In this episode of WichitaLiberty.TV: Do corporations prefer markets or big government? Legislative malpractice in Kansas. Education reform, or lack thereof. View below, or click here to view at YouTube. Episode 115, broadcast April 3, 2016.
Senate Bill 338 has been passed by the Legislature and is now on its way for Governor Sam Brownback to consider. The Governor should veto this bill. This bill gives cities, in conjunction with their preferred nonprofit organizations, the ability to take possession of unoccupied residential houses that the property taxes are currently paid in full. This bill will clearly place vulnerable senior citizens and less affluent property owners in the position of being victimized.
Cities in Kansas have all the powers they need to deal with property issues through current law. Over the past few years, the City of Wichita has bulldozed hundreds of houses for housing code violations. Enhancing the power of cities and their appointed nonprofit redevelopment organizations to take privately owned properties they do not own without compensation is wrong.
In this episode of WichitaLiberty.TV: There are a few things that make Bob wonder. Then, a troubling episode for Wichita government and news media. Finally, the harm of teachers unions. View below, or click here to view at YouTube. Episode 114, broadcast March 27, 2016.
The state’s largest newspaper has no good reason to avoid reporting and editorializing on an important issue. But that’s what the Wichita Eagle has done.
In November 2014 Wichita voters rejected a proposed Wichita city sales tax. The largest portion of that tax, $250 million, would have gone towards expanding the capacity of the Aquifer Storage and Recharge, or ASR, project.
The Wichita Eagle editorial board urged voters to approve the tax. It told readers that spending $250 million on ASR would “assure a future for Wichita with enough water.” “The needs are clear,” the editors wrote, adding “Investing in the aquifer project seems the best thing to do to anticipate and meet Wichita’s water needs.” The Eagle warned of “much higher water rates” if the sales tax is not passed.
Since voters rejected the tax to support that spending, the cost of providing adequate water has dropped, and dropped a lot. But you wouldn’t know that by reading the Wichita Eagle or by relying on our city’s other mainstream news media.
If you viewed a Wichita City Council workshop on December 1, however, you’d have learned that the city can provide adequate water for much less than $250 million. The rise in water bills will also be much less than what the Eagle and the city used to frighten voters into approving the sales tax.
So why hasn’t the Wichita Eagle reported on the December 1, 2015 workshop, in which Director of Public Works and Utilities Alan King presented the new plans — plans which will cost much less? Why have there been no editorials celebrating that we can provide adequate water at much less expense?
I can understand the editorial writers not wanting to admit they had been duped. That’s human nature. But for the news division of the Eagle: Why no reporting on this?
As it happens, the newsroom of the Eagle was also a cheerleader for the sales tax and ASR project. As an example, the Eagle printed a fact check article that disputed claims made by opponents of the tax. When asked why there was not a similar fact check article on the proponents, the reporter said there were no errors to be found. Nothing. That was incredulous — unbelievable — at the time. There were many questionable claims made by sales tax proponents. In hindsight, we are even more certain of that.
Tubs of ink the Wichita Eagle could be using to tell us what we need to know.The Eagle has plenty of reporting capacity, barrels of ink, and lots of online bandwith to report and editorialize on issues like who gets free parking at the Wichita airport. That’s important, perhaps, but trivial in terms of financial impact. But on this issue involving over $100 million in savings, there is silence.
The state’s largest newspaper has no good reason to avoid reporting and editorializing on an important issue. But that’s what the Wichita Eagle has done. We wonder why.
In 2014 the City of Wichita recommended voters spend $250 million on a new water supply. But since voters rejected the tax to support that spending, the cost of providing adequate water has dropped, and dropped a lot.
The events surrounding the need for a new water supply is a troubling episode in the history of Wichita government. During the prelude to the November 2014 election, citizens were presented with a gloomy scenario that could be fixed only with a sales tax and the spending of $250 million. After voters said no to that, new plans emerged that are much less expensive. Lily Tomlin once said “No matter how cynical you become, it’s never enough to keep up.” This episode shows Wichita city leaders — both in and out of government — reinforcing the truth of Tomlin’s observation.
On December 1, 2015, the Wichita City Council held a workshop on the topic “Phased Approach for New Water Supply.”1 Alan King, Director of Public Works and Utilities, was the presenter. King emphasized that the impetus for a new water supply was for drought protection: “We presently have enough water with our current water resources to last us through our planning period of 2060, without drought.”
He continued: “When we come and talk to you about additional water resources, it is really only for one purpose, and that is drought protection. If there was no drought, we have no need. The water resources that we come in and are talking to you about, the only value they have for us is in drought protection.”
But a city document leading up to the sales tax election presented a different scenario. It threatened a lack of water for even residential use: “Building a new supply, along with conservation efforts, is the lowest cost option for providing sufficient water through 2060. Significant conservation will be needed if the current supplies are the sole sources of water for the coming decades; sever [sic] conservation requirements could be harmful to local businesses and quality of life. Adding a new water supply would provide enough water for future growth for the community’s residential, commercial, and industrial base.”2
This is an important point. We have sufficient water except for a period of extended drought. Even in that case, there is sufficient water for residential, commercial, and industrial use. The purpose of a new water supply is to avoid restrictions on outdoor watering, and in the most extreme drought, a savings of 15 percent of indoor water usage.
In his December presentation to the council, King presented several phases that the city can take. The first three have no cost, and King said these are underway.
After that, the city can spend $23 million for new wells and rehabilitation of existing wells at the ASR site.
After that, there is the possibility of “operational credits,” which involve a change to state regulations. If the state approves, the city can receive credits for sending ASR water directly to Wichita instead of recharging it in the Equus Beds. If not approved, the city could spend $47.2 million for new recharge wells in 2022. If these wells are built, the cost rises to $70.2 million. (On January 22 King made a presentation to the Equus-Walnut Regional Advisory Committee on this topic.3)
Phased Approach for New Water Supply. Click for larger.There is also the matter of the parallel pipeline. The existing pipeline from the Equus Beds and ASR to the city’s downtown water plant is old and won’t support higher rates of water transmission. The proposed parallel pipeline provides not only redundancy of a major part of our water infrastructure, but also increased capacity. The cost of this, estimated in 2014 at $86 million, was included in the $250 million price tag for ASR expansion. If the parallel pipeline cost is added to the previous phase costs, the cost rises to either $109 million or $156.2 million, depending on the fate of the operational credits regulation reform.
Either way, the cost is much less than the $250 million the city asked voters to consider in November 2014. And I think I’m being charitable of motives when I say “consider.” The clear and revealed preference of the city council and the city’s political class was passage of the sales tax, meaning the city would spend $250 million to achieve something the city now says can be provided for $109 million or $156.2 million. (Well, everyone except then-city council member and now-mayor Jeff Longwell, but his vote against placing the sales tax on the ballot was a naked political calculation.)
In information the city presented to voters in the run up to the November 2014 election, the city promised large water bill increases if the sales tax vote failed, writing: “If a new water supply is funded only through water rate increases, the capital cost portion of the rate will increase an estimated 24%. This is in addition to anticipated annual rate increases.”4
Possible water bill increases. Click for larger.King’s 2015 presentation to the council showed increases of nine percent for residential, commercial, and industrial customers.5
Citizens ought to wonder what lessons may be learned from this. Furthermore, I don’t believe there has been any coverage of this in the city’s mainstream news media. That is a problem, too. For more on this problem, see Wichita Eagle, where are you?
The effect of a proposed bill to end transfer of Kansas sales tax revenue to the highway fund is distorted by promoters of taxation and spending.
The bill is SB 463. The bill’s fiscal note tells how this bill, if passed, would affect the highway fund: “Beginning in FY 2018, the percentage of state sales tax and compensating use tax distributed to the [State Highway Fund] would be eliminated.” The fiscal note goes on to estimate that the highway fund would receive $553.4 million less sales tax revenue than it would otherwise in fiscal year 2018. (This bill proposed changes to other funds, but here I consider only highways.)
In an email to supporters, Economic Lifelines wrote: “SB 463 would redirect 35% of T-WORKS funding beginning in July of 2017. Passage of this legislation would be a devastating blow to the future of the T-WORKS program.” (Economics Lifelines is a group that lobbies for more spending on highways. Its members are primarily local chambers of commerce, labor unions, construction equipment dealers, and construction material suppliers. In other words, those who benefit from more highway spending, without regard to whether it is needed and wise.)
Former Kansas budget director Duane Goossen was more emphatic, writing: “Watch out! A very dangerous financial bill just surfaced in the Senate Ways and Means Committee, but it was promoted with language that hid the ultimate purpose and effect. Senate Bill 463 permanently transfers more than $500 million annually from the highway fund to the general fund.”1
Goossen has it backwards, however. The proposed bill would transfer nothing from the highway fund to the general fund. It would, however, stop transfers from the general fund to the highway fund.
There’s a difference, and it’s important. The highway fund has no claim on sales tax revenue other than what the legislature decides to send it. That amount has changed over the years. Kansas law specifies how much sales tax revenue is transferred to the highway fund. Here are some recent rates of transfer and dates they became effective:2
July 1, 2010: 11.427%
July 1, 2011: 11.26%
July 1, 2012: 11.233%
July 1, 2013: 17.073%
July 1, 2015: 16.226%
July 1, 2016 and thereafter: 16.154%
(If SB 463 passes as it stands now, on July 1, 2017 the rate would become 0 percent.)
Transfers from Sales Tax to KDOT. Click for larger.Nearby is a chart showing how many sales tax dollars were transferred to the highway fund. In 2006 the transfer was $98.914 million, and by 2015 it had grown to $511.586 million, an increase of 417 percent. Inflation rose by 18 percent over the same period.3
(It’s important to note that in some years money has been transferred from the highway fund back to the general fund. Worse, in some years KDOT has borrowed money for the highway fund, but it was transferred to the general fund.4)
You’d think that Goossen, a former state budget director, would understand the difference between stopping a flow of funds versus reversing the flow. He claims the latter, and it isn’t surprising to see this mistake. A few sentences in the article let us know Goossen’s ideology, which is that Kansans should be taxed more so that government can continue to spend: “This maneuver does not fix the problem caused by unaffordable income tax cuts, it just makes highways and children pay for it.” First, tax cuts are never unaffordable. It is government that is unaffordable. Tax cuts let people keep more of what is rightly theirs. That is, unless you believe that government has a legitimate claim to your income and assets, as Goossen does. Second, he complains that “recurring revenue does not begin to cover expenses.” That is true. But the proper remedy is to reform and cut spending. Goossen prefers raising taxes.
Economic Lifelines makes the same mistake. We can understand — but not condone — this organization’s motive. It exists for the sole purpose of drumming up support for spending that benefits its members. If its director, who wrote the email cited above, said that Kansas is spending enough or too much on highways, he undoubtedly would be fired.
But what is Duane Goossen’s motivation for twisting the meaning of a bill? That’s a mystery.
KDOT spending on major road programs. Click for larger version.To top it off, spending on highways has increased — notwithstanding the transfers from the highway fund — when we look at actual spending on roads. KDOT’s Comprehensive Annual Financial Report shows spending in the categories “Preservation” and “Expansion and Enhancement” has grown rapidly over the past five years. Spending in the category “Maintenance” has been level, while spending on “Modernization” has declined. For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2015 totaled $932,666 million, up from a low of $698,770 in fiscal 2010.
News that a Wichita-based company is moving to Colorado sparked a round of Kansas-bashing, most not based on facts.
When a Kansas company announced moving its headquarters to Denver, comments left to a newspaper article made several statements that deserve closer examination.1
One reader wrote “Yup another example that the tax relief for businesses is working in Kansas.” Another wrote “The biggest takeaway here is that then didn’t bother to mention the benefits of lower taxes meaning the tax policy Kansas touts really has no bearing on company decisions.” Another wrote “Just low taxes is not a magnet for business or people wanting to move here.” Let’s look at a few statistics regarding Kansas and Colorado business taxation.
In the 2016 State Business Tax Climate Index from the Tax Foundation, Colorado ranked 18 overall, while Kansas ranked 22.2 According to this measure, Colorado has a better tax environment for business, even after Kansas tax reform.
Data from the U.S. Census Bureau for 2014 shows that Colorado collects $2,195 in taxes from each of its citizens. Kansas collects $2,526.3 That’s after the Kansas tax cuts took effect. Kansas would have to cut taxes much more before it reaches the low level of taxation in Colorado.
The takeaway: Even after Kansas tax reform, Colorado has lower taxes.
Another commenter stated “People want to live and businesses want to be located … where education is important and supported.” The writer didn’t elaborate, but generally when people say “support” education, they mean “spend” a lot on public schools. Another commenter wrote “Public schools are treated as an afterthought by our Governor and Legislature.” So let’s look at spending.
Colorado and Kansas schools, according to NEA. Click for larger.Regarding school spending, the National Education Association collects statistics from a variety of sources and uses some of its own transformations.4 A collection of statistics from that source is nearby. Note that Colorado teacher salaries are higher, while revenue per pupil is lower. Colorado spends more per student when considering current expenditures. Colorado has a higher student-teacher ratio than Kansas.
Colorado and Kansas NAEP scores by ethnicity. Click for larger.The U.S. Census Bureau has different figures on spending. In a table titled “Per Pupil Amounts for Current Spending of Public Elementary-Secondary School Systems by State: Fiscal Year 2013” we see Colorado spending $8,647, and Kansas $9,828.5 This tabulation has Kansas spending 13.7 percent more than Colorado.
Looking at scores on the National Assessment of Educational Progress (NAEP) — a test that is the same in all states — we see that when considering all students, Kansas and Colorado scores are very close, when measuring the percent of students scoring proficient or better. White students in Colorado, however, generally score higher than in Kansas.
Colorado and Kansas NAEP scores by free/reduced lunch eligibility. Click for larger.For NAEP scores by eligibility for free or reduced lunches, we see that Kansas and Colorado are similar, except that Colorado has made progress with eligible students in math, catching up with Kansas. (Eligible students are students from low-income households.)
For what it’s worth, in Colorado 10.4 percent of students who attend public schools attend public charter schools. In Kansas the figure is 0.6 percent, due to Kansas law being specifically designed to limit charter school formation and survival.6
A writer expressed this in his comment: “Colorado also presents a more stable political environment as well.” While this is something that probably can’t be quantified, a recent New York Times article disagrees, quoting a former governor:7
“Colorado is subjected to extremes,” said Roy Romer, a former governor. “It’s not just blue and red. It’s also urban and rural. We have a history to this.”
Of note, Colorado has initiative and referendum. Citizens may, by petition, propose new laws and veto laws the legislature passed.8 Kansas does not have initiative and referendum at the state level. This is one way that Kansas has a more stable political environment than Colorado: Citizens have less political power in Kansas. For example, the law that made marijuana legal in Colorado was passed through citizen initiative. I think it’s safe to say that it will be a long time — if ever — before Kansas has medical marijuana, much less full legalization.
Further, Colorado has TABOR, or Taxpayer Bill of Rights. This is a measure designed to limit the growth of taxation and spending. Whether one likes the idea or not, it has had a tumultuous history in Colorado, according to a Colorado progressive public policy institute.9 And if you thought Kansas was the only state that — purportedly — underfunds education, welcome to Colorado. The same report holds: “As 2016 approached, the [Colorado] General Fund remained nearly $900 million short of what it needed to fully fund K-12 education and well below what it needed to restore postsecondary education and other programs to historic levels.” This is in line with the amount Kansas school spending advocates say Kansas needs to spend, adjusted for population.
Colorado also has term limits on its state legislature and elected members of the state executive department (governor, lieutenant governor, secretary of state, attorney general, and treasurer.)10 Kansas has term limits on its governor, but on no other offices. This argues in favor of Colorado having a more dynamic and less stable government.
Bell Policy Center. The road to 2016: More than three decades of constitutional amendments, legislative acts and economic ups and downs. Available at http://www.bellpolicy.org/research/road-2016. ↩
The Wichita Pachyderm Club featured Wichita Police Chief Gordon Ramsay speaking on the topic “There’s a New Chef in Town.” This was recorded on March 18, 2016.
The average Kansan is misinformed regarding Kansas school spending, and Kansas news media are to blame, writes Paul Waggoner of Hutchinson.
Math Quiz on Kansas Spending
By Paul Waggoner
Math questions, one would think, are very straight-forward and easy to answer. At least easy to guess the right answer in a simple multiple choice test. Such is not the case however with the average Kansan who follows state issues relying on the headlines in the Kansas press.
The reality of how poor a job the Kansas press is doing with numbers is found in a December 2015 SurveyUSA study of 500 plus registered voters in Kansas. This scientific study of voters’ knowledge of educational spending in Kansas was virtually ignored by the Kansas media. Most likely because its implications don’t fit the media narrative on education in this Year 5 of the Age of Brownback. Even worse, the poll was commissioned by a conservative think tank, the Kansas Policy Institute.
As to voter (mis) understanding this 15 question poll hit the jackpot. All the questions were multiple choice with only 4 options given.
Question #6 asked how much state funding do you think Kansas school districts receive per pupil? The correct answer is well over $7,000 per student. 39% of Kansas voters thought it was under $4,000, another 22% thought between $4,000 and $5,000. Only 7% of voters guessed properly.
The follow-up, Question #7, was how much total (federal/state/local) funding do you think Kansas school districts receive per pupil? The correct answer in 2015 was over $13,000 per pupil. Only 5% of registered Kansas voters got that one right. 40% thought the total was under $7,000, and 21% said $7,000 to $10,000 which were the two most inaccurate options!
At this point I was even wondering how the accepted wisdom is so far removed from the truth. So I went to ksde.org, the website of the Kansas State Department of Education, to verify the precise figures. At that website every school district in the state is listed.
What our local school districts spend is very close to the state averages. The Hutchinson USD 308 budget was over $60,000,000 in 2014 with 4,836 full-time students or $12,449 spent per pupil. 5 years earlier the USD 308 budget was $57 million, 5 years before that it was about $41 million.
The comparable figures for USD 313 Buhler are $12,360 per pupil in 2014 with a $26,300,000 budget that 5 years earlier was $22,200,00 and 5 years before that was $18,000,000. For USD 313 that meant students were educated for just $9,000 per pupil as recently as 2005.
Kansas school districts total spending is $2.0 billion higher now than just 10 years ago ($6 billion versus $4 billion). That is an incontrovertible fact. Which leads to two immediate questions: How can the Supreme court keep claiming the spending is constitutionally inadequate? And what exactly do taxpayers have to show for the extra $2,000,000,000 every year?
The reality of those numbers are nowhere in the publics’ consciousness currently. For instance, SurveyUSA question #8 was “over the last 5 years how much do you think total per pupil funding has changed?” The correct answer is that it is actually up 9.92%. But fully 47% of Kansas voters confidently said it had dropped over 5%! Another 15% were sure it had dropped but thought the percentage was smaller. Only 7% of voters knew that school spending was up “over 5%’.
The budget trajectory has changed and is on a much flatter curve than ever before. Taxpayers are mostly rejoicing, tax spenders (and their allies) are howling mad.
My revised school spending narrative is frankly the story of the entire Kansas budget (as can be easily accessed at budget.ks.gov “Governors Budget Report FY 2017”).
The state general fund budget first hit $1 billion in 1980 and grew consistently under Governors Carlin/Hayden/Finney at about a 6.5% annual rate.
Under Graves and Sebelius that accelerated growth rate continued until the 2008-09 recession when the state budget dropped dramatically for 1 year under Governor Parkinson. This made a cumulative annual growth average of around 3% for those three administrations.
Under Governor Brownback the general fund budget is still going up, but at a 5 year annual growth rate of 1.8%.
On February 20th one Hutchinson News columnist’s headline blasted the “Deliberate financial starving of the state of Kansas.” I see this as more of a diet, and I say it is about time.
The numbers on the state budget spending (and taxation) are readily available online. The execution of the plan for this new governmental trajectory leave something to be desired, but that is the topic for another day.
Paul Waggoner is a Hutchinson resident and business owner. He can be reached with comments or questions at waggonerpm@gmail.com.
The Wichita Pachyderm Club featured Wichita Police Chief Gordon Ramsay speaking on the topic “There’s a New Chef in Town.” This was recorded on March 18, 2016.
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