Voice For Liberty

Tag: Kansas legislature

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

  • Economist: KPERS must undergo serious reform

    This morning in Wichita Barry W. Poulson, retired professor of economics at the University of Colorado, said that Kansas legislators are finally starting to realize the importance of dealing with the unfunded liability in the Kansas Public Employees Retirement System (KPERS), but cautioned that proposals currently in the legislature don’t contain the fundamental cost-saving reforms that are needed and that other states are implementing.

    Poulson’s visit to Wichita was sponsored by the Kansas Policy Institute. Poulson authored the report A Comprehensive Reform of Kansas Public Employees Retirement System for KPI.

    In his introduction of Poulson, KPI President Dave Trabert said that the KPERS deficit that is usually mentioned — $7.6 billion — is too low. The real deficit is at least $12 billion, he said. The difference comes from two sources: first, there are nearly $2 billion in losses that don’t have to be included in the official figures, at least not yet. Then, KPERS uses an assumption of eight percent for its future investment returns to arrive at the $7.6 billion figure. Trabert says that even KPERS understands it will not be able to achieve that rate. Using a rate of seven and one-half percent, the deficit blooms to $12 billion, and even that rate may be too high.

    In his remarks, Poulson said that the Government Accounting Office estimates that state and local governments will incur, over the next half-century, $10 trillion in debt. Most of that is due to unfunded liabilities in pension and retiree health plans for public employees, he said. Some of the debt issued by state governments has been downgraded to “junk” status. 84 municipal governments went bankrupt last year.

    Poulson said that economists estimate that over the next decade, there is a high probability that pension plans in a dozen states will not be able to meet their obligations. Kansas is one of those states, having one of the worst pension plans, considering its ability to meet its obligations.

    An important point that Kansans should know, Polson said, is that KPERS is in worse shape than has been reported. The “smoothing” actuarial technique used by KPERS means that $1.7 billion in unfunded liabilities are not yet officially recognized. The eight percent return on assets used as an assumption is not realistic, too. Using a return of five percent means the unfunded liabilities are much greater.

    Poulson explained that under current Kansas law, the state is not able to meet the unfunded liabilities of KPERS. Liabilities grow more rapidly than assets. The contribution the state currently makes to KPERS is about nine percent of total payroll. If Kansas wants to satisfy government accounting rules regarding covering the unfunded liability, it would have to increase this rate to about 15 percent. In dollar terms, this is an additional $250 million per year. (To place that in context, the one cent per dollar increase in the statewide sales tax last year was estimated to bring in about $300 million additional revenue per year.)

    This amount is what is needed to just to pay off the unfunded liability, not the total cost of providing KPERS benefits.

    If trends continue, Poulson said that by the 2020s the state would have to contribute 24 percent of payroll to KPERS. Spending at this level would require large cuts to programs or large tax increases.

    Some states have successfully reformed their state pension plans, and Kansas needs to look at these states as models. The most important reform. Poulson said, is to replace the present defined-benefit plan with a defined-contribution plan, commonly known as a 401(k) plan. The private sector has been doing this for the last three decades, he said.

    Part of the problem is that legislators have refused to recognize the problem with state employee pension plans. Poulson recounted how six or seven years ago he told Kansas legislators that they needed to pay attention to KPERS and its problems, and to start addressing the unfunded liability. But legislators assured him that KPERS was fine, and there was no cause for worry. “I couldn’t get anyone to listen to me,” he said. Now, he said legislators in Kansas are finally addressing the problem, although still not properly, he added.

    Critics say that if states offer defined-contribution instead of defined-benefit plans to new employees, they won’t be able to pay off the unfunded liabilities of their defined-benefit plans. Poulson pointed to Michigan as an example of a state that switched to defined-contribution plan, and has improved its ratio of assets to liabilities, meaning the unfunded liability problem is less severe.

    Eight states have a hybrid-contribution plan, which have both defined-benefit and defined-contribution aspects. Utah was in a position similar to Kansas, and after implementing a hybrid plan, is on the track to paying off its unfunded liability.

    Another reform that states, especially Kansas, must consider is that the burden of retiring the unfunded liability must be born not only by taxpayers and new employees. Current employees and retirees must help, too. Employees must increase their contributions. Retirees need to accept less generous cost of living adjustments. The retirement age and the years of service needed to qualify for benefits both need to be raised. The way that final average salary, a component of benefit calculations, needs to be reformed too. Currently workers may use overtime or other techniques to raise their final average salary so that they receive a larger pension benefit.

    Poulson noted that Kansas legislators are finally starting to “get it” as far as realizing the seriousness of the KPERS problem. There are two bills active in the current session of the legislature. The bill passed by the House of Representatives places new employees in a defined-contribution plan, while the Senate bill keeps the present defined-benefit plan. Neither bill, however, includes fundamental cost-reducing reforms mentioned above and that are happening in other states.

  • Kansas governor should veto arts commission funding

    As the Kansas Legislature returns to work this week, it’s possible that funding for the Kansas Arts Commission could make it into the budget appropriations bill that will eventually be sent to Governor Sam Brownback. If so, the governor should use his discretion and line item veto power to cancel this funding.

    It’s not only a financial matter, although this factor alone is reason enough to cancel this funding. The arguments of supporters of this funding, small amount that it is, illustrate some of the worse aspects of government and public policy.

    Government funded arts supporters promote the government funding as an investment that pays off for Kansas taxpayers. They have studies that say it does. But these studies have little credibility, as shown in Arts funding in Kansas. These studies purportedly show that spending on the arts has a magic power that is not present when people spend their own money on the things they value most highly. But these studies, like most, rely on several economic fallacies. Henry Hazlitt, writing in Economics in One Lesson, explains.

    Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine — the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for then plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

    The proposed funding for the arts commission is a clear illustration of the problem with many pleas for public funding. A small group of people will benefit powerfully from this spending. What about the rest of us? Government-funded arts supporters make the case that the cost of the funding is just 29 cents per person in Kansas. Who of us will get worked up over such a small cost?

    The Public Choice school of economics calls this the problem of concentrated benefits and dispersed costs. It’s a huge problem.

    Besides the financial aspects of government funding of arts, there’s the artistic issue itself. There are very important reasons to keep government away from art. Lawrence W. Reed wrote in What’s Wrong with Government Funding of the Arts? of the harm of turning over responsibility to the government for things we value and find worthwhile:

    I can think of an endless list of desirable, enriching things in life, of which very few carry an automatic tag that says, “Must be provided by taxes and politicians.” Such things include good books, nice lawns, nutritious food, and smiling faces. A rich culture consists, as you know, of so many good things that have nothing to do with government, and thank God they don’t. We should seek to nurture those things privately and voluntarily because “private” and “voluntary” are key indicators that people are awake to them and believe in them. The surest way I know to sap the vitality of almost any worthwhile endeavor is to send a message that says, “You can slack off of that; the government will now do it.” That sort of “flight from responsibility,” frankly, is at the source of many societal ills today: many people don’t take care of their parents in their old age because a federal program will do it; others have abandoned their children because until recent welfare reforms, they’d get a bigger check if they did.

    The boosters of government arts funding in Kansas make the case that arts are important. Therefore, they say, government must be involved.

    But actually, the opposite is true. The more important to our culture we believe the arts to be, the stronger the case for getting government out of its funding. Here’s why. In a statement opposing the elimination of the Kansas Arts Commission, former executive director Llewellyn Crain explained that “The Kansas Arts Commission provides valuable seed money that leverages private funds …”

    This “seed money” effect is precisely why government should not be funding arts. David Boaz explains:

    Defenders of arts funding seem blithely unaware of this danger when they praise the role of the national endowments as an imprimatur or seal of approval on artists and arts groups. Jane Alexander says, “The Federal role is small but very vital. We are a stimulus for leveraging state, local and private money. We are a linchpin for the puzzle of arts funding, a remarkably efficient way of stimulating private money.” Drama critic Robert Brustein asks, “How could the [National Endowment for the Arts] be ‘privatized’ and still retain its purpose as a funding agency functioning as a stamp of approval for deserving art?” … I suggest that that is just the kind of power no government in a free society should have.

    We give up a lot when we turn over this power to government bureaucrats and arts commission cronies. Again I turn to David Boaz, who in his book The Politics of Freedom: Taking on The Left, The Right and Threats to Our Liberties wrote this in a chapter titled “The Separation of Art and State”:

    It is precisely because art has power, because it deals with basic human truths, that it must be kept separate from government. Government, as I noted earlier, involves the organization of coercion. In a free society coercion should be reserved only for such essential functions of government as protecting rights and punishing criminals. People should not be forced to contribute money to artistic endeavors that they may not approve, nor should artists be forced to trim their sails to meet government standards.

    Government funding of anything involves government control. That insight, of course, is part of our folk wisdom: “He who pays the piper calls the tune.” “Who takes the king’s shilling sings the king’s song.”

    A few years ago when I read Rhonda Holman’s editorial City can be proud of its arts work in the July 15, 2008 Wichita Eagle — which starts with the stirring reminder that “The arts fire the mind and feed the heart” — I hoped that perhaps she was going to call for less government involvement in the arts. I thought she would argue that anything so important to man’s nature should not be placed in the hands of government.

    But my hopes were not realized, because soon she described the City of Wichita’s commitment to permanent spending on arts as “a bold and even brave investment in quality of life.” It appears that even the yearnings of our hearts and minds are subject to government management and investment — and, worst of all, control.

    “Government art.” Is this not a sterling example of an oxymoron? Must government weasel its way into every aspect of our lives? Governor Brownback can do the human spirit and all the people of Kansas a favor by vetoing government funding of the arts in Kansas.

  • CAP: Class size reduction not effective

    Last week the Center for American Progress released a report about class size reduction in schools and the false promise it holds for improving student achievement. While I am normally quite cautious about relying on anything CAP — a prominent left-wing think tank — produces, I’ve read the report, which is titled The False Promise of Class-Size Reduction. It’s accurate.

    It’s quite astonishing to see CAP cite evidence from Eric Hanushek of the Hoover Institution and Caroline Hoxby of Stanford and Hoover. These two researchers are usually condemned by the public education establishment and bureaucracy, including teachers unions. These are some of the key constituents CAP usually caters to.

    In a nutshell, class size reduction produces very little benefit for students. (It benefits others greatly. More in a moment.) It’s also very expensive, and there are other things we should be doing instead if we really want to increase student achievement.

    The report summarizes the important studies in class size reduction, and it’s accurate, based on the reading I’ve done over the years. The upshot is that there is only one study showing positive results from class size reduction, and that effect was found only among the early grades. The effect decreased after a few years, even though small class sizes were still used.

    The report also notes that class size reduction is very expensive to implement. Because it is, the report says we should look to other ways to increase student achievement, such as policies relating to teacher effectiveness: “The emerging consensus that teacher effectiveness is the single most important in-school determinant of student achievement suggests that teacher recruitment, retention, and compensation policies ought to rank high on the list.”

    Recently the Kansas Policy Institute sponsored a trip to Wichita by Sandi Jacobs of National Council for Teacher Quality. My reporting of that event and an audio recording is at Kansas ranks low in policies on teacher quality. The importance of teacher quality is this: “In the example she illustrated, third graders who had teachers in the top 20 percent of effectiveness for the next three years went from the 50th percentile in performance to the 90th. For students with teachers in the lowest 20 percent for the same period, their performance dropped from the 50th percentile to the 37th percentile.” Kansas ranks below average among the states in its policies that promote teacher quality.

    Who benefits from class size reduction?

    If class size reduction doesn’t work, why is it so popular? The answer is it benefits many special interest groups. The first group is the parents who send their children to public schools. While class size reduction doesn’t help their children (except in limited circumstances), they think it does. Intuitively, it seems like small class size should help. More individual attention to their kids, the parents are told. And what parent doesn’t want the best for their child? This leads to an effective tactic that school spending supporters use: Any reduction in school funding, no matter how small, will cause class sizes to “explode” or “balloon” out of control, causing student achievement to “plummet.”

    Then, there’s the teachers union. Small class size means more teachers and more union members. Fewer students means an easier job for teachers, too, with less papers to grade, etc. The unions also oppose nearly all the policies that would improve teacher quality. For example, this year the Kansas Legislature spent quite a bit of time on a policy where the period before teachers are awarded tenure could be increased from three to five years in certain circumstances. This is what qualifies as “school reform” in Kansas. Remember, Kansas ranks very low in policies that promote teacher quality. Tinkering with the policy on teacher tenure is not going to improve our teacher quality, as tenure is a system that ought to be eliminated. In Kansas the teachers union is Kansas National Education Association (KNEA).

    Public school administrators benefit from class size reduction. With more classrooms and more employees, their budgets and power swell. In Wichita, one of the main reasons USD 259, the Wichita public school district gave for the necessity of passing a bond issue in 2008 was the need for more classrooms to implement class size reduction. Now progress is in a “pause and study” phase, as the district has realized that funding to run the new schools and classrooms on an ongoing basis may not be available. (The bond issue pays for construction, but not operation, of new schools and expansion of existing schools.)

    Architects and construction companies. In my experience sitting in education committee hearing rooms in the Kansas statehouse, whenever there is any proposal that would reduce spending on school construction, a representative of architects is there to offer testimony in opposition. In the campaign for the Wichita school bond in 2008, an architectural firm headed the campaign, and construction companies contributed heavily. They also contribute to the campaign of school board candidates who are in favor of building more classrooms. Most of this is to support class size reduction, which is politically appealing, but we know doesn’t work. But the motivation of architects and construction companies is to build something, whether it is useful or not.

    Politicians — liberals and most conservatives — promote small class sizes. Any politician who promotes policies other than small class size has to overcome the forces listed above. Therefore, most don’t try.

    The rut we’re in

    The perceived desirability of small class sizes by parents and politicians coupled with the powerful motivations of special interests like school administrators, teachers unions, and the construction industry have placed us in a rut. It’s going to be difficult to escape, and it’s refreshing to see the Center for American Progress on the right side of this issue.

    The fact that such a well-known liberal think tank is promoting this issue provides a context other than the typical liberal vs. conservative dichotomy. We are now able to more clearly see the motivations of the special interests that benefit from high school spending and the incorrect evidence they rely on.

    The False Promise of Class-Size Reduction

    By Matthew M. Chingos, Center for American Progress

    Class-size reduction, or CSR, is enormously popular with parents, teachers, and the public in general. The latest poll results indicate that 77 percent of Americans think that additional educational dollars should be spent on smaller classes rather than higher teacher salaries. Many parents believe that their children will benefit from more individualized attention in a smaller class and many teachers find smaller classes easier to manage. The pupil-teacher ratio is an easy statistic for the public to monitor as a measure of educational quality, especially before test-score data became widely available in the last decade. …

    Parents, teachers, and policymakers have all embraced CSR as a strategy to improve the quality of public education. There is surprisingly little high-quality research, however, on the effects of class size on student achievement in the United States. The credible evidence that does exist is not consistent, and there are many low-quality studies with results all over the map.

    Continue reading at The False Promise of Class-Size Reduction.

  • Kansas and Wichita quick takes: Wednesday April 20, 2011

    Regulation as state moneymaker. Often those who propose new regulations will use, as justification for support, the revenue that government will gain from issuing licenses or permits. An example is from today’s Wichita Eagle Opinion Line: “Other parts of the country have leash laws for cats. They kill birds and leave deposits in your garden. A leash law for cats would help with income for the city.” … I would suggest that forcing people to pay in order to enjoy various rights and privileges is not a wise policy. In other words, let’s not use regulation as a revenue source. If the state thinks an activity, such as gambling, should be prohibited, the fact that the state might gain revenue from it shouldn’t change that judgment. Except, that’s the reasoning the state of Kansas used when it decided to allow casino gaming a few years ago.

    Kansas populism to be topic at Pachyderm. This Friday’s meeting (April 22) of the Wichita Pachyderm Club features Friends University Associate Professor of Political Science Russell Arben Fox speaking on the topic “The History and Legacy of Kansas Populism.” Besides his work at Friends, Fox actively blogs at In Media Res. For more information click on Wichita Pachyderm Club. … Upcoming speakers include Wichita State University Political Scientist Ken Ciboski on April 29.

    KPERS to be topic of breakfast meeting. On Wednesday (April 27) Kansas Policy Institute will host a breakfast with Dr. Barry Poulson, who recently wrote a report for KPI titled A Comprehensive Reform of the Kansas Public Employees Retirement System. Writes KPI: “There is a $12 billion elephant lurking in Kansas and it seems no one wants to talk about it. That elephant is the Kansas Public Employees Retirement System (KPERS) and it faces an unfunded liability of $12 billion. … Barry Poulson, Ph.D., is an adjunct fiscal policy fellow at KPI and is a retired professor at the University of Colorado. He has taught economics around the world and works with the Heritage Foundation and Americans For Prosperity.” … The event is at 8:00 am at the Hyatt Regency in Wichita. Cost is $25. RSVP by email to James Franko.

    Wichita-area legislators to meet with public. The fourth and probably final meeting of the South-Central State Legislative Delegation will be this Saturday April 23 at 9:00 am. Writes delegation chair Rep. Jim Ward: “Public comment about the proposed state budget, health care reform, voter eligibility and other major issues will be heard by local legislators at the Wichita State University Metroplex, 29th and Oliver. … Legislators need to hear from the people who are affected by these important issues. Better decisions are made when the public participates in the process.” … For further information, contact Rep. Ward, delegation chairman at 316-210-3609 or jim.ward@house.ks.gov.

  • Kansas Bioscience Authority, protected

    This year the Kansas Bioscience Authority has come under scrutiny for a variety of reasons, including salaries, bonuses, and expenses paid by the authority. Especially troubling is revelation that money we all thought would be invested in Kansas businesses had no such requirement, as can be seen in this video of CEO Tom Thornton. Dion Lefler of the Wichita Eagle has other reporting on the KBA.

    The problem with public-private partnerships like the KBA is that they are, in one sense, expected to operate like a private business, but they don’t have the freedom to operate as such. They also don’t have the same motivations and incentives that guide true private enterprise, namely profit and loss. Instead, we see agencies like KBA reporting their impact in terms of “return on investment.” For example, KBA claims: “Including estimated wages of jobs, that represents a $9.41 return to the state’s economy for each $1 invested by the KBA!” This “investment” by the KBA is nothing like the investments that business and individuals make.

    There’s also the issue of covering for the KBA by leadership of the Kansas Senate, specifically Steve Morris and John Vratil, as Alan Cobb details below.

    Kansas Senate Leadership needs to answer for KBA protection

    By Alan Cobb, Americans for Prosperity

    First the good news.

    Kansas Bioscience Authority (KBA) CEO Tom Thornton resigned under pressure today.

    Much credit goes to Gov. Sam Brownback and especially Sen. Susan Wagle who brought to public attention a slew of conflict of interest and other inappropriate behavior by Thornton and others at the KBA.

    It is of little surprise the Johnson County District Attorney’s office is investigating the KBA. Wagle is totally vindicated and Kansas taxpayers owe her a big debt of gratitude.

    Now the bad news.

    From what we know so far, what’s happened at the KBA is a textbook case of what not to do at a public agency.

    Thornton’s wife was receiving a $107,000 salary as an administrative assistant. The state of Kansas paid for a $1 million life insurance policy for Thornton’s ex-wife. The KBA invested $50 million to venture firms out of state with little oversight. The KBA invested in companies whose executives couldn’t be located by state officials. Many people in the know said an investigation of KBA and Thornton was “long overdue” and the KBA offices in Olathe were a “shrine” to Thornton.

    And this is someone being praised and protected key members of Senate Leadership, President Steve Morris and John Vratil? Just last month Morris said he was 100 percent behind the ousted KBA leader. Morris recently said that the KBA was an “icon for the state.”

    What planet do these guys live on?

    Vratil and Morris sat in the hearings conducted by Wagle, certainly as a show of support for Thornton and for disdain for Wagle and much-needed oversight of KBA.

    The protection given Thornton by Senate leadership even after his resignation today is astonishing.

    The question is what else is being hidden and why are Morris and Vratil so willing to fall on their swords for Thornton and his corrupt behavior?

    That’s the 800-pound rat in the middle of the room that’s eaten some bad Danish cheese.

    Kansans are waiting are waiting for answers.

  • Kansas and Wichita quick takes: Tuesday April 12, 2011

    Kansas Medicaid overhaul ideas. Kansas Reporter: “A collection of 120 ideas to overhaul the Kansas Medicaid program will become the groundwork for the state’s effort to transform its health program for the poor.” Full article at Lt. Gov. releases Medicaid overhaul ideas.

    Moody’s down on Kansas finances. From Dow Jones: “Moody’s Investors Service lowered its outlook on Kansas to negative, citing several budget challenges for the Midwestern state. The move indicates an increased likelihood of a near-term downgrade and comes as U.S. states face a host of hurdles, such as the funded status of pensions for public employees, mounting costs for programs such as Medicaid and tax revenue that remains pressured amid tepid economic growth. Moody’s noted Kansas’ general fund balance was negative for the second-straight year in fiscal 2010 and is likely to remain in the red in the current year. Meanwhile, the state legislature appears unlikely to include significant reserve-rebuilding provisions in the budget for the 2012 fiscal year, which begins July 1, it said. Kansas has used non-recurring measures to bolster its budget, such as a proposed $200 million from the state highway fund, the rating agency added. It also said pension under-funding ‘remains a significant challenge.’” … Moody’s has Kansas at Aa1, a step below its coveted Aaa rating. It said the state’s strengths include “strong management, with financial flexibility and adherence to best practices.”

    Kansas tax revenue. Following is a chart of the composition of Kansas general fund tax revenue through 2009. Note the general trends of personal income tax rising, and retail sales tax declining. This chart does not cover the time period since the statewide sales tax was increased last year.

    Composition of Kansas General Fund Tax Revenue

    Kansas consensus revenue estimating group. Within the next week the Kansas consensus revenue estimating group will meet to arrive at a forecast of revenue for the next fiscal year, and perhaps adjusting the estimates for the last few months of the current fiscal year (2011, which ends on June 30, 2011). This group is composed of “representatives of the Division of the Budget, Department of Revenue, Legislative Research Department, and one consulting economist each from the University of Kansas, Kansas State University, and Wichita State University.” All of these people are Kansas state government employees, and their institutions are dependent to different degree on appropriations from the legislature. Could this composition lead to a conflict of interest or possible bias in the forecasts? … The chart below shows the percent error between the group’s initial estimate of revenue for a year and the actual results. It seems that the group has a tendency to underestimate the magnitude of the swing of actual results, both good and bad. During the recession years of the early 2000s, the group was too high in its estimates (leading to a negative error percentage). Then during the following boom years the group underestimated. For the past two years the group forecast much more revenue than the state actually received, leading to some of its largest errors, in relative terms. … Forecasting the economy, of course, is a very difficult task, subject to all sorts of uncertainty that can’t be forecast.

    Kansas Consensus Revenue Estimating Group Error

  • Kansas and Wichita quick takes: Monday April 11, 2011

    Social security entitlement. In today’s Wichita Eagle Opinion Line, this comment was left: “Please stop calling my Social Security an ‘entitlement.’ I paid into it all my working life, and I just want my money back.” Two points: The writer seems to believe that just because people pay into Social Security, they’re entitled to benefits as through there was a contract in place. But there is no contract. Social Security benefits are what Congress says they are, and Congress can make changes at any time. … Second, the writer wants his money back, as though the money was paid onto some sort of investment account and has been working there earning interest. Unfortunately, the Social Security trust fund money has been spent. There’s nothing for the writer to get back except the future taxes to be paid by future workers.

    New York Times may be offended. “The New York Times is carrying out a vendetta against Charles and David Koch, two of the very few rich people who support conservative and libertarian causes. The Times is offended, apparently, that the Left does not quite have a monopoly on big money. The paper’s editorialists flat-out lied about the Koch brothers, and had to issue a retraction.” … Referring to author David Callahan and a recent op-ed: “What is most striking about Callahan’s piece is its rampant hypocrisy. He himself is an employee of a left-wing organization that prefers not to abide by the transparency standards that Callahan advocates.” From Powerline: The Times Vendetta Continues.

    Kansas Legislature website. Kansas Reporter writes: “Most hurdles now behind legislative website update.” The major problems I experience now are reliability issues, where many times clicking on a document produces the dreaded “Error 500 Internal Server Error” message. … The cost of the work, plus a new system for preparing legislative text, is some $11 million.

    General Electric tax bill. The Washington Post looks at the New York Times and its reporting on General Electric and its taxes: “Unfortunately, for all its good work, the article has created at least one major misperception: that GE paid no U.S. income taxes last year and is getting a $3.2 billion refund from the Treasury. … The company says it’s not getting any refund for 2010 — validating [accounting professor Ed] Outslay’s analysis. Its 2010 tax situation? ‘We expect to have a small U.S. income tax liability for 2010,’ said Gary Sheffer, GE’s chief spokesman. How big is small? GE declined to say. The number is unlikely to be disclosed unless GE goes public with it or is forced to do so. One reason the Times was ensnared — and that it took us a while to sort this out — is that the material is confusing. Outslay drew up 10 GE tax metrics for us and could have given us at least six more. None shows what GE’s U.S. income tax bill is for a given year.”

    Sweet deal for big sugar. Senator Dick Lugar, writing in the Washington Times, explains the harm to U.S. consumers from a tariff that benefits a few: “The collapse of communism brought an end to many of the world’s command-and-control economic systems and central planning by government bureaucrats. But a notable exception is the United States government’s sugar program. A complicated system of marketing allotments, price supports, purchase guarantees, quotas and tariffs that only a Soviet apparatchik could love, the U.S. sugar program has actually lasted longer than the Soviet Union itself.” The idea is that by keeping prices high and insulating domestic sugar produces from the world market, jobs are saved. Counters Lugar: “But in 2006, the Commerce Department calculated that for every sugar-growing job saved by artificially high prices, three manufacturing jobs in the confectionery industry are lost. Overall, from 1997 to 2009, more than 111,000 jobs were lost in the sugar-using food sector, according to Commerce data.” This is always the case with protectionist trade tariffs: a small number of highly-visible jobs are saved, at the cost of great economic harm spread across the economy, harm that is difficult to see. Sugar protectionism is only one such example. President Bush’s tax hike and Obama’s tax increase on tires are other examples.

    Williams on role of government. A short lecture by Walter E. WIlliams. “Almost every group in our country has come to feel that the government owes them a special privilege or favor.” Conservatives too, he says. Williams highlights the contradictions of conservatives, who “don’t have a moral leg to stand on,” he says. “They merely prove that it’s a matter of whose ox is being gored.” He quotes H.L. Mencken: “Government is a broker in pillage” and “Every election is an advance auction on the sale of stolen property.” Williams says not to blame the elected officials we send to Washington and local centers of government. They, he says, are doing precisely what we send them there to do: “Namely, to use the power of their office to confiscate the property of one American and bring it back to another American to whom it does not belong.” Politician who say they would not do this — of course, they do not speak so bluntly on the campaign trail — would not be elected.

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

    Local elections, qualifications of Wichita’s elected officials. On today’s edition of the KAKE Television public affairs program This Week in Kansas, Wichita State University’s Ken Ciboski, Chapman Rackaway of Fort Hays State University and myself join host Tim Brown to discuss local elections in Kansas. Mention was made of a recent article I wrote that was critical of the educational attainment of some Wichita City Council members. See Education gap on Wichita City Council.

    Steineger, Kansas senator, to address Pachyderms. This Friday (April 15) Kansas Senator Chris Steineger will speak to the members and guests of the Wichita Pachyderm Club on the topic “Using Business Principles to Restructure State and Local Government For Long-Term Efficiency.” Steineger, of Kansas City, has served in the Kansas Senate since 1997 and in December switched his affiliation from the Democratic to Republican party. Steineger has voted with Republicans on fiscal issues for many years. Explaining why he switched parties, he wrote “I am a fiscal hawk who believes Americans have been borrowing, spending, and living beyond their means for too long.” Steineger has spoken at events organized by Americans for Prosperity.

    Washington Monument strategy. At about 11:00 pm Friday night, President Barack Obama spoke on television in front of a window where the Washington Monument could be seen in the background. He said that thanks to the just-struck agreement to continue funding the operations of the federal government, the monument would be open to visitors the next day. This is explicit use of the Washington Monument strategy, in which the response to any proposed cut or slowdown in the growth of government is illustrated in the most painful or visible way. As the Wikipedia entry states: “The most visible and most appreciated service that is provided by that entity is the first to be put on the chopping block.” … The president also said “I would not have made these cuts in better circumstances.”

    Soros conference online. This weekend’s conference of the Institute for New Economic thinking has quite a few papers and videos online at the conference’s website. Surprise: Keynes and his economic theories are revered. Attendees are treated to papers and presentations like this: “It is the interdependence between the rule of law and the production and distribution of goods and services that gives capitalism its unity. The autonomy of the economy is thus an illusion, as is its ability to self-regulate. And we are in the current mess because the scales have tipped slightly too far in favour of this illusion. This shift in the balance represents an inversion of values. Efficiency, it was believed, would be better served if the workings of governments were regulated more tightly (especially in Europe, although the theory originates in America) and if the markets were deregulated to a greater extent. The ingenuity of the financial markets initially, then their blind sightedness, did the rest.” … What?

    Economics in one lesson this Monday. On Monday (April 11), four videos based on Henry Hazlitt’s class work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Lesson, The Broken Window, Public Works Means Taxes, and Credit Diverts Production. The event is Monday (April 11) at 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.

    Wichita City Council this week. On Tuesday, the Wichita City Council considers only consent agenda items. Then, tributes — including video — to outgoing Council Members Paul Gray, Sue Schlapp, and Roger Smith and installation of new members. A new vice mayor will also be selected. … I don’t know if the city will be hosting a luncheon afterward. Two years ago a celebratory luncheon titled “Wichita City Council Changing of the Guard” cost over $1,000.

  • Kansas fiscal policy is stifling the state’s economy

    Dave Trabert of Kansas Policy Institute explains that Kansas economic policies are leading to the growth of government at the expense of private sector economic activity. Separately, KPI released figures showing that it will be very difficult for the state to meet the revenue projections made for the current fiscal year, which ends on June 30, 2011. Kansas tax collections in March were below projections, meaning even more trouble balancing the current year budget.

    State Fiscal Policy is Stifling the Kansas Economy

    By Dave Trabert, Kansas Policy Institute.

    Kansas’ fiscal policy has stifled the state’s economy for more than a decade and the effects are now being severely felt. Policy debates are often thought of in terms of party identification but the dividing line in Kansas is about the size and role of government; specifically, limited government versus large, expanding government. Most major policy debates really come down to whether government or taxpayer interests take precedent.

    For example, last year’s 19 percent sales tax increase was designed to allow government spending to increase by more than $200 million. Efforts to instead have government operate more efficiently were rebuffed by the demand for higher revenues, even though both academic studies of the proposed sales tax increase concluded it would cost thousands of jobs. The February employment report from the Kansas Department of Labor confirms those predictions.

    Kansas employmentKansas employment

    Kansas continues to lose private sector jobs, while government jobs increase. The adjacent table shows a loss of 12,100 private sector jobs over the last year; you have to go back to 1997 to find fewer jobs in February. To fairly compare February employment to the July implementation of the sales tax, we have to use seasonally adjusted data from the U.S. Department of Labor. On that basis, there are 23,200 fewer private sector jobs since the sales tax increase.

    There’s been talk of repealing the sales tax but opponents say it would make it harder to balance the state budget. That’s true, but it can be done by having government operate more efficiently, eliminating programs no longer deemed effective, and treating government employees the same as all other taxpayers. Others oppose repealing the sales tax because they’d rather retain it and use the revenue to begin reducing income tax rates. The March to Economic Growth Act (MEGA) would restrict the growth in state revenue and ease the tax burden but opponents are concerned about the impact on government. Never mind that Kansas has one of the highest state and local tax burdens in the country (number 19 according to the Tax Foundation and getting worse) and that jobs and population are migrating to states with lower tax burdens.

    Last year’s smoking ban was another fine example of putting government interests first, with state-owned casinos getting an exemption. Opponents of an effort to remove that exemption say it would cost state-owned casinos millions of dollars in lost revenue and reduce state tax revenues. Bar owners said the same thing last year but their concerns were dismissed.

    And then there’s the Kansas Public Employees Retirement System (KPERS). The debate over resolving a KPERS deficit of at least $9.3 billion is perhaps the most egregious example of fiscal policy favoring government growth. KPERS is one of the worst funded plans in the country and provides benefits many times greater than received by most private sector workers. Fully funding it will have catastrophic impact on taxpayers and the economy, but even minor benefit reductions are vehemently opposed. Even a proposal to reduce benefits for employees not yet hired can’t get off the ground.

    Continuing to strip taxpayers of their economic freedom so that we can sustain and grow government will eventually cause the state’s economy to implode, as governments in California, Illinois and many nations are currently experiencing. This isn’t theory, it’s history — and we should avoid repeating it.