Voice For Liberty

Tag: Economic development

  • Kansas tax burdens getting heavier, studies show

    While Kansas ranks in the middle of the states in total tax burden, the state’s take is getting larger, compared to other states.

    This finding is important as Kansas and its largest city are increasingly using favorable tax treatment to centrally plan and manage economic development. When the state allows a company’s employee withholding taxes to be used for its own exclusive benefit — as outgoing Governor Mark Parkinson recently granted to Wichita’s Bombardier Learjet — it increases the cost of government for everyone else.

    The Kansas PEAK bill that the legislature passed this year allows this practice to be extended to more and smaller companies.

    In cities like Wichita, the city council routinely grants tax abatements and other favorable tax treatment to companies that it believes are deserving.

    The result of all this intervention is that the tax base is narrowed, and the high cost of government is born by a smaller group of taxpayers.

    To top it off, the result of this centralized planning and management of economic development is: pretty much zero.

    In 2008 the Kansas Legislative Division of Post Audit looked at the use of economic development incentives in Kansas, examining some $1.3 billion in spending over five years. In examining the literature, the auditors found: “Most studies of traditional economic development incentives suggest these incentives don’t have a significant impact on economic growth.”

    It also found: “The majority of research concludes there is a lack of demonstrated impact from the typical types of economic development assistance, and that incentives aren’t cost-effective.” The audit can be read at Economic Development: Determining the Amounts the State Has Spent on Economic Development Programs and the Economic Impacts on Kansas Counties. The document has an executive summary.

    The concentrating of the cost of government on a shrinking tax base spells trouble. One solution that I proposed to the Wichita city council is that when tax incentives are given, the city reduce its spending by the cost of the incentive: “The harmful effect of this tax abatement is this: When someone escapes paying taxes, someone else has to make up the difference. … As long as this body is willing to grant tax abatements and other special tax favors, I propose this simple pledge: that when the City of Wichita allows a company to escape paying taxes, that it reduce city spending by the same amount. By following this simple rule, the City can be reminded of the cost of granting special tax favors, and the rest of us won’t have to pay for them.”

    Kansas tax burdens getting heavier, studies show

    By Gene Meyer, Kansas Reporter

    (KansasReporter) TOPEKA, Kan. – Kansans’ state and local sales taxes are now 12th highest in the nation, though their total tax burden is nearer the middle of the pack in 24th place, say two new reports released Thursday.

    But, as investment companies always remind us when pitching their new products, your actual results may vary.

    “Even within a state, it can be difficult to know what the average tax rate is when there can be hundreds of different jurisdictions charging different rates,” said Kail Padgitt, an economist at the Washington, D.C. based Tax Foundation, which calculates Kansas’ 7.95 percent average state and local sales taxes are 12th highest in the nation.

    Within that average, though, actual local rates in some 790 different county, local and special tax districts across Kansas vary from 6.3 percent where only the basic state rate is charged to more than 10.5 percent in a few special taxing districts.

    The ranking, one of the first nationally to include Kansas’ recently raised 6.3 percent statewide sales tax that became effective July 1, puts the 12th ranked Sunflower state higher than its neighbors in 15th ranked Missouri, 25th ranked Colorado and 29th ranked Nebraska. Only Oklahoma, where an average 8.33 percent sales tax burden clocks in at seventh highest in the nation, comes in higher.

    Continue reading at Kansas Reporter

  • Wichita Community Improvement District approvals signal increased interventionism

    Yesterday’s action by the Wichita City Council in approving two Community Improvement Districts signals a new era in increased intervention in free markets by Wichita politicians and bureaucrats.

    CIDs are a creation of the Kansas Legislature from the 2009 session. They allow merchants in a district to collect additional sales tax of up to two cents per dollar. The extra sales tax is used for the exclusive benefit of the CID.

    Although at past city council meetings some members seemed as though they might view the districts with skepticism, there was little meaningful discussion, and no council members voted against the formation of the districts.

    The mayor and city council members are unable — or unwilling — to consider the harmful effects of their interventions in creating special tax districts.

    Or, it might be that some strategic campaign contributions helped city council members make up their minds. While I believe that Council Member Lavonta Williams is an honest and honorable council member, we have to be concerned when campaign contributions are made by people who know they will be asking the council for special treatment and favor, as Christian Ablah did yesterday.

    He got what he wanted from the council. Wichita taxpayers lost.

    The city looks silly when it jumps through hoops to conform to laws that shape the way it conducts economic development. As I urged the council:

    Let’s stop distinguishing between “eligible costs” and other costs. When we use a term like “eligible costs” it makes this process seem benign. It makes it seem as though we’re not really supplying corporate welfare and subsidy to the developers.

    As long as the developer has to spend money on what we call “eligible costs,” the fact that the city subsidy is restricted to these costs has no economic meaning.

    Suppose I gave you $10 with the stipulation that you could spend it only on next Monday. Would you deny that I had enriched you by $10? As long as you were planning to spend $10 next Monday, or could shift your spending, this restriction has no economic meaning.

    The issue of high-tax districts being a consumer protection issue didn’t resonate with the council, either. There are several council members who normally would be in favor of exposing greedy merchants who overcharge people, but not in this case. Maybe it’s the campaign contributions again.

    Even pointing out how the city works at cross-purposes with itself doesn’t work. We spend millions every year subsidizing airlines so that airfares to Wichita are low. Then we turn around and add extra tax to visitors’ hotel bills, with Vice Mayor Jeff Longwell and the Wichita Eagle editorial board approving this as a wise strategy.

    People remember high taxes. I don’t think it’s a good strategy to establish high-tax districts designed to capture extra tax revenue from visitors to our city.

    But perhaps the simplest public policy issue is this: If merchants feel they need to collect additional revenue from their customers, why don’t they simply raise their prices? Why the roundabout process of the state collecting extra sales tax, only to ship it back to the merchants in the CID?

    No one at Wichita city hall wants to talk about this, at least in public.

    Next month the city will hold public hearings for three proposed CIDs in addition to the two approved yesterday. I suspect that the next year will see many more proposed.

    With each intervention like this — not to mention each TIF district, STAR bond, industrial revenue bond with accompanying tax abatement, forgivable loan, EDX property tax exemption, historic preservation income tax credit, and other programs — Wichita and Kansas move farther away from the principles of economic freedom that have created prosperity, and move closer to a centrally planned economy. Those have not worked out well.

  • More Wichita Community Improvement Districts proposed

    Tomorrow’s meeting of the Wichita City Council will consider starting the process for the approval of three Community Improvement Districts in Wichita.

    CIDs are a creation of the Kansas Legislature from the 2009 session. They allow merchants in a district to collect additional sales tax of up to two cents per dollar. The extra sales tax is used for the exclusive benefit of the CID.

    CIDs may work in one of two ways: First, the city might sell special obligation bonds, give the money to the applicant, and pay off the bonds with the extra sales tax that is collected.

    The other way is “pay-as-you-go,” in which the extra sales tax is sent to the applicant as it is collected.

    Tomorrow’s city council meeting will accept petitions by property owners in the proposed CIDs and set dates for public hearings, usually around 30 days in the future.

    The first of the proposed CIDs is the Bowllagio project at Kellogg and Maize Road. This is proposed to be a pay-as-you-go CID, meaning that the city will not issue bonds. The applicant proposes to collect the full two cents per dollar extra tax for up to 22 years.

    The second is a development in the 2600 block of north Maize Road titled Central Park Place Development. The applicant proposes collecting an additional one cent per dollar for up to 22 years on a pay-as-you-go basis.

    The third project is Planeview Grocery Store Project at George Washington Blvd. and Pawnee in southeast Wichita. This applicant proposed to collect two cents per dollar extra sales tax on a pay-as-you-go basis. This applicant also proposes creating a tax increment financing (TIF) district.

    According to city documents, a goal of this project is to provide “affordable access to grocery shopping to the underserved Planeview area.” But if affordability is a goal of this project, we have to question the wisdom of adding two cents per dollar spent to the grocery bills of low income people.

    Community Improvement Districts and public policy

    There are several public policy issues surrounding Community Improvement Districts that deserve consideration.

    First, the extra sales tax collected in these districts needs to be considered from a consumer protection perspective. How will shoppers in these districts learn that they are going to be paying extra sales tax? While some shoppers may not care, certainly low-income shoppers need to stretch their grocery dollars. Asking them to spend two cents extra per dollar doesn’t seem like the city is watching out for the best interests of its citizens.

    Then there’s the “tax our visitors” strategy of council member and Vice Mayor Jeff Longwell and some other council members. Since the extra sales taxes in some CIDs like a hotel will largely be paid by visitors, it’s a wise economic development strategy, they say.

    We need to consider, however, the effect of these high sales tax districts on visitors to Wichita. Will they be happy with their decision to visit Wichita once they learn of the high taxes on their hotel or restaurant bill? Will they mistakenly assume that these high taxes apply to the entire city? When corporate expense accounting sees the high taxes charged in Wichita, will they want to send business here again?

    But perhaps the simplest public policy issue is this: If merchants feel they need to collect additional revenue from their customers, why don’t they simply raise their prices? Why the roundabout process of the state collecting extra sales tax, only to ship it back to the merchants in the CID?

    No one at Wichita city hall has an answer for this question.

  • The ‘tax expenditure’ solution for our national debt

    While most critics of government spending focus on entitlements, regular appropriations, and earmarks, there is a category of spending that not many pay much attention to. The spending is called “tax expenditures.”

    It’s a big issue. As economist Martin Feldstein writes in the Wall Street Journal, tax expenditures will increase the federal budget deficit by $1 trillion this year.

    Tax expenditures are implemented through the tax system. It’s usually the income tax system, especially at the federal level. Taxpayers may receive tax credits, which reduce the tax that must be paid dollar for dollar. Many credits are refundable, meaning that if the taxpayer has no tax liability, the government will send the recipient a check. Examples cited by Feldstein include “$500 million annual subsidy for the rehabilitation of historic structures and a $4 billion annual subsidy of employer-paid transportation benefits.”

    While supporters of many of these programs portray them as not costing the government anything, Feldstein writes that they do: “These tax rules — because they result in the loss of revenue that would otherwise be collected by the government — are equivalent to direct government expenditures.”

    I argued this in testimony I presented to a committee in the Kansas Legislature this year, when it was considering restoring and expanding the Kansas historic preservation tax credit program. I told committee members: “We must recognize that a tax credit is an appropriation of Kansans’ money made through the tax system. If the legislature is not comfortable with writing a developer a check for over $1,000,000 — as in the case with one Wichita developer — it should not make a roundabout contribution through the tax system that has the same economic impact on the state’s finances.”

    In that committee, not one member voted against this program, even though the committee has some members who consider themselves very fiscally conservative and hawks on spending.

    Here in Wichita, the city council regularly steers spending to certain companies through the tax system by granting property tax exemptions and tax increment financing.

    Feldstein describes problems with spending implemented through the tax system:

    • Politicians use tax expenditures to grow the welfare state. While proposing a freeze on discretionary spending, President Obama at the same time proposed an expansion of a tax credit program for child or elderly care.
    • Once enshrined in the tax law, these appropriations don’t have to be reauthorized each year. They’re on auto-pilot, so to speak.
    • Eliminating tax expenditures is looked on by Republicans as a tax increase, so they are reluctant to support their elimination. Felstein counters: “But eliminating tax expenditures does not increase marginal tax rates or reduce the reward for saving, investment or risk-taking.”
    • Tax expenditures distort the economy in harmful ways: “[Eliminating tax expenditures] would also increase overall economic efficiency by removing incentives that distort private spending decisions.”

    Feldstein concludes: “Cutting tax expenditures is really the best way to reduce government spending. And to be politically acceptable, the cuts in tax expenditures must be widespread, requiring most taxpayers to give up something so that the fiscal deficits can decline.”

    The ‘Tax Expenditure’ Solution for Our National Debt

    The credits and subsidies that make the tax code so complicated cost big bucks. Reduce them by third and the debt will be 72% of GDP in 2020 instead of 90%.

    By Martin Feldstein

    When it comes to spending cuts, Congress is looking in the wrong place. Most federal nondefense spending, other than Social Security and Medicare, is now done through special tax rules rather than by direct cash outlays. The rules are used to subsidize a wide range of spending including education, child care, health insurance, and a myriad of other congressional favorites.

    These tax rules — because they result in the loss of revenue that would otherwise be collected by the government — are equivalent to direct government expenditures. That’s why tax and budget experts refer to them as “tax expenditures.” This year tax expenditures will raise the federal deficit by about $1 trillion, according to estimates by the congressional Joint Committee on Taxation. If Congress is serious about cutting government spending, it has to go after many of them.

    Continue reading at the Wall Street Journal (subscription required)

  • Wichita downtown boom could be over before it starts

    As Wichita moves towards the release of the plan for the revitalization of its downtown, urban planners — both local and out-of-town — tell us that there’s a big demand for downtown living. People are tired of suburban living, they say. The recent draft presentation by the city’s planning firm Goody Clancy contained bullet points like “who favor living and working in vibrant downtowns” and “and they are part of broad demographic trends that are much more ‘downtown friendly’ …e.g., almost two-thirds of Wichita’s households include just one or two people.”

    Or, as “uber-geographer” Joel Kotkin wrote in the Wall Street Journal this week: “Pundits, planners and urban visionaries — citing everything from changing demographics, soaring energy prices, the rise of the so-called ‘creative class,’ and the need to battle global warming — have been predicting for years that America’s love affair with the suburbs will soon be over.”

    But as Kotkin later writes: “But the great migration back to the city hasn’t occurred.”

    Kotkin cites some figures showing the decline in the market for downtown condos in a few cities, and concludes “Behind the condo bust is a simple error: people’s stated preferences.” He shows some figures that support his contention that “Demographic trends, including an oft-predicted tsunami of Baby Boom ’empty nesters’ to urban cores, have been misread.”

    These demographic trends are behind the analysis that Goody Clancy uses to promote its vision for downtown Wichita. Kotkin’s research ought to give us concern that downtown visionaries are leading Wichita down a path that really isn’t there.

    Kotkin issues a note of caution for urban planners: “The condo bust should provide a cautionary tale for developers, planners and the urban political class, particularly those political ‘progressives’ who favor using regulatory and fiscal tools to promote urban densification. It is simply delusional to try forcing a market beyond proven demand.”

    What does this mean for Wichita? Wichita’s planners and leaders are promoting a light-handed approach to downtown development, saying, for example, that public financing will be only for public purposes. But Wichita has a history of heavy-handed interventionism in markets, using economic development tools of all types. And as the mayor recently said at a council meeting, he’s recently learned of new types of incentive programs that other cities are using.

    So I think Wichita’s leaders definitely will use the “regulatory and fiscal tools” that Kotkin warns of. It’s only without government intervention that we’ll know whether Wichitans really prefer suburban, downtown, or other forms of living. Urban planners and city hall bureaucrats can’t tell us that.

    The Myth of the Back-to-the-City Migration

    The condo bust should lay to rest the notion that the American love affair with suburbia is over.

    Pundits, planners and urban visionaries—citing everything from changing demographics, soaring energy prices, the rise of the so-called “creative class,” and the need to battle global warming—have been predicting for years that America’s love affair with the suburbs will soon be over. Their voices have grown louder since the onset of the housing crisis. Suburban neighborhoods, as the Atlantic magazine put it in March 2008, would morph into “the new slums” as people trek back to dense urban spaces.

    But the great migration back to the city hasn’t occurred. Over the past decade the percentage of Americans living in suburbs and single-family homes has increased. Meanwhile, demographer Wendell Cox’s analysis of census figures show that a much-celebrated rise in the percentage of multifamily housing peaked at 40% of all new housing permits in 2008, and it has since fallen to below 20% of the total, slightly lower than in 2000.

    Continue reading at the Wall Street Journal (subscription required) or at Kotkin’s website.

  • In Kansas Legislature, a bad year for freedom and liberty

    It was a bad year for economic freedom in the Kansas Legislature. There were the big votes that most people know of — the big-spending budget, the increase in the sales tax, and the statewide smoking ban — but the legislature passed — and the governor signed — many other laws that chip away at personal liberty and economic freedom. The following list contains many of these bills.

    This list was produced by Bob Corkins of Kansas Votes, a project of the Kansas Policy Institute. It contains only bills that were enacted into law. There were, of course, some bad bills that didn’t make it all the way through the lawmaking process.

    Corkins said that 2010 was the worst session for personal liberty that he could think of in more than two decades of working in the Kansas Statehouse. In many cases these bills had broad support among conservatives.

    Some of these bills are concerned with what people might consider to be minor, unimportant matters. But the legislature thought they were important enough to be the subject of legislation. And while some might seem to chip away at personal liberty and economic freedom in small, insignificant ways, taken together over years, it all adds up.

    Further, when lawmakers pass laws like this and no one complains, and when they get re-elected year after year, it emboldens them to take on bigger challenges to personal liberty and economic freedom, like increasing sales or other taxes. It hardens their resolve to block expansions of economic freedom like school choice programs.

    An example of a bill contrary to personal liberty and economic freedom is House Bill 2130, which requires every occupant of a car to wear a safety belt. Now I happen to think seat belts are a great idea. I always wear mine and ask everyone in my car to wear theirs. But it’s a different matter when the state requires their use. It’s an example of lawmakers trying to protect us from ourselves. Once they start down this road, it’s very difficult for them to stop.

    I’m aware of the argument that says because automobile accidents produce serious and costly injuries that drive up the cost of health care for everyone, and seat belt use reduces the severity of these injuries, we ought to regulate the behavior of people by requiring use of seat belts. We can expect to see arguments made like this more often as our nation moves towards greater collectivization of health care and its costs. What we ought to do, however, is reverse this trend in health care.

    An example of a move away from a uniform tax system is House Bill 2554, authorizing the PEAK (Promoting Employment Across Kansas) program. This program allows certain employers to keep most of the withholding tax their employees pay. Programs like this are contrary to economic freedom because, in this case, we have the state deciding how to direct resources. An alternative that is in harmony with economic freedom is to rely on free markets for this guidance. Besides being contrary to economic freedom, there is scant evidence that economic development programs like this work, in terms of increasing overall prosperity.

    Don’t think for a moment, however, that conservative Kansas legislators rose in opposition to this bill and its intervention into free markets. In the Senate, the bill passed 40 to zero. In the House, the bill passed 109 to 12. Of the 12 votes in opposition, eleven were from Democrats who mostly have far-left voting records. Brenda Landwehr was the only Republican to vote against this bill.

    Another example of government intervention in markets is Senate Bill 430, which restored and boosted a historic preservation tax credit program. In my testimony to a House committee on this bill, I said “We must recognize that a tax credit is an appropriation of Kansans’ money made through the tax system. If the legislature is not comfortable with writing a developer a check for over $1,000,000 — as in the case with one Wichita developer — it should not make a roundabout contribution through the tax system that has the same economic impact on the state’s finances.”

    Principles of economic freedom and personal liberty contend that the state should not be spending this money, whether through direct appropriations or the tax system. Very few conservatives voted against this bill on these principles.

    The following list of enacted bills is ordered, Corkins says, from the “most atrocious to the merely very bad.” Each bill is linked to its page on Kansas Votes.

    Senate Bill 572 (Propose state budget for 2011)
    to approve a state budget that would authorize total spending for the current 2010 fiscal year of $5.416 billion in State General Fund spending (SGF, that portion of the budget paid primarily with state-imposed sales and income taxes) and $14.414 billion from All Funds (including SGF, federal aid, and state agency fees), and for spending $5.621 billion SGF and $13.685 from All Funds in fiscal year 2011.

    House Bill 2360 (Increase state sales, income taxes)
    to enact a state sales tax increase from the current 5.3 percent up to 6.3 percent, amend the Kansas Taxpayer Transparency Act, expand the food sales tax rebate program, and expand the state earned income tax credit (EITC) program.

    House Bill 2221 (Ban smoking in public and workplaces)
    to ban smoking in enclosed areas, including all public places, any placy of employment, taxicabs, hallways and more, but would not apply to outdoor areas, private residences, hotel or motel rooms, tobacco shops, certain private clubs and casino gaming floors.

    House Bill 2320 (Impose nursing home tax)
    to create a provider assessment tax on nearly all licensed beds within skilled nursing care facilities in the state of Kansas; deem the Kansas Health Policy Authority to be the state agency to calculate and implement the provider assessment; establish a Quality Care Fund where all assessments and penalties collected through the assessment program would be deposited; and, establish a Quality Care Improvement Panel.

    House Bill 2356 (Increase state inspections of child care facilities)
    to adopt “Lexie’s law” requiring the Department of Health and Environment to inspect every child care facility once every 15 months. The inspection frequency of a family child care home following an initial inspection will be at intervals that the department determines to be appropriate to assess the health, safety and well-being of children being cared for in the family child care home. In addition, to open certain records to the public regarding the identity of maternity center, family day care home, and child care facility licensees, but would allow the state to withhold such information if necessary to protect public health and safety or that of the facility’s patients or children.

    House Bill 2130 (Mandate seat belts, allow traffic stops)
    to amend state law to require every occupant of a passenger care to wear a safety belt. A law enforcement officer would now be permitted to stop a passenger car for any violation of the seat belt requirement by anyone in the front seat or anyone under 18. The fine for violations would be $5 until July 1, 2011, when it would increase to $10.

    House Bill 2650 (Launch new state transportation works program)
    to initiate a new state transportation works program, providing for the construction, improvement and maintenance of the state highway system; authorizing financial transfers between the State Highway Fund and the Rail Service Improvement Fund; increasing vehicle registration fees; increasing the borrowing authority of the Kansas Department of Transportation; and, pledging $8 million in transportation projects for each county in Kansas over the next 10 years.

    Senate Bill 409 (Development of passenger rail service in Kansas)
    to authorize the Kansas Secretary of Transportation to establish and implement a passenger rail service program in the state. To establish the program, the Secretary would enter into agreements with Amtrak and other rail operators to develop passenger rail service serving Kansas and other state. The agreements can include cost-sharing agreements and joint powers agreements. The Secretary should also enter into agreements with local jurisdictions along a proposed route. The bill also gives the Secretary authority to make loans or grants to passenger rail service providers for the purpose of restoring existing rail infrastructure, for rail economic development projects and the cost to initiate and operate passenger rail service. The bill does not specify where program funding would come from.

    House Bill 2476 (Extend and increase court fees)
    to increase a number of court fees and extend such judicial branch surcharges through fiscal year 2011 to fund non-judicial personnel working in the court system; the compromises recommended would alter specific fee increases for specific court actions with the fees ranging generally between $10 and $20.

    Senate Bill 200 (Repeal partial HMO tax, apply full rate to all)
    to repeal the partial state tax of 0.5 percent imposed on premiums charged against a few Health Maintenance Organizations so that the full one percent premiums tax would be applied uniformly against all HMOs.

    House Bill 2582 (Extend and reallocate e-911 tax revenue to locals)
    to delay for one year — until July, 1, 2011 — a provision in current law that discontinues the wireless enhanced 911 grant fee and the VoIP enhanced 911 grant fee, abolishes the wireless enhanced 911 advisory board and the grant fund, and that directs the distribution of the unobligated balance in the grant fund to public safety answering points (PSAPs).

    House Bill 2554 (Expand tax incentives for hiring new workers)
    expanding the PEAK program (Promoting Employment Across Kansas) by liberalizing its definitions, relaxing its requirements so that a company would be eligible if it relocated or expanded a portion of its business operations into the state, permitting qualified companies to retain 95 percent of the employees’ withholding taxes if the median wage paid to the new employees at least equals that paid throughout the county, and by requiring an independent evaluation of economic development incentives administered by the Kansas Department of Commerce.

    House Bill 2226 (Change earmarks of traffic fine revenue, increase fines)
    to increase the fine assessed on traffic infractions that are on the uniform fine schedule by $15. The revenue generated by the increased fines would be distributed to several justice related programs, including the Crime Victims Compensation Fund, the Crime Victims Assistance Fund, the Community Alcoholism and Intoxication Programs Fund, the Boating Fee Fund, the Children’s Advocacy Center Fund, and the criminal justice information system line fund.

    Senate Bill 430 (Limit use of certain tax credits)
    make a 10 percent cut in certain income tax credits permitted under current law; repeal a $3.75 million cap that had been imposed on historic preservation income tax credits; make statutory amendments needed for Kansas to remain in national compliance with the streamlined sales tax act; impose a $10 fee for delinquent taxpayers who enter into an installment payment plan agreement in excess of 90 days from the date of the payment plan agreement; and, people with intangibles tax liability would be required to file their returns with county clerks, rather than the Department of Revenue.

    House Bill 2501 (Allow exemption from liability limit on mortgage insurers)
    to allow the Kansas Department of Insurance to waive (at the sole discretion of the Commissioner of Insurance) the current requirement that a mortgage guaranty insurance company must have a total liability that does not exceed 25 times its capital, surplus and contingency reserve; to amend the definition of “RBC instruction” to mean risk-based capital instructions promulgated by a specified national insurance association; to prohibit firms that offer health care plans from requiring or requesting genetic tests, and prohibiting insurance companies from charging a higher premium because of any genetic test results; and, to grant rights to insurance customers in seeking special exceptions for cases in which their credit histories may affect their insurance coverage, allowing any such customer who experiences an “extraordinary life circumstance” that hurts their credit, and thereby causes an adverse insurance action, to obtain reasonable exceptions to the insurer’s rates.

    House Bill 2485 (Increase evaluation period for trucking licenses)
    to increase the time period from the current 12 up to 18 months for the Kansas Corporation Commission to verify a trucking company’s fitness and regulatory compliance for its continued operation.

    House Bill 2472 (Specify rights in common interest communities)
    to enact a set of rights and duties regarding people who live in common interest communities such as associations of apartment owners, but not owners currently and similarly bound by covenants unless they agree otherwise – setting forth duties in such communities regarding bylaws, owner voting rights, dispute resolutions, access to property, borrowing money, communications with owners, recordkeeping, and other matters; to prohibit until July 1, 2011, any city from adopting or enforcing any rule requiring the installation of a multi-purpose residential fire protection sprinkler system; and, to decrease down to 90 days, but permit a court to extend to up to 180 days, a compliance period for an abandoned property owner to carry out a rehabilitation plan where the property is brought into compliance with fire, housing and building codes and current on all ad valorem property tax owed, and to reduce from three to two years the time a person who purchases a house from an organization that has rehabilitated an abandoned property must occupy the house.

    Senate Bill 389 (Compensation to dentists in health insurance plans)
    to only permit a health insurance plan — including any individual health insurance policy, the State Children’s Health Insurance Plan and the state Medicaid program — to set fees for covered services (and not for uncovered services)provided by a dentist who is a participating provider in the plan.

    Senate Bill 377 (Regulate retainage in construction contracts)
    to prohibit an owner, contractor or subcontractor from withholding more than a five percent limit on the contract as retainage (money withheld to ensure proper work performance); to require release of retainage on an undisputed payment within 30 days after substantial completion of the project; to permit no more than 150 percent of the value of incomplete work, due to a contractor or subcontractor, to be withheld by an owner or contractor and require it be paid within 45 after completion of the work; and, to permit a general contractor to request an alternative security in lieu of retainage, such as an irrevocable bank letter or credit, certificate of deposit or cash bond.

    Senate Bill 373 (Amending application of municipal court fees)
    to require a $19 municipal court fee be imposed uniformly statewide in each case filed in municipal court, other than a nonmoving traffic violation, where there is a finding of guilty, a plea of guilty, a plea of no contest, or a forfeiture of bond or a diversion.

    House Bill 2433 (Liberalize school purchasing process, Prison sales)
    to allow all state educational institutions more independence in choosing how they acquire goods, supplies, equipment, services and land leases without the need to route acquisitions through the Kansas State Director of Purchases; and, to authorize the Department of Corrections for the next three years to sell prison-made goods to private citizens and businesses in Kansas.

    House Bill 2415 (Exempt universities from surplus property law)
    to exempt the six Kansas Regents universities from the current duty to dispose of any of their personal property through the terms of the Kansas Surplus Property Act. That law ordinarily makes the goods available for sale to the general public.

    House Bill 2411 (Criminalize incense, “K2”)
    to criminalize the unauthorized use or possession of certain chemicals known as “K2”, BZP and TFMPP that have been added to herbs and incense to produce hallucinogenic effects when inhaled or consumed.

    House Bill 2353 (Ratify local sales tax vote for jail)
    to retroactively validate a local election last year in Chautauqua County to impose a countywide sales tax where money raised would pay for a new county jail and law enforcement facility.

    House Bill 2160 (Require state workers’ health plan to cover autism)
    to require the state employees’ health plan to cover services for the diagnosis and treatment of autism spectrum disorders in any covered person less than 19 years old, and to require health insurance policies include coverage provisions for orally administered anti-cancer medications.

    Senate Bill 83 (Require licensure of naturopathic doctors)
    to change the regulatory status of naturopathic doctors with the Board of Healing Arts from registrants to licensees and to permit naturopaths to form professional corporations; and, to include two licensure categories — “exempt license” and “federally active license” — in the Physical Therapy Practice Act.

  • Hayek’s star on the rise, sometimes

    Partly due to Glenn Beck’s interest, a book and its ideas is receiving increased attention. F.A. Hayek is the author, and The Road to Serfdom is the book.

    Personally, I find the book difficult to read. An example of Hayek’s writing is from the jacket notes prepared by the author himself: “The economic freedom which is the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right.”

    Someone else might have written: “A socialist government that provides for our needs doesn’t make us free. Freedom, both economic and political, comes from having choices and the power to exercise them. With that comes responsibility and risk.”

    I might suggest interested readers look to The Reader’s Digest condensed version of The Road to Serfdom, which may be purchased or read online at the Institute of Economic Affairs. The forward by Walter E. Williams is especially valuable.

    (Hayek’s realization of the importance of economic freedom is one of the reasons why I named my analysis of votes of the Kansas Legislature the Kansas Economic Freedom Index.)

    This week George Mason University’s Russell Roberts wrote about The Road to Serfdom in the pages of the Wall Street Journal. The article, titled Why Friedrich Hayek Is Making a Comeback and available only to subscribers, lists four of Hayek’s important ideas:

    First, “[Hayek] and fellow Austrian School economists such as Ludwig Von Mises argued that the economy is more complicated than the simple Keynesian story.”

    Second, Hayek recognized the Federal Reserve’s control of monetary policy as a factor in the business cycle. Applied to current events, Roberts writes: “Former Fed Chairman Alan Greenspan’s artificially low rates of 2002-2004 played a crucial role in inflating the housing bubble and distorting other investment decisions. Current monetary policy postpones the adjustments needed to heal the housing market.”

    Third, “political freedom and economic freedom are inextricably intertwined. In a centrally planned economy, the state inevitably infringes on what we do, what we enjoy, and where we live.”

    Fourth, “order can emerge not just from the top down but from the bottom up. … Hayek understood that the opposite of top-down collectivism was not selfishness and egotism. A free modern society is all about cooperation. We join with others to produce the goods and services we enjoy, all without top-down direction. The same is true in every sphere of activity that makes life meaningful — when we sing and when we dance, when we play and when we pray. Leaving us free to join with others as we see fit — in our work and in our play — is the road to true and lasting prosperity. Hayek gave us that map.”

    In Wichita, we see the importance of economic freedom ignored — trampled upon, I might say — on a regular basis as the City of Wichita seeks to direct economic development in our town from city hall. We are entering an especially dangerous period, as the master plan for the revitalization of downtown Wichita will soon be in place. This form of centralized planning by government is precisely what Hayek warns against.

    Why Friedrich Hayek Is Making a Comeback

    With the failure of Keynesian stimulus, the late Austrian economist’s ideas on state power and crony capitalism are getting a new hearing.

    By Russ Roberts

    He was born in the 19th century, wrote his most influential book more than 65 years ago, and he’s not quite as well known or beloved as the sexy Mexican actress who shares his last name. Yet somehow, Friedrich Hayek is on the rise.

    When Glenn Beck recently explored Hayek’s classic, “The Road to Serfdom,” on his TV show, the book went to No. 1 on Amazon and remains in the top 10. Hayek’s persona co-starred with his old sparring partner John Maynard Keynes in a rap video “Fear the Boom and Bust” that has been viewed over 1.4 million times on YouTube and subtitled in 10 languages.

    Why the sudden interest in the ideas of a Vienna-born, Nobel Prize-winning economist largely forgotten by mainstream economists?

    Continue reading at the Wall Street Journal (subscription required)

  • Wichita downtown master plan meetings scheduled

    Recently planning firm Goody Clancy presented the master plan for the revitalization of downtown Wichita. This plan is in “draft” form, meaning that input is being solicited, with revisions appearing in the final version expected to be ready in September.

    In order that citizens may become familiar with the draft plan, the Wichita Downtown Development Corporation, the City of Wichita, and Visioneering Wichita will present the plan at a series of community meetings. The schedule is:

    July 7: Atwater Neighborhood City Hall (2755 E. 19th St. N.)
    July 8: Evergreen Library (2601 N. Arkansas)
    July 12: Haysville Public Library (210 S. Hays)
    July 13: Bel Aire City Hall (7651 E. Central Park Ave.)
    July 14: Derby City Hall (611 Mulberry)
    July 19: 1st United Methodist Church (330 N. Broadway) Meredith Room
    July 20: WSU Metroplex (5015 E. 29th St. N.) Entrance C
    July 21: Sedgwick County Extension (7001 W. 21st St.)

    All meetings begin at 7:00 pm.

  • Wichita should follow Lawrence’s lead in tax warnings

    Is there a point where sales taxes become so high that consumers need to be warned?

    Sales tax is already high in the northeast Kansas college town of Lawrence, home to the University of Kansas Jayhawks. After July 1, the combined sales tax rate — state, county, and city — will be 8.85 percent.

    Lawrence has two districts where an extra one cent per dollar is added to that. Like Wichita, Lawrence is considering creating Community Improvement Districts, where merchants add up to another two cents per dollar in sales tax. The proceeds of that extra sales tax go to the exclusive benefit of the district.

    In Lawrence, therefore, the sales tax in some parts of town could reach 10.85 percent. On in round numbers, eleven cents per dollar spent.

    That has the mayor and some city council members concerned, according to reporting in the Lawrence Journal-World. According to the article: “Commissioners said they have heard multiple concerns from residents who fear they may buy products at locations without knowing they are paying the extra tax.”

    That’s a problem. Most people are generally aware of their state’s sales tax rate, and of that in the city where they live. But shoppers are just starting to realize that different stores in a city may charge different sales tax rates. A Kansas Reporter story has more on this.

    So the issue is this: should high-tax zones be required to post signage warning shoppers that they’ll pay more sales tax by shopping there?

    Some in Lawrence are worried that the signs are bad for business, both within the high-tax districts, but also for the city as a whole. I think they’re right: taxes — and the realization thereof — are bad for business and consumers.

    In Wichita, the only community improvement district approved so far is for a hotel. According to Wichita City Council Member and Vice Mayor Jeff Longwell, the fact that the extra sales tax will be paid almost exclusively by visitors to our city is a wise economic development strategy.

    With or without signs warning of high sales tax districts, local shoppers will eventually learn where these districts exist. Our out-of-town visitors, however, probably won’t learn of the high tax rates until they receive their bill. Then, one of two realizations will set in: They’ll either curse themselves for staying at a hotel in a special high-tax district, or they they may form an impression that sales tax is very high in the entire City of Wichita or State of Kansas.

    Either way, Longwell’s soak-the-visitors tax strategy isn’t likely to make Wichita many friends.