Voice For Liberty

Tag: Kansas legislature

Articles about the Kansas legislature, both the House of Representatives and the Senate.

  • Kansas school funding formula is badly broken

    By Dave Trabert, Kansas Policy Institute.

    Data from the Kansas State Department of Education (KSDE) shows school districts’ unencumbered operating carryover cash reserves (excluding capital, debt and federal funds) as of July 1, 2011 were at a record-high $868.3 million. All last year districts said funding shortfalls were prompting them to cut teachers and programs. Meanwhile, most districts didn’t spend all of their state and local tax aid and increased their operating carryover cash reserves by $85.7 million.

    This isn’t a one-time phenomenon; 2011 was the sixth consecutive year (since the courts said schools were under-funded) that some state and local tax aid was used to increase operating carryover cash reserves. Total operating carryover increased by $410.1 million since 2005.

    If the school funding formula is consistently providing more money than necessary to operate schools, we should put the money where it’s really needed or give it back to taxpayers. That may be a controversial statement, but we can’t let controversy get in the way of providing kids with a quality education and a fiscally stable state after they graduate.

    A large portion of the buildup in carryover cash is in funds set aside for special education, academically at-risk, and bilingual students. The balances in these funds alone have grown by $164.5 million; their total is $314.4 million. This is money specifically allocated by the funding formula for those purposes; the fact that this much apparently wasn’t needed is a clear indication that the formula is badly broken.

    Kansas Policy Institute has been researching this issue since 2009. At first, some districts said the money wasn’t there; others said it existed at one point but had been spent. Still others said the cash existed but couldn’t be spent.

    There is a legitimate issue of needing some degree of carryover to manage cash flow, especially since the state has been late sending money to districts over the last two years. But even that reason has an element of ‘the dog ate my homework’ for many districts.

    Data collected from KSDE shows that districts’ operating carryover ratio last year (beginning carryover cash divided by operating costs) ranged from 1 percent (USD 312 Haven) to 64 percent (USD 502 Lewis), with the median at 16 percent. If Haven and dozens of other districts consistently manage cash flow with less than 10 percent carryover cash ratio, those with ratios of 20 percent or greater could do so with much smaller carryover balances.

    Fortunately, the Kansas Legislature recognized the absurdity of having carryover cash pile up and gave schools full authority to transfer carryover balances from previously-restricted funds to offset up to $156 million in Base State Aid reductions over the last two years. (Another quirk of the formula caused base state aid to decline even though total state aid increased.) KSDE reports that only a small portion has been put to use so far.

    The school funding formula should be based on what it costs to achieve required outcomes and also have districts operating and organized in a cost-effective manner.

    Believe it or not, that wasn’t the basis of the last school lawsuit.

    How’s that for a broken system?

  • Kansas and Wichita quick takes: Monday August 22, 2011

    How not to grow an economy. Wall Street Journal Review & Outlook How Not to Grow an Economy: A week in the life of the Obama recovery. from today: “Financial markets are in turmoil, investors are fleeing to safe havens, and the chances of another recession are rising. This would seem to be a moment when government should be especially careful to do no harm, to talk and walk softly, and to reassure business that Washington wants more private investment and hiring. But this is not how our current government behaves. Day after day brings headlines of another legislative, regulatory or enforcement action that gives CEOs and investors reason to hunker down, retain as much cash as possible and ride out whatever storms are ahead.” … After listing a number of headline events of the type mentioned, the Journal concludes: “None of these stories by themselves — or even a week of them — is enough to undermine a recovery. But the cascade of such stories day after day — about new regulations, new prosecutions or fines against business, new obstacles to investment, more spending and higher taxes — contributes to the larger lack of business and consumer confidence. It’s impossible to quantify the impact of such policies on lost GDP or lost job creation, but everyone in the real economy understands how such signals work. The great tragedy of the Obama nonrecovery is that this Administration still doesn’t realize the damage it is doing.” … Me, if wonder why if President Obama knows how to create jobs and has a plan to do so, why not introduce it today — or two and a half years ago, right after he became president? Are we to believe the he and his advisers know something now that they didn’t know then? We might hold some faint hope that Obama will reveal a plan that relies less on government and more on free markets and capitalism, but that doesn’t seem likely.

    Son of TARP. Also in the Wall Street Journal, Holman W. Jenkins, Jr. explains that the housing crisis isn’t over, thanks to government policies: “Under bailout theory, housing was supposed to hit bottom, but the bottom would be higher than if the economy had lapsed into depression. But housing hasn’t been allowed to hit bottom, thanks to policies designed to foil foreclosures and keep people in houses they can’t afford and have stopped paying for. As a result, the housing and construction industries remain paralyzed.” Bank of America, having bet on the success of the bailout, and now creatures of a government safety net: “They wouldn’t exist without it.” Holman contends the bailout isn’t working, and that raises a possibility for the future: “Our warning of two years ago — ‘bank nationalization will soon be back on the agenda unless the economy picks up’ — threatens to come true. If the tea party crowd didn’t like the debt-ceiling hike, think how they’d react to Son of Tarp.” The full article is The Bailout Isn’t Working: Bank of America is the canary in the coal mine.

    Wichita City Council. The Wichita City Council in its Tuesday meeting will consider consent items only as it is the fourth Tuesday of the month. Consent agendas are usually reserved for items thought to be of non-controversial nature, and items on them will not be discussed by the council unless a member asks to “pull” an item for discussion and a possible vote separate from the other consent agenda items. One item that may be of interest to citizens is a decision on purchasing four new city buses. This item is notable, according to Wichita Eagle reporting, because “The four buses the city is poised to purchase might be the last diesel buses it ever buys.” … Also on the consent agenda is a proposal to rezone large swaths of downtown property from various classifications to “CBD” Central Business District zoning. City document say this will allow existing land uses to continue while permitting new. The Metropolitan Area Planning Commission approved this proposal unanimously. … The council will also decide whether to accept petitions regarding the formation of a community improvement district and authorization of a facade improvement project at 104 South Broadway. That’s the Douglas Place Project being developed by David Burk and partners. There’s not much basis for refusing to accept the petitions, and all the agenda item does is accept the petition and set September 13 as the date for the public hearing on these matters. The council has already issued of letter of intent stating that it desires to go forward with these programs. … Earlier this year Jeff Longwell (district 5, west and northwest Wichita) voted against accepting CID petitions for the Eastgate shopping center. … As always, the agenda packet is available at Wichita city council agendas.

    Critique of Keynesian policies. Sheldon Richman in The Freeman: “The Keynesian pundits, then, are wrong on all counts. The government need not be the spender of last resort because 1) producers and consumers would spend just fine if it would get out of their way, and 2) the government can’t be relied on to create, rather than destroy, value in its use of scarce resources.” Richman also notes the intolerance, and also the “attitude that is at once arrogant and ignorant” of those who question “Keynesianism as the only truly scientific economics.” He explains that “The pundits can’t even acknowledge good faith in their opponents. This explains the intolerance shown those who refuse to agree that in a recession government spending is indispensable to raising aggregate demand and restoring economic growth.” … Boosters of government spending as stimulus often explain that the ARRA stimulus passed in 2009 was too small at only around $800 billion. But all government deficit spending counts as stimulus — and there’s been a lot of deficit spending the past few years.

    Junior Kansas legislators to speak. This Friday’s meeting (August 26th) of the Wichita Pachyderm Club features Kansas State Representatives Jim Howell and Joseph Scapa speaking on “Our freshmen year in the Kansas Legislature.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club … Upcoming speakers: On September 2 the Petroleum Club is closed for the holiday, so there will be no meeting. … On September 9, Mark Masterson, Director, Sedgwick County Department of Corrections, on the topic “Juvenile Justice System in Sedgwick County.” Following, from 2:00 pm to 3:00 pm, Pachyderm Club members and guests are invited to tour the Sedgwick County Juvenile Detention Center located at 700 South Hydraulic, Wichita, Kansas. … On September 16, Merrill Eisenhower Atwater, great grandson of President Dwight D. Eisenhower, will present a program with the topic to be determined. … On September 23, Dave Trabert, President of Kansas Policy Institute, speaking on the topic “Why Not Kansas: Getting every student an effective education.” … On September 30, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.” … On October 7, John Locke — reincarnated through the miracle of modern technology — speaking on “Life, Liberty, and Property.” … On October 14, Sedgwick County Commission Members Richard Ranzau and James Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On October 21, N. Trip Shawver, Attorney/Mediator, on “The magic of mediation, its uses and benefits.”

  • Kansas and Wichita quick takes: Wednesday August 10, 2011

    Kansas House Appropriations Chair to speak. This Friday’s meeting (August 12th) of the Wichita Pachyderm Club Kansas Representative Marc Rhoades, Chair of the Kansas House of Representatives Committee on Appropriations, speaking on the topic “The impact of the freshman legislators on the 2011 House budgetary process.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club … Upcoming speakers: On August 19, Jay M. Price, Ph.D., Associate Professor and Director of the public history program at Wichita State University, speaking on “Clashes of Values in Kansas History.” His recent Wichita Eagle op-ed was Kansas a stage for “values showdowns.” … On August 26, Kansas State Representatives Jim Howell and Joseph Scapa speaking on “Our freshmen year in the Kansas Legislature.” … On September 2 the Petroleum Club is closed for the holiday, so there will be no meeting. … On September 9, Mark Masterson, Director, Sedgwick County Department of Corrections, on the topic “Juvenile Justice System in Sedgwick County.” Following, from 2:00 pm to 3:00 pm, Pachyderm Club members and guests are invited to tour the Sedgwick County Juvenile Detention Center located at 700 South Hydraulic, Wichita, Kansas. … On September 16, Merrill Eisenhower Atwater, great grandson of President Dwight D. Eisenhower, will present a program with the topic to be determined. … On September 23, Dave Trabert, President of Kansas Policy Institute, speaking on the topic Why Not Kansas,” an initiative to provide information about school choice. … On September 30, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.”

    Sebelius responds to waivers inquiry. In June U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, along with others asked Secretary of Health and Human Services Kathleen Sebelius for information about the Obamacare waivers HHS has been granting. He got a response — except it’s not a response. In a statement, Huelskamp said “No details and no additional information about the Annual Limit Waivers were provided, so again we remain in the dark about this secretive process. Candidate Obama promised to be the most ‘open and transparent’ in history — a far cry from President Obama. The American people have a right to know why this new health care law is unfairly applied and what they can do to be exempted from ObamaCare. If one person, labor union, state, or business can get a waiver, then everybody should be able to get waivers.” … Huelskamp is not alone in noting the lack of transparency in the Obama administration.

    Brownback to Sebelius: No thanks. Speaking of Secretary Sebelius, Kansas Governor Sam Brownback has decided to return a grant the state received for being an “early innovator” in implementing portions of the Patient Protection and Affordable Care Act (PPACA), better known as Obamacare. A statement from the governor’s office reads: “There is much uncertainty surrounding the ability of the federal government to meet it’s already budgeted future spending obligations. Every state should be preparing for fewer federal resources, not more. To deal with that reality Kansas needs to maintain maximum flexibility. That requires freeing Kansas from the strings attached to the Early Innovator Grant. … “Federal Medicaid mandates have cost Kansans over 400 million in the past 2 years alone. Full implementation of the mandates in the President’s health care law would cost billions more,” said {Lieutenant Governor] Dr. [Jeff] Colyer. “We will work to find innovative Kansas based solutions to Kansas challenges and be very selective in the federal funds the state applies for and receives. We look forward to working with legislative leaders and Insurance Commissioner Praeger as we develop Kansas solutions.”

    ‘Nullify Now’ tour in Kansas City. The idea that states can nullify unconstitutional laws passed by Congress is gaining traction as a way to reign in the federal government. Next week an event in Kansas City will help citizens learn more about this possibility. Writes the event’s organizers: “Crushing debt, health care mandates, ‘super’ congress, and more. The list of constitutional violations from DC never seems to end. The good news is that we don’t have to wait for DC to fix itself. As Thomas Jefferson told us, state nullification is “THE RIGHTFUL REMEDY” to unconstitutional actions by the federal government. … At Nullify Now! Kansas City, you’ll hear nationally-renowned speaker Thomas Woods (and nine others) present the constitutional case for nullification. You’ll learn: the constitutional basis for nullification, how nullification has been used in history, how nullification is being called upon right now vs Obamacare, to protect gun rights, against the TSA, and more, and what YOU CAN DO RIGHT NOW to get your state to put a stop to the Feds.” The event is Saturday August 20, and tickets, ranging in cost from free to $75, are required. For more information click on Nullify Now! Kansas City.

    ‘Birth of Freedom’ screening. On Monday (August 15th) the film The Birth of Freedom will be shown for free in Wichita. The film is a product of the Acton Institute, whose mission statement describes the institute as “[promoting] a free and virtuous society characterized by individual liberty and sustained by religious principles.” This free event is Monday from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415. … I’ve been told by those who have viewed the film that it is a very moving presentation. A trailer or preview may be viewed below.

  • Kansas budget director on budget, fiscal reform

    By Paul Soutar, Kansas Watchdog.

    WICHITA — Budget Director Steven J. Anderson outlined how he and his boss, Gov. Sam Brownback, would like to improve the fiscal affairs and economic recovery in Kansas. But Anderson admitted the effort isn’t likely to win him many friends.

    His presentation to the Wichita Pachyderm Club Friday included much for fiscal conservatives to like, including efforts to reduced state spending, lower income tax rates and make state government more efficient. But some planned initiatives probably won’t sit too well with a portion of the Republican base.

    Anderson said he thinks the Fair Tax, a proposal that relies on a sales or consumption tax and eliminates virtually all other taxes and exemptions, would not work politically. “From a strictly numbers perspective it’s very viable,” he said.

    “When you talk about the Fair Tax you gore about everybody. Twenty percent of the GDP in this country is non-profits. Do we really want to take the charitable deduction away from your churches?” One audience member said yes as Anderson continued. “I think the hue and cry becomes really high and pitchfork and torch sales go up all over town when you talk fair or flat tax.”

    Anderson also said he prefers to keep the 19 percent sales tax increase, from 5.3 to 6.3 cents on the dollar) enacted by the 2010 Legislature. “That isn’t wildly popular among some members of my party,” Anderson said. Repealing the tax increase was high on the priority list for many freshmen legislators.

    Anderson would use the extra sales tax revenue to offset reductions in income tax rates. “I believe income tax is an economic inhibitor and sales tax is a measure of economic activity.”

    Senate Bill 1, which would cap state spending and use sales tax revenue to reduce income tax rates, passed the House and is likely to get another shot in the Senate next year. Opponents of SB1 argue that sales taxes place a greater burden on the poor who spend a higher percentage of their income on necessities.

    Recent experience shows that improving the state’s fiscal health and competitiveness will not be as simple as cutting one tax and increasing another.

    In August 2009 QuikTrip demolished a store in Kansas then built a new one on the same property just a few feet to the east so the store, cash registers, and gasoline tanks are on the other side of the state line in Kansas City, Mo. The company said it pays lower taxes, has a better regulatory environment and has more customers who save money on gasoline taxes, sales taxes and cigarette taxes. Kansas loses an estimated $1.4 million in tax revenue each year because of the move.

    Anderson said by keeping the state’s income tax rates where they are and cutting the state sales tax back to 5.3 percent the state would get more gas stations, but if the state has no income tax it would be more likely to lure businesses just as Texas and other states with no income tax have done. “I’d rather have the corporate headquarters.”

    Anderson said he advised Brownback to focus on the state’s customers in addressing fiscal reform. “We all know that a business doesn’t survive if it can’t keep its customers. What has happened in Kansas in the last decade? If you’ve seen the latest census you know. Our customers, our citizens, have voted with their feet and left the state. I am probably an example of that. I had greater opportunity moving to Oklahoma.”

    Anderson, a Kansas native and graduate of Fort Hays State University, has an accounting practice in Edmond and worked for Oklahoma Gov. Frank Keating from 1999 to 2002 in the Office of State Finance. He moved back to Kansas to work with Brownback.

    “When the state thinks they can raise taxes and outwit business they make a bad mistake,” Anderson said. “Business knows how to deal with that. They either leave the state or they adjust their operations.”

    Brownback wrote the foreword to “Rich States, Poor States,” an annual evaluation of economic competitiveness among the states published by the American Legislative Exchange Council (ALEC). “When you read it you will understand where we are going to go. He is very plain that we intend to cut income taxes and we intend to cut them a lot.”

    One of Brownback’s early initiatives was creation of Rural Opportunity Zones (ROZ). The program offers individuals income tax exemptions for up to five years and up to $15,000 in student loan forgiveness for moving into one of 50 rural counties.

    “Part of the reason why we did that was to show those that were on the fence that if you will move to what they consider the hinterlands — of course, being from Western Kansas, I don’t consider it that — for zero income tax, they certainly will jump across the Missouri border into Kansas. It’s been a real success so far and we aren’t a month into it yet.”

    Anderson’s presentation addressed complaints that Brownback’s team is doing too much or too little.

    Newly elected fiscal conservatives and their supporters have said Brownback didn’t move fast enough on reforms during the 2011 Legislative session. Anderson said Brownback’s team is continuing to explore data that was not available during the transition and is finding additional opportunities for reforms he expects to be unveiled soon.

    Anderson also said reforms must not be stalled by projections of economic improvement based on improving income tax revenue. He said about $100 million in recent income tax revenue is from capital gains tax paid by filers who chose to sell investments now rather than after a feared federal capital gains tax increase.

    As of publication time, the Kansas Department of Revenue has not replied to a KansasWatchdog request that they verify or deny Anderson’s claim.

    “We actually are running behind on every revenue source,” Anderson said. “I think that should trouble us when we look down to Oklahoma who just cut taxes again. They just put $219 million in their rainy day fund. I think the proof is in the pudding. Cutting taxes works.”

    Video of Anderson’s presentation is available on Kansas Watchdog TV at Kansas Budget Director Steve Anderson Part 1, part 2, and questions and answers.

  • Kansas Capitol renovations

    The restoration of the Kansas Statehouse was featured last fall on an episode of the television program Sunflower Journeys. While providing an interesting look at the history of the stonecarvings on the building’s exterior, the show made a mistaken argument about the economics of the project.

    During the 2011 legislative session, the Republican-controlled Kansas Legislature decided to borrow an additional $34 million for the renovation of the Kansas Capitol building. Add this to the already-established cost of $285 million, and the total cost now pushes well above $300 million. There’s no guarantee this is all that will be spent.

    During the episode Vance Kelley, a project manager for Treanor Architects, promoted the economic development aspects of the capitol building’s restoration. Since the workers are local, he said that utilizing local labor forces means that tax dollars get passed along to local merchants: “Actually we’re generating, I think it’s been estimated between six and seven times the amount of money within the local economy. Preservation actually creates jobs. It is economic development in itself.”

    This argument — that government spending of this type creates jobs — is commonly heard from advocates of more government spending. It’s a popular argument among historic preservationists, too, as they seek to justify why their work is so expensive, and why public money should be expended on it.

    Does government spending create jobs? The short answer is no. The primary reason is that government can only spend what it takes from someone else. It might do the taking now in the form of taxation. Or it might borrow, which delays taxation to the future. Either way, many people have less money to spend, save, and invest because of the taxation.

    Kelley’s argument does have a ring of truth to it. Local merchants — Topeka, he means — are benefiting. Taxpayers across the state are taxed to send money to be spent largely in Topeka. This benefit, however, comes at the expense of spending — and related jobs — in other parts of Kansas. This is a selfish argument.

    Kelley may not be aware of the seen and unseen fallacy that pervades popular thinking. When we go to Topeka — or watch taxpayer-funded public television — we can see the glory and magnificence of the government spending on the Kansas Capitol. Finding the harm caused by the taxation necessary to pay for this, however, is disbursed across the state and very difficult to find. But it exists.

    Kelley also referenced the multiplier. That’s the observation that money spent gets spent again, and again, and again. That’s true. But advocates of government spending like Kelley think that only government spending is magically multiplied. The truth is that any spending is multiplied in this way. It’s a natural phenomenon of economics.

    Some people make the argument that people may not spend their money during uncertain times. Instead, they may save it. But where do savings go? Many people put their money in a bank, which then lends it to people who want to spend it. Other people buy stocks or bonds, or pay down debt. Either action provides funds for others to spend. It’s only when people save money by stuffing it in their mattresses that this argument — that government must spend — applies. And very few people do this.

    The further truth is that when spending their own money, people are usually careful. Government? Not so much. Evidence of this is the ornate decorative carvings illustrated in the Sunflower Journeys episode. Few private buildings are built to this standard, because people — even wealthy people — spending their own money don’t value this frivolity very highly.

    Instead, it is government, spending taxpayers’ money, that builds elaborate monuments to itself.

    There are some cases where we might argue that government spending creates wealth, such as in the building of needed highways. It does not follow, however, that only government is capable of making this investment. Further, streets and highways are far removed from ornate stonecarvings on a government monument.

  • Kansas and Wichita quick takes: Friday July 22, 2011

    Republican populism. Timothy P. Carney writing in Washington Examiner: “President Obama, ignoring his own calls to leave rhetoric at the door, has relied on populist demagoguery throughout the debt-ceiling negotiations. But given the President’s record of bailouts, his dedication to corporate-welfare handouts, and his calendar filled with $35,800-a-plate fundraisers, Republicans ought to take the populist cudgel from Obama and use it against Democrats.” Carney recommends: “Instead of trying to defend themselves against Obama’s misleading populism, Republicans ought to return fire with some sincere populism in this debt battle.”

    Cost of space shuttle. It’s a difficult question to answer, writes Carl Bialik in As Shuttle Sails Through Space, Costs Are Tough to Pin Down for The Wall Street Journal: “Some media outlets have pegged the total cost of the shuttle program, and its 135 launches, at between $115 billion and nearly twice that amount, demonstrating the challenge of tallying a bill over such a long time span.” Even at the lowest figure, that’s nearly $1 billion, or $1,000 million, per launch. In the early days of the program, Bialik writes, the cost of a launch was estimated at $7 million, and it was thought there would be weekly launches. … Me, I’m still waiting for lemon-flavored Tang.

    Raj Goyle spotted. Some have been wondering what former Kansas fourth district Congressional candidate Raj Goyle is doing these days, and this photograph gives us a clue. In the caption, Goyle is identified as Executive Director of the United Nations Office of Global Partnerships.

    Media Mogul Charged with First Degree Murdoch. Ann Coulter reminds us that outrage is surely in the eyes of the beholder, as she looks back at a Florida couple who were caught taping cell phone conversations for political purposes.

    Authority to adjust KPERS benefits. From Kansas Policy Institute: “There is a mounting realization that the Kansas Public Employee Retirement System (KPERS) is facing a crisis and there is a need for immediate reform. Legal Authority to Adjust State Pension Plans, a paper released earlier this week by KPI, outlines the legal history of modifying public pension benefits. Ralph Benko, a senior economic policy advisor to American Principles in Action, authored the paper and participated in a media conference call on July 12 announcing the paper’s release. An audio recording of that conference call is available here. … “Exorbitant retirement benefits are threatening the ability of states and municipalities to deliver essential government services, and, in up to 20 states and hundreds of municipalities, are threatening their very solvency,” writes Benko. “There is a widespread misunderstanding in many states that the U.S. Constitution prohibits [adjusting pension obligations], but there is no such prohibition.” … A full copy of “Legal Authority to Adjust State Pension Plans” is available here. … KPI President Dave Trabert added the following, “The simple reality is that KPERS faces an unfunded liability well beyond $7.6 billion. KPERS acknowledges an additional $1.7 billion of losses that aren’t yet reported and a more likely rate of return puts the true liability well closer to $14 billion. Many states are faced with the same problem, but Kansas is one of the worst. We can’t solve this problem without having the full knowledge of the possible solutions and that means an understanding of the legal framework as well. Ralph does a terrific job of demonstrating that the U.S. Constitution allows state pension obligations to be changed for ‘significant’ purposes to remedy an ‘economic problem.’ If Kansas isn’t facing a significant economic problem right now, then that definition is meaningless.”

    Should Kansas establish a health insurance exchange? A big part of the new national health care legislation is health care exchanges. Are these a good idea? From Americans for Prosperity, Kansas: “Beverly Gossage, research fellow with the Show-Me Institute, has helped pioneer health savings account policies for businesses in Kansas and Missouri and has testified on health policy bills before the Kansas and Missouri legislatures. She has explored the possibilities of ‘health insurance exchanges’ — or government clearinghouses for health care funds and programs — and has written about the likely consequences of these exchanges in the Sunflower State. … According to Gossage, a health insurance exchange in Kansas would simply result in more bureaucracy and higher insurance premiums, and would be a threat to the free market. We agree and encourage you to review the document as this will be an issue discussed by the Kansas Legislature later this year in an interim committee and during the 2012 Legislature.” … Gossage’s paper is at Should Kansas Establish a Health Insurance Exchange?.”

    A new day in politics? John Stossel writes about the new book The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong with America by Nick Gillespie and Matt Welch, both of Reason, the libertarian magazine of “Free Minds and Free Markets.” Ssays Stossel: “‘Independence in politics means that you can actually dictate some of the terms to our overlords,’ Welch and Gillespie write, adding that we need independence not just in politics but from politics. Welch said, ‘When we look at the places where government either directly controls or heavily regulates things, like K-12 education, health care, retirement, things are going poorly.’ … It’s very different outside of government where — from culture to retail stores to the Internet — there’s been an explosion of choice. ‘(Y)ou were lucky … 20 years ago (if) you would see one eggplant in an exotic store,’ Welch continued. ‘Now in the crappiest supermarket in America you’ll see four or five or six varieties of eggplant, plus all types of different things. … (W)hen you get independent from politics, things are going great because people can experiment, they can innovate. … We should squeeze down the (number of) places where we need a consensus to the smallest area possible, because all the interesting stuff happens outside of that.’” … Now Stossel’s television show dedicated to this topic and the book authors is available on the free hulu service.

  • Despite subsidy program, Wichita flights are declining

    Supporters of the Kansas Affordable Airfares Program are proud of the program’s success. But looking at the statistics uncovers a troubling trend that is obscured by the facts used to promote the program.

    The program provides taxpayer-funded grants to airlines so that they will provide low-cost service to cities in Kansas. The thought is that by propping up a discount carrier, other airlines will be forced to reduce their fares. By far the largest consumer of these subsidies is Airtran Airways in Wichita. For this goal, the program has worked, probably. We have to say “probably” because we can never know what would have happened in the absence of this program. But it is quite likely that fares are at least somewhat lower than would they would be otherwise.

    But lower fares is not the only measure of success. The number of available flights is a measure, too, and a very important one for many people.

    The problem is that subsidy boosters state that the number of flights has increased. For example, on a page that is part of the Sedgwick County official website, the claim is made that the affordable airfares program “offers more flights to both east and west coasts.”

    In the agenda packet for the July meeting of the Regional Economic Area Partnership of South Central Kansas — that’s the body that administers the affordable airfares program — board members were presented this information: “In presenting its proposal Sedgwick County provided evidence documenting that low-fare air service to eastern and western U.S. destinations through Wichita Mid-Continent Airport had been successful in providing more air flight options, more competition for air travel, and affordable air fares for Kansas.”

    Later that document describes selection criteria for deciding which airlines will receive grants. The first goal listed is “more air flight options,” which is further described as the number of scheduled, daily nonstop and one-stop flights.

    Certainly enticing a new airline carrier to town by paying them a subsidy increases the number of flights that carrier will offer, as before the subsidy, they offered none. But the experience of Wichita shows that the affordable airfares program is causing an overall loss of flight options in Wichita.

    It’s true that when the airline subsidy started, funded at first only by the City of Wichita, the number of flights departing from Wichita increased. That’s not remarkable. That was the stated goal of the program, and if we paid AirTran a subsidy and they didn’t provide flights, that would have been a problem.

    But the history of flights before the subsidy program is not the only important measure, although supporters of the program like the Wichita Eagle’s Rhonda Holman make use of it when she recently wrote this about the program and an audit of it conducted by Kansas Legislative Division of Post Audit: “Even so, the audit put the return on the state’s investment at $2.32-to-$1, cited 38 percent growth in passenger counts between 2000 and 2009, and said ‘fares have decreased, while the number of passengers and the number of available flights have increased.’”

    Yes, the number of available flights increased upon the arrival of AirTran and the start of the subsidy payments. But the trend since 2005 — about the time the state got involved in the funding and the program matured — is not encouraging. As shown in the accompanying charts, that trend is continually on a downward trajectory. (The charts show two different sets of data for the number of departures from Wichita.)

    The decline in the number of available flights is important, because for some travelers, particularly business travelers, the availability of a seat on an airplane at any price is more important than being able to book a cheap flight a month in advance.

    People may disagree about the wisdom of the airline subsidy program. But we need to recognize that the availability of flights to and from Wichita is declining, and has been declining for a number of years.

    We often hear of the unintended consequences of government intervention. This is such an example. Compounding the problem is the refusal of the program’s supporters — both within and outside of government — to recognize it, at least publicly.

    Monthly departures from WichitaMonthly departures from the Wichita airport
    Number of daily departures from the Wichita airport by air carriers (excluding weekends)Number of daily departures from the Wichita airport by air carriers (excluding weekends)

  • Wichita school fund balances again an issue

    The issue of school fund balances in Wichita and Kansas is a serious issue that deserves discussion. At the same time, we need to make sure we don’t lose sight of Kansas school issues that are even more important. But school officials need to be held accountable for their deception of the public, most notably through straw man arguments.

    When Dr. Walt Chappell, an elected member of the Kansas State Board of Education, used a slot on the public agenda to address the board of USD 259, the Wichita public school district, his shabby treatment by the board was one issue. But the more important issue is the substance of Chappell’s remarks, and the reaction by school district officials.

    Chappell asked the board to use money socked away in various fund balances to balance the budget. In his written remarks, he wrote: “The Wichita school board does not need to lay off teachers, raise property taxes or cut instructional programs to balance next year’s budget.”

    The Wichita school district, like many across the state, has unused balances in a variety of funds. Some of these funds, by law, must be used only for certain purposes. But this year the Kansas Legislature passed a law that gives school districts greater flexibility in using these fund balances.

    Even through the unused fund balances have been restricted to certain uses, school districts have always been able to “spend” them by simply not transferring so much to the funds. But there’s been an incentive to make transfers to these funds, as once the money is in certain funds, school districts can hoard it.

    In his response to Chappell, and also in a recent letter to the Wichita Eagle, board member Lynn Rogers tried to explain why these fund balances are not the solution that Chappell and others say they are. His primary argument is that fund balances are needed for cash management purposes. An example: “Special education is a clear example of why having a fund balance is good business practice. We ended the past fiscal year with $12.5 million in the special education fund. Special education salaries are about $12.1 million between July 1 and the next state aid payment received in October.”

    Everyone can understand that. The need for fund balances to manage cashflow is legitimate and not part of the argument of those who advocate using fund balances for other purposes. For Rogers to use this as part of his argument is an example of a straw man argument. In using this fallacy, Rogers replaces his opponent’s argument with a “superficially similar yet unequivalent proposition.” Then he refutes it. The appearance, if you’re not watching carefully, is that Rogers has refuted the original argument. But he hasn’t.

    What Rogers and other school spending advocates don’t talk about is the rise in the fund balances over years. In a letter to the Wichita Eagle George Pearson wrote that Rogers provided “accurate but incomplete information” on the school fund balances. Pearson explained: “USD 259 had $45 million in those funds at the beginning of this fiscal year. Five years ago, those balances were $31 million. The buildup in those balances comes from state and local tax dollars received in prior years that haven’t been spent. SB 111 authorizes USD 259 to use about $16 million in any manner the district chooses — ironically, about the same amount it collected but didn’t spend over the past five years.”

    This is what the arguments of Rogers and the school spending lobby don’t explain: Why do the fund balances rise year after year, and rise faster than the overall level of school spending? The only explanation is that money is added to the funds faster than it is spent, year after year. Schools have not spent all the money we’ve sent them — despite their constant poor-mouthing.

    This issue, while important, is not the most serious issue facing Wichita and Kansas schools. For example, most people would be surprised — and shocked — to learn that only 26 percent of Kansas students that take the ACT test are ready for college-level coursework in all four areas that ACT considers. (See Most Kansas students not ready for college.) While this result was slightly better than the national average, it means that three-fourths of Kansas high school graduates need to take one or more remedial college courses.

    It is important that citizens understand the issue of the unspent fund balances. It’s also important that they are aware of the refusal of school districts and school spending advocates to deal forthrightly with the public on this issue. It provides insight into the nature of our public schools, and why reform is so difficult.

    For more articles on the fund balances, click on Kansas school fund balances. Chappell’s written remarks are below (use the toolbar to zoom or for a full-screen view), and video of his appearance before the Wichita school board follows that.

    Wichita, Kansas (USD 259) School Budget Recommendations

  • Kansas and Wichita quick takes: Sunday July 10, 2011

    Wichita city council. This week the Wichita City Council considers these major items of interest: Capps Manufacturing, Inc. seeks to avoid paying property tax on an expansion of its plant. Under the city’s Economic Development Exemption (EDX) Program, the company, according to city documents, is eligible to avoid paying 80 percent of the property tax on the expansion for a period of ten years. The documents state: “Based on the 2010 mill levy, the estimated taxable value of exempted property for the first full year is approximately $38,387.” I believe this is incorrect; that figure is the amount of property tax that would be paid on the value of the property. If the council approves, Capps will be forgiven 80 percent of that tax — nearly $31,000 per year.

    Bombardier Learjet seeks issuance of $2,564,275 in Industrial Revenue Bonds. The benefit to the company is that the property purchased with bond proceeds is exempt from property taxes, which is estimated by the city to be worth $76,966 per year in taxes that Bombardier won’t be required to pay. Also, property purchased with bond proceeds isn’t subject to the sales tax. If all the items being purchased are taxable, this means Bombardier could escape paying $187,192 in sales tax. Under the IRB program, the city is not the lender and does not guarantee that bonds will be repaid.

    There will be a public hearing for a facade improvement program loan for a building at 1525 E. Douglas to house GLMV Architecture. This action will loan $500,000 for the purposes of sprucing up the outside of the building, with that amount, plus interest, to be paid back in the form of special assessments collected with the regular property tax. It’s similar to the special assessment financing used in new housing developments, but here applied to existing structures. Interestingly, the city documents proclaim a “gap,” meaning that “applicants show a financial need for public assistance in order to complete the project, based on the owner’s ability to finance the project and assuming a market-based return on investment.” In other words, private financing was not available, so the city steps in, and we have another example of the city investing in money-losing projects. Although it is likely the city will be paid back, the program also includes a $30,000 grant for this project. That, of course, is a gift from Wichita taxpayers made by the city council, and will not be paid back. In addition to assistance from Wichita and its taxpayers, GLMV also benefits from state and federal taxpayers, too. Its application for historic preservation tax credits has been approved. Under the state program, GLMV is eligible for tax credits of 25 percent of the $2 million cost of the project, so Kansas taxpayers will be giving this company $500,000.

    The council will be asked to receive and file the city manager’s budget. … As always, the agenda packet is available at Wichita city council agendas.

    Kansas news media criticized. Kansas University political science professor Burdett Loomis takes a look at Kansas news media, particularly its coverage of the Brownback administration, and finds it lacking. In his listing of Kansas news media, Loomis misses a few outlets, namely Kansas Watchdog and Kansas Reporter. This is in contrast to his characterization of Dome on the Range as a “serious attempt.” This is laughable. Dome on the Range, written anonymously, exists primarily to poke fun at conservatives, many times for reasons that have little to do with serious issues of public policy. After several posts in March, DOTR had no posts in May, and one each in June and July. This, combined with anonymity — meaning the author is not willing to be accountable — doesn’t qualify as serious. But DOTR meshes well with Loomis’ personal politics, and Kansas Watchdog and Reporter are sponsored by conservative groups. … Loomis is correct in his assessment of the Kansas Health Institute as a valuable resource for reporting. … The op-ed is at Insight Kansas: Covering Kansas Conservatism.

    The revolving door. Between government and lobbying, that is. Latest example: The Lawrence Journal-World through the Associated Press reports that Michael White, Chief of Staff for Kansas Senate President Steve Morris, is becoming a lobbyist for ITC Great Plains, an electric transmission company. The article says that White will oversee the company’s lobbying in Kansas and Oklahoma.