Tag: Featured

  • Sedgwick County WATC funding trajectory following manager’s recommendations

    Sedgwick County WATC funding trajectory following manager’s recommendations

    Sedgwick County taxpayers have been generous with funding for Wichita Area Technical College, and the former county manager has recommended reducing its funding.

    During the July 16, 2014 meeting of the Sedgwick County Commission, county manager Bill Buchanan presented the recommended budget for 2015. It included a cut in funding for Wichita Area Technical College in the amount of $150,000. In response to a question, Buchanan told the commissioners:

    “The new president has been assertive and aggressive in trying to deal with their financial issues. They have, he has turned that financial, that institution around financially. They are in pretty healthy shape. They have a fund balance that’s relatively strong, and it’s in my opinion that our subsidy, although it was critical in the beginning, is less critical in their operations now, and perhaps it would be time for us, when we face our own fiscal issues, to reduce their funding so we can address some of ours.”

    Under the leadership of Chair Dave Unruh, this reduction in funding was approved.

    At the January 7, 2015 meeting of the commission, again under the leadership of Unruh, the commission heard an off-agenda item to restore $50,000 of the funding for 2015, making the cut $100,000. That item passed. Being an off-agenda item, there is little or no public notice. Commissioner Karl Peterjohn noted this in his remarks: “I frankly would feel much more comfortable if we postponed this issue until we could get it published in the paper and have at least whatever public attention that that would generate provided, as opposed to taking another Off Agenda item that’s going to increase county spending.”

    In support of Peterjohn’s motion to delay the decision for a week, Commissioner Richard Ranzau expressed concern over the lack of financial information made available to commissioners. He also repeated the manager’s recommendation that WATC needs less county funding: “Well, I’d like to have more financial information. It’s my understanding that since the state has increased funding for Vocational Ed, they’re doing very well, their reserves increased significantly, and that’s why, I mean, I was told the reason we could reduce it $150,000 was because they were doing so well. I support what they’re doing out there, but if they’ve had an influx of money from the state, a result of Vocational Ed legislation then I think it’s appropriate to adjust our spending, and I’m not prepared to increase it by $50,000 without more financial information, and that’s why I support Commissioner Peterjohn’s motion to postpone this a week so we can get more information and make a more educated decision on this. There is really no reason for hurry through this in my estimation.”

    In summary, the Sedgwick County manager recommended that commissioners reduce funding to WATC, as its need for county funding has declined. Under commission chair Unruh, the commission did so, in the net amount of $100,000. The same amount is proposed for cuts this year. In light of this, the criticism of WATC beneficiaries like Spirit Aerosystems is unfounded.

    By the way, the commission has been criticized for considering off-agenda items since Ranzau became chair in January, with the Wichita Eagle editorial board describing one off-agenda vote as “abrupt.” In another op-ed, Rhonda Holman complained that “The move came in an off-agenda item, with little opportunity for GWEDC and the business community to argue against it.”

    Whether off-agenda items are good or bad public policy seems to depend on the whim of the Eagle editorial board.

  • WichitaLiberty.TV: Michael Tanner of Cato Institute on deficits, debt, and entitlements

    WichitaLiberty.TV: Michael Tanner of Cato Institute on deficits, debt, and entitlements

    In this episode of WichitaLiberty.TV: Michael Tanner of the Cato Institute talks about his new book “Going for Broke: Deficits, Debt, and the Entitlement Crisis.” View below, or click here to view at YouTube. Episode 90, broadcast August 2, 2015.

    Tanner’s page at Cato is here. Video of a book forum on “Going for Broke: Deficits, Debt, and the Entitlement Crisis” is here. Video of Tanner at the Wichita Pachyderm Club is here. A good discussion of the book on C-SPAN is here.

  • In Wichita, benefitting from your sales taxes, but not paying their own

    In Wichita, benefitting from your sales taxes, but not paying their own

    A Wichita real estate development benefits from the sales taxes you pay, but doesn’t want to pay themselves.

    STAR bonds in Kansas. Click for larger version.
    STAR bonds in Kansas. Click for larger version.
    In Kansas, the STAR bond program allows cities to issue bonds (that is, to borrow money), give the proceeds (that is, cash) to a private business firm, and then pay off the bonds with the sales taxes paid by the business firm’s customers.

    But sometimes this gift by taxpayers isn’t sufficient. In Wichita, despite benefitting from STAR bonds, a company wishes to skip paying sales taxes itself. This is what the Wichita City Council will consider tomorrow.

    The Wichita Sports Forum (WSF) project on North Greenwich Road, according to city documents, is a project with a cost of $14,025,000. Of that, $7,525,000 (53.6 percent) may be paid for by the STAR bonds. These bonds will be paid off at no cost to the owners of WSF.

    Additionally, according to city documents, the STAR bonds program carries with it a sales tax exemption. That is, if any of the bond proceeds are spent on items subject to sales tax (like building materials), WSF doesn’t pay the sales tax.

    There’s another consideration, however. Some of the project is being paid for by the developers themselves rather than by STAR bonds. Stuff purchased with their money will be subject to sales tax. Evidently that is a problem, and the city has a way to step in and solve it.

    Through the Industrial Revenue Bonds program, the WSF developers can avoid paying sales tax on $4,500,000 of building materials. City documents don’t mention this number, but with the sales tax rate in Wichita at 7.5 percent, this is a savings of $337,500. It’s as good as a grant of cash. Better, in fact. If the city granted this cash, it would be taxable as income. But forgiveness of taxes isn’t considered income.

    In Kansas, low-income families must pay sales tax on their groceries, and at a rate that is among the highest in the country. Is it unseemly that having already benefited from millions in taxpayer subsidy and sales tax exemption, the developers of Wichita Sports Forum seek even more sales tax exemptions?

  • Sedgwick County spending beneficiaries overwhelm others

    Sedgwick County spending beneficiaries overwhelm others

    That so many speakers at a public hearing were in favor of government spending is not surprising.

    In a letter to the editor of the Wichita Eagle the writer stated “But apparently few of them felt strongly enough to come to the commission hearing and express their support of budget cuts.” He was referring to the public hearing on Wednesday July 29, when some 50 people spoke, and just three supported cuts.

    This lopsided ratio is not surprising. It’s an example of the well-known phenomenon of concentrated benefits and dispersed (or diffuse) costs. Explained in this video, it observes that for most government spending programs, the benefits are showered on a few very visible recipients who benefit greatly. There were 47 of these speaking at last week’s public hearing.

    But the costs of these spending programs are spread across everyone, or at least a large group. For them, the cost is small. In fact, politicians use this argument in favor of their spending programs. Dave Unruh observed that the proposed county property tax cuts amount to savings of $1.37 per year for a $100,000 house. His arithmetic is correct, and so is his understanding of human nature. Most people look at the small cost of any single government spending program and realize it’s not worth much personal effort to save $1.37 (or whatever) per year.

    Since the costs of each spending program is small for any single person, not many get worked up and take action. That’s why only three of 50 speakers opposed the spending programs. Politicians and beneficiaries of spending programs rely on this imbalance of motives.

    Not often mentioned is that most of the organizations seeking county funding are charities. Anyone may make contributions directly to them. Some people have testified that they don’t need a cut in taxes, or that they would be willing to be taxed more so that these organizations could have more funding. Perhaps these people don’t realize that it is within their power to make contributions to these charities at any time.

    It seems we have forgotten that charity is a voluntary act, and that government taxation and spending is not charitable. This is evidence of further drift from a civil society where things like zoos and medical care for the poor are handled on a voluntary and cooperative basis. Instead, we fight.

  • The real free lunch: Markets and private property

    The real free lunch: Markets and private property

    As we approach another birthday of Milton Friedman, here’s his article where he clears up the authorship of a famous aphorism, and explains how to really get a free lunch. Based on remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 1993.

    I am delighted to be here on the occasion of the opening of the Cato headquarters. It is a beautiful building and a real tribute to the intellectual influence of Ed Crane and his associates.

    I have sometimes been associated with the aphorism “There’s no such thing as a free lunch,” which I did not invent. I wish more attention were paid to one that I did invent, and that I think is particularly appropriate in this city, “Nobody spends somebody else’s money as carefully as he spends his own.” But all aphorisms are half-truths. One of our favorite family pursuits on long drives is to try to find the opposites of aphorisms. For example, “History never repeats itself,” but “There’s nothing new under the sun.” Or “Look before you leap,” but “He who hesitates is lost.” The opposite of “There’s no such thing as a free lunch” is clearly “The best things in life are free.”

    And in the real economic world, there is a free lunch, an extraordinary free lunch, and that free lunch is free markets and private property. Why is it that on one side of an arbitrary line there was East Germany and on the other side there was West Germany with such a different level of prosperity? It was because West Germany had a system of largely free, private markets — a free lunch. The same free lunch explains the difference between Hong Kong and mainland China, and the prosperity of the United States and Great Britain. These free lunches have been the product of a set of invisible institutions that, as F. A. Hayek emphasized, are a product of human action but not of human intention.

    (more…)

  • Sedgwick County Zoo funding

    Sedgwick County Zoo funding

    The Sedgwick County Commission has been generous with zoo funding, spending far more than agreed upon and granting a moratorium on loan payments and interest.

    Funding agreement from 2013.
    Funding agreement from 2013.
    In September 2013 the Sedgwick County Commission agreed on a new funding plan with the Sedgwick County Zoo for years 2014 through 2018. For 2016 the recommended budget calls for keeping funding the same as the 2015 level instead of a 6.9 percent increase as indicated by the 2013 plan.

    That’s the plan. What actually happened is quite different.

    In September 2014 the commission voted to give the zoo $5.3 million to help pay for a new elephant exhibit. This contribution was not in any funding agreement, and the money was paid in January 2015. This extra funding is almost as large as the planned funding for 2015, which was about $5.6 million.

    Sedgwick County Zoo funding, planned and actual.
    Sedgwick County Zoo funding, planned and actual.
    For next year the commission proposes drawing back just a little, proposing that 2016 funding be the same as 2015 planned and actual funding.

    But instead of being grateful for the contribution of $5.3 million for the elephant exhibit, zoo boosters are bitter because the commission is proposing to keep zoo funding level from 2015 to 2016. Level, that is, if one ignores an extra $5.3 million from the county in 2015.

    When considering zoo funding we also need to factor in the zoo’s failure to keep its commitment to the county. The zoo has borrowed money from the county so it could build a restaurant. Now the zoo is enjoying a deferral of loan payments and a break from accumulating interest charges. See For Sedgwick County Zoo, a moratorium on its commitment.

    By the way, the 2013 funding plan holds that “either party may terminate this agreement by giving written notice.” The parties contemplated that one may not be able or willing to meet the plan.

  • For Sedgwick County Zoo, a moratorium on its commitment

    For Sedgwick County Zoo, a moratorium on its commitment

    As the Sedgwick County Zoo and its supporters criticize commissioners for failing to honor commitments, the Zoo is enjoying a deferral of loan payments and a break from accumulating interest charges.

    In 2007 the Sedgwick County commission authorized a loan of up to $2.4 million to the zoo to build a restaurant. The idea for this is credited to just-retired County Manager Bill Buchanan. According to meeting minutes from February 21, 2007, the Manager told the commissioners “A new restaurant in the zoo will make some money for the zoo, it is a feature that zoos around the country use as a way to attract people and as an additional revenue source.” As for the county’s role in the venture, the manager said “I’ve viewed this as a way to invest our money, rather than with a Treasury note[,] with a partner.”

    Buchanan pitched the loan as a way for the county to earn a little bit more interest than a Treasury note, and as a way for the Zoo to save over $100,000 in interest. If the Zoo was not able to repay the loan, the manager said the county’s annual contribution to the Zoo could be a repayment source. “No one is anticipating that,” said Buchanan.

    Immediately after the manager spoke Chris Chronis, the county’s Chief Financial Officer, told the commissioners that “despite what you may have concluded from what the Manager just said, we do not consider this an investment. In fact, it would not be a permitted investment under State law.” Instead, he told the commissioners it should be considered “a loan for economic development purposes.”

    Mark Reed, the Zoo Director, told the commissioners “it is my desire and hope to have this paid off in five to seven years.”

    What has been the result of this loan?

    The zoo borrowed a total of $2,251,100 in two draws in 2007 and 2008. Payments were made through 2013. As of the end of 2014 the zoo owed $936,044 on this loan, according to the county’s annual financial report and other documents.

    In 2013 the commission authorized a five-year moratorium on loan payments, to start in 2014. Besides deferring loan payments, the commission decided that interest will not accrue during the moratorium. The deferred payments are in the amount of $234,011.11 for each year.

  • Sedgwick County budget outlook

    Sedgwick County budget outlook

    The Sedgwick County recommended budget for 2016 reduces projected deficits.

    Sedgwick County budget outlook as presented to commissioners in February.
    Sedgwick County budget outlook as presented to commissioners in February.
    In February Sedgwick County Commissioners were presented with a forecast of budget deficits through 2020, as can be seen in the nearby illustration provided by the county. (Click charts for larger versions.)

    Sedgwick County budget outlook as contemplated by recommended budget in July.
    Sedgwick County budget outlook as contemplated by recommended budget in July.
    The recommended budget reduces the deficits in each year, as can be seen in the second chart provided by the county. The bar chart provides a different view of the same figures.

    During a meeting with commissioners, the county’s financial officer said “In each year this budget provides for a reduction in the anticipated deficit.” He also added that it improves the county’s financial picture.

    The recommended budget cuts spending in some areas. An alternative that could be proposed by commissioners is to raise taxes, either property or sales.

    An alternate presentation of the projected deficits based on the recommended budget.
    An alternate presentation of the projected deficits based on the recommended budget.
  • ‘Roast of Trump’ best left unserved

    ‘Roast of Trump’ best left unserved

    A celebrity roast of Donald Trump provides insight into the honoree’s character.

    Anyone who is thinking of supporting Donald Trump for president might want to view the Comedy Central Roast of Trump. This was recorded in 2011, and several roasters referred to Trump’s possible presidential candidacy. You can find it on YouTube.

    In these roasts the humor is raunchy and vulgar. The language is foul. I’m not sure I understand all the jokes, and I’m a little ashamed to admit that I do understand many. The roasters — a collection of has-beens like Larry King and celebrities who seem to do nothing but appear on roasts — poke fun at the roastee, in this case Donald Trump.

    Well, it’s much more than poking fun. The roasters skewer Trump. No aspect of his life seems off limits. Multiple jokes refer to his several young wives and his sex life. These jokes are often funny. They’re funny because they exaggerate some aspect of Trump. They have to have a whiff of plausibility, some grounding in reality, in order to be funny.

    If, for example, a roaster were to poke fun at Trump for being poor or short, that wouldn’t be funny. Trump is not poor; he’s extremely wealthy, and he’s tall. There’s no platform from which to exaggerate for humorous effect.

    But when a roaster crudely jests at how Trump’s ego intrudes on his sex life (it has to do with Trump being more interested in himself than in his partner), that’s pretty funny. It references things that are true about Trump — his massive ego and his several beautiful young wives — and exaggerates a little.

    Jokes like this could not have been a surprise to Trump. He (or his people) must have known the nature of the humor employed at these roasts. So the question is: Why did he appear in such a forum? Is this a way to appear presidential?