Voice For Liberty

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  • KU records request seen as political attack

    KU records request seen as political attack

    A request for correspondence belonging to a Kansas University faculty member is a blatant attempt to squelch academic freedom and free speech.

    When conservative groups seek records of correspondence of liberal university professors, the American Association of University Professors defends its withholding based on academic freedom. That is, until the subject of a records request is a Kansas University professor who believes in free markets and receives funding from the Left’s favorite target, Charles and David Koch. Then, the local chapter of AAUP flips its position. It will even contribute money against the ideal of academic freedom.

    In 2011 Republicans in Wisconsin requested the correspondence of a professor who was critical of American Legislative Exchange Council, a free market advocacy group. AAUP argued against releasing the records, writing:

    We believe that disclosure of Professor Cronon’s e-mail correspondence will inevitably produce a chilling effect not only on Professor Cronon’s academic freedom but also on the academic freedom of his faculty colleagues and of faculty members throughout the University of Wisconsin system, with potentially deleterious effects on the quality of research and teaching. We urge you to do what you can to resist complying with this outrageous request. (source here)

    In defense of a professor at the University of Virginia whose correspondence was sought by a conservative group, AAUP also defended academic freedom:

    The AAUP and the Union of Concerned Scientists (UCS) filed a joint amicus brief in support of UVA and Professor Mann, urging that “in evaluating disclosure under FOIA, the public’s right to know must be balanced against the significant risk of chilling academic freedom that FOIA requests may pose.” ATI’s request, the brief stated, “strikes at the heart of academic freedom and debate.” … The AAUPUCS brief argued, however, that “in the FOIA context, the public’s right to information is not absolute and courts can and do employ a balancing test to weigh the interest of the public’s right to know against the equally important interests of academic freedom.” (source here)

    When a student group requested correspondence of a Kansas University professor, the local chapter of AAUP flipped its stance regarding academic freedom. It even contributed money towards the costs of the records request.

    The political motivation of AAUP and the student group that filed the request cannot be overlooked. The primary subject of the request for correspondence is Dr. Arthur P. Hall. He is a lecturer in the KU School of Business and Director of its Center for Applied Economics. He believes in free markets and economic freedom. He won an award for his teaching of MBA students this year. He testifies to the Kansas Legislature against rent-seeking and crony capitalism. Hall and the Center also receive funding from the Fred and Mary Koch Foundation.

    It’s the latter that probably stirs up suspicion and opposition. It doesn’t matter that around the world we’ve found that free markets and economic freedom create better living conditions for everyone. It doesn’t matter that disclosure of e-mail correspondence “will inevitably produce a chilling effect” on academic freedom. As long as a political attack on Koch Industries can be advanced, anything is fair game. Principles no longer apply.

    A political attack

    The request for Hall’s correspondence was made by Schuyler Kraus, who is president of the student group Students for a Sustainable Future. Members of SSF have ties to groups like Greenpeace, the Sierra Club, and PowerShift. SSF advertises that members will have networking opportunities with these groups and “Forecast the Future, Kansas Interfaith Power & Light, etc.” These groups have mounted political attacks on Charles and David Koch for years.

    SFF also listed as an advisor Manny Abarca, who is Recycling Operations Coordinator for KU as well as Community Affairs Liaison for Emanuel Cleaver, the Democratic Congressman from Kansas City, Missouri. Prior to that he worked for U.S. Senator Claire McCaskill.

    On August 3, the Kansas chapter of AAUP contributed $1,000 to SFF.
    On August 3, the Kansas chapter of AAUP contributed $1,000 to SFF. Click for larger version.
    When KU said the request for Hall’s records would cost $1,800, SFF was able to raise that amount quickly, aided by $1,000 from the Kansas chapter of AAUP. That’s the local chapter of the national group that opposes release of the correspondence of liberal professors. (For a student group, SSF seems to have access to funds, offering to pay students $12.50 per hour for political work.)

    Students for a Sustainable Future Facebook post. Click for larger version.
    Students for a Sustainable Future Facebook post. Click for larger version.
    Why would the Kansas chapter of AAUP attack academic freedom in the case of Hall’s correspondence, while at the national level AAUP defends academic freedom? As Hall wrote in an op-ed, “With the odd exception of the Kansas chapter (which reportedly provided funding to the student group seeking my private documents), the AAUP has consistently stood by professors and researchers in shielding their private correspondence from over-reaching records requests, acknowledging the threat that this kind of activity poses to academic freedom.”

    This episode shows that the Left views “academic freedom” much like it does “free speech.” The Left will defend free speech and academic freedom at any cost — as long as they agree with what is being said and taught. The Left can’t tolerate the marketplace of ideas that Charles and David Koch support, even when it’s just one faculty member of a large university school.

    That, quite simply, is the reason for the requests made to KU for Hall’s correspondence. By harassing certain faculty and the university, the Left thinks it can shut down speech. While promoting free speech and open scientific and economic inquiry, the Left mounts attacks like this on those who don’t conform to the liberal orthodoxy present at most universities.

    In a message to fellow School of Business faculty, Hall explained that he has nothing to hide regarding his correspondence. He expressed concern, however, that political opponents might “cherry-pick language from hundreds of emails to weave a story.” That sword cuts both ways. The university should not acquiesce quietly to this attempt to silence one of its faculty. It should not set a precedent that conservatives might justifiably cite when requesting correspondence of liberal faculty members.

  • Food labeling act to be heard

    Food labeling act to be heard

    A bill sponsored by U.S. Representative Mike Pompeo of Wichita will be heard in committee this week. On his Facebook page, Pompeo wrote:

    On December 10 there will be a hearing in the Energy and Commerce Committee to review the Safe and Accurate Food Labeling Act. We will hear testimony from expert scientists and those with a wide variety of experiences. We will also hear from those who produce the safest food in the world here in America.

    This legislation will make the following reforms:

    • Ensure that new innovations in food are — and always remain — safe by creating a mandatory process for all genetically engineered crops that requires an FDA safety review prior to their introduction into the food supply;
    • Empower the FDA to specify special labeling if these foods are found to be unsafe in any way, and;
    • Preserve the FDA’s 100-year management of food labeling and prevent a disruptive regulatory patchwork that will significantly increase the cost of food for families.

    Following from Voice for Liberty in July, why this legislation should be passed.

    For GMOs, a patchwork of state regulations would be a nightmare

    A complicated regulatory landscape for genetically modified foods would shift power to large food producers at the expense of small companies and innovative startups.

    Have you ever seen a product that displayed a label that states: “This product contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.” And notifying you that you should wash your hands after handling it?

    In my case, it was a cable attached to a computer peripheral.

    How is that that the State of California “knows” this product is harmful, but none of the other states or the federal government have such knowledge? And why should I — here in Kansas — be discouraged by buying a product and then be scared to use it, just because California believes it is harmful?

    The answer is that California has a list of about 900 chemicals that it believes are harmful. If you want to sell a product in California, and if your product contains one of these, you must provide a warning label on your product.

    Now, can you imagine the confusion that would result if other states had their own list of chemicals that they believe are harmful. It’s quite likely that each state would have a different list. Complying with the multitude of different harmful lists and labeling requirements would be a burden. It might be impossible — or very costly — to comply.

    Today, we have similar potential for regulatory complexity cropping up in the form of state-based label requirements for foods that contain GMOs (Genetically Modified Organisms). Dozens of states are considering their own labeling requirements for food sold within their borders. It’s quite likely that each state would have a different set of labeling requirements. The complexity of complying with such disjointed regulations is costly and forbidding.

    To help in this situation, United States Representative Mike Pompeo has introduced legislation that would eliminate the ability of states to require labeling. The bill is H.R. 4432: Safe and Accurate Food Labeling Act of 2014.

    The proposed law does not prohibit voluntarily labeling.

    What’s interesting is that opponents say this bill will create a new federal bureaucracy to enforce GMO regulations. I suppose that’s true. But it’s either that, or 50 states with 50 sets of regulations, all different. Cities could add regulations, too, further complicating the regulatory landscape.

    Another observation: Critics of this bill say its supporters have “sold out” to the large food producer companies, Monsanto being mentioned most prominently. But it is large companies like Monsanto that are best able to cope with complicated regulations. Large companies have fleets of lawyers and compliance officers that can deal with burdensome regulation. And being large, these companies can spread the cost of regulation over a large sales volume.

    But small companies, start up companies, and innovators don’t have lots of lawyers and compliance officers. Being small, they can’t spread the cost of regulation over a large sales volume. These are the companies that are most harmed by regulations like those that H.R. 4432 is designed to squelch.

    It’s in the interest of large companies to have regulations that create barriers to entry to markets by new competitors. We often see companies lobbying to create such regulations. But H.R. 4432 will create a uniform playing field that is easier and simpler to navigate and obey.

    Finally, markets have a remarkable ability to provide the products and information that consumers want. If a food producer senses that consumers want information about the ingredients in a product, they’ll provide it. Their competitors — if they see themselves disadvantaged — will also provide the information that consumers demand. The alternative is relying on 50 sets of government bureaucrats operating in 50 state capitals, plus ambitious city bureaucrats.

  • Options for funding Wichita’s future water supply

    Options for funding Wichita’s future water supply

    Now that the proposed Wichita sales tax has failed, how should Wichita pay for a future water supply?

    At the December 2 meeting of the Wichita city council, discussion by Council member Pete Meitzner (district 2, east Wichita) referred to the recent election in which Wichita voters rejected a proposed sales tax. (Video below, or click here to view at YouTube.) The major portion of the tax, $250 million collected over five years, would have been used to expand the ASR system as a way of providing for Wichita’s future water needs.

    One of the arguments advanced by opponents of the sales tax such as myself is that water users should pay for future water supply. Advocates of the sales tax disagreed, arguing that Wichitans and visitors should pay higher sales taxes to fund a new water supply.

    What does the arithmetic look like if we pay for a water supply though water bills? (Some use the term rates.) First, let’s set aside the questions of when the city needs an expanded water supply and how that water should be supplied.

    Meitzner’s questioning of city public works director Alan King elicited how many water meters or accounts the water department has, which King said is almost 140,000. Meitzner then proceeded to ask if the cost of a new water supply — $250 million — was born equally by each of these customers, how much would that add to water bills? King said it would be in the range of “23, almost 24 dollars per bill, and at the high end something closer to 30 dollars per bill. That would be each month, you would have to pay that for 60 months.”

    Meitzner then ran through computations that resulted in a cost of $1,500 per meter over five years to pay for the cost of a new water supply. He then compared that to sales tax opponents who said that the cost of the additional sales tax per family would be $160 per year. Meitzner said that would be an additional cost of $800 over five years to pay for everything the proposed sales tax was dedicated to, not just a new water supply.

    The line of reasoning followed by Meitzner is superficially appealing but economically unsound. It is true that water bills would have to rise by quite a bit in order to raise $250 million over five years. But it seems unlikely that the city would decide to spread that cost equally among its water customers. Would the city ask its largest industrial customers to contribute the same amount each month as small households that do no outside irrigation? I don’t think that most people would think this is reasonable. But Meitzner’s arithmetic implies that the city would, or could, do exactly this.

    There are many ways the city could apportion the cost of a new water supply among water users. First, the city could simply raise the price of a gallon of water. That would let water users participate in the funding of a new water supply in proportion to the amount of water they use.

    Second, the city could add a fixed amount to each water bill, that money reserved for a future water supply. The city already has a fixed cost for water service. It’s referred to in the rate ordinance as the “minimum monthly” charge. It varies from $11.95 per month for the smallest hookups to $478.78 per month for the largest wholesale users. This amount could be increased by equal portion — say ten percent — for everyone. Or, if the city wants to reduce the burden on small households, it could leave the rate for small hookups as it is, and raise it for larger hookups.

    Third, the city could decide to raise the price of a gallon of water by different amounts for different classes of water users. Wichita, like many cities, use a tiered structure of rates that separates summer irrigation water usage from household usage inside the home. How does Wichita’s tiered structure of rates compare to other cities? A recent Black & Veatch survey found for that the 50 cities in the survey, considering only the water portion of bills, the average cost for using 3,750 gallons per month is $19. For using 15,000 gallons, the cost is $65. That’s a ratio of 3.4 to 1. For Wichita, the survey reported costs of $18 and $36, for a ratio of 2.0 to 1.

    These are two important numbers: 3.4 and 2.0. They mean that while the price per gallon of Wichita water becomes marginally more expensive as more water is used, the slope is as steep as the average. It means that Wichita households that use low amounts of water pay about average rates, but those Wichita households using a lot of water pay rates much less than average. This is something the city could easily adjust. It would also have the benefit of encouraging conservation, which is something the city says is important for our future.

    We need to be aware of the cost of water

    Wichita proposed sales tax explanation on waterIt’s important to have water users pay for a new water supply. The benefit is that water users will become acutely aware of the costs of a new water supply. That awareness is difficult to achieve. Many citizens are surprised to learn that the city has spent $247 million over the past decade on a water project, the ASR program. Nearly all that was paid by using long-term debt, the same type of debt that the city urged citizens to avoid during the sales tax campaign.

    Paying for a new water supply through water bills would let commercial and industrial users participate in paying the cost of the project. These water users usually don’t pay a lot of sales tax. A restaurant, for example, does not pay sales tax on the food ingredients it purchases. An aircraft manufacturer does not pay sales tax on the raw materials and component parts it buys. But these companies have a water bill. Yet, the city recommended that low income households pay more sales tax on their groceries. The city said this is the best way to pay for a new water supply to protect our lawns and golf courses during a drought.

  • In Wichita, a campaign issue to watch for

    In Wichita, a campaign issue to watch for

    As Wichita enters campaign season for mayor and city council, will any candidates call for implementing a reform that we desperately need in Wichita? Following, from 2012, explains.

    In the wake of scandals some states and cities have passed “pay-to-play” laws. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    Many people make campaign contributions to candidates whose ideals and goals they share. This is an important part of our political process. But when reading campaign finance reports for members of the Wichita City Council, one sees the same names appearing over and over, often making the maximum allowed contribution to candidates.

    And when one looks at the candidates these people contribute to, you notice that often there’s no common thread linking the political goals and ideals of the candidates. Some people contribute equally to liberal and conservative council members. But then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose political ideals they agree with. Instead, they’re donating so they can line their own pockets. These donors are opportunists.

    An architect makes big contributions supporting a school bond issue campaign, and then wins a no-bid contract. Coincidence?
    An architect makes big contributions supporting a school bond issue campaign, and then wins a no-bid contract. Coincidence?
    As another example, for the 2008 campaign for a bond issue for USD 259 (Wichita public school district), my analysis found that 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms, and others who directly stand to benefit from school construction. Do these companies have an especially keen interest in the education of children? I don’t think so. They are interested in themselves.

    Some states and cities have taken steps to reduce this harmful practice. New Jersey is notable for its Local Unit Pay-To-Play Law. The law affects many local units of government and the awarding of contracts having a value of over $17,500, requiring that these contracts be awarded by a “fair and open process,” which basically means a contract process open to bidding.

    Cities, too, are passing pay-to-pay laws. Notably, a recently-passed law in Dallas was in response to special treatment for real estate developers — the very issue Wichita is facing now as it prepares to pour millions into the pockets of a small group of favored — and highly subsidized — downtown developers who are generous with campaign contributions to almost all council members. Not that this is new to Wichita, as the city has often done this in the past.

    Smaller cities, too, have these laws. A charter provision of the city of Santa Ana, in Orange County, California, states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    But Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life.

    In 2011 nearly all council members approved a no-bid contract for this garage. It was later re-bid at a much lower price.
    In 2011 nearly all council members approved a no-bid contract for this garage. It was later re-bid at a much lower price.
    In Kansas, campaign finance reports are filed by candidates and available to citizens. But many politicians don’t want campaign contributions discussed, at least in public. Recently Wichita Council Member Michael O’Donnell expressed concern over the potential award of a $6 million construction contract without an open bidding process. The contractor the city wanted to give the contract to was Key Construction, a firm that actively makes political contributions to city council members, both conservative and liberal.

    For expressing his concern, O’Donnell was roundly criticized by many council members, and especially by Mayor Carl Brewer.

    Here’s what’s interesting: Brewer and city council members say the campaign contributions don’t affect their votes. Those who regularly make contributions say they don’t do it to influence the council. Therefore, it seems that there should be no opposition to a pay-to-play law in Wichita — or the entire state — like the one in Santa Ana.

    But until we get such a law, I can understand how Wichita city council members don’t want to discuss their campaign contributions from those they’re about to vote to give money to. It’s not about supporting political ideologies — liberal, moderate, or conservative. It’s about opportunists seeking money from government.

    The practice stinks. It causes citizens to be cynical of their government and withdraw from participation in civic affairs. It causes government to grow at the expense of taxpayers. Pay-to-play laws can help reverse these trends.

    You may download a printable copy of this article at Kansas Needs Pay-to-Play Laws.

  • WichitaLiberty.TV: Wichita’s legislative agenda, and a bit of bad news

    WichitaLiberty.TV: Wichita’s legislative agenda, and a bit of bad news

    In this episode of WichitaLiberty.TV: A look at some elements of Wichita’s legislative agenda for state government, in particular special tax treatment for special artists, problems with the city’s numbers regarding airfares, and why we should abandon the pursuit of passenger rail. Then, why are people not more involved in political affairs? View below, or click here to view at YouTube. Episode 67, broadcast December 7, 2014.

  • City of Wichita State Legislative Agenda: Airfares

    City of Wichita State Legislative Agenda: Airfares

    The City of Wichita’s legislative agenda regarding the Affordable Airfares subsidy program seems to be based on data not supported by facts.

    Excerpt from Wichita Legislative Agenda, November 2014
    Excerpt from Wichita Legislative Agenda, November 2014
    As the City of Wichita prepares its legislative agenda for the Kansas Legislature, the first issue gets off to a rocky start with figures that are not aligned with facts. Probably the largest whopper is the claim of how much has been saved in airfares. The Wichita document states this: “Since 2002, Affordable Airfares has provided $1.446 billion in savings for Wichita Mid-Continent air travelers.”

    That is a lot of money. It is certainly exaggerated. We don’t really know how much the subsidy program has saved, as we can not know what would have happened had there been no subsidy program. So we estimate, and here two estimates.

    A study from Dr. Art Hall contained this: “Combining the estimated aggregate savings for AirTran and Frontier sums to an annual average range of $30.75 to $39.5 million. (An Evaluation of the Kansas Affordable Airfares Program, Arthur P. Hall, Ph.D., February 2013)

    Minutes of a July 2011 REAP board meeting hold “This program also saved air travelers out of MidContinent Airport more than $33.2 million in reduced fares in 2010, compared to 2000.”

    So if we use, say, $35 million as the annual savings, then for the 12 years from 2002 to 2014 the savings sum to $420 million. The city claims $1,446 million, or 3.4 times as much. Wichitans might want to ask city hall why there is such a large difference.

    The city’s legislative agenda also mentions a presentation given by William S. Swelbar, an aviation industry analyst, reporting “The Wichita airport performance is acknowledged for its unique performance in growth and capacity (Bill Swelbar presentation at WSU Economic Conference).” There are several curious aspects of this presentation.

    Excerpt from William S. Swelbar presentation, October 2014
    Excerpt from William S. Swelbar presentation, October 2014
    The slide that shows growth in traffic at the Wichita airport needs to be interpreted with caution. First, note that the scale of the vertical axis does not start with zero. This is something that needs to be recognized. Here’s why: The bars for departures appear to be rapidly rising. The bar for 2013 looks about twice as tall as the bar for 2102. This leads to the impression that whatever it is that these bars represent, it has doubled from 2012 to 2013. That’s because bars on a chart traditionally represent a quantity of something, starting from zero.

    When we examine the entire vertical axis of the chart, we see that it does not start with zero. Instead, it starts at the value 12,050, and the entire axis represents a range of 250 passengers per year. This means that the increase in departures from 2012 to 2013, which looks like an impressive jump in Swelbar’s chart — a doubling in value — is an increase from 12,120 to 12,195. This represents a growth of departures of 75 per year, which is 0.62 percent. Or, about 6 flights per month. This is better than a decline, but not by much. (I’m reading the chart and interpreting the height of the bars against the scale, so these numbers could be off a bit.)

    It is not deceptive to start a bar chart from a point other than zero, as long as readers are aware of that and interpret the numbers cautiously and appropriately. But that wasn’t made clear in this presentation. These numbers need to be placed in meaningful context. Otherwise, city council members and bureaucrats might jump on this chart and use it as evidence of dramatic changes happening at the Wichita airport when in reality the change is quite mild. This is what has happened.

    What about the increase in departures from 2013 to 2014? The presentation by Swelbar was given in October 2014 and would have been based on data available only through June or July. But somehow, Swelbar told the audience how many departures the Wichita Airport would experience in all 2014. I can understand presenting an estimate for 2014, but the number is not presented as such.

    The data for the years that are complete also appear to be questionable. For departures, Swelbar shows departures rising from 12,120 for 2012 to 12,195 for 2013 (again, estimating from the heights of bars on the chart). The Bureau of Transportation Statistics shows departures from Wichita in 2012 as 12,037, then declining to 11,984 for 2013. (Click here to view these statistics.) The statistics from the Wichita airport don’t directly report the number of scheduled departures. For what it’s worth, the airport reports passenger count of 1,509,206 in 2012, which fell to 1,508,872 in 2013.

    These are problems found on the first page of the city’s presentation. The agenda was presented to the council during a workshop on November 25. The council will vote on adoption of the agenda on December 9, having postponed the vote from December 2.

  • Wichita economic development items

    Wichita economic development items

    The Wichita city council has been busy with economic development items, and more are upcoming.

    At the November 25 meeting of the Wichita City Council, on the consent agenda, the council passed these items.

    Approved a sublease in a warehouse. This action was necessary as the incentivized warehouse pays no property taxes due to a subsidy program. Given tax costs and industrial building rents, this policy gives these incentivized buildings a cost advantage of about 20 to 25 percent over competitors. That’s very high, and makes it difficult for existing buildings to compete. This lease is for 40,500 square feet for annual rent of $196,425.00, which is $4.85 per square foot. Competing warehouse space might be able to charge rent of $4.25 plus property tax of about $1.00, for a total rent of $5.25 per square foot to the tenant. In the case of the subsidized building, the landlord collects $4.85 instead of $4.25, and the tenant pays $4.85 instead of $5.25. Everyone’s happy. Everyone, that is, except for existing industrial landlords in Wichita — especially those with available space to rent — who must be wondering why they attempt to stay in business when city hall sets up subsidized competitors with new buildings and a large cost advantage. Then, other commercial tenants must be wondering why they don’t get discounted rent. Taxpayers must be wondering why they have to make up the difference in taxes that the subsidized tenants aren’t paying. (On second thought, these parties may not be wondering about this, as we don’t have a general circulation newspaper or a business newspaper that cares to explain these things.) See Wichita speculative industrial buildings.

    While asking for tax breaks, the owner of this building wanted you to pay higher taxes.
    While asking for tax breaks, the owner of this building wanted you to pay higher taxes.
    Set January 6 as the date for a public hearing on a TIF district project plan. This is the plan for Union Station in downtown Wichita. The public hearing for the formation of its tax increment financing district has already been held, and it passed. The project plan will consider and authorize the actual project and spending of taxpayer funds to reimburse the developer for various items. Unlike the formation of the TIF district, the county and school district have no ability to object to the project plan.

    Set December 16 as the date for the public hearing on the formation of a community improvement district. This district is for the benefit of the River Vista project, the proposed apartments on the west bank of the Arkansas River between Douglas and First streets. CIDs redirect sales tax revenue from general government to the developers of the project. Say, does anyone remember Charter Ordinance No. 144, which says this land “shall be hereafter restricted to and maintained as open space”? See In Wichita, West Bank apartments seem to violate ordinance.

    Also on that day, during its workshop, the council heard items for the city’s legislative agenda. I have a several articles covering these topics as they relate to the legislative agenda: Airfares, passenger rail, cultural arts districts, and economic development.

    On its December 2 agenda, the council has these items:

    Property tax and sales tax exemptions for Bombardier Learjet. The council may grant property tax discounts worth as much as $268,548 per year for up to ten years, according to city documents. This will be split among taxing jurisdictions as follows: City $72,389, State $3,340, County $65,415, and USD 259 $127,404. The purchased items may also receive an exemption from sales tax, but city documents give no amount. Bombardier boasts of “Investing in the communities where we do business to ensure we have strong contexts for our operations” and “We support our home community through donations, sponsorships and our employee volunteering program.” Evidently this commitment to investment and support does not extend to shouldering the same tax burden that everyone else does.

    Property tax exemptions for Cessna Aircraft Company. The council may grant property tax discounts worth as much as $302,311 per year for up to ten years, according to city documents. This will be split among taxing jurisdictions as follows: City $81,491, County $73,639, State $3,760, and USD 259 $143,421. Generally, items purchased with proceeds of the IRB program also receive sales tax exemption, but city documents do not mention this. Cessna speaks of its commitment to the communities where it operates, but evidently this commitment does not extend to shouldering the same tax burden that everyone else does.

    High Touch Technologies in downtown Wichita, with sign calling for higher sales tax.
    High Touch Technologies in downtown Wichita, with sign calling for higher sales tax.
    Property tax exemptions for High Touch. This is an extension of tax breaks first granted last year. See In Wichita, the case for business welfare. Did you know the CEO of this company is also chair of the Wichita Metro Chamber of Commerce? And that while campaigning for higher sales taxes in Wichita, including higher taxes on groceries for low-income households, he sought and received a sales tax exemption for his company?

    Forgivable loan to Apex Engineering International. The Wichita Eagle reported that this company “has been growing briskly and adding employees.” Still, the company seeks incentives, in this case a forgivable loan from the city of $90,000. It will ask Sedgwick County for the same amount. These loans are grants of cash that do not need to be repaid as long as goals are met. Three years ago Apex received $1,272,000 in tax credits and grants under programs offered by the State of Kansas. It is not known at this time if Apex is receiving additional subsidy from the state. According to a company news release, “AEI was nominated for the Wichita Metro Chamber of Commerce 2012 Small Business Awards. This prestigious award recognizes two companies each year who are selected based on specific criteria including: entrepreneurship, employee relations, diversity, community contribution and involvement, and leadership and performance.” Maybe we can justify this grant as repayment for Apex’s community contribution. This forgivable loan may receive resistance from some council members. Current council member and mayoral candidate Jeff Longwell (district 5, west and northwest Wichita) was recently quoted in the Wichita Eagle as wanting a “moratorium on forgivable loans right now until we can reassess the way that we do economic development.” While campaigning for his current office, Council member Pete Meitzner (district 2, east Wichita) told an audience “I am not for forgivable loans.” He noted the contradiction inherent in the terms “forgivable” and “loan,” calling them “conflicting terms.” Meitzner has said he will run for his current office again.

    Set January 6 as the date for the public hearing regarding the project plan for the Mosely Avenue Project TIF district in Old Town. This TIF district is a project of David Burk and Steve Barrett. Burk has received millions of taxpayer dollars in subsidy. But he’s not finished.

    Consider whether to raise water bills by about 5 percent.

    Consider a new lease agreement with Museum of World Treasures, Inc. which will, among other things, reduce the museum’s rent paid to the city from $60,000 per year to $1.

    Consider passing the legislative agenda. See above for more on this topic.

  • City of Wichita State Legislative Agenda: Economic Development

    City of Wichita State Legislative Agenda: Economic Development

    The City of Wichita wishes to preserve the many economic development incentives it has at its disposal.

    The proposed legislative agenda for the City of Wichita holds this regarding economic development incentives:

    ISSUE: The State of Kansas provides economic development incentives through a variety of programs.

    RECOMMEND: The Wichita City Council supports the continuation of state economic incentive programs that assist local governments in their efforts to improve their local economies.

    Wichita Legislative Agenda, November 2014, page 16, Economic DevelopmentThat’s all the agenda holds. In the presentation for the previous year, the request was more complete, naming specific programs. It’s useful to revisit that list, as Wichita leaders often complain that Wichita doesn’t have enough “tools in the toolbox” to compete effectively in economic development.

    In a way, I don’t blame the city for omitting the list this year. Part of the campaign for the proposed sales tax was that Wichita doesn’t have enough incentives to compete for jobs. In making that argument, city leaders use a narrow definition of incentive that doesn’t count the programs listed below. Given the poor results of the city’s economic development machinery, you can see why city leaders minimize the number of incentive programs and the amounts of money that are available.

    Here are the programs listed in the previous legislative agenda that the city wants the legislature to protect. Some of these are so valuable that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

    • GWEDC/GO WICHITA: Support existing statutory records exemptions
    • Industrial Revenue Bond tax abatements (IRBX)
    • Economic Development Exemptions (EDX)
    • Tax Increment Financing (TIF)
    • Sales Tax Revenue (STAR) Bonds
    • Community Improvement Districts (CID)
    • Neighborhood Revitalization Area (NRA) tax rebates
    • Special Assessment financing for neighborhood infrastructure projects, facade improvements and abatement of asbestos and lead-based paint.
    • State Historic Preservation Tax Credits (HPTC)
    • State administration of federal Low Income Housing Tax Credits (LIHTC)
    • High Performance Incentive Program (HPIP) tax credits
    • Investments in Major Projects and Comprehensive Training (IMPACT) grants
    • Promoting Employment Across Kansas (PEAK) program
    • Economic Revitalization and Reinvestment Act bonding for major aviation and wind energy projects
    • Kansas Industrial Training (KIT) and Kansas Industrial Retraining (KIR) grants
    • Network Kansas tax credit funding
    • State support for Innovation Commercialization Centers in Commerce Department budget
  • City of Wichita State Legislative Agenda: Cultural Arts Districts

    City of Wichita State Legislative Agenda: Cultural Arts Districts

    Wichita government spending on economic development leads to imagined problems that require government intervention and more taxpayer contribution to resolve. The cycle of organic rebirth of cities is then replaced with bureaucratic management.

    Commerce Street Arts District P9As the City of Wichita prepares its legislative agenda for 2015, an issue arises for the first year. It seems that the success of government spending on development has created rising property values, which creates higher tax bills, and that is a burden for some. Here’s the issue the city has identified: “Cultural arts enterprises in certain areas are threatened by rising property values and the resulting tax burden.”

    Here’s the solution the city proposes: “The Wichita City Council supports state legislation that would allow local governments to use innovative measures to protect cultural arts enterprises from circumstantial increases in property taxes. The intent is to nurture and preserve arts activity throughout the City of Wichita and the State of Kansas.”

    What are the “innovative measures” the city wants to use? Nothing special; just allowing a special group of people to shirk paying the same taxes that everyone else has to pay. The city wants to be able to use tax abatements for up to ten years. The percentage of taxes that could be forgiven could be as high as 80 percent.

    So there’s really nothing innovative to see here. The city merely wants to broaden the application of tax forgiveness. Which means the tax base shrinks, and the people who still find themselves unlucky enough to still be part of the tax base face increasing demands for their tax payments.

    The city manager said that artists from Commerce Street came to the city looking for a solution to their problem. Which is about the same problem that everyone else has: high taxes.

    Here’s the nub of the problem, as explained by the city manager: “The more successful that we are with the redevelopment, the higher the value of the properties, and therefore harder for them who are on thin margins to begin with to stay in the districts, so they lose their charm of being the artistic or art districts.”

    The proposed solution, which will require a change to state law, is that a government bureaucrat will decide the boundaries of one or more cultural arts districts. The bureaucrat will also decide which types of business firms qualify for discounts on their taxes. Besides Commerce Street, the manager identified Delano, Old Town, and the Douglas Design District as possible districts where artists might receive 80 percent discounts on their property taxes.

    After this, other taxpayers have to make up the lost tax revenue from the artists. That is, unless the city decides to reduce spending by the amount of the tax discounts. I’ve proposed that to the city in other similar circumstances, and the idea was rejected. I believe council members thought I was delusional.

    There are many people and business firms that operate on the same “thin margins” that the city manager wants to help artists escape. We see them come to city hall seeking special treatment. As a result, the city plans and manages an increasing share of the economy, and economic freedom, entrepreneurship, and the potential for a truly dynamic economy decline.

    Who will stake out the next frontier?

    There are many problems with the idea the city is proposing.

    One is that the city is asking poor people to pay their full share of property taxes while granting artists a discount. This is a serious problem of equity, which is that people in similar circumstances should be treated the same. Just because someone chooses art as a business or vocation doesn’t mean they should be treated specially with respect to the taxes they pay.

    Bob Weeks and Bill Goffrier in the artist's studio, Flatiron Building, Wichita, 1982
    Bob Weeks and Bill Goffrier in the artist’s studio, Flatiron Building, Wichita, 1982
    Another problem is that the process of establishing arts districts will interrupt the dynamism of the way cities develop. Arts districts develop because artists want (or need) places with cheap rent. Unless they can persuade city hall to grant property tax discounts, this generally means artists rent space in “bad” parts of town, that is, parts of town that are run down, blighted, and may have high crime rates. Thus, cheap rent.

    If things go well, that is, the artists are successful and a community develops, things get fixed up. Rents rise. Taxes rise. The artists can’t afford the higher rent and taxes and have to move on. Which means the cycle repeats. The artists on the cutting edge find other places to move to, and the cycle repeats. Other parts of the city are reborn — organically — through the benefits of markets, not government bureaucracy. This is good.

    Except: The City of Wichita is proposing to end the cycle by granting discounts on taxes to artists so they may remain where they are.

    We replace dynamism with stagnation by bureaucracy. The city says this is innovative.