Voice For Liberty

Tag: Economic development

  • Wichita needs transparency from its agencies

    Wichita needs transparency from its agencies

    When the Wichita city council delegates spending to outside agencies such as Visit Wichita, it should insist on the same transparency requirements the city itself faces.

    The Kansas Open Records Act is designed to give citizens access to data concerning their government. In the words of the Kansas Attorney General, “An open and transparent government is essential to the democratic process.”

    The preamble to the Kansas act states, “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.” (emphasis added)

    That isn’t always the case in Wichita. Here, the city has formed several non-profit organizations that are funded in large part by tax revenue. But these organizations believe they are not covered by KORA, and so far the city agrees with that.

    An example is Visit Wichita, the city’s convention and visitors bureau. This week the Wichita City Council will consider the scope of services and budget for the money the agency receives from Wichita’s Tourism Business Improvement District. This is a tax of 2.75 percent that is added to hotel bills in the city. From 2016 to 2018 this tax brought in an average of just over three million dollars per year.

    If the city itself was spending these funds, there is no doubt that the spending records would be public. But Visit Wichita wants to spend this money in secret. It also wants to enter into contracts in secret.

    In the Kansas law, here is the definition of a public agency: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.” There is an exception, which doesn’t apply here: “‘Public agency’ shall not include: … Any entity solely by reason of payment from public funds for property, goods or services of such entity.”

    As can be seen in the nearby table, Visit Wichita gets around 93 percent of its funds from taxes. Surely this qualifies as “supported in whole or in part by the public funds.”

    In the past, agencies have objected to the release of records on the basis that they would reveal information or strategies that would benefit Wichita’s competitors for jobs, conventions, and tourists. But the requests I have made (and which were rejected) asked for past data, not contemporaneous data. Further, if Wichita was successful in attracting jobs, conventions, and tourists, this might make some sense. But Wichita lags in these categories, which means that oversight is important. For example, among large hotel markets in Kansas, Wichita is near the bottom in growth.

    The records that Visit Wichita needs to disclose are its spending records, which means the checks it has written and credit card charges made. It also needs to disclose its contracts. This is the law, and it is also good public policy.

    When my records requests were rejected, I asked the Sedgwick County District Attorney to enforce the law. The DA sided with Visit Wichita (then known as Go Wichita) and the city’s other non-profit agencies, concluding that they were not “public agencies.”

    That determination simply meant that Visit Wichita could not be forced to reveal records. But it does not prohibit the agency from supplying records — if it wanted.

    This issue is important so that people can trust their government. But leadership in Wichita has not agreed. Now, as Wichita considers large public investments in facilities like a convention center — something desired by Visit Wichita — we need transparency, not secrecy.

    Wichita Mayor Brandon Whipple campaigned on greater government transparency. An amendment to the city’s recommended action could require that Visit Wichita recognize itself for what it is — a public agency as defined in the Kansas Open Records Act. Proposing a motion to include this requirement would allow the mayor to fulfill a campaign promise, and it would let Wichitans know where council members stand on this issue.

    For more information, see Open Records in Kansas.

    Click for larger.
  • Wichita city council to address misunderstanding

    Wichita city council to address misunderstanding

    The Wichita city council will address a misunderstanding regarding imprecise language in an economic development incentive agreement.

    This week the Wichita City Council will address a mistake or misunderstanding regarding an economic incentive. Briefly, a company that received a tax abatement believed that land was included in the abatement. When it received a bill for tax on the land, it paid it and inquired to the city as to why it received a bill for taxes it believed it would not owe.

    Documents for the meeting state: “The agenda report and Economic Development Incentive Agreement did not specifically state that the land would not be exempt from property tax.” The agreement, which was approved at the January 16, 2018 council meeting, states: “… it is the City’s intention that the acquisition and equipping of a building by the Company pursuant to Section 1.A., above, shall be entitled to an 100% exemption from ad valorem taxation …” (Section 1.A. specifies a time frame and amount of investment, which it appears the company satisfied.)

    The ordinance that the council passed states: “5. Tax exemption will be given only for the acquisition and equipping of the building.” It seems that the term “acquisition” is the source of uncertainty. Another source of confusion might be the original agenda packet which refers to “estimated value of the real property tax exemption.” The usual definition of real property is buildings and land.

    The recommended action is that the council side with the company, that is, grant the tax abatement on land as the company believed it would receive, and apply the abatement to the remaining years of the agreement. Additionally, the city will reimburse the company for the taxes it paid on the land.

    In the agenda review meeting on Friday, the city manager said that the documents are not clear regarding land and that the city is taking steps to clarify language in future agreements. Also, at least two staff members will be involved in calculations.

    City staff assured the council that the cost-benefit analysis has been revised. But the numbers contained in the agenda for this week are exactly the same as in the original agenda from January 2018.

    Of note, this is not the only correction the council may want to address this week. In a different agenda item regarding tax increment financing for the Chester I. Lewis Reflection Park, a table is titled “West Bank Redevelopment District Delano and Stadium Project.”

  • Wichita jobs and employment, March 2020

    Wichita jobs and employment, March 2020

    For the Wichita metropolitan area in March 2020, the labor force is up, the number of unemployed persons is up, the unemployment rate is down, and the number of people working is up when compared to the same month one year ago. Seasonal data shows increases in labor force and jobs from February, with the unemployment rate unchanged. It is unclear how the pandemic has affected this data.

    Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving employment situation for the Wichita Metropolitan Statistical Area for March 2020.

    Because of the COVID-19 pandemic, it is difficult to assess the meaning of the March data. BLS gathers this data through two survey programs. For employment data derived from the Current Employment Statistics (CES) program, also known as the payroll survey or the establishment survey and which counts jobs, the estimate is for the pay period that includes the twelfth day of the month. For data from the Current Population Survey, which counts people, the estimate is for the “reference week,” which is usually the week that includes the twelfth day of the month. For the Wichita metropolitan area, here are the dates of some major events that would be expected to affect employment:

    • March 13: President Trump declares a national emergency that began on March 1.
    • March 16: Social distancing guidelines announced for the nation.
    • March 24: Kansas City metro area stay-at-home order takes effect.
    • March 25: Sedgwick County stay-at-home order takes effect.
    • March 30: Kansas stay-at-home order takes effect.

    As noted, the BLS data is collected nearer the start of the month than the end. For Wichita, these events that should affect employment occurred mostly towards the end of the month. There were also these two major events that affected employment in recent months: Spirit Aerosytems announced layoffs (2,796) that started January 22 1, according to news reports, and Textron (875) the month before 2.

    BLS also offered this guidance, and more, for the March data:

    We cannot precisely quantify the effects of the pandemic on the job market in March. However, it is clear that the decrease in employment and hours and the increase in unemployment can be ascribed to the effects of the illness and efforts to contain the virus. It is important to keep in mind that the March survey reference periods for both surveys predated many coronavirus-related business and school closures in the second half of the month. 3

    Click charts and tables for larger versions.

    Total nonfarm employment rose from 302,800 last March to 307,100 in March 2020. That’s an increase of 4,300 jobs (1.4 percent). (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, employment in the nation grew by 1.0 percent. The unemployment rate in March 2020 was 3.5 percent, down from 3.6 percent one year ago.

    Considering seasonally adjusted data from the household survey, the labor force rose by 800 persons (0.3 percent) in March 2020 from February 2020, the number of unemployed persons rose by 95 (0.9 percent), and the unemployment rate was 3.5 percent, unchanged from February January. The number of employed persons not working on farms rose to 307,367 in March from 306,662 the prior month, an increase of 705 persons (0.2 percent).

    The following chart of the monthly change in labor force and employment shows the positive trend in employment and labor force over the last year. In some months the change has been small, but always positive, with one exception.

    The following chart of changes from the same month one year ago shows a slight decline in the rate of growth of both employment and labor force, but with both still growing.

    The following chart of changes in employment from the same month of the previous year shows months when the Wichita MSA performed better than the nation. Over the past 12 months, the average monthly job growth for the nation was 1.33 percent, and for the Wichita MSA, 1.56 percent.

    The following two charts show changes in jobs for Wichita and the nation over longer periods. The change is calculated from the same month of the previous year. For times when the Wichita line was above the nation, Wichita was growing faster than the nation. This was often the case during the decades starting in 1990 and 2000. Since 2010, however, Wichita has rarely outperformed the nation and sometimes has been far below the nation.

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    Notes

    1. https://www.kansasworks.com/ada/mn_warn_dsp.cfm?id=2021 ↩
    2. Textron, Inc. Form 8-K, December 5, 2019. Available at https://www.sec.gov/ix?doc=/Archives/edgar/data/217346/000110465919070378/tm1924597-1_8k.htm. ↩
    3. Bureau of Labor Statistics. Frequently asked questions: The impact of the coronavirus (COVID-19) pandemic on The Employment Situation for March 2020. Available at http://www.bls.gov/cps/employment-situation-covid19-faq-march-2020.pdf. ↩
  • Wichita jobs and employment, February 2020

    Wichita jobs and employment, February 2020

    For the Wichita metropolitan area in February 2020, the labor force is up, the number of unemployed persons is up, the unemployment rate is up, and the number of people working is up when compared to the same month one year ago. Seasonal data shows increases in labor force and jobs from January.

    Data released yesterday by the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving employment situation for the Wichita Metropolitan Statistical Area.

    Click charts and tables for larger versions.

    Total nonfarm employment rose from 302,300 last February to 307,000 this February 2020. That’s an increase of 4,700 jobs (1.6 percent). (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, employment in the nation grew by 1.6 percent. The unemployment rate in February 2020 was 3.8 percent, up from 3.6 percent one year ago.

    Considering seasonally adjusted data from the household survey, the labor force rose by 1,594 persons (0.5 percent) in February 2020 from January 2020, the number of unemployed persons rose by 192 (1.8 percent), and the unemployment rate was 3.5 percent, up from 3.4 percent in January. The number of employed persons not working on farms rose to 303,935 in February from 302,533 the prior month, an increase of 1,402 persons (0.5 percent).

    A note regarding recent layoffs and COVID-19

    This data is for February 2020. Spirit Aerosytems announced layoffs (2,796) that started January 22 1, according to news reports, and Textron (875) the month before 2. The effect of these layoffs should be realized in these statistics. For employment data derived from the Current Employment Statistics (CES) program, also known as the payroll survey or the establishment survey, the estimate is for the pay period that includes the twelfth day of the month. For data from the Current Population Survey, which counts people, the estimate is for the “reference week,” which is usually the week that includes the twelfth day of the month. This data was collected well before there was any talk of closing businesses due to the COVID-19 pandemic.

    The following chart of the monthly change in labor force and employment shows the positive trend in employment and labor force over the last eight months.

    The following chart of changes from the same month one year ago shows a decline in the rate of growth of both employment and labor force, but with growth returning the past six or seven months.

    The following chart of changes in employment from the same month of the previous year shows months when the Wichita MSA performed better than the nation. Over the past 12 months, the average monthly job growth for the nation was 1.37 percent, and for the Wichita MSA, 1.81 percent.

    The following two charts show changes in jobs for Wichita and the nation over longer periods. The change is calculated from the same month of the previous year. For times when the Wichita line was above the nation, Wichita was growing faster than the nation. This was often the case during the decades starting in 1990 and 2000. Since 2010, however, Wichita has rarely outperformed the nation and sometimes has been far below the nation.

    —
    Notes

  • Freestanding emergency room in Wichita closes

    Freestanding emergency room in Wichita closes

    The conversion of a medical facility should receive city scrutiny due to tax breaks granted based on its original use.

    The Wichita Eagle reports that a freestanding emergency room in northeast Wichita has closed after two years. It will be converted to a cardiology office under the same ownership.

    As I reported in Free standing emergency department about to open in Wichita, the facility received property tax abatements worth an estimated $61,882 per year in the first year. The abatement was scheduled to last for five years, with a likely extension for an additional five years. These abatements were obtained through the use of the industrial revenue bonds program.

    The emergency room, also called a freestanding emergency department, qualified for tax abatements under a city policy that “requires medical facilities to attract at least 30% of patients from outside the Wichita MSA.” It is not known whether the shift from an emergency department to a cardiology office will meet this requirement.

    Further, the ordinance the council passed refers specifically to “an emergency medical facility,” not a cardiology office.

    These two significant changes ought to, at minimum, be brought to the attention of the Wichita City Council.

    Also reported in Free standing emergency department about to open in Wichita, treatment in these emergency departments is expensive. While I do not have information on this specific ED, UnitedHealth Group found this in its analysis of freestanding emergency departments: “FSEDs largely treat non-emergent conditions: 2.3 percent of FSED visits in the U.S. are emergent or immediate and require services unique to an ED.” Also, “In Texas, the average cost of treating common conditions at an FSED ($3,217) is 22 times more than at a physician office ($146) and 19 times more than at an urgent care center ($167).” UnitedHealth Group is a large insurer.

  • Wichita jobs and employment, January 2020

    Wichita jobs and employment, January 2020

    For the Wichita metropolitan area in January 2020, the labor force is up, the number of unemployed persons is down, the unemployment rate is down, and the number of people working is up when compared to the same month one year ago. Seasonal data shows increases in labor force and jobs from December.

    Data released yesterday by the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving employment situation for the Wichita Metropolitan Statistical Area.

    Click charts and tables for larger versions.

    Total nonfarm employment rose from 299,400 last January to 303,100 this January 2020. That’s an increase of 3,700 jobs (1.2 percent). (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, employment in the nation grew by 1.5 percent. The unemployment rate in January 2020 was 3.7 percent, down from 3.9 percent one year ago.

    Considering seasonally adjusted data from the household survey, the labor force rose by 1,149 persons (0.4 percent) in January 2020 from December 2019, the number of unemployed persons rose by 79 (0.7 percent), and the unemployment rate was 3.4 percent, unchanged from December. The number of employed persons not working on farms rose to 302,522 in January from 301,452 the prior month, an increase of 1,070 persons (0.4 percent).

    The following chart of the monthly change in labor force and employment shows the positive trend in employment and labor force over the last nine months.

    The following chart of changes from the same month one year ago shows a decline in the rate of growth of both employment and labor force considering the entire year, but with growth returning the past five or six months.

    The following chart of changes in employment from the same month of the previous year shows months when the Wichita MSA performed better than the nation. Over the past 12 months, the average monthly job growth for the nation was 1.38 percent, and for the Wichita MSA, 1.80 percent.

    The following two charts show changes in jobs for Wichita and the nation over longer periods. The change is calculated from the same month of the previous year. For times when the Wichita line was above the nation, Wichita was growing faster than the nation. This was often the case during the decades starting in 1990 and 2000. Since 2010, however, Wichita has rarely outperformed the nation and sometimes has been far below the nation.

    A note regarding recent layoffs

    This data is for January 2020. Spirit Aerosytems announced layoffs that started January 22, according to news reports. The effect of these layoffs is probably not realized in these statistics. For employment data derived from the Current Employment Statistics (CES) program, also known as the payroll survey or the establishment survey, the estimate is for the pay period that includes the twelfth day of the month. For data from the Current Population Survey, which counts people, the estimate is for the “reference week,” which is usually the week that includes the twelfth day of the month.

    Photo credit unsplash-logoDorrell Tibbs

  • Intrust Bank Arena economic impact holds mistake

    Intrust Bank Arena economic impact holds mistake

    A report on the economic impact of the first ten years of operation of the Intrust Bank Arena in downtown Wichita incorrectly reported tax revenue.

    Recently Intrust Bank Arena in downtown Wichita promoted the results of an analysis of the economic impact of the arena through its first ten years of operation. 1 The arena partnered with the Center for Economic Development and Business Research at Wichita State University to conduct the study. 2

    In all, the report claims $2.7 million over ten years in Sedgwick County guest tax revenue paid by out-of-town arena visitors who stayed in local hotels. But while the county has a guest tax, it does not raise nearly the dollars shown in the report.

    The transient guest tax, sometimes called a guest tax or bed tax, is a tax on a hotel bill. It is collected in addition to retail sales tax. In the City of Wichita, hotel guests pay 7.5 percent retail sales tax, an additional six percent guest tax, and an additional 2.75 percent city tourism fee. If the hotel is located within a Community Improvement District, an additional tax of up to two percent is collected.

    The guest tax for Sedgwick County was last revised in 2006. 3 The rate is five percent. The ordinance says that the tax “… shall be levied in the unincorporated area of Sedgwick County, Kansas …”

    The term unincorporated area is key, meaning the portions of the county that are not within an incorporated town or city. Reports from the Kansas Department of Revenue show there is just one establishment in Sedgwick County that files a guest tax report. 4 For comparison, 108 establishments in the City of Wichita file guest tax reports. These are located in the city limits and are not in the unincorporated area of the county, and therefore not subject to the county guest tax.

    How much does Sedgwick County collect in guest tax? The reports from the Kansas Department of Revenue don’t say. The value is suppressed to protect confidentiality, given that there is just one filing establishment in the unincorporated area of the county.

    We do know, according to the economic impact report, that the one hotel in unincorporated Sedgwick County collects $351,656 per year in guest tax (annualized over the period 2015 to 2019.) Since the guest tax rate is five percent, that implies $7 million in annual sales, which would be collected by a hotel selling 191 rooms per day at a rate of $100 per day, 365 days per year.

    Is there such a hotel in unincorporated Sedgwick County? It’s unlikely. Consider this one hotel with $351,656 in guest tax collections by arena visitors compared to the $421,987 reported for all hotels in the City of Wichita, again for arena visitors. (The Wichita guest tax rate is slightly higher at six percent, so the comparison is not strictly equal.)

    Remember: According to the analysis, this level of activity is generated just by visitors attending events at Intrust Bank Arena.

    I think it’s safe to say there is a mistake. Correspondence with CEDBR, the organization that prepared the analysis, confirms that county guest tax was incorrectly estimated, and a new version reports $0 in county guest tax. 5 CEDBR says no numbers were changed other than the county guest tax and totals that included it.

    While it is unfortunate that CEDBR made this mistake, the use of the analysis by downstream consumers teaches us something about economic development, the data supporting it, and its practitioners.

    As an example, the management of Intrust Bank Arena issued a press release touting the analysis and its findings. Regarding tax collections, the announcement reports, “The fiscal impact of visitors to the area for INTRUST Bank Arena events that occurred in 2010-2019 was approximately $12 million in tax revenue generated.”

    What’s interesting is that the release cites only the retail sales tax revenue. It omits the guest tax revenue, which is — according to the analysis that was available at the time of the press release — about $6 million. That’s half as much as the retail sales tax, but it was not included in a press release touting economic impact.

    An excerpt from the first page of the CEDBR analysis. Click for larger.

    Why didn’t the arena use the guest tax collections, thereby reporting $18 million in tax revenue collected from visitors rather than $12 million? It wasn’t due to concern over the accuracy of the guest tax collections, as arena management told me they were not aware of CEDBR’s error. But because the press release did not mention the erroneous guest tax, arena management says there is no need to correct the press release. This is correct, and it reveals the mistake in not including guest tax revenue.

    Adding to our learning about the use of data in economic development is this: Of the sales tax collected by hotels in Wichita, about 87 percent belongs to the State of Kansas, with the remainder shared by Wichita and Sedgwick County. For guest tax, however, all is returned to the city, except for a small administrative fee of two percent. So of the $12 million in retail sales tax revenue promoted by arena management, about $1.5 million was shared by the city and county. 6 For the purported $6 million in guest tax revenue, all went to the city and county, except for the administrative fee.

    We also learn about the diligence of Sedgwick County Commissioner Pete Meitzner (district 1) in examining this data. He is quoted in the arena’s press release. But it’s quite easy to see that the analysis erroneously reports county guest tax revenue.

    Besides this mistake, there are other areas of concern regarding this analysis of the economic impact of the arena. One is that this report mentions revenue but not costs. 7

    The second is that before Intrust Bank Arena opened in downtown, the county owned another arena. That former arena generated economic activity and economic impact, too, including NCAA men’s basketball tournament games. A thorough analysis should look at the marginal activity created by the new arena.

    —
    Notes

    1. INTRUST Bank Arena Reports Economic Impact Study Results Through First 10 Years. February 14, 2020. Available at https://www.intrustbankarena.com/release/366/intrust-bank-arena-reports-economic-impact-study-results-through-first-10-years/. ↩
    2. Analysis by CEDBR, version 2, dated 1/6/2020. The document does not seem to be available online at either the arena website or Sedgwick County, but it has been preserved. Available at https://drive.google.com/file/d/11LZfbEXxYPfjLs02zE2fdUaWrQYJiUzm/view. ↩
    3. Sedgwick County. A charter resolution exempting Sedgwick County, Kansas, from the provisions of k.S.A. 12-1692, 12-1693, 12-1694, 12-1694a, 12-1695, and providing substitute and additional provisions on the same subject relating to the levy of a transient guest tax in the unincorporated area of Sedgwick County and providing for purposes of expenditure of such funds; and repealing charter resolution #32. Available at https://library.municode.com/ks/sedgwick_county/codes/code_of_ordinances?nodeId=SECOKACO_APXACHRE_NO._59. ↩
    4. Kansas Department of Revenue. Transient Guest Tax Rate and Filer Report. Available at https://www.ksrevenue.org/pdf/tgratesfilers.pdf. ↩
    5. Analysis by CEDBR, version 3, dated 2/26/2020. Available at https://drive.google.com/file/d/1uhLJBr5PXJ_Y6RaiP13bHNRAK08fEVg4/view. ↩
    6. Specifically, the analysis reports $983,449 in sales tax to the city and $703,714 to the county, for a total of $1,687,163. ↩
    7. It’s common for officials to talk as though there is no cost or expense in owning the arena, because a sales tax was used to pre-fund the arena. After the funds were in place, the arena was built. But, see Weeks, Bob. The finances of Intrust Bank Arena in Wichita. Available at https://wichitaliberty.org/sedgwick-county-government/the-finances-of-intrust-bank-arena-in-wichita/. For annual expenses, in a presentation to Sedgwick County Commissioners in February, county staff reported $1,991,471.99 in expenses charged to the arena’s reserve fund. This was offset by $722,933.65 in revenue, mostly from a revenue-sharing agreement with the arena’s operator and from the sale of naming rights. The declining balance in the arena’s reserve fund led Commissioner David Dennis to wonder if a special tax district could be established to provide more revenue to cover these expenses. See https://drive.google.com/file/d/1UbAfjQaIWQOzrYzIWqKdBIbrqFMDlfX-/view ↩

  • The Reality of Economic Development Incentives

    From the Wichita Pachyderm Club: Patrick Tuohey spoke on February 21, 2020, on “The Reality of Economic Development Incentives: Lessons from Kansas City and Elsewhere.” Tuohey is the Director of Policy at the Better Cities Project and a Senior Fellow of Municipal Policy at the Show-Me Institute, Kansas City, Missouri.

    View video below, or click here to view at YouTube.

    Shownotes

  • Missing from Wichita city documents: Sales tax

    Missing from Wichita city documents: Sales tax

    It would be simple for the City of Wichita to include additional relevant information regarding economic development incentive decisions.

    When the Wichita City Council makes decisions regarding economic development incentives, the Center for Economic Development and Business Research at Wichita State University prepares an analysis for the city. The purpose of the analysis is to determine benefit-cost ratios for overlapping governmental jurisdictions, purporting to show that these jurisdictions will receive more in benefits than they pay in costs. An example of the analysis for a large project is here.

    The city does not make this analysis document available to the public. It is a public record, though. Every time I have asked, they have been provided.

    One thing, then, that the city could do to increase transparency is to simply make these analysis documents available. Perhaps not in the agenda packet, but as a supplement, such as the way the city provides Powerpoint presentations for council meetings.

    Another thing the city could do is to include relevant data that would take just a little more effort.

    Consider sales tax exemptions. For a recent industrial revenue bond decision, city documents stated: “The project will also qualify for a sales tax exemption on bond-financed purchases.” 1 But the document doesn’t state the dollar value of the sales tax exemption, even though the CEDBR analysis includes this number. 2 That value, for this recent project, is $1,111,264.

    Is that information relevant to decision-makers? City documents estimate the value of the property tax abatements in the first year as $773,604. So for the total tax forgiveness received in the first year, the sales tax exemption is larger than the property tax abatement, accounting for 59.0 percent of the total. 3 That is relevant.

    Even over the ten-year life of the property tax abatement, the sales tax exemption is still 11.8 percent of the total tax forgiveness. That — the duration of the property tax abatement — is another opportunity to increase transparency. The CEDBR analysis gives the total cost of the incentives for ten years. (A nearby table summarizes.) These totals are speculative, as the city council must revisit the matter in five years to determine whether the company deserves the property tax abatement for an additional five years. (This is known as a “five-plus-five year tax exemption.”)

    But the total value of the exemptions is relevant, as it flows into the benefit-cost ratio calculations.

    Given all the numbers the city presently reports from the CEDBR analysis documents, not including the value of the sales tax exemption is a significant omission, and one easy to correct.

    —
    Notes

    1. Wichita city council agenda packet for January 21, 2020, item V-1 ↩
    2. Center for Economic Development and Business Research. January 8, 2020, version 8. Available at https://drive.google.com/file/d/1Mg3B0sJVy67_r4gNl4NZbclZKZsdgQUx/view. ↩
    3. Assuming all sales taxes are paid during the first year. ↩