Voice For Liberty

Tag: Carl Brewer

Wichita Mayor Carl Brewer

  • Kansas and Wichita need pay-to-play laws

    In the wake of scandals some states and cities have passed “pay-to-play” laws. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    Many people make campaign contributions to candidates whose ideals and goals they share. This is an important part of our political process. But when reading campaign finance reports for members of the Wichita City Council, one sees the same names appearing over and over, often making the maximum allowed contribution to candidates.

    And when one looks at the candidates these people contribute to, you notice that often there’s no common thread linking the political goals and ideals of the candidates. Some people contribute equally to liberal and conservative council members. But then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose political ideals they agree with. Instead, they’re donating so they can line their own pockets. These donors are opportunists.

    As another example, for the 2008 campaign for a bond issue for USD 259, the Wichita public school district, my analysis found that 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms, and others who directly stand to benefit from school construction. Do these companies have an especially keen interest in the education of children? I don’t think so. They are interested in themselves.

    Some states and cities have taken steps to reduce this harmful practice. New Jersey is notable for its Local Unit Pay-To-Play Law. The law affects many local units of government and the awarding of contracts having a value of over $17,500, requiring that these contracts be awarded by a “fair and open process,” which basically means a contract process open to bidding.

    Cities, too, are passing pay-to-pay laws. Notably, a recently-passed law in Dallas was in response to special treatment for real estate developers — the very issue Wichita is facing now as it prepares to pour millions into the pockets of a small group of favored — and highly subsidized — downtown developers who are generous with campaign contributions to almost all council members. Not that this is new to Wichita, as the city has often done this in the past.

    Smaller cities, too, have these laws. A charter provision of the city of Santa Ana, in Orange County, California, states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    But Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life.

    In Kansas, campaign finance reports are filed by candidates and available to citizens. But many politicians don’t want campaign contributions discussed, at least in public. Recently Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) expressed concern over the potential award of a $6 million construction contract without an open bidding process. The contractor the city wanted to give the contract to was Key Construction, a firm that actively makes political contributions to city council members, both conservative and liberal.

    For expressing his concern, O’Donnell was roundly criticized by many council members, and especially by Wichita Mayor Carl Brewer.

    Here’s what’s interesting: Brewer and city council members say the campaign contributions don’t affect their votes. Those who regularly make contributions say they don’t do it to influence the council. Therefore, it seems that there should be no opposition to a pay-to-play law in Wichita — or the entire state — like the one in Santa Ana.

    But until we get such a law, I can understand how Wichita city council members don’t want to discuss their campaign contributions from those they’re about to vote to give money to. It’s not about supporting political ideologies — liberal, moderate, or conservative. It’s about opportunists seeking money from government.

    The practice stinks. It causes citizens to be cynical of their government and withdraw from participation in civic affairs. It causes government to grow at the expense of taxpayers. Pay-to-play laws can help reverse these trends.

    You may download a printable copy of this article at Kansas Needs Pay-to-Play Laws.

  • Wind energy split in Kansas

    Despite the promise as a temporary subsidy when it started twenty years ago, wind energy is reliant on government handouts. Today’s Wall Street Journal brings this into focus, writing: “The truth is that those giant wind turbines from Maine to California won’t turn without burning through billions upon billions of taxpayer dollars. In 2010 the industry received some $5 billion in subsidies for nearly every stage of wind production.” (See Republicans Blow With the Wind: Another industry wants to keep its taxpayer subsidies..)

    The piece also properly refutes the argument that oil and gas receives the same type of tax credits as does wind and other renewable energy forms. “The most dishonest claim is that wind and solar deserve to be wards of the state because the oil and gas industry has also received federal support. That’s the $4 billion a year in tax breaks for oil and gas (which all manufacturers receive), but the oil and gas industry still pays tens of billions in federal taxes every year.” There’s a difference between tax deductions, which reduce taxable income, and tax credits, which are government spending programs in disguise.

    Despite this: Senator Jerry Moran of Kansas has joined with five other senators in urging the Senate to pass an extension of the subsidy program for wind power. Kansas, it should be noted, has a lot of wind. Our former governors Sebelius and Parkinson bought into the green energy fantasy, and current governor Kansas Governor Sam Brownback agrees, having penned op-eds in support of wind energy subsidy programs and usage mandates. Wichita Mayor Carl Brewer has been busy promoting Wichita as a site for wind energy-related industry, despite its failing economics based on government handouts.

    (By the way, it’s not only wind that is receiving subsidy on Kansas. Recently the Department of Energy announced the award of a $132.4 million loan guarantee to a cellulosic ethanol plant in southwest Kansas. At the time of the award, no commercial cellulosic ethanol had been produced in America. See Kansas and its own Solyndra.)

    Contrast this with U.S. Representative Mike Pompeo of Wichita, who has introduced legislation to end all tax credits related to energy production. Writes the Journal: “Here’s a better idea. Kill all energy subsidies– renewable and nonrenewable, starting with the wind tax credit, and use the savings to shave two or three percentage points off America’s corporate income tax. Kansas Congressman Mike Pompeo has a bill to do so. This would do more to create jobs than attempting to pick energy winners and losers. Mandating that American families and businesses use expensive electricity doesn’t create jobs. It destroys them.”

    Republicans Blow With the Wind

    Another industry wants to keep its taxpayer subsidies.

    Congress finally ended decades of tax credits for ethanol in December, a small triumph for taxpayers. Now comes another test as the wind-power industry lobbies for a $7 billion renewal of its production tax credit.

    The renewable energy tax credit — mostly for wind and solar power — started in 1992 as a “temporary” benefit for an infant industry. Twenty years later, the industry wants another four years on the dole, and Senator Jeff Bingaman of New Mexico has introduced a national renewable-energy mandate so consumers will be required to buy wind and solar power no matter how high the cost.

    The truth is that those giant wind turbines from Maine to California won’t turn without burning through billions upon billions of taxpayer dollars. In 2010 the industry received some $5 billon in subsidies for nearly every stage of wind production.

    Continue reading at the Wall Street Journal (subscription required)

  • For Wichita, no election news is good politics

    After last week’s election results in Wichita in which voters canceled an ordinance passed by the city council, I noticed there was no mention of the election results on the city’s website. So I dashed off a note to several responsible authorities, writing this:

    “I notice that the city’s website carries no news on the results of the February 28th election. Is this oversight unintentional? Or does the city intend to continue spending its taxpayer-funded news producing efforts on stories with headlines like ‘Valentine’s at Mid-Continent Airport,’ ‘Rain Garden Workshops in February,’ and ‘Firefighter Receives Puppy Rescued at Fire Scene’?”

    It’s not as though city staff doesn’t have time to produce a story on the election. The city’s public affairs department employs 15 people with an annual budget of some $1.3 million. While some of these employees are neighborhood assistants, there are still plenty of people who could spend an hour or two writing a story announcing the results of the February 28th election.

    Except: That doesn’t fit in with the city’s political strategy. That strategy appears to be to ignore the results of the election, or to characterize the election as a narrowly-focused referendum on one obscure economic development tool.

    At one time, however, the attitude of city hall was that the election was over the entire future of downtown Wichita. Mayor Carl Brewer said the election would cause “turmoil inside the community, unrest.” Council member Pete Meitzner (district 2, east Wichita) said we needed to have an early election date so “avoid community discourse and debate.” He later backpedaled from these remarks.

    But now that city hall and its allies lost the election, the issue is now cast as having been very narrow, after all. Citizens aren’t against economic development incentives, they say. They’re just against hotel guest tax rebates.

    This narrow interpretation illustrates — again — that we have a city council, city hall bureaucracy, and allied economic development machinery that is totally captured by special interests. Furthermore, the revealed purpose of the city’s public affairs department, including its television channel, is now seen as the promotion of Wichita city government, not Wichita and its citizens. These are two very different things.

  • Kansas and Wichita lag the nation in tax costs

    If we in Kansas and Wichita wonder why our economic growth is slow and our economic development programs don’t seem to be producing results, there is now data to answer the question why: Our tax rates are high — way too high.

    This week the Tax Foundation released a report that examines the tax costs on business in the states and in selected cities in each state. The news for Kansas is worse than merely bad, as our state couldn’t have performed much worse: Kansas ranks 47th among the states for tax costs for mature business firms, and 48th for new firms.

    The report is Location Matters: A Comparative Analysis of State Tax Costs on Business.

    The study is unusual in that it looks at the impact of states’ tax burden on mature and new firms. This, according to report authors, “allows us to understand the effects of state tax incentives compared to a state’s core tax system.” In further explanation, the authors write: “The second measure is for the tax burden faced by newly established operations, those that have been in operation less than three years. This represents a state’s competitiveness after we have taken into account the various tax incentive programs it makes available to new investments.”

    The report also looks at the tax costs for specific types of business firms. For Kansas, some individual results are better than overall, but still not good. For a mature corporate headquarters, Kansas ranks 30th. For locating a new corporate headquarters — one that would benefit from tax incentive programs — Kansas ranked 42nd. For a mature research and development facility, 46th; while new is ranked 49th. For a mature retail store, 38th, while new is ranked 45th.

    There are more categories. Kansas ranks well in none.

    The report also looked at two cities in each state, a major city and a mid-size city. For Kansas, the two cities are Wichita and Topeka.

    Among the 50 cities chosen, Wichita ranks 30th for a mature corporate headquarters, but 42nd for a new corporate headquarters.

    For a mature research and development facility, Wichita ranks 46th, and 49th for a new facility.

    For a mature and new retail store, Wichita ranks 38th and 45th, respectively.

    For a mature and new call center, Wichita ranks 43rd and 47th, respectively.

    In its summary for Kansas, the authors note the fecklessness of Kansas economic development incentives: “Kansas offers among the most generous property tax abatements and investment tax credits across most firm types, yet these incentives seem to have little impact on the state’s rankings for new operations.”

    Kansas tax cost compared to neighbors. Click here for a larger version.

    It’s also useful to compare Kansas to our neighbors. The comparison is not favorable for Kansas.

    More evidence of failure

    Recently the Greater Wichita Economic Development Coalition issued its annual report on its economic development activities for the year. This report shows us that power of government to influence economic development is weak. In its recent press release, the organization claimed to have created 1,509 jobs in Sedgwick County during 2011. According to the Bureau of Labor Statistics, the labor force in Sedgwick County in 2011 was 253,940 persons. So the jobs created by GWEDC’s actions amounted to 0.59 percent of the labor force. This is a very small fraction, and other economic events are likely to overwhelm these efforts.

    In his 2012 State of the City address, Wichita Mayor Carl Brewer took credit for creating a similar percentage of jobs in Wichita.

    The report by the Tax Foundation helps us understand why the economic development efforts of GWEDC, Sedgwick County, and Wichita are not working well: Our tax costs are too high.

    While economic development incentives can help reduce the cost of taxes for selected firms, incentives don’t help the many firms that don’t receive them. In fact, the cost of these incentives is harmful to other firms. The Tax Foundation report points to this harm: “While many state officials view tax incentives as a necessary tool in their state’s ability to be competitive, others are beginning to question the cost-benefit of incentives and whether they are fair to mature firms that are paying full freight. Indeed, there is growing animosity among many business owners and executives to the generous tax incentives enjoyed by some of their direct competitors.”

    But there is one incentive that can be offered to all firms: Reduce tax costs for everyone. The policy of reducing tax costs for the selected few is not working. This “active investor” approach to economic development is what has led companies in Wichita and Kansas escaping hundreds of millions in taxes — taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form.

    Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business is critical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

    In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Wichita and Kansas has been pursuing and which Wichita’s Brewer wants to step up: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

    In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.’”

    There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates is an example of such a policy. Abating taxes for specific companies through programs like IRBs is an example of precisely the wrong policy.

    We need to move away from economic development based on this active investor approach. We need to advocate for policies — at Wichita City Hall, at the Sedgwick County Commission, and at the Kansas Statehouse — that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances, except to reduce the cost of government for everyone.

  • In Wichita, pushing back against political cronyism

    A message from Bob Weeks, campaign chair of Tax Fairness for All Wichitans, upon the campaign’s victory of 62 percent to 38 percent in an election regarding a tax rebate to the Ambassador Hotel:

    First, I’d like to thank my campaign leadership team and all the volunteers. Many started working in October by carrying the petition and gathering signatures, sometimes in cold and windy winter weather. My job as campaign chair was made much easier through the efforts of dedicated people like Susan Estes, John Todd, Derrick Sontag, and the many others who helped.

    Usually, winning an election is a happy time. In most elections the winning side is happy because they elected a candidate to office who they feel has the better ideas.

    I’m glad we won. But my happiness is tempered by the realization that we simply prevented something bad from happening in Wichita.

    I’m proud that the electorate responded positively to our accurate and truthful campaign. When citizens have the facts, they make the right decision.

    Going forward, I’d like to remind Wichitans that the Ambassador Hotel is receiving assistance from eight taxpayer-funded government programs with costs of $15.4 million up-front and several hundred thousand annually. None of these were affected by the election. Wichita city hall and its allies are ready, willing, and able to use these incentive programs in the future for other hotels and businesses.

    So to the extent that these economic development programs actually help Wichita, they are still available, and will likely be used.

    But we feel these programs are not wise. Often, we’ve found that they’re not needed. And when used, they direct public investment to where politicians and bureaucrats want it, not where people want it.

    The best way to create jobs is to get government out of the way. Instead of entrepreneurs spending resources applying for grants, finding government programs and taking handouts, we would be much better off if they could directly invest those resources in job creation. That is what the voters said tonight.

    We need to reform our economic development efforts. Our present methods, which are just about the same as most other cities, are not working. We need to realize that there are several long-serving politicians and bureaucrats that have presided over this failure.

    These people have presided over the system of political cronyism that passes for economic development in Wichita. Politicians like Mayor Carl Brewer and most members of the Wichita City Council pocket thousands in campaign contributions from opportunists like David Burk and David Wells, who are partners in the Ambassador Hotel project. These people make contributions to those they know are in a position to vote to give them money.

    This is such a foul system that we need pay-to-play laws to reform it. I’m suggesting that Kansas pass such a law, and name it “Davids’ Law.”

    I hope that Wichita City Hall, the economic development machinery in our city, and the Wichita Eagle editorial board will be more receptive to the message of economic freedom, free markets, and limited government that was expressed in the results of this election.

  • Wichita economic development isn’t working

    Recently the Greater Wichita Economic Development Coalition issued its annual report on its economic development activities for the year. That report, along with a Wichita Eagle article from January, tells us that the traditional methods of economic development used in the Wichita area isn’t working very well.

    In the Eagle article, (Why isn’t Wichita winning projects?, January 22, 2012 Wichita Eagle), after listing four items economic development professionals say Wichita needs but lacks, the reporter wrote “The missing pieces have been obvious for years, but haven’t materialized for one reason or another.”

    If these pieces are truly needed and have been obviously missing for years: Isn’t that a startling assessment of failure of Wichita’s economic development regime?

    While Wichita Mayor Carl Brewer was quoted in the article as saying “You hear a lot from the loud minority,” the fact is that the minority rarely wins. Six of seven members of the Wichita City Council will vote for almost any giveaway to any company, no matter how unnecessary or unwise the subsidy program is.

    With two of its five members having a realistic view of government’s power to influence economic development, it’s a little tougher to push programs through the Sedgwick County Commission. But most programs make it through or don’t need the county’s participation.

    The GWEDC report also shows us that power of government to influence economic development is weak. In its recent press release, the organization claimed to have created 1,509 jobs in Sedgwick County during 2011. According to the Bureau of Labor Statistics, the labor force in Sedgwick County in 2011 was 253,940 persons. So the jobs created by GWEDC’s actions amounted to 0.59 percent of the labor force. This is a very small fraction, and other economic events are likely to overwhelm these efforts.

    In his 2012 State of the City address, Brewer took credit for creating a similar percentage of jobs in Wichita.

    Not mentioned are the costs of creating these jobs. These costs have a negative economic impact on those who pay these costs. This means that economic activity and jobs are lost somewhere else in order to pay for the incentives.

    Also, at least some of these jobs would have been created without the efforts of GWEDC. All GWEDC should take credit for is the marginal activity that it purportedly created. Government usually claims credit for all that is good, however.

    GWEDC website stale and out-of-date

    If GWEDC is looking for ways to improve its efforts in marketing Wichita, it might start with its own website. While the site features a high level of design sophistication, examining its contents reveals a lack of attention being paid to the site.

    For example, on a GWEDC page titled Recent Relocations Highlights, the most recent item is from 2009.

    The “News” page holds as its most current story one encouraging attendance at a conference that took place in 2010. The second and final story on this page notifies us that someday in the future there will be an Intrust Bank Arena in downtown Wichita. That arena has now been open for two years.

    The site also promotes an RFP (request for proposal) with a deadline in 2009 — three years ago.

    Anyone who comes across the GWEDC site would conclude from this negligence that this is an organization — and by extension, a city — that simply doesn’t care about its online presence.

    Going forward

    The danger we in Kansas, and specifically the Wichita area, face is the overwhelming urge of politicians to be seen doing something. For example, in response to the departure of Boeing, Wichita Mayor Carl Brewer called for the community to “launch an aggressive campaign of job recruitment and retention.”

    It is likely that we will become susceptible to large-scale government interventions in an attempt to gain new jobs. Our best course would be to take steps to make Kansas and Wichita an inviting place for all firms to do business. The instinct of politicians such as Brewer, however, is to take action, usually in the form of targeted incentives as a way to spur economic development. GWEDC is the agency responsible for this.

    We’ve seen the disappointing results — not only with Boeing, but also in a report showing that Wichita has declined in economic performance compared to other areas.

    These targeted economic development efforts fail for several reasons. First is the knowledge problem, in that government simply does not know which companies are worthy of public investment. This, however, does not stop governments from creating policies for the awarding of incentives. It also doesn’t stop the awarding of incentives willy-nilly without a policy, as the Wichita City Council has done for a hotel.

    This “active investor” approach to economic development is what has led to Boeing and other companies escaping hundreds of millions in taxes — taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form.

    Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business is critical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

    In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Wichita is sure to undertake in response to the loss of Boeing: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

    In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.’”

    There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates is an example of such a policy. Abating taxes for specific companies through programs like IRBs is an example of precisely the wrong policy.

    We need to move away from economic development based on this active investor approach. We need to advocate for policies — at Wichita City Hall, at the Sedgwick County Commission, and at the Kansas Statehouse — that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances.

  • Kansas Senator Jerry Moran wants to pick losers in the market: His choice is big wind

    In Kansas, we have a lot of wind — no doubt about that. But the economics of wind as a source of electricity generation is another matter. There’s a split in Kansas over this. On one side are Kansas Governor Sam Brownback, who has been vocal in his support of wind power, along with Wichita Mayor Carl Brewer, who has been busy promoting Wichita as a site for wind energy-related industry. Now we see Kansas’ newest U.S. Senator Jerry Moran jumping in to promote the wind power subsidy program. Contrast this with U.S. Representative Mike Pompeo of Wichita, who has introduced legislation to end all tax credits related to energy production. It’s important to remember that the government subsidy program for wind power is in the form of tax credits, which are equivalent to grants by the government. The term “tax expenditures” is starting to see widespread usage to accurately describe the economic effect of tax credits.

    Senator Jerry Moran wants to pick losers in the market: His choice is big wind

    By Daniel Horowitz

    If I were pressed to offer one anecdote exemplifying our failure to elect consistent conservatives to Congress last November, the story of Senator Jerry Moran and Big Wind would be at the top of the list.

    In 2010, then-Congressman Jerry Moran beat former Congressman Todd Tiahrt for the Republican nomination for Senate in Kansas running as a red meat conservative. He easily won the seat in this solid Republican state and summarily joined the ‘Tea Party Caucus’ in the Senate. Nothing emblematizes the convictions of the Tea Party more than its fervent opposition to special interest handouts and government interventions in the private sector as a way of picking winners and losers. Yet, Senator Moran let the cat out of the bag last week that he has absolutely no compunction about picking winners and losers, or in the case of Big Wind, big losers.

    Last week, Senator Moran announced that he is submitting an amendment to the terrible Senate highway bill (S.1813) that would extend the 2.2 cent/ per kilowatt-hour Production Tax Credit (PTC) for another 4 years. This special interest handout to Solar and Wind is slated to expire at the end of the year. What happened to Moran’s Tea Party views? Well, he unabashedly threw them under the solar-powered bus:

    Asked about opposition to extending the credit expressed by Rep. Mike Pompeo of Wichita, Moran said: “There are members of Congress who feel we ought not to pick winners and losers, to let the markets decided. I believe it’s better to get this industry up and running, then let the country decide … rather than pull the rug out overnight.”

    Wow! At least he’s honest. I wish we had known that before the election.

    The PTC is the corporate version of the Earned Income Credit for green energy. It is among 51 ‘tax extenders’ that have either expired last December or are slated to expire this December. The PTC offers a 2.2 cent/per kilowatt-hour refundable credit for wind, solar, or geothermal. According to the Heritage Foundation, if the oil industry received a commensurate subsidy, they would get a $30 check for every barrel produced.

    Headed into the November elections, one of our most potent and popular arguments we have is to paint the Democrats with the Solyndra economy — an economy where the government intervenes to pick winners and losers, at the detriment of consumers and taxpayers. How can we effectively articulate an alternative free-market vision when we have a member of “the Tea Party Caucus” supporting Obama’s policy of picking losers in the energy sector? Talk about pale pastels!

    Folks, this is not how we win elections. Moreover, this type of special interest peddling — from energy subsidies to farm welfare — creates dependency in some of the reddest states. This is not a winning message for the future of conservatism, especially when it emanates from such a Republican state.

    There is a better way. Congressman Mike Pompeo (R-KS) introduced legislation (HR 3308) to sunset all targeted energy tax credits and grants, including those for fossil fuels and nuclear power. The bill would use the savings from the repeal of these credits (roughly $90 billion over ten years) to lower the corporate tax rate on everyone. Senator DeMint has introduced a companion bill in the Senate (S.2064).

    Every member of Congress who seeks a clean break from a centrally-planned Solyndra economy must cosponsor this bill. Additionally, as we look for more congressional candidates to endorse, it is these issues — energy and farm subsidies — that will separate the men from the boys. We must fight this election by offering voters a choice, not an echo.

    Cross-posted from The Madison Project

  • Fact checking Wichita Mayor Carl Brewer

    Last week Wichita Mayor Carl Brewer appeared on the KPTS Television public affairs program Impact to discuss his recent State of the City Address for 2012. While the mayor didn’t say much that is factually incorrect, examining some of his statement in a larger context is a valuable exercise.

    Regarding the plans for Southwest Airlines to start service in Wichita, Brewer said: “Our number one goal is to create an environment where people can fly anyplace in the country they want.”

    This is a curious statement by Mayor Brewer for this reason: According to its website, Southwest serves 72 cities. But other carriers that serve Wichita, such as American, United, and Delta, serve hundreds of cities in the U.S. and many more across the world. So Wichitans already have access to many more cities than Southwest serves.

    Regarding the Affordable Airfares program and its subsidy to low-cost carriers, the mayor said the program has created an environment where “we’ve increased travel at the airport.”

    The actual numbers barely support this claim. The chart below, using data from the Bureau of Transportation Statistics, shows the number of passengers at the Wichita Airport on a monthly basis. Since the monthly data varies so much, I’ve included a 12-month moving average line in black.

    Would you say this chart shows “increased travel” as the mayor claimed? Yes, the passenger count has increased since 2003, but in recent years the moving average line is nearly flat, with a few ups and downs. Especially relevant is the period since 2006, when the Affordable Airfares program took affect. In 2005, the average monthly passenger count was 59,565. For the first seven months of 2011, it was 60,736.

    So we can give the mayor credit for this: traffic is up — a little. But when compared to the cost of the subsidy program and the harmful effect on other airlines, I would say the program is less than a model success story.

    Wichita monthly passengers

    There’s another way to look at airport traffic: the number of flights. Figures from the Wichita Airport appear in the chart below. While these figures include only weekday departures, statistics from BTS that include all flights show a similar trend: the number of flights is, and has been, going down. This is an important statistic, as for many people, especially business travelers, the availability of a flight at any cost is more important than low fares for everyone.

    Wichita daily departures

    Mayor Brewer also said “We’ve actually cut $20 million out of the overall budget for the city.” This line of thinking is common among the political class. To them, if spending does not rise as fast as hoped for, it’s a cut. The chart below, however, shows that spending continues to increase, despite the claim of budget cuts.

    Wichita general fund spending

    On economic development, Mayor Brewer said we need to diversify Wichita’s economy, and he promoted wind energy and solar energy as industries that Wichita should diversify into.

    The problem is — besides a few spectacular failures such as Solyndra — these two green energy sources don’t have much of a future, and don’t represent a good plan for Wichita to stake its future on. The False Promise of Green Energy, a new book from the Cato Institute, is described as follows: “Green energy promises an alluring future — more jobs in a cleaner environment. We will enjoy a new economy driven by clean electricity, less pollution, and, of course, the gratitude of generations to come. There’s just one problem: the lack of credible evidence that any of that can occur. The False Promise of Green Energy critically and realistically evaluates the claims of green-energy and green-jobs proponents who argue that we can improve the economy and the environment, almost risk-free, by spending hundreds of billions of taxpayer dollars in return for false or highly speculative promises. … The False Promise of Green Energy illustrates the irresponsibility of attempting to transform modern society with borrowed money, wishful thinking, and bad economics. It shows how the top-down control programs offered by green-energy and green-jobs advocates are unlikely to achieve positive results compared with allowing competitive forces to continue to provide ever greater environmental quality and energy efficiencies.”

    The energy sources Brewer wants Wichita to rely on for its economic future are highly dependent on government subsidy programs for their very existence. U.S. Representative Mike Pompeo of Wichita has introduced legislation to end all tax credits related to energy production, including wind and solar. We should rely on markets instead of government to decide which energy forms are best for the country. Mayor Brewer should not hitch Wichita’s wagon to energy forms that are bound to be losers in the long run, and even in the very near future.

  • An ill wind blows in Kansas: The politics of renewable energy

    Kansas Representative Charlotte O’Hara, who represents Kansas House District 27 in southern Johnson County, offers a look at the politics surrounding wind power in Kansas. Besides O’Neal, other prominent supporters of renewable energy in Kansas include Kansas Governor Sam Brownback, who has been vocal in his support of wind power. So too has been Wichita Mayor Carl Brewer, who has been busy promoting Wichita as a site for wind energy-related industry. Contrast this with U.S. Representative Mike Pompeo of Wichita, who has introduced legislation to end all tax credits related to energy production.

    An ill wind blows in Kansas: The politics of renewable energy

    By Kansas Representative Charlotte O’Hara

    The world of Topeka politics continue to amaze, frustrate, entertain and humor me in my second year of representing the 27th District. Case in point:

    On Tuesday of this week during the Republican Caucus discussion of HB 2446 (concerning the expansion of definition of alternative energy to include storage facilities/devices) this fact came to light: The Kansas Legislature, in 2009, passed the Renewable Energy Standards Act (KSA 66-1258), which requires 10 percent of our power companies’ capacity to be from renewable energy sources by 2011, 15 percent in 2016 and 20 percent in 2020.

    So, being the conservative that I am, I suggested an amendment that would freeze renewable energy standards to the current 10 percent. Rep. Dennis Hedke carried the amendment on the floor. The amendment received 43 votes.

    Only 43 out of 125 representatives voted to stop strangling the Kansas economy and burdening consumers with high energy costs of these draconian requirements. According to the Heritage Foundation, just a 15% renewable energy mandate would increase electricity prices for consumers by as much as 11.3 percent!

    After the defeat of the amendment, Rep. Forrest Knox introduced an amendment that would tie the freeze to licensing of the Holcomb Power Plant, which currently has been stopped by federal court and another environmental impact study has been ordered. The Knox amendment received 65 votes, a majority. However Speaker of the House Mike O’Neal (who voted against both amendments) interceded and referred the amended bill, HB 2446, back to committee (with the approval of the House members) and removing it from final action.

    So, why would Speaker O’Neal oppose a freeze at the current 10% on the Kansas Renewable Standard Act? Well, let’s see. Could it possibly be that these required increased standards in Kansas law is why Siemens chose Hutchinson (O’Neal’s district) in 2009 to locate a $35 million wind turbine plant? Is this the type of crony capitalism we want to build our economic future on in Kansas?

    Another wrinkle in the future of renewable energy is that extension of federal tax credits is in doubt. Those credits currently subsidize renewables by 2.1 cents per kw. Without the federal, state and local tax incentives, abatements and exemptions, the economics of renewable energy collapses.

    Here is a link to Heritage Foundation on this issue of renewable energy subsidies: No More Energy Subsidies: Prevent the New, Repeal the Old.

    It always puzzles me why after the fall of the Soviet Union, government mandated / subsidized / incentivized industries continue to flourish in the U.S. and, in particular, here in our own Kansas backyard.

    So, if you would like to register your concerns about the Speaker’s action to circumvent final action on HB 2446, which as amended would freeze Kansas Renewable Energy Act requirement at 10 percent and stop it from going to 20 percent, call his office: 785-296-2302 or e-mail at Mike.ONeal@house.ks.gov