Voice For Liberty

Tag: Featured

Block grants a chance for more school choice in Kansas
The block grant school funding bill under consideration in the Kansas Legislature would hold districts harmless for enrollment declines due to school choice.
Critics of school choice programs allege that as public school districts lost students to other schools, and the students’ funding follows the students to the new schools, school districts are worse off, financially speaking. That’s because school districts say that their costs do not fall as rapidly as does enrollment, although this has been found to be untrue.
But under the block grant bill in Kansas, school funding is no longer tied to enrollment, at least for the next two years. This means that when school districts lose students for any reason, including due to school choice programs, their revenue stays the same. Funding rises, when measured on a per-pupil basis.
This should be an opening for increased school choice programs in Kansas. Presently Kansas has a law that allows charter schools, but there are few such schools. That’s because local school districts have to approve a charter school, and few districts will do that. We have a tax credit scholarship program in Kansas this year, but it is capped at a small amount of money, and student eligibility requirements mean that not everyone can participate. An “eligible student” is a child who qualifies as an at-risk pupil (eligible for free lunch under the National School Lunch Act) and either attends a school that would qualify as either a Title I Focus School or a Title I Priority School; or has received an educational scholarship under this program and has not graduated from high school or reached 21 years of age. Also, eligible students must have been enrolled in a public school in the year prior to receiving the scholarship or be eligible to be enrolled in a public school, if under the age of six. These are significant restrictions that focus the scholarship program on students who need it most, and who are least likely to be able to afford private schools on their own. But many other Kansas schoolchildren would also benefit from school choice, as they do in other states.
With the primary criticism of school choice out of the picture (the alleged “drain” on public school funding) supporters of choice have an opportunity to advance their cause. So far, no one has publically advanced any proposals or legislation for expansion of school choice in Kansas.
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March 13, 2015
Kansas slips in Tax Foundation business tax climate index
Based on five components of taxation important to business, Kansas ranks twenty-second among the states, two positions lower than last year.
The Tax Foundation collects and presents data regarding taxation in the states. From this data, analysts compute the State Business Tax Climate Index. In the Facts & Figures 2015 compilation released today, Kansas ranks 22 among the states. A rank of 1 means the most favorable business tax climate.
In 2014 Kansas ranked at position 20.
The index is composed of five components: Corporate tax rates, individual income tax rates, sales tax rate, unemployment insurance tax rate, and property tax rate.
In many of the areas where data is gathered Kansas ranks near the middle of the states, but there are exceptions.
One area where Kansas ranks low among the states is in “Federal aid as a percentage of general revenue.” For Kansas the value is 24.9 percent, which is 44th among the states. For Missouri the value is 38.2 percent, which ranks fifth.
Another area where Kansas is outside of the middle is in “State general sales tax collections per capita.” The value for Kansas is $1,003, which ranks 12th. This high ranking is probably due to the sales tax on groceries in Kansas. Many states do not tax groceries. In a similar measure “State and local general sales tax collections per capita” Kansas ranks 11th.
In “State and local cell phone tax rates” Kansas ranks 11th highest, with a tax rate of 12.87 percent.
In “State and local excise tax collections per capita” Kansas ranks 42nd at $384.
In “Property taxes paid as a percentage of owner-occupied housing value” Kansas ranks 15th, with a rate of 1.39 percent. In this ranking, first position means the highest tax rate, so only 14 states have a rate higher than Kansas.
In “State debt per capita” Kansas ranks lower than most, at position 37 with debt at $2,362 per person. But in “State and local debt per capita” Kansas is higher than most states, at position 16 with debt of $9,274 per person.
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March 10, 2015
Energy subsidies for electricity production, in proportion
To compare federal subsidies for the production of electricity, we must consider subsidy values in proportion to the amount of electricity generated, because the magnitude is vastly different.
When comparing federal subsidies for the production of electricity, it’s important to look at the subsidy values in proportion to the amount of electricity generated. That’s because the scales vary widely. For example, in 2010 for the United States, as can be seen in the accompanying table, coal accounted for the production of 1,851 billion kWh (or megawatt hours) of electricity production. That’s 44.9 percent of all electricity produced. Solar power accounted for the production of 1,851 billion kWh, which is 0.025 percent of all electrical production.
Solar power, however, received 8.2 percent of all federal subsidies, or about 328 times its share of production.
The nearby table and chart are based on data from the Energy Information Administration (EIA), Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010 through the Congressional Research Service, along with the author’s calculations.
Click table for larger version.
Of particular interest is wind power, as it receives subsidy in the form of cash equivalent tax credits, and many states (including Kansas) have mandates forcing its use. For the year covered in the table, wind accounted for 2.3 percent of U.S. electricity generation. It received 42.0 percent of federal energy subsidies.
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March 9, 2015
Huelskamp, Pompeo at top of Club for Growth scorecard
Kansans Tim Huelskamp and Mike Pompeo are among the eight U.S. House Members who scored 100 percent for 2014 on Club for Growth’s scorecard.
Club for Growth describes itself as “a national network of over 100,000 pro-growth, limited government Americans who share in the belief that prosperity and opportunity come from economic freedom.”
On the scorecard for 2014, released today, Kansas Representatives Tim Huelskamp and Mike Pompeo voted with the Club for Growth’s preferred position one hundred percent of the time. So did six other members of the House of Representatives.
Kansans Lynn Jenkins and Kevin Yoder were tied at rank 73, with scores of 77.
On the club’s Senate scorecard for 2014, Pat Roberts was ranked at number 11 with a score of 90, far above his lifetime score of 76. Jerry Moran was ranked at spot 25, with a score of 69 (lifetime score 73).
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March 9, 2015
Wichita mayoral candidates at Pachyderm Club
On March 6, 2015, the Wichita Pachyderm Club hosted the first forum for mayoral candidates after the primary election. Jeff Longwell and Sam Williams are the candidates for the April 7, 2015 general election.
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March 6, 2015
A Wichita Shocker, redux
Based on events in Wichita, the Wall Street Journal wrote “What Americans seem to want most from government these days is equal treatment. They increasingly realize that powerful government nearly always helps the powerful …” But Wichita’s elites don’t seem to understand this.
Three years ago from today the Wall Street Journal noted something it thought remarkable: a “voter revolt” in Wichita. Citizens overturned a decision by the Wichita City Council regarding an economic development incentive awarded to a downtown hotel. It was the ninth layer of subsidy for the hotel, and because of our laws, it was the only subsidy that citizens could contest through a referendum process.
In its op-ed, the Journal wrote:
The elites are stunned, but they shouldn’t be. The core issue is fairness — and not of the soak-the-rich kind that President Obama practices. One of the leaders of the opposition, Derrick Sontag, director of Americans for Prosperity in Kansas, says that what infuriated voters was the veneer of “political cronyism.”
What Americans seem to want most from government these days is equal treatment. They increasingly realize that powerful government nearly always helps the powerful, whether the beneficiaries are a union that can carve a sweet deal as part of an auto bailout or corporations that can hire lobbyists to write a tax loophole.
The “elites” referred to include the Wichita Metro Chamber of Commerce, the political class, and the city newspaper. Since then, the influence of these elites has declined. Last year all three campaigned for a sales tax increase in Wichita, but voters rejected it by a large margin. It seems that voters are increasingly aware of the cronyism of the elites and the harm it causes the Wichita-area economy.
Last year as part of the campaign for the higher sales tax the Wichita Chamber admitted that Wichita lags in job creation. The other elites agreed. But none took responsibility for having managed the Wichita economy into the dumpster. Even today the local economic development agency — which is a subsidiary of the Wichita Chamber — seeks to shift blame instead of realizing the need for reform. The city council still layers on the levels of subsidy for its cronies.
Following, from March 2012:
A Wichita shocker
“Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.” So starts today’s Wall Street Journal Review & Outlook editorial (subscription required), taking notice of the special election last week in Wichita.
The editorial page of the Wall Street Journal is one of the most prominent voices for free markets and limited government in America. Over and over Journal editors expose crony capitalism and corporate welfare schemes, and they waste few words in condemning these harmful practices.
The three Republican members of the Wichita City Council who consider themselves fiscal conservatives but nonetheless voted for the corporate welfare that voters rejected — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — need to consider this a wake up call. These members, it should be noted, routinely vote in concert with the Democrats and liberals on the council.
For good measure, we should note that Sedgwick County Commission Republicans Dave Unruh and Jim Skelton routinely — but not always — vote for these crony capitalist measures.
The Wichita business community, headed by the Wichita Metro Chamber of Commerce endorsed this measure, too.
Hopefully this election will convince Wichita’s political and bureaucratic leaders that our economic development policies are not working. Combined with the startling findings by a Tax Foundation and KMPG study that finds Kansas lags near the bottom of the states in tax costs to business, the need for reform of our spending and taxing practices couldn’t be more evident. It is now up to our leaders to find within themselves the capability to change — or we all shall suffer.
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March 6, 2015
Legislation to end Economic Development Administration introduced
U.S. Rep. Mike Pompeo calls for an end to a wasteful federal economic development agency.
If you think a proper function of the federal government is spending your tax dollars to build replicas of the Great Pyramids in Indiana or a gift shop in a winery, you’re not going to like legislation introduced by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, including the Wichita metropolitan area.
Others, however, will appreciate H.R. 661: EDA Elimination Act of 2015. In the following article from 2012, Pompeo explains the harm of the Economic Development Administration, which he describes as a “politically motivated federal wealth redistribution agency.” Pompeo had introduced similar legislation in the past, and this bill keeps the effort alive in the new Congress.
In his article Pompeo mentions the trip by Assistant Secretary of Commerce for Economic Development John Fernandez to Wichita. This was in conjunction with EDA’s grant to Bombardier, part of which was to facilitate production of a new airplane, the LearJet 85. Since then, Fernandez has moved on to the private sector, working for a law firm in a role that seems something like lobbying.
Unfortunately, earlier this year Bombardier mothballed the LearJet 85 project, with industry observers doubting it will be revived.
For more background on the EDA, see Economic Development Administration at Downsizing the Federal Government.
End the Economic Development Administration — Now
By U.S. Representative Mike Pompeo, January, 2012
As part of my efforts to reduce the size of government, I have proposed to eliminate the Economic Development Administration (EDA), a politically motivated federal wealth redistribution agency. Unsurprisingly, the current leader of that agency, Assistant Secretary of Commerce for Economic Development John Fernandez, has taken acute personal interest in my bill to shutter his agency.
Last week, Secretary Fernandez invited himself to Wichita at taxpayer expense and met with the Wichita Eagle’s editorial board. Afterwards, the paper accurately noted I am advocating eliminating the EDA even though that agency occasionally awards grant money to projects in South Central Kansas. They just don’t get it. Thanks to decades of this flawed “You take yours, I’ll take mine” Washington logic, our nation now faces a crippling $16 trillion national debt.
I first learned about the EDA when Secretary Fernandez testified in front of my subcommittee that the benefits of EDA projects exceed the costs and cited the absurd example of a $1.4 million award for “infrastructure” that allegedly helped a Minnesota town secure a new $1.6 billion steel mill. As a former CEO, I knew there is no way that a taxpayer subsidy equal to less than one-tenth of one percent (0.1%) of the total capital needed made a difference in launching the project. That mill was getting built whether EDA’s grant came through or not. So, I decided to dig further.
I discovered that the EDA is a federal agency we can do without. Similar to earmarks that gave us the infamous “Bridge to Nowhere” or the Department of Energy loan guarantee scandal that produced Solyndra, the EDA advances local projects that narrowly benefit a particular company or community. To be sure, the EDA occasionally supports a local project here in Kansas. But it takes our tax money every year for projects in 400-plus other congressional districts, many if not most of which are boondoggles. For example: EDA gave $2 million to help construct UNLV’s Harry Reid Research and Technology Park; $2 million for a “culinary amphitheater,” tasting room, and gift shop at a Washington state winery; and $500,000 to construct (never-completed) replicas of the Great Pyramids in rural Indiana.
Several times in recent decades, the Government Accountability Office has questioned the value and efficacy of the EDA. Good-government groups like Citizens Against Government Waste have called for dismantling the agency. In addition, eliminating the EDA was listed among the recommendations of President Obama’s own bipartisan Simpson-Bowles Deficit Reduction Commission.
So why hasn’t it been shut down already? Politics. The EDA spreads taxpayer-funded project money far and wide and attacks congressmen who fail to support EDA grants. Soon after that initial hearing, Secretary Fernandez flew in his regional director — again at taxpayer expense — to show me “all the great things we are doing in your home district” and handed me a list of recent and pending local grants. Hint, hint. You can’t say I wasn’t warned to back off. Indeed, Eagle editors missed the real story here: Secretary Fernandez flew to Wichita because he is a bureaucrat trying to save his high-paying gig. The bureaucracy strikes back when conservatives take on bloated, out-of-control, public spending, so I guess I’m making progress.
Please don’t misunderstand. I am not faulting cities, universities, or companies for having sought “free” federal money from the EDA. The fault lies squarely with a Washington culture that insists every program is sacred and there is no spending left to cut.
A federal agency run at the Assistant Secretary level has not been eliminated in decades. Now is the time. My bill to eliminate the EDA (HR 3090) would take one small step toward restoring fiscal sanity and constitutional government.
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March 5, 2015
WichitaLiberty.TV: A downtown Wichita deal shows some of the problems with the Wichita economy
In this episode of WichitaLiberty.TV: We’ll examine the city council’s action regarding a downtown Wichita development project and how it is harmful to Wichita taxpayers and the economy. View below, or click here to view at YouTube. Episode 77, broadcast March 8, 2015.
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March 5, 2015
Exchange Place incentives, including free sales tax and an ethics bypass
A downtown Wichita project receives free sales taxes and a bypass of Wichita’s code of conduct for city council members. Remarks to the Wichita City Council, March 3, 2015.
Regarding the Exchange Place project in downtown Wichita, I’d like to remind the council of the entire subsidy package offered to the project.
There are historic preservation tax credits, which may amount to 25 percent of the project cost. These credits have the same economic impact as a cash payment, and their cost must be born by taxpayers.
There is $12.5 million in tax increment financing, which re-routes future property tax revenues back to the project for the benefit of its owners. Most everyone else pays property taxes in order to pay for government, not for things that benefit themselves exclusively, or nearly so.
There is a federal loan guarantee, which places the federal taxpayer on the hook if this project isn’t successful.
The owner of this project also seeks to avoid paying sales taxes on the purchase of materials. City documents don’t say how much this sales tax forgiveness might be worth, but it easily could be several million dollars.
Mayor and council, if it in fact is truly necessary to layer on these incentives in order to do a project in downtown Wichita, I think we need to ask: Why? Why is it so difficult to do a project in downtown Wichita?
Other speakers will probably tell you that rehabilitating historic buildings is expensive. If so, working on historic buildings is a choice they make. They, and their tenants, ought to pay the cost. It’s a lifestyle choice, and nothing more than that.
But I’m really troubled about the sales tax exemption. Just a few months ago our civic leaders, including this council, recommended that Wichitans add more to our sales tax burden in order to pay for a variety of things.
Only 14 states apply sales tax to food purchased at grocery stores for home consumption, and Kansas has the second-highest statewide rate. So we in Kansas, and Wichita by extension, require low-income families to pay sales tax on their groceries. But today this council is considering granting an exemption from paying these taxes that nearly everyone else has to pay.
These tax subsidies are not popular with voters. Last year when Kansas Policy Institute surveyed Wichita voters, it found that only 34 percent agreed with the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development. Then, of course, there is the result of the November sales tax election.
Might I also remind the people of Wichita that some of their taxpayer-funded subsidies are earmarked to fund a bailout for a politically-connected construction company for work done on a different project, one not related to Exchange Place except through having common ownership in the past? I don’t think it is good public policy for this city to act as collection agent for a private debt that has been difficult to collect.
This project is slated to receive many million in taxpayer-funded subsidy. Now this council proposes to wave a magic wand and eliminate the cost of sales tax for its owners. People notice this arbitrary application of the burden of taxation. They see certain people treated differently under the law, rather than all being treated equally under the law. People don’t like this. It breeds distrust in government. This council can help restore some of this trust by not issuing the Industrial Revenue Bonds and the accompanying sales tax exemption.
The ethics problem for the city
Wichita Mayor Carl Brewer with friend and major campaign donor Dave Wells of Key Construction. Today Brewer voted for benefits for Wells, in apparent contradiction of city code.
Although I did not mention this to the council, Mayor Carl Brewer should not have voted on this matter. The politically-connected construction company that benefits from this deal through a taxpayer-funded bailout Key Construction. Its president, Dave Wells, is a friend of the mayor, as well as frequent and heavy campaign financier for the mayor and other council members.
This is a problem, as there is a law in Wichita. Here’s an excerpt from Section 2.04.050 Code of ethics for council members from the Wichita city code as passed in 2008:
“[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”
Dave Wells and Carl Brewer are friends. The mayor has said so. But the City of Wichita’s official position is that Section 2.04.050 does not need to be followed. Even children can see that elected officials should not vote economic benefits for their friends — but not the City of Wichita.
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March 3, 2015