Voice For Liberty

Tag: Featured

  • What else can Wichita do for downtown companies?

    What else can Wichita do for downtown companies?

    With all Wichita has done, it may not be enough.

    Within a month, these two headlines appeared in the opinion pages of the Wichita Eagle:

    Investment in downtown Wichita is impressive 1

    State and local leaders need to help meet Cargill’s needs 2

    The second headline was in response to the news story “Cargill plans to move its Wichita headquarters — but where?” 3 In this story, Carrie Rengers reports “Cargill is looking to move its Wichita headquarters, but whether that’s within downtown, where it already is, or outside of it or even outside of Kansas is unclear. … City and state officials are working in full gear to make sure Wichita — downtown specifically — is the option Cargill selects.”

    Rengers reports that Wichita city officials say no specific incentives have been offered to Cargill, but “any incentives likely would involve infrastructure help, such as with parking, or assistance with easing the process for a new building, such as with permitting.” Wichita Mayor Jeff Longwell says “cash incentive won’t be an option,” according to Rengers.

    A Cargill official says that the company needs to attract millennials and younger people, who are not attracted to “traditional office space and office-type buildings.”

    Now, consider the first opinion headline: “Investment in downtown Wichita is impressive.” In this op-ed, Phillip Brownlee writes “It’s encouraging that investment in downtown Wichita is continuing — and that it is mostly privately funded. A vibrant downtown is important to the city’s image and to attracting and retaining young adults. More than $1 billion in private and public investment has occurred downtown in the past decade. About $675 million of that investment has been privately funded, and $411 million has been public projects, according to Wichita Downtown Development Corp.”

    Brownlee goes on to note other investments, such as 800 new apartment units “in the works.”

    On the importance of downtown, Brownlee writes “City leaders have long recognized the value of a healthy downtown. Besides the symbolic importance of not having a lot of empty buildings, many young adults prefer an urban environment. That makes downtown important even for businesses not located there, because it can help or hurt their ability to recruit and retain young professionals.”

    I see a discontinuity. Our city’s leaders — opinion, elected, and bureaucratic — brag about all the investment in downtown Wichita, public and private, yet it doesn’t seem to be enough to retain a major Wichita employer in downtown.

    At least editorialist Rhonda Holman recognizes the problem in her column: “It’s concerning that Cargill’s stated intentions to relocate and consolidate have not included a commitment to remain downtown or even in Wichita or Kansas.” What is her solution? “Elected and business leaders need to be creative and assertive in helping Cargill meet its needs.”

    I share Holman’s concern. It’s very troubling that with $411 million in private investment over the past decade, downtown Wichita still isn’t attractive enough to retain Cargill, if the company’s intent to move is real and genuine. And advising the same group of people who have been in power during the decline of the Wichita economy to be “creative and assertive” is a solution?

    What’s even more disconcerting is that the person who has overseen much of this downtown spending has been promoted. Now Jeff Fluhr of Wichita Downtown Development Corporation is president of Greater Wichita Partnership, with responsibility “to grow the regional economy.”

    Forgive me if I’m underwhelmed.

    Regulation
    One of the things that may be offered to Cargill, according to Rengers, is “assistance with easing the process for a new building, such as with permitting.” This is a big red flag on a very tall flagpole. If the city has regulations so onerous that they are a consideration as to whether to locate in Wichita, this is something that must be fixed immediately. But the instinct of the Wichita City Council and city bureaucrats is to create more regulations covering everything from the striping of parking lots to the personal hygiene of taxi drivers.

    Cash incentives
    Mayor Longwell says there will be no cash incentives offered to Cargill. Instead, something like help with parking may be offered. This might take the form of building a parking garage for Cargill. We should ask: What is the difference between giving cash to Cargill and building a parking garage for Cargill’s use? There really isn’t a meaningful difference, except for Cargill. That’s because cash incentives are taxable income. Free use of a parking garage isn’t taxable. 4 5

    Further, Cargill may qualify for PEAK, or Promoting Employment Across Kansas.6 This program allows companies to retain 95 percent of the payroll withholding tax of employees. The original intent of this program was to lure companies to locate in Kansas, but in recent years the program has been expanded to include incentivizing companies to remain in Kansas. While this is a state program and not a city program under the mayor’s control, PEAK benefits are more valuable than cash.

    —
    Notes

    1. Brownlee, Phillip. Investment in downtown Wichita is impressive. Wichita Eagle. March 5, 2016. Available at www.kansas.com/opinion/editorials/article64129977.html. ↩
    2. Holman, Rhonda. State and local leaders need to help meet Cargill’s needs. Wichita Eagle. April 1, 2016. Available at www.kansas.com/opinion/opn-columns-blogs/now-consider-this/article69534982.html. ↩
    3. Rengers, Carrie. Cargill plans to move its Wichita headquarters — but where? Wichita Eagle. March 29, 2016. Available at www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article68700517.html. ↩
    4. Journal of Accountancy, (2009). Location Tax Incentive Not Federal Taxable Income. Available at: www.journalofaccountancy.com/issues/2009/apr/locationtaxincentive.html. ↩
    5. American Institute of CPAs, (2015). Federal Treatment of State and Local Tax Incentives. Available at: www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2008/CorpTax/Federaltreat.jsp. ↩
    6. Weeks, Bob. In Kansas, PEAK has a leak. Voice For Liberty in Wichita. Available at wichitaliberty.org/kansas-government/kansas-peak-leak/. ↩
  • In Wichita, revealing discussion of property rights

    In Wichita, revealing discussion of property rights

    Reaction to the veto of a bill in Kansas reveals the instincts of many government officials, which is to grab more power whenever possible.

    When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it.
    — Frederic Bastiat

    Kansas Governor Sam Brownback’s veto of a bill that gives cities additional means to take blighted property has produced reaction from local officials in Wichita. The bill is Senate Bill 338.

    As has been noted in numerous sources, cities in Kansas have many tools available to address blight. 1 What is the purported need for additional power?

    In remarks from the bench, Wichita City Council Member Pete Meitzner (district 2, east Wichita) said there is no intent to be “aggressive in taking people’s property.” 2 But expanding the power of government — aggression, in other words — is what the bill does. Otherwise, why the need for the bill with its new methods and powers of taking property?

    And once government is granted new powers, government nearly always finds ways to expand the power and put it to new uses. Even if we believe Meitzner — and we should not — he will not always be in office. Others will follow him who may not claim to be so wise and restrained in the use of government power.

    In particular, government finds new ways to expand its powers through enabling concepts like blight. Did you know the entire suburban town of Andover is blighted? 3 Across the country, when governments find they can take property with novel and creative interpretations of blight, they do so. 4

    It’s easy to sense the frustration of government officials like Wichita Mayor Jeff Longwell. In his remarks, he asked opponents of SB 338 “what they would do” when confronted with blight. That is a weak argument, but is often advanced nonetheless. Everyone has the right — the duty — to oppose bad legislation even if they do not have an alternate solution. Just because someone doesn’t have a solution, that doesn’t mean their criticism is not valid. This is especially true in this matter, as cities already have many tools to deal with blight.

    Proponents of SB 338 also make unfounded accusations about the motivation of opponents of the law. Because someone opposes this law, it doesn’t mean they are in favor of more blight. Those who fight for freedom and liberty are used to this. Advocating for the right to do something doesn’t necessarily mean that one is in favor of actually doing it.

    The nature of rights

    Much of the discussion this issue concerns the rights of people who live near blighted property. People do have certain rights, but rights have limits. Regarding property, Roger Pilon writes: “Thus, uses that injure a neighbor through various forms of pollution (e.g., by particulate matter, noises, odors, vibrations, etc.) or through exposure to excessive risk count as classic common-law nuisances because they violate the neighbor’s rights. They can be prohibited, with no compensation owing to those who are thus restricted.” 5

    Note that Pilon mentions “excessive risk” as something that injures a neighbor. Some of the activities the city wants to control are things like drug dealing, drug usage, and prostitution that may take place on blighted property. And, I suppose it is a risk to have gangs dealing drugs out of the house across the street, blighted or not. But these activities are illegal everywhere, and there are many laws the city can use to control these problems. There is no need for new laws.

    It is important to draw a bright line as to where property rights end. Pilon: “By contrast, uses that ‘injure’ one’s neighbor through economic competition, say, or by blocking ‘his’ view (which runs over your property) or offending his aesthetic sensibilities are not nuisances because they violate no rights the neighbor can claim. Nor will it do to simply declare, through positive law, that such goods are ‘rights.’” 6

    In today’s world, however, where new rights are seemingly created from thin air, people want to exercise their purported right to control how their neighbor’s property looks. But we have no such right, writes Pilon: “The principle, in fact, is just this: People may use their property in any way they wish, provided only that in the process they do not take what belongs free and clear to others. My neighbor’s view that runs over my property does not belong free and clear to him.” 7

    Opposition in the Legislature

    When the Kansas House of Representatives and Senate voted on this bill, several House members submitted explanations of their vote. In the Senate, David Haley filed a protest and message explaining his opposition to the bill. These statements follow.

    Explanation of vote in the House of Representatives

    MR. SPEAKER: I VOTE NO ON SB 338. KANSAS ALREADY HAS SUFFICIENT TOOLS IN PLACE TO ADDRESS BLIGHT. SB 338 circumvents our current eminent domain statutes by redefining “abandoned property” and by allowing our local governments to expeditiously confiscate, seize or destroy law abiding citizens’ private property without compensation, adequate notice, and a legal property title. This is an egregious overreach that deprives some citizens of their private property rights without sufficient due process and it will cause irreparable harm to our most vulnerable citizens that do not have the resources to protect their property.
    — GAIL FINNEY, BRODERICK HENDERSON, RODERICK HOUSTON, BEN SCOTT, VALDENIA WINN, JOHN CARMICHAEL, KASHA KELLEY, BILL SUTTON, JERRY LUNN, CHARLES MACHEERS

    Protest of Senator David Haley against Senate Bill 338

    February 23, 2016

    In Accordance with Article 2, Section 10 of the Constitution of Kansas, I, David Haley, a duly elected Senator representing the Fourth District of Kansas, herein PROTEST the action of this Legislature in the promulgation and passage of Senate Bill 338: An Act pertaining to Cities.

    In my 23 years as a Kansas Legislator and as but one of only three attorneys in the Senate, this is the first PROTEST I have ever lodged on any measure of the thousands I have considered.

    This Chamber now further denigrates real property rights to which every Kansan should be heir.

    SB 338 which purports to grant authority to cities and nonprofit organizations to petition courts to possess vacant property for rehabilitation purposes will, simply, but legalize grand theft.

    The Senate Commerce committee as is its charge (and not the Senate Local Government committee where, justifiably, similar language as SB 338 had over many years failed time and time again) recognizes and advances business and financial opportunities for our State.

    First, the question of a city, redefining definitions of “abandonment” and “blight” as these terms apply to real property, land and or improvements, is the expertise of deliberations of a committee membership dedicated to the auspices of municipalities not the principles of profit.

    The principles of real property ownership should always inure to the rights of the citizen not to a developer’s bottom line or even a desire to enhance appraised valuations for tax purposes.

    Diabolical in its spawning, methodical and tenacious in its steady lurch forward, SB 338 adheres to two tiered definitions of “abandoned property;” both ingenuous and neither accurate. One definition of “abandoned property”: vacant for 365 days and having a “blighting influence” on surrounding properties; the other definition vacant for 90 days and 2 years tax delinquent.

    There are numerous every day scenarios whereby a real property owner has in no way “abandoned” their property though that same property may be vacant for 90 to 365 days, be tax delinquent for 2 years or may have need of rehabilitation to conform to a local standard, real or perceived. But SB 338 alleges “abandonment” and triggers governmental intrusion, harassment and potentially leads to a taking of real property by the government for the benefit of an organization which profits from the taking and kick back higher taxes to the city.

    “Commerce,” yes, but a shameful way to run a citizen responsive “Local Government.”

    The specious argument in favor of this legislation portends neighborhood beautification, tax viability and repopulation of or demolition and rebuilding of older houses. By eradicating “blight,” the entire community, even the city, is greatly enhanced.

    With that premise, I, David Haley, could not agree more.

    Today, with no need for warping and putting into statute time-honored definitions of “blight” and “abandonment” or presupposes new postulates for passages of time periods to correlate to real property owners’ interests or genuine concern with their legally owned land(s), there are tools already available to every municipality to address blight. “Code enforcement” departments can post notice and bring to environmental and district court negligent property owners. Subsequent to insufficient response, steep fines and even jail time can be issued now. Today in current statute, a property with two or more years of delinquent property taxes may be sold by the Sheriff of each Kansas County in a “Delinquent Property Tax Sale” also known as a “Sheriff’s” sale or as property “sold on the Courthouse steps.” Again, these are current tools available to curb or cure blight and to put real property into fiscally responsive ownership.

    The property rights of legal property owners should not be infringed upon by this Legislature.

    Marginal or fragile property owners (traditionally average income or poor property owners attempting to hold on to inherited property or an entrepreneurial hope structure as often found in inner cities) will be set upon by keen-eyed, out of county based developers sheltered by an industrious “not-for-profit” which uses the city and district court as the leverage to harass and ultimately take the land, all in the name of “civic pride” or “community betterment.” Theft.

    The late Kansas City, Missouri civil rights leader Bernard Powell (1947-1979) envisioned and warned of the transfer of inner city property back into the same hands of those who fled the same a half century or more ago to the sanctity of the suburbs. Bernard Powell predicted the day would come when government, and the tools they elect and hire, will work hand-in-hand with “robber barons” to turn those out; those who have despaired in neglected, under represented, often high crime, poorly educated neighborhoods, those who have weathered poverty, hard times, civic and civil harassment but yet held a real property interest, a “piece of the pie” … to force them out. Bernard Powell spoke of prosperity returning to the inner city and nothing being tendered to the people who had paid the price for the most sought after of land.

    He called it government assisting the turning of the “ghetto into a goldmine.” How prophetic.

    Here I sit, practically alone in my opposition to this expansion of eminent domain targeted at poorer property owners ill equipped to “fight City Hall,” in this Kansas Senate and watch this unfold. Again, SB 338 came out of the Commerce committee as well it should.

    Government has redefined terms before to shape shift often dastardly need to justify ill deeds.

    I remember efforts to redefine “blight” for economic purposes in another eminent domain taking for use in building the Kansas Speedway and Legends in Wyandotte County. Succinctly, the new definition of “blight” was the ability for exponentially more taxes to be levied against the future use of the land than that which the owner who it was being taken from could be expected to pay in its current use. Remnants of that economically fascist philosophy resonate in SB 338. As more people flee the “golden ghettos” of suburbia, the inner city “ghettos” will be repopulated and turned into “goldmines” at the expense I fear, once again, of the poor and unsuspecting. Ironically, we celebrated and honored some of our Korean and Vietnam War heroes today in the Senate Chamber. Was the freedom to own real property without fear of unwarranted government intrusion something for which they fought?

    I protest the passage of Senate Bill 338 as is my Constitutional right as a Kansas State Senator under Article Two, Section 10 of the Kansas Constitution for reasons, beliefs afore-listed as well as others not so and hereby vow to continue to assist unnecessarily embattled real property owners in my home District as we together will face the challenges that this bill, when signed into law, will undoubtedly bring.

    —
    Notes

    1. Todd, John. Power of Kansas cities to take property may be expanded. Voice For Liberty in Wichita. Available at wichitaliberty.org/kansas-government/power-kansas-cities-take-property-may-expanded/. ↩
    2. Video. Wichita City Council speaks on blight. Available at wichitaliberty.org/wichita-government/wichita-city-council-speaks-blight/. ↩
    3. Weeks, B. (2012). Andover, a Kansas city overtaken by blight. Voice For Liberty in Wichita. Available at wichitaliberty.org/economics/andover-a-kansas-city-overtaken-by-blight/. ↩
    4. Nicole Gelinas, Eminent Domain as Central Planning. (2015). City Journal. Available at www.city-journal.org/html/eminent-domain-central-planning-13253.html. ↩
    5. Pilon, Roger. Protecting Private Property Rights from Regulatory Takings. (1995). Cato Institute. Available at www.cato.org/publications/congressional-testimony/protecting-private-property-rights-regulatory-takings. ↩
    6. ibid ↩
    7. ibid ↩
  • Rich States, Poor States, 2106 edition

    Rich States, Poor States, 2106 edition

    In Rich States, Poor States, Kansas continues with middle-of-the-pack performance, and fell sharply in the forward-looking forecast.

    In the 2016 edition of Rich States, Poor States, Utah continues its streak at the top of Economic Outlook Ranking, meaning that the state is poised for growth and prosperity. Kansas continues with middle-of-the-pack performance rankings, and fell sharply in the forward-looking forecast.

    Rich States, Poor States is produced by American Legislative Exchange Council. The authors are economist Dr. Arthur B. Laffer, Stephen Moore, who is Distinguished Visiting Fellow, Project for Economic Growth at The Heritage Foundation, and Jonathan Williams, who is vice president for the Center for State Fiscal Reform at ALEC.

    Rich States, Poor States computes two measures for each state. The first is the Economic Performance Ranking, described as “a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment — all of which are highly influenced by state policy.” The process looks at the past ten years.

    Looking forward, there is the Economic Outlook Ranking, “a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs, and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.”

    For economic performance, Kansas is twenty-seventh. That’s up from twenty-eighth last year.

    In this year’s compilation for economic outlook, Kansas ranks twenty-seventh, down from eighteenth last year and fifteenth the year before. In 2008, the first year for this measure, Kansas was twenty-ninth.

    Kansas compared to other states

    Kansas and nearby states Economic Outlook Ranking. Click for larger version.
    Kansas and nearby states Economic Outlook Ranking. Click for larger version.
    A nearby chart shows the Economic Outlook Ranking for Kansas and some nearby states, shown as a trend over time since 2008. The peak of Kansas in 2013 is evident, as is the decline since then.

    Why Kansas fell

    Rich States Poor States Kansas trends 2016 aloneKansas fell in the Economic Outlook Ranking from 2013 to 2016. To investigate why, I gathered data for Kansas from 2008 to 2016. The nearby table shows the results for 2016 and the rank among the states, with the trend since 2008 shown. A rank of one is the best ranking, so for the trend lines, an upward slope means a decline in ranking, meaning the state is performing worse.

    There are several areas that may account for the difference.

    The most notable change is in the measure “Recently Legislated Tax Changes (per $1,000 of personal income)” Kansas fell four positions in rank. By this measure, Kansas added $2.67 in taxes per $1,000 of personal income, which ranked forty-seventh among the states. This is a large change in a negative direction, as Kansas had ranked seventh the year before.

    In “Property Tax Burden (per $1,000 of personal income)” Kansas improved one position in the rankings, despite the tax burden rising.

    In “Sales Tax Burden (per $1,000 of personal income)” Kansas fell one spot in rank. The burden is calculated proportional to personal income. The sales tax burden, as measured this way, fell slightly in Kansas, but the ranking fell in comparison to other states. (Although the Kansas sales tax rate rose in 2015, this report uses data from 2013, which is the most recent data available from the U.S. Census Bureau. It’s likely that the 2015 sales tax hike will increase this burden, but whether the ranking changes depends on actions in other states.)

    Kansas improved six rank positions for “Debt Service as a Share of Tax Revenue.”

    Kansas remains one of the states with the most public employees, with 672 full-time equivalent employees per 10,000 population. This ranks forty-eighth among the states.

    Kansas has no tax and spending limits, which is a disadvantage compared to other states. These limitations could be in the form of an expenditure limit, laws requiring voter approval of tax increases, or supermajority requirements in the legislature to pass tax increases.

    How valuable is the ranking?

    Correlation of ALEC-Laffer state policy ranks and state economic performance
    Correlation of ALEC-Laffer state policy ranks and state economic performance
    After the 2012 rankings were computed, ALEC looked retrospectively at rankings compared to actual performance. The nearby chart shows the correlation of ALEC-Laffer state policy ranks and state economic performance. In its discussion, ALEC concluded:

    There is a distinctly positive relationship between the Rich States, Poor States’ economic outlook rankings and current and subsequent state economic health.

    The formal correlation is not perfect (i.e., it is not equal to 100 percent) because there are other factors that affect a state’s economic prospects. All economists would concede this obvious point. However, the ALEC-Laffer rankings alone have a 25 to 40 percent correlation with state performance rankings. This is a very high percentage for a single variable considering the multiplicity of idiosyncratic factors that affect growth in each state — resource endowments, access to transportation, ports and other marketplaces, etc.

    Rich States, Poor States compilation for Kansas. Click for larger version.
    Rich States, Poor States compilation for Kansas. Click for larger version.
  • Governor Brownback steps up for property rights

    Governor Brownback steps up for property rights

    Today Kansas Governor Sam Brownback vetoed Senate Bill 338. As explained by John Todd, this bill unnecessarily and dangerously increased the power of cities over private property rights. Thank you to the governor for understanding the harm of this bill and acting appropriately. Most of all, thank you to John Todd for recognizing the bill’s danger, for his committee testimony, and for his tireless work in helping inform the governor and his staff about this bill.

    Following, the governor’s veto message:

    The right to private property serves as a central pillar of the American constitutional tradition. It has long been considered essential to our basic understanding of civil and political rights. Property rights serve as a foundation to our most basic personal liberties. One of government’s primary purposes is to protect the property rights of individuals.

    The purpose of Senate Bill 338, to help create safer communities, is laudable. However, in this noble attempt, the statute as written takes a step too far. The broad definition of blighted or abandoned property would grant a nearly unrestrained power to municipalities to craft zoning laws and codes that could unjustly deprive citizens of their property rights. The process of granting private organizations the ability to petition the courts for temporary and then permanent ownership of the property of another is rife with potential problems.

    Throughout the country, we have seen serious abuse where government has broadened the scope of eminent domain, especially when private development is involved. The use of eminent domain for private economic development should be limited in use, not expanded. Senate Bill 338 opens the door for serious abuse in Kansas. Governmental authority to take property from one private citizen and give it to another private citizen should be limited, but this bill would have the effect of expanding such authority without adequate safeguards.

    Kansans from across the political spectrum contacted me to discuss their concerns that this bill will disparately impact low income and minority neighborhoods. The potential for abuse of this new statutory process cannot be ignored. Government should protect property rights and ensure that the less advantaged are not denied the liberty to which every citizen is entitled.

    There is a need to address the ability of municipalities and local communities to effectively maintain neighborhoods for public safety. However, Senate Bill 338 does much more. Though I am vetoing this bill, I would welcome legislation that empowers local communities to respond to blight and abandoned property that does not open the door to abuse of the fundamental rights of free people.

  • Wichita economic development and capacity

    Wichita economic development and capacity

    An expansion fueled by incentives is welcome, but illustrates a larger problem with Wichita-area economic development.

    Last week a Wichita company received economic development incentives in conjunction with an expansion. This is the third incentive the company has received in four years. The incentives are forgiven property taxes and sales taxes. 1 Simply, the company is allowed to skip paying many of the same taxes that everyone else must pay, including low-income households paying sales tax on groceries.

    While the expansion of this company is welcome news, the hoopla surrounding it shows how we can’t rely on government intervention to pull Wichita out of its slump. Here are some figures.

    According to the Bureau of Labor Statistics, Wichita metropolitan area employment is 14,500 less than its peak in 2008. Manufacturing jobs are down by 23,600 from the peak in 1998, or down by 15,400 from 2008. 2

    In 2012 when this company requested an incentive, its employment was given as 110. 3 Current employment is given as 130, and by 2021, the company is required to employee 188 people. 4

    So if everything goes as planned, 5 three economic development incentives programs will boost a company’s employment from 110 to 188. That’s an increase of 78 jobs over nine years, or about nine jobs per year.

    If we look at these jobs in the larger context, we see that these jobs represent 0.5 percent of the jobs lost in the Wichita area since 2008. If we are relying on these jobs to spur a renaissance of manufacturing in Wichita, they represent 0.3 percent of manufacturing jobs lost since its peak.

    This company and these three economic development incentives are not the only efforts the city has made. Other incentives to other companies have created jobs. But this company is considered a significant and major success. The awarding of this inventive was evidently such an uncommon event that it merited a large article in the Wichita Eagle. In his remarks, according to meeting minutes, Wichita Mayor Jeff Longwell said “this is how we move Wichita forward” and “this is how we grow our businesses here in Wichita and help them be successful.”

    The jobs are welcome. But this incident and many others like it reveal a capacity problem, which is this: We need to be creating nine jobs every day in order to make any significant progress in economic growth. If it takes this much effort to create 78 jobs over nine years, how much effort will it take to create the many thousands of jobs we need to create every year?

    A related problem is that we don’t know how many jobs are created by the city’s economic development efforts. As part of a campaign for a city sales tax in 2014, the city promised a web site to track the progress of jobs created. The sales tax didn’t pass, but the city still engages in economic development, and still does not track results. At least not publicly, and when I’ve asked, the results provided have been sketchy and incomplete.

    On top of this, we don’t know if the incentives were necessary to enable the company to expand. Usually city documents state that incentives are necessary to make economic activity “viable.” No such claim was made in the documents supporting this incentive.

    The large amount of bureaucratic effort and cost spent to obtain a relatively small number of jobs lets us know that we need to do something else in order to grow our local economy. We need to create a dynamic economy, focusing our efforts on creating an environment where growth can occur organically without management by government. Dr. Art Hall’s paper
    Embracing Dynamism: The Next Phase in Kansas Economic Development Policy provides much more information on the need for this.

    Another thing we can do to help organically grow our economy and jobs is to reform our local regulatory regime. Recently Kansas Policy Institute released a study of regulation and its impact at the state and local level. This is different from most investigations of regulation, as they usually focus on regulation at the federal level.

    Business Perceptions of the Economic Impact of State and Local Government Regulation coverThe study is titled “Business Perceptions of the Economic Impact of State and Local Government Regulation.” It was conducted by the Hugo Wall School of Public Affairs at Wichita State University. Click here to view the entire document.

    Our civic leaders say that our economic development efforts must be reformed. Will the path forward be a dynamic economy and reformed regulation? Or will it be more bureaucracy, handfuls of jobs at a time?

    —
    Notes

    1. Wichita City Council meeting agenda, April 5, 2016, p. 12. ↩
    2. According to the Bureau of Labor Statistics, the peak of nonfarm employment in the Wichita metropolitan area was in 2008, where employment averaged 310,500. For 2015, employment averaged 296,000. That’s a loss of 14,500 jobs. For manufacturing jobs, the peak was 1998, when employment in this field was 75,900. In 2008 the figure was 67,700 jobs, and in 2015, 52,300 jobs. This is a loss of 23,600 jobs from manufacturing’s peak, or of 15,400 jobs from Wichita peak employment in 2008. ↩
    3. Wichita City Council meeting agenda, September 11, 2012, p. 45 ↩
    4. Wichita City Council meeting agenda, April 5, 2016, p. 12. ↩
    5. So far, employment is not progressing as planned. In the 2012 agenda item, it was said that employment would rise by 50 jobs over the next five years, which you by 2017. Current employment, according to the current city council agenda, is 130, which is 30 jobs short. The deadline for this projection has not yet arrived. ↩
  • Sedgwick County District Attorney Marc Bennett

    Sedgwick County District Attorney Marc Bennett

    Voice for Liberty radio logo square 02 155x116Sedgwick County District Attorney Marc Bennett spoke to the Wichita Pachyderm Club, providing an update on the activities in his office. This audio presentation was recorded April 8, 2016. Bennett’s visual presentation is available here. Also, a year in review for 2015 is available here.

  • Tax collections by the states

    Tax collections by the states

    An interactive visualization of tax collections by state governments.

    Note: this visualization has been updated. Click here for the most recent version.

    Each year the United States Census Bureau collects data from the states regarding tax collections in various categories. I present this data starting in 1993, in an interactive visualization.

    The values are for tax collections by the state only, not local governmental entities like cities, counties, townships, improvement districts, cemetery districts, library districts, drainage districts, watershed districts, and school districts.

    Of particular interest is the “State Total” tab. Here you can select a number of states and compare their tax burdens. (Probably three or four states at a time is the practical limit.)

    Data is as collected from the United States Census Bureau, Annual Survey of State Government Tax Collections, and not adjusted for inflation.

    Using the visualization. Click for larger.
    Using the visualization. Click for larger.
  • Northwest High prank, some underlying facts

    Northwest High prank, some underlying facts

    Instead of pranking, Wichita public school students and their leaders might consider a few facts.

    KSN News reported on an April Fools’ Day prank at Northwest High School in Kansas. The message is that the school is short of funds.

    The KSN news story reported: “Wendy Johnson, the Director of Marketing and Communications for Wichita Public Schools also said, ‘This appears to be someone’s effort at a humorous April Fool’s commentary on the funding crisis that public education is facing in Kansas.’”

    Also: “USD 259 Board of Education member Lynn Rogers called the prank, ‘very ingenious.’ Rogers says there was no harm done, but, the education funding issue is at its core, ‘no laughing matter. There’s some dark days for public education right now, and people have been very discouraged,’ Rogers said.”

    When looking at this story, I wonder how the pranksters — likely students at the school — developed an opinion of issues like school funding. Who told them there was a “funding crisis?” Is that an opinion high school students developed on their own, or is it an opinion spoon-fed to them? The quotes from school district leaders provide the answer to that question.

    It’s unfortunate that students are fed this opinion. Because when we look at actual numbers, the idea of a crisis doesn’t hold water. There is a lot of controversy over school funding in Kansas. Should teacher retirement fund contributions be included, or not? What counts as classroom funding? Should dollar amounts be adjusted for inflation, and at what rate? (Schools argue that their costs rise faster than the general price level.)

    Schools tell us that their largest expenditure is on personnel costs. Across the country, the portion of current expenditures going to salaries and benefits hovers around 80 percent. 1

    Enrollment and Employment at Wichita Northwest High School.
    Enrollment and Employment at Wichita Northwest High School. Click for larger.
    Looking at the number of school employees strips away most of the confounding factors and concentrates on the largest, and most important, cost schools face: Teachers and other employees.

    Enrollment and Employment at Wichita Northwest High School. Click for larger.
    Enrollment and Employment at Wichita Northwest High School. Click for larger.
    As it turns out, Wichita Northwest High School shouldn’t be complaining about a funding crisis. For one thing, enrollment at this school is falling, from 1,580 in 2009 to 1,399 in 2015, a decline of 11 percent. While the number of teachers and certified employees has varied, the ratios of students to these employees has been level or declining.

    Employment ratios in the Wichita school district. Click for larger.
    Employment ratios in the Wichita school district. Click for larger.
    For that matter, the ratios of students to teachers and certified employees for the entire Wichita public school district is on a long downward trend, with small interruptions.

    1. National Center for Education Statistics: The Condition of Education, Elementary and Secondary Education, Finance, Public School Expenditures. Available at: http://nces.ed.gov/programs/coe/indicator_cmb.asp. ↩
  • Wichita on verge of new regulatory regime

    Wichita on verge of new regulatory regime

    The Wichita City Council is likely to create a new regulatory regime for massage businesses in response to a problem that is already addressed by strict laws.

    During a presentation to the Wichita City Council on February 23, 2016, police officials reported on a number of investigations and arrests. In 2015, there were 22 arrests for human trafficking and other violations. The presentation did not include what comprised “other violations,” nor did it contain any information about the disposition of these cases.

    If the city is concerned about prostitution and child trafficking, the latter being a serious crime, we already have strong laws concerning this. As far as the two crimes being related: Prostitutes and pimps are already criminals, according to the law. Committing more crimes like child trafficking is just another step down the path they’ve already chosen.

    A solution is to bring prostitution out of the shadows. Stop making consensual behavior between adults a crime. Then police can focus on actual and serious crime, like child trafficking.

    But the zeal of the Wichita City Council for creating new regulatory regime is likely to overwhelm any rational thought about the problem. Now Wichita massage business owners and therapists are likely to be saddled with onerous licensing requirements. To become a newly-licensed therapist, you must possess one of several educational credentials, one of which is 500 hours of training. Existing therapists must meet similar requirements.

    City officials note that the existing local massage industry requested this regulation. That’s not surprising. The purpose of nearly all occupational licensure laws is to restrict entry to the industry so that existing practitioners can charge higher rates. That is a scam, especially against low-income people that need a masseuse or a plumber. It is also a burden to people who want to become plumbers, barbers, massage therapists, or one of the many other licensed occupations.

    It is both shocking and disappointing to realize that Wichita city bureaucrats and council members do not realize these economic realities. Another economic reality is that when licensing requirements are strict, the quality of service that many people receive declines. When investigating the demand for licensed plumbers, researchers found this:1

    This proxy assumes that the more stringent are the barriers the higher will be the cost of licensed service and the smaller will be its quantity. These two effects increase the motivation of consumers to substitute their own services for those of trained professionals. This substitution process should show up in rising retail sales of plumbing supplies in more tightly restrictive states since licensed plumbers will generally purchase supplies wholesale. The implicit assumption is this causal chain is that self-service is on the average of lower quality than could be obtained from even a marginally trained journeyman plumber.

    When presented with a convincing but fake credential, how diligently with Wichita officials investigate?
    When presented with a convincing but fake credential, how diligently with Wichita officials investigate?
    In other words, when strict licensure requirements make plumbers expensive, more people do their plumbing work themselves, and this work is likely to be of lower quality. It’s quite a stretch (literally and figuratively) to apply this reasoning to do-it-yourself massage, but here’s another economic reality: The more difficult it is to achieve a credential, the greater is the incentive to cheat. You don’t have to search very far before you find vendors advertising their services like this:

    We are one of the oldest and most trusted seller of fake diplomas on the web. We use real diploma paper, the same paper that most major universities and high schools use. We also use professional security paper for our fake transcripts. We have more than 12 years experience in printing fake diplomas. You can rest assured that your fake diploma or fake transcript will look very authentic. We offer many different types of fake diplomas and fake certificates such as, FAKE GEDs, fake college diploma, fake university degree, fake high school diploma, fake college degree, or fake high school transcripts and fake skill certificate.

    How diligently will Wichita’s bureaucratic machinery investigate when presented with a fake diploma certificate and transcript? The city’s record is not good. After the city passed new taxicab regulations, somehow the regulation that prohibited convicted sex offenders from receiving licenses was not implemented effectively. The city granted a taxi driver license to a man who was on the state sex offender registry. He raped a passenger.

    The city council should reject these regulations and devote the city’s resources to protecting people from actual crime.

    Limiting economic opportunity

    Kansas occupational license requirements, with proposed Wichita massage therapists. Click for larger.
    Kansas occupational license requirements, with proposed Wichita massage therapists. Click for larger.
    The Wichita City Council is concerned about human trafficking for the purposes of prostitution. That’s good. But the response the council is considering — which is licensing massage therapists — is not needed. We have strict laws already on the books that make human trafficking a serious criminal offense, which it is. The proposed Wichita regulations will simply make it more difficult for honest people to become massage therapists. Criminals will operate illegally. They are criminals, after all. Or, they will easily obtain false credentials.

    Kansas already has many burdensome occupational licensure requirements that limit economic opportunity and protect entrenched interests. Nearby is a chart of the number of days training or experience required to obtain a license to work in various fields, according to Institute for Justice in 2012. 2 I’ve added the proposed Wichita massage therapist requirements. As you can see, it will require more than twice as much education to become a massage therapist as is required to become an emergency medical technician. How does that make sense?

    Comparing the proposed Wichita requirements to the nation, we find that the Wichita standard is quite lax. 39 states license massage therapists, with the average education or training requirement being 139 days, with the range being from 117 days to 327 days3. Wichita is proposing 83 days, which might inspire one to ask this question: If the Wichita City Council is truly concerned about protecting Wichitans from getting a bad massage, why is it proposing such minimal requirements, compared to other states?

    In reality, the high barriers to becoming a massage therapist in many states is testimony to the massage industry’s success in erecting barriers to entry. By making it difficult to become a massage therapist, the supply is lower than it could be, and prices are higher. Consumers lose. Upward economic opportunity is lost.

    The purpose of nearly all occupational licensure laws is to restrict entry to the industry so that existing practitioners can charge higher rates. That is a scam, especially against low-income people that need a masseuse or a plumber. It is also a burden to people who want to become plumbers, barbers, massage therapists, or one of the many other licensed occupations.

    —
    Notes

    1. Carroll, Sidney L., and Robert J. Gaston. “Occupational Restrictions and the Quality of Service Received: Some Evidence.” Southern Economic Journal 47.4 (1981): 959–976. ↩
    2. Institute for Justice, (2012). License to Work. Available at: ij.org/report/license-to-work/ Accessed 29 Feb. 2016. ↩
    3. ibid ↩