demand in 2060 (target is 0%).
Volume of water treated (target is 20.8 billion gallons per year).
Annual water reductions from conservation programs (target is 0.35%).
Water conservation program cost to achieve water reduction goal (target is $300,000 annually).

None of this material mentions the condition of existing water infrastructure.

In September 2014 the city published a document titled “Water Supply Plan: The Proposed 1-cent Sales Tax.” 5 under “Plan Summary,” the document states: “Sales tax revenue would fund a new water supply, through Aquifer Storage and Recovery (ASR) improvements. This new supply would reduce the impact of any future drought and would support job growth.”

Later, the document says the plan does the following:

Pulls more water from the Little Arkansas River
Constructs new storage basins
Further utilizes existing treatment plant capacity
Stores treated water underground where it doesn’t evaporate
Builds an additional pipeline

The document clarifies that the “additional pipeline” is a “parallel pipeline” from the ASR plant to the central water plant.

Information from the City of Wichita. Click for larger.

An information sheet prepared for citizens said the same and warned of the costs of borrowing to pay for these facilities. 6

A lengthier presentation prepared for voters by the city held this:

THE NEED
Demand for water is expected to increase by more than seven billion gallons per year by 2060. A new water supply is needed to meet this demand. If the community should experience a significant drought, residents would face severe water restrictions.” 7

From these city documents, we can understand the error in the second commenter’s remarks. In the context of 2014, taxing and spending “for the water” meant expansion of supply, not maintenance of existing assets.

Further, in 2014 “the risk” that was to be addressed was the risk of water use restrictions in case of an extended drought. The risk of basic water plant infrastructure failing was not considered or addressed in the city’s plan for spending $250 million on a water project.

—
Notes

  1. Swaim, Chance. Wichita’s water plant: ‘Every hour that thing is running, it could fail.’ Wichita Eagle, July 21, 2019. Available at https://www.kansas.com/news/politics-government/article232826482.html. ↩
  2. City of Wichita. Water Supply Planning. May 13, 2014. Archived on Google Drive here. ↩
  3. Layton, Robert. Strategic Plan Follow Up. May 27, 2014. Archived on Google Drive here. ↩
  4. City of Wichita. Strategic Plan Implementation Timetable. July 22, 2014. Archived on Google Drive here. ↩
  5. City of Wichita. Water Supply Plan: The Proposed 1-cent Sales Tax. September 2014. Archived on Google Drive here. ↩
  6. City of Wichita. Proposed 1 cent sales tax. Archived on Google drive here. ↩
  7. City of Wichita. Plans & Background on Proposed 1 cent Sales Tax. Archived on Google Drive here. ↩
Wichita city government

Naftzger Park, according to Wichita Mayor Jeff Longwell

Leave a comment

He had an opportunity to learn the true history of Naftzger Park in downtown Wichita. But Mayor Jeff Longwell didn’t learn, or maybe he doesn’t care.

In March, Wichita Mayor Jeff Longwell answered a question about Naftzger Park, telling viewers of the KPTS Television program Call the Mayor that:

“Actually what we found out is when our city fathers put in that park years ago they put the park in on private development land and so the development’s actually not on Naftzger Park. Naftzger Park used to be planted on private development land and so they had to change the boundaries of the park.”

The mayor blamed past city administrations for not being to read a survey. (Click here to view the video starting with this question.)

Chase M. Billingham, who is assistant professor of sociology at Wichita State University, has researched the history of this part of downtown. 1 He submitted a piece to the Wichita Eagle shortly after that episode of Call the Mayor aired. He wrote:

This claim — that the public park was erroneously built on privately owned land — has been one of the most common arguments offered by city officials in favor of their strategy to bulldoze Naftzger Park and rebuild it on a new footprint. This argument has been voiced repeatedly by elected officials and city staff during City Council meetings and public hearings. As the developers of the Spaghetti Works property have begun to build a new mixed-use development there, the city has maintained that it must fix that previous error and restore the developers’ property rights by relinquishing Naftzger Park’s eastern edge.

The claim that Naftzger Park was built on private land is wrong, however, and it epitomizes the disregard for history and due diligence that has characterized much of the city’s disjointed effort to overhaul this key public downtown space.

Billingham then explained the documented history of land ownership in the area, with the upshot being this: “As a result, small areas on the eastern edge of the park did, indeed, sit on privately owned land. But it was not because the park was built on private land; instead, it was because Wichita sold parts of its own public park to private owners for far less than it had paid for the land just a few years earlier.” (emphasis added)

Concluding, he wrote:

When city officials argue that destroying and rebuilding Naftzger Park was necessary, in part, because their predecessors mistakenly built the public park on private land, they are not being truthful. Among other questions surrounding the demolition of that important public space, then, Wichitans deserve to know why their leaders were so eager to relinquish the public access to this land that they had been entitled to for decades.

Why is this incident from March relevant today, two months later? Because on the May 30, 2019 edition of the monthly show Call the Mayor, Longwell repeated the same falsehood.

I’m reluctant to call someone a liar, as a lie means “a false statement deliberately presented as being true” or “something meant to deceive.” But as Billingham wrote, Wichita city officials, including Longwell, are not telling the truth.

Mayor Longwell, along with other Wichita city officials, had an opportunity to learn the truth in both the online and print editions of the largest newspaper in Kansas. If they did not agree with Billingham’s research and conclusion, there are many ways to have a public dialog on the matter. For example, the city has a popular website and social media presences, with the city’s Facebook page being liked by 27,230 people. 2 The city has a communications staff, including a strategic communications director, marketing services director, assistant director of strategic communications, and communications and special events manager. 3 There is a city manager, assistant city manager, six city council members, and a fleet of bureaucrats.

Don’t any of these people care about the truth? Don’t they want to help the mayor of the city present accurate and truthful information?

—
Notes

  1. Billingham is also the author of a fascinating history of the area, but it was published in an academic journal that is not freely available online. See Billingham, C. M. (2017) “Waiting for Bobos: Displacement and Impeded Gentrification in a Midwestern City”, City & Community, 16(2), pp. 145–168. doi: 10.1111/cico.12235. ↩
  2. Facebook, https://www.facebook.com/cityofwichita/, observed on May 31, 2019. ↩
  3. City of Wichita. Meet the Communications Team. Available at https://www.wichita.gov/News/Pages/Team.aspx. ↩
Sedgwick county government

Retiring Sedgwick County Commissioner Dave Unruh praised

Leave a comment

The praise for retired Sedgwick County Commissioner Dave Unruh can’t be based on our region’s accomplishments under his guidance. That is, if people are informed and truthful.

In January a group of Wichita business leaders submitted an op-ed to the Wichita Eagle to mark the retirement of Sedgwick County Commissioner Dave Unruh. I quote portions here, with emphasis added:

He easily won re-election because his constituents and the rest of us knew he was dedicated to strengthening our community, region and the state.

…

In economic development Commissioner Unruh was chairman in 2006 when the board voted to build a world-class technical-education facility to ensure we remained competitive for new jobs. The National Center for Aviation Training is home to the growing WSU Tech. He also championed smart economic development programs that generated additional tax dollars and regional cooperation through REAP and other efforts.

…

In his perseverance to get things done and his belief in our future, he’s made a difference.

On Sunday, the Wichita Eagle published a drawing by cartoonist Richard Crowson which lauded Unruh’s championing of the Intrust Bank Arena, Sedgwick County Zoo, Exploration Place, and mental health services. Responding on his Facebook profile, Commissioner Michael O’Donnell wrote this for public consumption:

“A society grows great when old men plant trees whose shade they know they will never sit in” I believe this Greek proverb sums up the leadership of Dave Unruh as much as this stupendous Wichita Eagle cartoon. Our community has been blessed by the selfless and indelible leadership of Dave Unruh. I believe he was the most consequential local leader in our region for the last 2 decades and those of us fortunate enough to live in Sedgwick County are able to sit under the countless trees which Dave planted for us and our families for generations to come.

There’s another way to look at the Dave Unruh legacy in Sedgwick County, and that is through the lens of data. A shiny downtown area is nice, but not as nice as a prospering economy. Here are some figures.

In 2001, the year when Unruh assumed office in its first month, the median household income in Sedgwick County was higher than that of both Kansas and the United States. By 2017, Unruh’s last full year on the commission, Sedgwick County had fallen behind both, and by significant margins.

In 2001, the poverty rate in Sedgwick County was lower than that for the nation. By 2017, the situation was reversed: The Sedgwick County poverty rate is now higher, and significantly higher.

Looking at other measures of prosperity, we see Sedgwick County falling behind during the time Unruh was in office. Gross domestic product, personal income, per capita personal income, population, total employment, wage and salary employment, and manufacturing employment: In all these measures Sedgwick County underperformed the nation, and usually the State of Kansas. (GDP is available only for the Wichita metropolitan area, which is dominated by Sedgwick County.)

By himself, Dave Unruh isn’t responsible for this economic performance. Many others contributed at Wichita City Hall and the Kansas Capitol, as well as some of Unruh’s colleagues on the Sedgwick County Commission. Unruh and they supported the interventionist, corporatist model of economic development, and it hasn’t worked. That’s why it’s surprising to see so much praise for Unruh. It’s sad, too, because if business leaders and politicians really believe the “Unruh way” is the way that works, the outlook for our region is bleak.

Wichita city government

In Wichita, a gentle clawback

1 Comment

Despite the mayor’s bluster, Wichita mostly lets a company off the hook.

As reported in Wichita City Council to consider a clawback, a company failed to meet the targets of an economic development incentive, and according to that agreement, owes the city $253,000 in clawbacks.

The city council, however, decided to require the company to pay only $100,000 of that. The city reasoned that because the company is planning an expansion, that would offset the other $153,000 of the clawback.

Wichita Mayor Jeff Longwell described this is holding the company accountable. The Wichita Eagle quoted him as saying, “This is why we’ve done it, to make sure that everyone is accountable and that the taxpayers, at the end of the day, win.”

But despite the mayor’s bluster, the city failed to enforce the agreement it made to protect taxpayers. Instead, the company receives $153,000 in free taxes that it didn’t deserve, along with an interest-free loan of $100,000 amortized over four years.

By the way, the same Eagle article reported: “Fiber Dynamics, a company founded by Darrin Teeter to commercialize technology developed at Wichita State’s National Institute for Aviation Research in the early ‘90s, hasn’t had to pay city property taxes since 2008, an estimated value of more than $500,000.”

Actually, the company didn’t pay any property taxes on the exempted property. That includes county, school, and state taxes.

Wichita and Kansas schools

Kansas tax credit scholarship program

Leave a comment

An op-ed in the Wichita Eagle regarding school choice prompts uninformed and misinformed comments.

An op-ed written by James Franko appearing in the Wichita Eagle explains the importance of the Kansas Tax Credit for Low Income Students Scholarship Program. This is a program that awards scholarships to students to attend schools of choice. It is a small program. For the school year ending in 2018, 292 students received scholarships totaling $675,892.63. This represents one of every 9,606 dollars spent on Kansas schools. For each group of 1,632 Kansas students, one received a tax credit scholarship. Yet, this program is seen as a threat to existing public schools.

Following is Franko’s editorial, followed by some comments left by Wichita Eagle readers.

Tax credit programs give parents power over their children’s education

James Franko
December 22, 2018

James Franko is vice president and policy director at Kansas Policy Institute.

Education in Kansas has evolved dramatically since settlers plowed out a life on the Plains. The one-room schoolhouse is gone and the local community coming together to hire a young woman to teach are left to the Little House stories that I read with my kids. Education is now a political debate where decisions are increasingly made far away from families, teachers and local communities.

While certainly well-intended, people in Topeka and Washington, D.C., are making decisions, demanding paperwork and setting standards that remove parents and teachers from the driver’s seat. Our teachers and other educators deserve our admiration. But we’ve all heard a teacher lament “teaching to the test” or that money that doesn’t seem to reach the classroom.

A recent column about school choice (“How school choice works in Kansas,” Nov. 29 Eagle) seems to confuse what public education is intended to be with what it currently is. Schools — public, private, and home — are tremendous parts of our community. They make our society vibrant as a by-product of preparing children to succeed.

Dr. Sharon Iorio’s concern about expanded tax credit programs undermining public education gets it backward. The free association of people choosing a private school is equally important to “the bond that holds together our society…” as is a choice to send a child to a public school. The point is that tax credit programs, which are different from vouchers, put parents back in the primary role of educating their children. Kansas’ tax credit scholarships help low-income students attending the lowest-performing schools in our state. It is almost paradoxical, but there is evidence from around the country that achievement increases in public schools when school choice is an option.

America and Kansas have always been a patchwork of communities and cultures. This is what makes a road trip so great. We get to experience the different flavors of American life, many of them from our immigrant history. Expanding private school choice enhances and protects this diversity by allowing parents to decide where their children are educated. Local educators and parents will decide what education looks like in a community. This is in contrast to a one-size-fits-all approach taken when standards are dictated, tests are mandated and policies are implemented from afar.

One approach captures the diversity of our communities and helps improve achievement for all students. The other homogenizes a rich community life and too often leaves student achievement stagnant.

—

Following, some comments from Eagle readers. These comments show how much there is to learn about the actual Tax Credit for Low Income Students Scholarship Program.

Who qualifies for scholarships?

What people think: “The Kochs, err, KPI, wants private vouchers because it gives money to the wealthy to help pay for their expensive private schools.”
“The tax credit idea mostly benefits religious schools.”
“It’s a regressive tax meant for the 1%.”

First, the guidelines from KSDE state: “An educational scholarship shall not exceed $8,000 per eligible student.” Expensive private schools cost more than this, but there are many private schools that do not. Also, $8,000 is less than the state spends on each student.

Further, the scholarship program is limited to students who are “eligible for free lunch and attends a Title I Focus School or Title I Priority School.” This means a student from a low-income family.

Still further, students over the age of six must have attended a public school in the year prior to receiving a scholarship. Students currently enrolled in private schools of any type, including church schools, are not eligible for a scholarship. 1

Parents already have choice

What people think: “You have always had, in fact anyone, freedom to choose where to send their child to school. Be it private or public.”

This is cruel. The people who need school choice the most — poor children in inner-city schools — simply can’t afford tuition at even the most inexpensive private schools. Thinking like this ensures a permanent underclass cut off from private schools or even good public schools.

Who gets the tax credits?

What people think: “Tax credit is only if you make enough to apply for it and I have yet to see any of these minoritys and poor demanding school choice.”
“When one can get 100% of their tax credit refunded and another family only gets a portion of their tuition refunded due to a low tax rate your playing a KPI pretend game without the facts.”

These writers believe that the parents of scholarship students receive tax credits. Anyone who contributes to a scholarship-granting organization may receive a tax credit. Since scholarships are limited to students from low-income families, it’s not likely these families are able to make a contribution and receive a tax credit. Also, the writer who mentioned tax rates is confusing tax deductions with tax credits.

Education only for those who can afford one

What people think: “Right now people have the ability to get a free education. Under the Koch’s dream land, education would be reserved for those who could afford it.”

Somehow, there are people who think that the goal of companies like Koch Industries and others is to have a poorly-educated population. But companies spend much time and effort recruiting educated and qualified employees to work in scientific laboratories, deal with complicated financial and accounting matters, drive innovation through information technology and other means, deliver health care, and perform numerous other tasks that benefit from a competent education.

Then, don’t these companies want customers to buy their stuff? People with better educations earn more, buy more, and invest more. Companies want more of these people, not fewer.

Without taxes and public schools, there will be no learning

What people think: You don’t like paying taxes? You don’t like living where people can read and write? Go live in the woods.”

In both the Wichita Public School System and the State of Kansas, the proportion of students testing at Level 1 rose. That’s bad. The proportion of students testing at Level 3 or better declined. That’s bad, too. 2

The writer seems to think that public schools are teaching students to read and write. Despite a large influx of spending this year, test scores have fallen. A population of people can’t read and write is becoming larger.


Kansas and Wichita school performance reports. Click for larger.

—
Notes

  1. “Eligible students must meet the following criteria: (1) eligible for free lunch and attends a Title I Focus School or Title I Priority School; or (2) has previously received a scholarship under this program and has not graduated from high school or reached 21 years of age. 56(d)(1)(A)-(B) AND Eligible students are required to reside in Kansas while receiving a scholarship and be enrolled in a public school in the year prior to receiving the scholarship or be eligible to be enrolled in a public school, if under the age of six. 56(d)(2) and 56(d)(3)(A)-(B).” Kansas State Department of Education. Tax Credit for Low Income Students Scholarship Program Guidelines. Available at https://www.ksde.org/Portals/0/School%20Finance/Action%20Items/TCLISS%20Program–Guidelines.doc. ↩
  2. “Kansas assessment results are now reported in four levels. Level 1 indicates that a student shows a limited ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 2 indicates that a student shows a basic ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 3 indicates that a student shows an effective ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 4 indicates that a student shows an excellent ability to understand and use the English Language arts skills and knowledge needed for college and career readiness.” Kansas State Department of Education, Kansas Report Card. ↩
Wichita city government

On big contracts, Wichita has had problems

Leave a comment

As Wichita prepares to award a large construction contract, let’s hope the city acts in an ethical manner this time.

As the Wichita City Council prepares to make a decision regarding a contract for the new baseball stadium, the council’s past reputation in these matters can’t be overlooked.

The controversy over the stadium contract has been covered by the Wichita Eagle: “The Wichita City Council hasn’t officially approved a design-build team for the city’s new $75 million Minor League ballpark, but there’s already been a protest over the recommended group. … At issue in a protest by a competing team is whether the JE Dunn team meets a key requirement to be selected, which is that it has built at least three similar Major or Minor League ballparks.” 1

The biggest potential for unethical behavior comes from Wichita Mayor Jeff Longwell. In 2012, as the Wichita city council was considering the award of the contract for the new airport terminal, Longwell (then a council member) received campaign contributions from executives of Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal. 2

Two Walbridge contributions were made on July 16, 2012, the day before the council, Longwell included, voted to award the contract to the Key/Walbridge partnership. More contributions from Walbridge arrived on July 20, according to Longwell’s campaign finance reports.

When questioned about the Michigan contributions, Longwell told the Wichita Eagle, “We often get contributions from a wide variety of sources, including out-of-town people.” But analysis of past campaign finance documents filed by Longwell showed just three out-of-state contributions totaling $1,500. 3

In deciding the airport contract issue, the council was asked to make decisions involving whether discretion was abused or whether laws were improperly applied. It’s not surprising that Jeff Longwell made these decisions in favor of his campaign contributors. But he shouldn’t have been involved in the decision.

That was not the first time Jeff Longwell has placed the interests of his campaign contributors ahead of taxpayers. In 2011 the city council, with Longwell’s vote, decided to award Key a no-bid contract to build the parking garage that is part of the Ambassador Hotel project. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

It’s not only Longwell with problematic behavior in the past. In 2012, before the vote on the airport contract, executives of Key Construction and spouses contributed heavily to the campaigns of both Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) and Wichita City Council Member James Clendenin (district 3, southeast and south Wichita). These contributions were not known to the public until months after the vote was cast.

Williams is no longer on the council, but Clendenin remains.

Former Wichita Mayor Carl Brewer had his own issues, with a curious set of ethics principles. 4

The city needs an adult in the room. That person is, or should be, Wichita city manager Robert Layton. In the past he has implemented policies to end the practice of no-bid contracts. We don’t know what will happen this week.

—
Notes

  1. Rengers, Carrie. City selects ballpark design-build group; competing bidder questions qualifications. Wichita Eagle, November 29, 2018. Available at https://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article222372330.html (subscription may be required). ↩
  2. “A campaign finance report filed by Wichita City Council Member Jeff Longwell contains contributions from executives associated with Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal. … These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.” Weeks, Bob. Michigan company involved in disputed Wichita airport contract contributes to Jeff Longwell. Available at https://wichitaliberty.org/wichita-government/michigan-company-involved-in-disputed-wichita-airport-contract-contributes-to-jeff-longwell/. ↩
  3. “Analysis of Longwell’s July 30, 2012 campaign finance report shows that the only contributions received from addresses outside Kansas are the Walbridge contributions from Michigan, which contradicts Longwell’s claim. Additionally, analysis of ten recent campaign finance reports filed by Longwell going back to 2007 found three contributions totaling $1,500 from California addresses.” Weeks, Bob. Jeff Longwell out-of-town campaign contributions. Available at https://wichitaliberty.org/wichita-government/jeff-longwell-out-of-town-campaign-contributions/. ↩
  4. Weeks, Bob. The odd ethics of Wichita Mayor Carl Brewer. Available at https://wichitaliberty.org/wichita-government/odd-ethics-wichita-mayor-carl-brewer/. ↩
Wichita city government

It’s not the bonds, it’s the taxes

Leave a comment

A Wichita Eagle headline reads “Wichita aircraft supplier plans 45 new jobs with $7.5 million bond request,” but important information is buried and incomplete.

According to the agenda packet for the December 4, 2018 meeting of the Wichita City Council, a local aircraft supplier is “requesting issuance of bonds” worth $7.5 million. 1

Even if you read the entire Wichita Eagle article2 on this matter, you wouldn’t really learn much about this item. You might think the city is lending the company this money, which many people assume is the purpose of the Industrial Revenue Bonds program. But in the IRB program, the city lends no money, nor does it guarantee repayment of the bonds. 3

Instead, the purpose of the IRBs is to convey a tax holiday. In the very last paragraph, the article mentions this property tax abatement, but no dollar value is given, even though the “city documents” presumably used as a source for this story clearly state the dollar values. The sales tax exemption is also mentioned, with no dollar value given. City documents don’t hold that, either.

The value of the tax holiday, according to the city, is estimated at $82,040 annually for up to ten years, shared among local taxing authorities thusly:

City of Wichita: $22,837
State of Kansas: $1,050
Sedgwick County: $20,575
USD 259 (Wichita school district): $37,578

For the value of the sales tax exemption, no value is given. By city documents state the purpose of the bonds is to pay for “$4,000,000 for new machinery and equipment.” Sales tax on that would be $300,000. If the entire $7.5 million is spent on taxable purchases, sales tax savings would be $562,500.

Why doesn’t the Wichita Eagle mention some of these important matters?

The article also holds no mention of the important public policy issues involved. For example, why does the owner of the business want to escape paying the same taxes that (nearly) everyone else must pay? This question is especially pertinent as Kansas is one of the few states in which even low-income households pay the full sales tax rate on groceries.

Perhaps the reason is that the cost of government makes this investment unprofitable. If that is true, we have a grave problem. If the city must issue bonds and create a tax holiday for this rather small investment, we have a capacity problem. A reader on Facebook left this wry comment to the Eagle story: “So, local area population 600,000+ people … About to add 45 jobs over 5 years?”

The city justifies tax giveaways like this by using a benefit-cost analysis. That is, if the city gives up some taxes, it will receive even more in additional taxes. This analysis is useful to politicians and bureaucrats. But the analysis is valid and meaningful only if the investment is impossible without the tax giveaway.

The question then becomes: Is this tax forgiveness necessary? City documents don’t say. Showing necessity is not a requirement of the IRB incentive program. We’re left wondering if the tax expenditure, which is potentially more than one million dollars over ten years, is truly needed.

The city is proud of its requirements that the benefit-cost ratio must be at least 1.3 to 1. But for USD 259, the Wichita school district, the ratio is 1.17 to 1. So the city is pushing an “investment” on the school district that is below the standard it requires for itself. The school district has no say in the matter, based on Kansas state law. Note also that the school district gives up the most tax revenue, 1.6 times as much as the city.

By the way, Wichita Mayor Jeff Longwell says the city is no longer using cash as economic development incentives. But when the city waves a magic legislative wand and says you don’t have to pay $82,040 per year in property tax, how is that different than giving the same amount in cash? Or when the city says don’t bother paying the sales tax on this, how is that different than giving a cash discount?

The answer is there’s no difference. The mayor, city council members, and city bureaucrats hope you won’t notice the sleight of hand, that is, skillful deception. And with the Wichita Eagle being the watchdog, there’s little chance very many people will be informed.

—
Notes

  1. City of Wichita, agenda for December 4, 2018. V-2: Public Hearing and Issuance of Industrial Revenue Bonds, Etezazi Industries, Inc. Available at http://www.wichita.gov/Council/Agendas/12-04-2018%20Agenda.pdf. ↩
  2. Siebenmark, Jerry. Wichita aircraft supplier plans 45 new jobs with $7.5 million bond request. Wichita Eagle, November 30, 2018. ↩
  3. “Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to avoid paying property and sales taxes.” Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/. ↩