Kansas and Wichita quick takes: Wednesday October 5, 2011

Green energy in Kansas. Kansas Representative Charlotte O’Hara of Overland Park issues a cautionary note on Kansas energy policy. Commenting on Kansas Governor Sam Brownback’s recent energy policy forum, she writes: “I applaud the governor’s energy summit, however with the recent events and controversy swirling around the issue of renewable/green energy initiatives at the federal level (Solyndra), we in Kansas need to step back and analyze whether our current tax incentive packages for green energy is based on sound economic principles or rather an attempt to embrace ‘green’ energy for politically correct reasons. Here’s the question that begs to be asked, are incentive programs offered in Kansas useful economic development tools or are we throwing money at failed public policy? Among those incentives: Up to $5 million in bond financing for wind the solar manufacturers; a 10 percent corporate income tax credit for new capital investment; a tax abatement on real property for up to 10 years (subject to community approval); no franchise or inventory tax; the ability to retain payroll and withholding taxes for five to 10 years depending on the number of jobs created in Kansas.” … She references a recent op-ed written by the governor (Wind energy offers clean path to economic growth) and cites the rebuttal by Paul Chesser of American Tradition Institute. That may be read at ATI Release: Kansas Gov., Former Sen. Brownback Incorrect on Promise, Economics of Renewable Energy. More coverage at Kansas Governor Sam Brownback on wind energy.

Economic development in Wichita. Events yesterday in Wichita City Hall and today at the Sedgwick County Commission indicate that most city leaders are firmly committed to rent seeking, corporate welfare, and large-scale government interventionism as the way to create propensity for our city and county. Here are a few articles with a different perspective: Wichita’s economic development strategy: rent seeking: “So what is rent seeking? Wikipedia defines it like this: ‘In economics, rent seeking occurs when an individual, organization or firm seeks to earn income by capturing economic rent through manipulation or exploitation of the economic environment, rather than by earning profits through economic transactions and the production of added wealth.’ … The private returns of rent seekers come from the redistribution of wealth, not from wealth creation. The tax that rent seeking imposes on the productive sector reduces the output growth rate by reducing the incentives of entrepreneurs to produce and innovate.” … Wichita again to bet on corporate welfare as economic development: “This week the Wichita City Council will consider three measures that, if adopted, will further establish corporate welfare and rent-seeking as Wichita’s economic development strategy. … When people are living on welfare, we usually see that as a sad state of affairs. We view it as a failure, both for the individual and for the country. We seek ways to help people get off welfare so that they become self-sufficient. We want to help them contribute to society rather than being a drain on its resources. But Wichita’s leaders don’t see corporate welfare as a bad thing. Instead, as these three measures — all of which will likely pass unanimously — illustrate, welfare is good when you’re a business in Wichita. Especially if you can raise speculation that your company might move out of Wichita.” … The ‘active investor’ role that the city of Wichita is about to take with regard to these three companies is precisely the wrong role to take. These actions increase the cost of government for the dynamic small companies we need to nurture. Instead these efforts concentrate and focus our economic development efforts in an unproductive way.”

The first rough draft of the Solyndra story. As compiled by David Boaz, it’s a story that “just keeps getting more discouraging.” The headlines tell the story in his compilation at The First Rough Draft of the Solyndra Story.

Tax increment financing. From Randal O’Toole: “Tax-increment financing (TIF) costs taxpayers around $10 billion per year and is growing as fast as 10 percent per year, according to a new report, Crony Capitalism and Social Engineering: The Case against Tax-Increment Financing published by the Cato Institute. Though originally created to help renew “blighted” neighborhoods, TIF today is used primarily as an economic development tool for areas that are often far from blighted. The report argues that TIF does not actually generate economic development. At best, it moves development that would have taken place somewhere else in a community to the TIF district. That means it generates no net tax revenues, so the TIF district effectively takes taxes from schools and other tax entities. At worst, TIF actually slows economic development, both by putting a larger burden on taxpayers and by discouraging other developers from making investments unless they are also supported by TIF.” … Tax increment financingTIF districts — are expected to be a major source of revenue for the revitalization of downtown Wichita — and the accompanying social engineering directed from Wichita city hall. Wichita has also shown itself to be totally incapable of turning away from crony capitalism.

Democrats Anonymous. “The first step is admitting you have a problem.”

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