‘Efficiency Kansas’ introduced in Wichita

At stops in Topeka and Wichita, Kansas officials introduced the Efficiency Kansas loan program.

This is a program funded by the American Recovery and Reinvestment Act of 2009, better known as the stimulus bill. In Kansas, the State Energy Office, a subsidiary of the Kansas Corporation Commission, was awarded $38 million to foster energy efficiency for homes and businesses in Kansas. That office will manage the program.

Kansas Treasurer Dennis McKinney was in Wichita to introduce the program and help give tours of a demonstration home in west Wichita. In his remarks he said that the program engages private sector forces so that the program runs effectively and efficiently.

The program starts when a homeowner or business owner contacts a participating lender or utility company. The customer selects an energy auditor from a list of those qualified to work in the program, and the energy audit is performed. The result is a plan. Then, the customer seeks bids from contractors based on the plan. If the State Energy Office approves, work can start.

Homes can receive up to $20,000 in improvements, while small businesses can receive up to $30,000.

In this program, it is participating banks or utility companies, not the state, that make the loans and it is they who bear the risk of credit loss. The loans are fixed-rate, up to 15 years term, with an interest rate of not more than 4%. The State Energy Office provides rebates to lenders to cover $250 of loan origination fees.

For the demonstration house in Wichita, a three bedroom ranch-style house of 1,440 square feet built in 1963, the cost of the recommended improvements is $2,922. Estimated monthly energy savings are $35, and the monthly payment on the loan is $24. The demonstration house in Topeka required $7,617 of work, with monthly savings estimated at $89, and payment of $57.

Analysis

In the press release, Kansas Governor Mark Parkinson said “this program will help save jobs and put more Kansans back to work.” Many would disagree with this assessment, as the program is paid for with borrowed money that must be paid back at some later date. The taxes necessary to repay this borrowing will reduce jobs in the future.

I asked McKinney that if these energy efficiency investment are wise economically, why can’t we let people make them on their own rather than having the federal and state government involved. His answer was that the program makes loans available at 4% interest rather than 8%, and the program would gain the attention of entrepreneurs to help get more homes upgraded.

As with many government programs, this essentially boils down to a subsidy. The program participants will be able to borrow money at a below-market interest rate.

While some people might feel it is worthwhile for the government to subsidize low or modest income homeowners, the owners of the Wichita home probably don’t fall into that category. According to the Sedgwick County Treasurer, the house has an appraised value of $99,800. There was a large flat-panel television among its furnishings. Should Americans of all income levels pay taxes so that this family can save a few dollars a month on a loan?

Further, although the program is touted as being low cost to the state, the state pays $250 for each loan to the lending bank. The first 1,000 participants will receive $350 to help pay for the energy audit.

Prior to this program, the State Energy Office had just five employees and a budget of $500,000. Now the office’s website lists ten employees. While the costs of this program are paid for by the federal government, this should be of little comfort to taxpayers.

Surprisingly, there was no mention of this program’s role to potentially reducing carbon emissions.

3 Comments

  • This should be so far out of the purview of government it just disgusts me. When are people going to wake up to the insanity of gov’t being involved in every single thing!?

  • Why are the greedy people in Ks state government so anxious to inflict more taxes and debt on US? This makes me angry,it seems the people applying could afford to make the improvements if they wanted to.
    I just got my property tax statement,with a substantial rate increase, (and property values down)so I was mad anyway,this just added fuel !!

  • When government gets in,honesty gets out;just heard that Recovery.gov lists 6.4 BILLION dollars going to non-existing districts in eleven states…All American taxpayers should be demanding an explanation from the idiots that run this 18 million dollar website set up to “inform us where the stimulus money goes”

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