Voice For Liberty

Tag: Sam Brownback

  • Winners and losers in Kansas school finance lawsuit

    Who are the winners and losers now that the decision in Gannon vs. Kansas — better known as the Kansas school finance lawsuit — has been reached?

    The decision reached by the court is that Kansas schools are unconstitutionally underfunded. While it is most commonly reported that the decision requires Kansas to spend an additional $440 million per year on schools, the actual amount of increased spending will be $594 million per year. This is because of the mechanism of the local option budget, according to Kansas Policy Institute. The decision is being appealed to the Kansas Supreme Court.

    The winners are the Kansas school spending establishment. These are the people who are devoted to spending more on Kansas schools — without regard to need, or whether the spending increases student achievement, or whether the spending is harmful to the Kansas economy. The main cheerleader for this team is Kansas National Education Association (KNEA), our state’s teachers union. Although not a party to the suit, Kansas Association of School Boards (KASB) is a winner, too. Kansans should remember a story told by Kansas House of Representatives member Arlen Siegfreid of a conversation he had with KASB lobbyist Mark Tallman: “During our discussion I asked Mr. Tallman if we (the State) had the ability to give the schools everything he asked for would he still ask for even more money for schools. His answer was, ‘Of course, that’s my job.’”

    An obvious group of losers is Kansas taxpayers. Obviously.

    The people who truly lost, and who will suffer the most from the court’s decision, are Kansas schoolchildren. That’s because most people believe the problems with Kansas schools — whatever they are — can be solved with more spending. Certainly that’s the position taken by school system bureaucrats and others who benefit from increased school spending.

    These advocates for spending conveniently ignore that school spending has been on a long upward trajectory, while at the same time test scores are steady or even falling in some cases. But school spending is an easy issue. Appeals that tug on heartstrings — “It’s for the kids” — are easy to make. And it’s easy to spend more on schools — at least easier than the real reforms that will help Kansas schoolchildren.

    The relevant part of the Kansas Constitution states: “The legislature shall make suitable provision for finance of the educational interests of the state.” It’s a good thing for the state’s education bureaucracy the Constitution doesn’t say “the state shall provide a suitable education.” We’d be in a lot of trouble.

    The state of Kansas schools

    Those who think Kansas schools are doing well should compare Kansas NAEP scores with those of Texas. See Kansas school test scores, in perspective for an explanation of why Kansas test scores seem to be much better than other states.

    Kansas Commissioner of Education Diane DeBacker has written that she is proud of student achievement in Kansas: “Since 2001, the percentage of students statewide who perform in the top three levels on state reading assessments has jumped from about 60 percent to more than 87 percent. In math, the jump has been from just more than 54 percent to nearly 85 percent.”

    This rise in performance, however, is only on tests that the Kansas education establishment controls. On every measure of student performance that I know of that is independent, this rising trend in student achievement does not appear. In some measures, for some recent years, the performance of Kansas students has declined.

    How can it be that one series of tests scores are rising, but not others? Kansas school administrators don’t have a good answer for this. But there is a good reason: The Kansas test scores are subject to manipulation for political reasons.

    In 2006 Kansas implemented new tests, and the state specifically warns that comparisons with previous years — like 2001 — are not valid. A KSDE document titled Kansas Assessments in Reading and Mathematics 2006 Technical Manual states so explicitly: “As the baseline year of the new round of assessments, the Spring 2006 administration incorporated important changes from prior KAMM assessments administered in the 2000 — 2005 testing cycle. Curriculum standards and targets for the assessments were changed, test specifications revised, and assessed grade levels expanded to include students in grades 3-8 and one grade level in high school. In effect, no comparison to past student, building, district, or state performance should be made.” (emphasis added.)

    Despite this warning, DeBacker and Kansas school superintendents make an invalid statistical comparison. This is not an innocent mistake. This is an actual example of — turning the superintendents’ quote on themselves — “data that was used out of context, completely misrepresenting the truth.”

    On other tests, only 28 percent of Kansas students are ready for college-level work in all four subjects the ACT test covers. While this result was slightly better than the national average, it means that nearly three-fourths of Kansas high school graduates need to take one or more remedial college courses.

    School spending advocates also take advantage of the fact that citizens are generally misinformed on Kansas school spending. When asked about the level of spending on public schools in Kansas, citizens are generally uninformed or misinformed. They also incorrectly thought that spending has declined in recent years.

    Kansas school standards

    Last summer Kansas schools received a waiver from participating in the No Child Left Behind program. KSDE reported: “Another key component of the state’s waiver is related to evaluating teachers and school leaders. Among the criteria for achieving a waiver request was implementing an evaluation system that includes student achievement as a significant factor in the evaluation. The Kansas plan calls for appointing a commission to identify the most effective means of tying student achievement to teacher and leader evaluations and building that into the existing Kansas Educator Evaluation Protocol (KEEP).”

    Many people would be surprised to learn that student achievement has not been the primary factor used in evaluating teachers in Kansas. This is one of the reasons why Kansas has been found to rank low in policies on teacher quality.

    Last year Kansas school superintendents wrote an op-ed proclaiming the high standards and performance of Kansas schools. But what Kansans ought to take notice of is the superintendents’ claim in this sentence: “Historically, our state has had high-performing schools, which make Kansas a great place to live, raise a family and run a business.”

    The truth is that when compared to other states, Kansas has low standards.

    The U.S. Department of Education’s National Center for Education Statistics (NCES) has analyzed state standards, and we can see that Kansas has standards that are below most states. The table of figures is available at Estimated NAEP scale equivalent scores for state proficiency standards, for reading and mathematics in 2009, by grade and state. An analysis of these tables by the Kansas Policy Institute shows that few states have standards below the Kansas standards.

    This table is from KPI’s report in 2012 titled Removing Barriers to Better Public Education: Analyzing the facts about student achievement and school spending.

    The conclusion by NCES is “… most states’ proficiency standards are at or below NAEP’s definition of Basic performance.” KPI, based on simple analysis of the NCES data, concluded: “Kansas is one of those states, with its Reading Proficiency standard set lower than what the U.S. Department of Education considers Basic performance. Math Proficiency levels are above what NAEP considers to be Basic but still well below the U.S. standard for Proficient.”

    Should we spend more on Kansas schools?

    Education is vitally important, school officials tell us. They’re right — and that’s why the education of Kansas schoolchildren is too important to be exclusively in the hands of government.

    The school finance lawsuits illustrate this. Suppose that the court is right, and that increased spending will fix the problems with schools. How many years will pass before the solution is implemented? And even if we immediately start spending more, do we really think it will improve student outcomes, in light of our past experience?

    The solution for Kansas schoolchildren is increased school choice, through charter schools and either vouchers or tax credit scholarships. This is what we are missing in Kansas. With greater choices available to students and parents, there will be less need for government oversight of schools and all the bickering that accompanies decisions made through the political process.

    This is the reform that will most help Kansas schoolchildren. It will cost less and improve outcomes. It doesn’t require fleets of education bureaucrats and stacks of plans and regulations. But it does require the school establishment to give up some power and their stranglehold on the use of public funds for schools.

    Unfortunately, we’re not moving in that direction in Kansas. Recently in Wichita, Kansas Governor Sam Brownback had two opportunities to promote school choice in Kansas. On the Joseph Ashby radio program he was asked about school choice, but wouldn’t commit to it as a priority.

    Later that day at the Wichita Pachyderm Club a similar question was asked, and again Brownback wouldn’t commit to school choice. The focus right now is efficiency and to get fourth grade reading levels up, Brownback said. He added that about 28 percent of fourth graders can’t read at basic level, which he described as a “real problem. If you can’t read, the world starts really shrinking around you.”

    It’s a mystery why Governor Brownback hasn’t made school choice a priority in Kansas. Many governors are doing that and instituting other wide-reaching reforms.

  • Reaction to Kansas school lawsuit decision

    Following are several reactions to the decision in Gannon vs. Kansas, the school funding lawsuit. The court ruled the state must spend more on schools.

    An important observation on the true size of the court-ordered tax increase was offered by Kansas Policy Institute:

    “Today’s mandate of a $654 Base State Aid Per-Pupil (BSAPP) increase forces the state to raise annual spending and taxes by $440 million and, because of the way the Local Option Budget is written, local property taxes will automatically increase by $154 million. In total, the Shawnee District Court would take an additional $594 million out of the Kansas economy every year.”

    See KPI on Gannon: Extremely Unfortunate $600 Million Annual Tax Hike more, including:

    “It is extremely unfortunate for citizens of Kansas that the court has effectively ordered an annual $594 million tax hike. This is even more shocking given that there is no evidence that the billions in increased spending have raised student achievement on independent national exams. According to the National Assessment of Educational Progress (NAEP), less than half of Kansas’ 4th and 8th grade students are proficient in math and only about one third are proficient in reading – this is essentially unchanged over the past decade despite billions in increased taxpayer support.

    “It costs a lot of money to operate our schools, but its how the money is spent that matters, not simply how much. Just this week, Education Week gave Kansas a D+ for student achievement; among other things, this was a result of low rankings for achievement gains and that we are below the national average for gains in each subject and grade level. They also pointed out that per-pupil spending in Kansas is above the national average and that State expenditures on K-12 schooling, as a percent of state taxable resources, are the 12th highest in the nation.

    Kansas Governor Sam Brownback issued this statement:

    “The ruling by the district court is disappointing but not unexpected given the Kansas Supreme Court’s previous ruling in the Montoy case in 2005. Through today’s ruling, the courts are drastically increasing the property tax burden on every Kansan. The Kansas Legislature, not the courts, has the power of the purse and has, in fact, increased total state funding for schools every year during my administration. The legislative process is the appropriate venue for debating and resolving issues of taxation and spending.”

    From Senate President Susan Wagle:

    “Once again, Kansas judges have overstepped their constitutional bounds and defied the will of Kansas voters and their elected representatives and senators. With today’s decision, this judicial panel ignored the system of checks and balances that every Kansas student is taught in school and decided that they alone, not the people via the legislature, would determine how the people’s money should be spent, by imposing a specific dollar amount that Kansas must spend for education.

    “These judges have made themselves the sole arbiters of spending — and by extension, taxation — in Kansas. They have demonstrated no regard for the ability of struggling Kansas families to pay higher taxes, if necessary, to meet their demands. This also disregards the will of Kansas voters, who overwhelmingly elected a House and Senate that supports the existing school funding policy — one that maintains educational quality while also being sensitive to the very real difficulties being faced by Kansas taxpayers.

    “I am committed to upholding the will of the majority of Kansans who want their elected leaders to maintain high-quality public education. I am committed to restoring to Kansas the fundamental American principle that only the elected representatives of the people of Kansas — accountable to them at the ballot box — may enact laws regarding spending and taxation.”

    In a press release titled “District Court decision supports a quality education” Kansas National Education Association (KNEA), our state’s teachers union said:

    Once again a Kansas Court has found that the Legislature has failed to fully fund an appropriate public education for Kansas students. …

    As to the issue of property taxes, this decision has no effect on property taxes whatsoever. Whether or not property taxes increase will be a matter of how the Legislature decides to react. Since the Legislature last year chose to enact massive cuts to the state income tax, they will need to look to some tax source to overcome first the shortfall of nearly $300 million created by the tax cut and then the projected $440 million necessary to fund the school finance formula. If property taxes go up, the decision will rest entirely with the Legislature. There are many options available to them; they have so far chosen to use scare tactics in reaction to being held accountable.

    There is no greater economic development tool than a well-trained, well-educated citizenry. Kansas has long delivered on that promise. This ruling reasserts the State’s commitment to the children, families, and businesses of Kansas.

    USD 259, the Wichita public school district:

    The District Court of Kansas issued its opinion on the school finance lawsuit on January 11. The ruling, which is in excess of 250 pages, requires adequate funding for schools. The court ordered that the base state aid per pupil should be funded at $4,492, up from $3,838. If funded, the base increase would restore most of the cuts the district has made since 2009. The increase could be at least $45 million. To read the ruling, click here. To watch BOE President Lynn Rogers’ news conference about the opinion, click here.

    “This is a win for Kansas students,” said BOE President Lynn Rogers. “The lawsuit is about our children and the Kansas of tomorrow, so we can prepare Wichita students for the high-wage, high skill jobs of the future.”

    BOE President Rogers said that the lawsuit was about adequate funding for all Kansas students and that they deserve a quality education regardless of where they live in the state. He also said it is about creating a highly-skilled workforce for the future, which starts with students receiving a quality education.”

    “The education we provide is the foundation for our workforce and the future of Kansas. If we don’t give our students a quality education now, we will pay for it in the future,” he added.

    The school districts involved in the lawsuit represent about one-third of the students across the state.

    President Lynn Rogers said that school districts must collaborate with the Kansas State Legislature to work towards school funding solutions.

  • Wichita STAR bonds project not good for capitalism

    Tomorrow the Wichita City Council considers approval of the project plan for a STAR bonds project in Wichita.

    The formation of the district has already been approved. This action by the council will consider the development plan and the actual authorization to spend money.

    If approved, the city will proceed under the State of Kansas STAR bonds program. The city will sell bonds and turn over the proceeds to the developer. As bond payments become due, sales tax revenue will make the payments.

    It’s only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online — or as sales rise at existing merchants — the increased sales tax over the base is diverted to pay the STAR bonds. Estimates are that annual revenue available for the bonds will be over $5,000,000.

    For this district, the time period used to determine the base level of sales tax is February 2011 through January 2012. A new Cabela’s store opened in March 2012, and it’s located in the STAR bonds district. Since Cabela’s sales during the period used to calculate the base period was $0, the store’s entire sales tax collections will be used to benefit the STAR bonds developer.

    (There are a few minor exceptions, such as the special CID tax Cabela’s collects for its own benefit.)

    Which begs the question: Why is the Cabela’s store included in the boundaries of the STAR bonds district?

    With sales estimated at $35 million per year, the state has been receiving around $2 million per year in sales tax from this store. But after the STAR bonds are sold, that money won’t be flowing to the state. Instead, it will be used to pay off bonds that benefit the project’s developer.

    Some questions

    Curiously, the city doesn’t provide a cost-benefit study for this project. This is the usual mechanism the city relies on as justification for investments in economic development projects.

    Often developers ask government for incentives because they claim the project is not economically feasible without assistance. Is that the case with this development? If not, why the need for subsidies?

    And if taxpayer subsidy is required for this development, we need to ask what it is about Kansas that discourages this type of business investment.

    STAR bonds should be opposed as they turn over tax policy to the private sector. We should look at taxation as a way for government to raise funds to pay for services that all people benefit from. An example is police and fire protection. Even people who are opposed to taxation rationalize paying taxes that way.

    But STAR bonds turn tax policy over to the private sector for personal benefit. The money is collected under the pretense of government authority, but it is collected for the exclusive benefit of the owners of property in the STAR bonds district.

    Citizens should be asking this: Why do we need taxation, if we can simply excuse some from participating in the system?

    Another question: In the words of the Kansas Department of Commerce, the STAR bonds program offers “municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment and tourism areas and use the sales tax revenue generated by the development to pay off the bonds.” This description, while generally true, is not accurate. This STAR bonds district includes much area beyond the borders of the proposed development, including a Super Target store, a new Cabela’s store, and much vacant ground that will probably be developed as retail. The increment in sales taxes from these stores — present and future — goes to the STAR bond developer. As we’ve seen, since the Cabela’s store did not exist during the time the base level of sales was determined, all of its sales count towards the increment.

    STAR bonds, or capitalism?

    In economic impact and effect, the STAR bonds program is a government spending program. Except: Like many spending programs implemented through the tax system, legislative appropriations are not required. No one has to vote to spend on a specific project. Can you imagine the legislature voting to grant $5 million per year to a proposed development in northeast Wichita? That doesn’t seem likely. Few members would want to withstand the scrutiny of having voted in favor of such blatant cronyism.

    But under tax expenditure programs like STAR bonds, that’s exactly what happens — except for the legislative voting part, and the accountability that sometimes follow.

    Government spending programs like STAR bonds are sold to legislators as jobs programs. Development, it is said, will not happen unless project developers receive incentives through these spending programs. Since no legislator wants to be seen voting against jobs, many are susceptible to the seductive promise of jobs.

    But often these same legislators are in favor of tax cuts to create jobs. This is the case in the Kansas House, where many Republican members are in favor of reducing the state’s income tax as a way of creating economic growth and jobs. On this issue, these members are correct.

    But many of the same members voted in favor of tax expenditure programs like the STAR bonds program. These two positions cannot be reconciled. If government taxing and spending is bad, it is especially bad when part of tax expenditure programs like STAR bonds. And there’s plenty of evidence that government spending and taxation is a drag on the economy.

    It’s not just legislators that are holding these incongruous views. Secretary of Commerce Pat George promoted the STAR bonds program to legislators. Governor Sam Brownback supported the program.

    When Brownback and a new, purportedly more conservative Kansas House took office, I wondered whether Kansas would pursue a business-friendly or capitalism-friendly path: “Plans for the Kansas Republican Party to make Kansas government more friendly to business run the risk of creating false, or crony capitalism instead of an environment of genuine growth opportunity for all business.” I quoted John Stossel:

    The word “capitalism” is used in two contradictory ways. Sometimes it’s used to mean the free market, or laissez faire. Other times it’s used to mean today’s government-guided economy. Logically, “capitalism” can’t be both things. Either markets are free or government controls them. We can’t have it both ways.

    The truth is that we don’t have a free market — government regulation and management are pervasive — so it’s misleading to say that “capitalism” caused today’s problems. The free market is innocent.

    But it’s fair to say that crony capitalism created the economic mess.

    But wait, you may say: Isn’t business and free-market capitalism the same thing? Not at all. Here’s what Milton Friedman had to say: “There’s a widespread belief and common conception that somehow or other business and economics are the same, that those people who are in favor of a free market are also in favor of everything that big business does. And those of us who have defended a free market have, over a long period of time, become accustomed to being called apologists for big business. But nothing could be farther from the truth. There’s a real distinction between being in favor of free markets and being in favor of whatever business does.” (emphasis added.)

    Friedman also knew very well of the discipline of free markets and how business will try to avoid it: “The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.”

    The danger of Kansas government having a friendly relationship with Kansas business is that the state will circumvent free markets and promote crony, or false, capitalism in Kansas. It’s something that we need to be on the watch for. The existence of the STAR bonds program lets us know that a majority of Kansas legislators — including many purported fiscal conservatives — prefer crony capitalism over free enterprise and genuine capitalism.

    The problem

    Government bureaucrats and politicians promote programs like STAR bonds as targeted investment in our economic future. They believe that they have the ability to select which companies are worthy of public investment, and which are not. It’s a form of centralized planning by the state that shapes the future direction of the Kansas economy.

    Arnold King has written about the ability of government experts to decide what investments should be made with public funds. There’s a problem with knowledge and power:

    As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

    When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

    Despite this knowledge problem, Kansas legislators are willing to give power to bureaucrats in the Department of Commerce who feel they have the necessary knowledge to direct the investment of public funds. One thing is for sure: the state and its bureaucrats have the power to make these investments. They just don’t have — they can’t have — the knowledge as to whether these are wise.

    What to do

    The STAR bonds program is an “active investor” approach to economic development. Its government spending on business leads to taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form.

    Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business is critical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

    In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Kansas and many of its cities employ: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

    In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.’”

    There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates is an example of such a policy. Government spending on specific companies through programs like STAR bonds is an example of precisely the wrong policy.

    We need to move away from economic development based on this active investor approach. We need to advocate for policies at all levels of government that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances.

    Public Hearing Considering the Adoption of a STAR Bond Project Plan for the K-96 Greenwich Star Bond Projec… by

  • Wind tax credit promotes expensive electricity

    Conservative and free-market groups are asking Congress to oppose extending the Production Tax Credit for production of electricity from wind.

    The letter, presented below, is designed for representatives from states that don’t have a Renewable Portfolio Standard, which is a policy or law that requires a certain amount of electricity to be produced from renewable sources, which is primarily wind in most places. Kansas has an RPS, and Governor Sam Brownback actively supports maintaining this standard, which will require that more Kansas electricity be produced from wind. Kansas Policy Institute has found that RPS will result in higher electricity costs, fewer jobs, and less investment in Kansas. Its summary is at The Economic Impact of the Kansas Renewable Portfolio Standard, and the full report is here.

    The letter points out that the PTC has the effect of transferring subsidy from states without RPS to those states, like Kansas, that do.

    December 12, 2012
    Dear Members of Congress:

    We write to urge your opposition to extending the wind Production Tax Credit (PTC). Created in 1992 by the Energy Policy Act, the PTC has far outlived its usefulness. Moreover, as a member of Congress serving a state that does not have a renewable energy mandate, you should be aware that the PTC essentially transfers taxpayer dollars from your constituents and subsidizes the states with such mandates. Renewable energy mandates force utilities to buy politically-favored forms of energy such as wind, while your state has wisely chosen to allow the most abundant and affordable forms of energy to be purchased by consumers and industries.

    The wind PTC provides a tax credit of 2.2 cents per kilowatt-hour, and lasts for ten years for anyone receiving it. With the wholesale price of electricity frequently ranging from 2.5 to 4.5 cents per kilowatt-hour, the PTC is worth a large percentage of the total price. This makes the wind industry one of the most heavily subsidized forms of energy. In 2010, federal subsidies paid $56 for every megawatt hour of wind energy compared to $0.64 for coal and natural gas electricity.

    Despite having this generous subsidy for two decades, wind only produces 3 percent of America’s electricity. This corporate dependence on federal subsidies not only harms the taxpayers who finance the PTC, it also creates an improper incentive for wind companies to focus on obtaining lucrative subsidies rather than long-term sustainability and competitiveness. It is time the wind energy industry stood on its own and continued funding by the federal government will only hurt cost-effective energy sources as well as American taxpayers.

    Lastly, for the twenty-one states that do not have a renewable energy mandate in place — states like your own — the stakes are much higher. Under the structure of the PTC, the bulk of the tax credits flow to those states that have the most wind generation capacity and those happen to be states with an RPS. This is because the PTC helps to disguise the true cost of the mandate. Extending the wind PTC ensures that your constituents will continue to subsidize wind power in other states that have made political decisions to force consumers to buy more expensive and less reliable forms of energy — like wind.

    Reliable, affordable, and ‘always on’ electricity is critical to get our economy back on track. The wind PTC promotes unreliable and expensive energy to the detriment of dependable and cost-effective forms of electricity generation. By taking a principled stand against the PTC, you help taxpayers in your own state and ensure more cost-effective electricity generation overall. We urge you to allow this wasteful subsidy to expire, as planned, at the end of the year.

    Freedom Action
    Competitive Enterprise Institute
    American Conservative Union
    American Energy Alliance
    Heritage Action
    American Commitment

  • Economic development incentives questioned

    When the New York Times is concerned about the cost of government spending programs, it’s a safe bet that things are really out of control. Its recent feature As Companies Seek Tax Deals, Governments Pay High Price reports on economic development incentive programs that are costly and produce questionable benefits.

    Do we know the cost of economic development incentives? No, reports the Times: “A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.”

    Kansas Governor Sam Brownback appears in a video that accompanies the story.

    A concern of the newspaper is that the money spent on incentives could be spent on other government programs, primarily schools. My concern is that government spending on incentives is harmful to the economy. It redirects capital from productive to unproductive uses. Charles Koch recently explained:

    Today, many governments give special treatment to a favored few businesses that eagerly accept those favors. This is the essence of cronyism.

    Many businesses with unpopular products or inefficient production find it much easier to curry the favor of a few influential politicians or a government agency than to compete in the open market.

    After all, the government can literally guarantee customers and profitability by mandating the use of certain products, subsidizing production or providing protection from more efficient competitors.

    Cronyism enables favored companies to reap huge financial rewards, leaving the rest of us — customers and competitors alike — worse off.

    In another article Koch wrote: “Instead of protecting our liberty and property, government officials are determining where to send resources based on the political influence of their cronies. In the process, government gains even more power and the ranks of bureaucrats continue to swell.”

    We must distinguish between business and capitalism and hold business groups accountable when they fail to promote economic freedom and capitalism. An example is the Wichita Metro Chamber of Commerce. Its legislative platform reads “The Wichita Metro Chamber believes the State should practice fiscal discipline.”

    But the Chamber recommends retaining several business welfare programs that are harmful to capitalism and economic freedom.

    Next week the agenda for the meeting of the Wichita City Council contains six items that dish out business welfare and promote cronyism. Another item recommends approval of the city’s legislative agenda, which contains this:

    ISSUE: Existing economic development tools are essential for the continued growth and prosperity of our community.

    RECOMMEND: The Wichita City Council supports continuation of its 2012 legislative agenda item, calling for protection of existing economic development tools for local public-private partnerships. Among those are Tax Increment Financing (TIF) districts, Community Improvement Districts (CIDs), Industrial Revenue Bonds (IRBs) and Sales Tax Revenue (STAR) bonds.

    The premise is false twice: These economic development tools are not “essential,” and Wichita is not growing and prospering, compared to other cities: “The inflation-adjusted gross domestic product for the Wichita metro area declined 0.4 percent in 2010, according to initial estimates from the federal Bureau of Economic Analysis. The decline slowed from the year before, when this measure of economic growth plummeted by 7.7 percent. … Wichita’s decline came even as GDP grew by 2.5 percent nationwide in 2010. GDP increased in 304 of 366 metro areas nationwide.” (Wichita Business Journal, Wichita’s real GDP declined in 2010 amid national recovery, database shows.)

  • Mixed message on Southwest subsidies

    Now that Southwest Airlines has announced that it will offer service in Wichita, the question is this: Will Southwest tap the subsidy?

    Last year city manager Bob Layton said he feels “pretty good” about Wichita’s chances in receiving service from the popular discount airline. He said that we need to keep the Affordable Airfares Program to keep Southwest interested in Wichita. But later he said “The Southwest business model doesn’t require subsidies over a long period of time.”

    A mixed message.

    From the Wichita Eagle: “[Southwest vice president for airport affairs Bob] Montgomery said Southwest may initially utilize Affordable Airfares revenue to mitigate ‘risk’ but hopes to grow its business so the public subsidies aren’t needed.”

    Mixed.

    “[Kansas Governor Sam] Brownback also committed during the news conference to recommending the extension of Affordable Airfares during the 2013 legislative session, calling its potential role helping defray Southwest’s risk entering the Wichita market appropriate. ‘The program is doing what we want,’ the governor said. ‘It’s a good program, and I’m going to propose continuing it.’”

    Mixed message again. Especially so for a governor who is being praised for his free market beliefs. Or, as in Forbes: “Sam Brownback is a dazzlingly Reaganesque success as governor of Kansas.”

    The Southwest executive again: “But Montgomery said the fate of Affordable Airfares will have no bearing on Southwest’s future in Wichita. ‘We are here with no conditions, no demands,’ he said. ‘We ask that y’all fly Southwest, because this is a tough business.’”

    Mixed.

    Southwest has started service in cities comparable to Wichita without government subsidy or with only small levels of assistance. Let’s hope our city and state leaders can do the same.

  • Kansas property tax honesty is needed

    Kansas Governor Sam Brownback has proposed property tax reform that may bring balance and relief to property taxes.

    The governor’s proposal is that when the value of property taxed by local governmental jurisdictions rises, the mill levy (tax rate) will be lowered so that there is no increase in total tax dollars levied.

    New property will still come on the tax rolls at its appraised value. Local governments can vote to raise the mill levy if they feel they need more property tax revenue.

    But instead of relying on rising property values automatically boosting tax revenue, government will have to be honest with citizens when they want more money. While property values haven’t risen in recent years, hopefully they will soon, and we could have this problem again.

    Most proposals in Kansas for property tax reform consist of simply transferring tax revenue from the state to local jurisdictions. That’s not very much reform.

    In 2008 I noted this phenomenon in the following article:

    The combination of a rising mill levy (the rate at which property is taxed) and rising appraised values mean that property taxes paid to USD 259, the Wichita public school district, rise rapidly.

    Appraised values in Wichita have risen faster than general inflation. The Consumer Price Index, a measure of the general inflation rate, rose by 24% from 1999 to 2007. Over the same time period, the Sedgwick County house price index rose by 34%. This means that district revenues — if the mill levy didn’t change — will rise faster than the inflation rate. When the mill levy is increased, property tax revenues rise very rapidly. The following table illustrates.

  • Kansas Democrats mailing again, and wrong again

    It’s campaign season, and mail pieces are flying fast, replete with more Kansas Democratic errors.

    Examples come from two mailers from the Kansas Democratic Party targeting Joseph Scapa, a one-term Republican incumbent seeking to return to the House or Representatives.

    Here’s one: “SCAPA voted for the largest cut to school funding in Kansas history — schools are closing, class sizes are increasing and fees are going up on parents. Sub HB 2014 (HJ 5/12/11, p. 1570)”

    This is a repeat of a mistaken claim made on other anti-Scapa mailings, for which Kansas Democrats have apologized.

    Here’s something from another ant-Scapa mail piece from the Kansas Democratic Party: “The Brownback Agenda included the largest cut to public education funding in Kansas history in order to pay for tax cuts for the wealthy and big corporations.”

    This claim is incorrect, too. As explained in Kansas Democrats wrong on school spending, the claims of education cuts generally consider only Kansas state spending on schools, neglecting federal and local sources of funds. In the 2008-2009 and 2009-2010 schools years, federal aid soared as a result of the Obama stimulus program. These funds almost made up for the decline in state spending, meaning that total spending on Kansas schools declined only slightly.

    (You’d think that Kansas Democrats would want to remind us of the supposedly wonderful things the Obama stimulus accomplished, but evidently not when the facts are inconvenient.)

    Then, who was Kansas governor during the years that Kansas state spending on schools actually declined? Kathleen Sebelius and Mark Parkinson. They’re Democrats, I believe.

    Here’s something else from a mailer from the Kansas Democrats:

    JOE SCAPA is just another rubber stamp for Sam Brownback.
    JOE SCAPA VOTES WITH SAM
    BROWNBACK 92.33% OF THE TIME.*
    Instead of working to create jobs and improve education, Scapa has been nothing more than a rubber stamp for Governor Brownback’s irresponsible agenda.
    *www.KanFocus.com, Republican Support Rankings

    Most people don’t have access to KanFocus, a useful but expensive subscription information service. The rankings that the mailer refers to, according to KanFocus, “… show the percentage of votes on which each Representative voted with and against the majority of Republicans.”

    So it’s not a measure of how closely Representatives’ votes align with Governor Brownback, but with the majority of Republicans. Oops.

    Aside from that, Scapa ranked 56 out of 93 Republicans that cast votes in 2012. Then, consider that most of the Republicans who ranked “higher” than Scapa (meaning they voted less often with the Republican majority) are legislators who in most states would be Democrats.

    An accurate assessment, then, of Scapa’s voting record is that he is relatively independent from the Republican majority in his voting. Which is not the same as the Brownback agenda, as the Democratic Party mailer erroneously claims.

  • Kansas Democrats wrong on school spending

    While the Kansas Democratic Party apologized last week for misstating candidates’ voting record on two mail pieces, the party and its candidates continue a campaign of misinformation regarding spending on Kansas public schools.

    Many of the allegations are made against Kansas Governor Sam Brownback for purportedly cutting school spending. An example is on the Kansas Democratic Party Facebook page, which can be seen nearby.

    As part of the party’s website, on a page titled Restore Education Funding, Kansas Democrats make this claim:

    An Education Fact

    Between FY2008-2009 and FY2011-2012, general state aid to education was cut by nearly $400 million. In just thee [sic] years, that’s a reduction of $620 for every schoolchild in the state.

    This claim is repeated on candidates’ web sites, such as this example from senatorial candidate Tim Snow, which reads: “In the last three years, conservatives in Topeka have slashed education spending by $620 per student.”

    The problem is that these claims aren’t factual. Consider the numbers from the Kansas Democrat website. In 2008-2009 Kansas state spending on schools was $3,287,165,278, according to the Kansas State Department of Education. In 2011-2012, that figure was $3,184,163,559. That’s a difference of $103,001,719, which is a long way from $400 million, the number claimed by Democrats.

    Looking at spending per pupil figures, the change was from $7,344 to $6,983. That’s $361, not $620 as Democrats claim.

    The Democrats are also considering only Kansas state spending on schools, neglecting federal and local sources of funds. In the 2008-2009 and 2009-2010 schools years, federal aid soared as a result of the Obama stimulus program. These funds almost made up for the decline in state spending, meaning that total spending on Kansas schools declined only slightly.

    (You’d think that Kansas Democrats would want to remind us of the supposedly wonderful things the Obama stimulus accomplished, but evidently not when the facts are inconvenient.)

    Then, who was Kansas governor during the years that Kansas state spending on schools declined? Kathleen Sebelius and Mark Parkinson. They’re Democrats, I believe.

    There are more examples of Democrats misleading Kansans. Here’s Senate Minority Leader Anthony Hensley: “But Gov. Brownback is acting on the assumption that schools aren’t stretching every dollar to the last cent, even after he made the largest cut to public education in Kansas history.” (Dems seek input from parents, educators on impact of school funding cuts.) (emphasis added)

    Paul Davis, the Kansas House of Representatives Minority Leader, was quoted in the Lawrence Journal-World as saying “Instead of hosting an online forum to complain about public schools, why not discuss all the innovative ways our teachers and administrators have done more with less since Gov. Brownback implemented the largest cut to education funding in Kansas history?” (emphasis added)

    Hensley and Davis are two of the top Democrats in Kansas, absolutely so in the Kansas Legislature.

    It’s easy to understand why Democrats focus on school spending. It’s easy to persuade parents — and anyone, for that matter — that if we want the best for Kansas schoolchildren, we need to spend more.

    More spending in schools means more spending in largely Democratic hands, and more public sector union members, a key Democratic constituency.

    The school spending advocates have done a good job promoting their issue, too. On a survey, not only did Kansans underestimate school spending levels, they did so for the state portion of school funding, and again for the total of all funding sources — state, federal, and local. Kansans also thought spending had declined, when it had increased. See Kansans uninformed on school spending. Similar findings have been reported across the country.

    Spending more on schools is seen as an easy way to solve a problem. But the problems facing Kansas schools will require different approaches, and the Kansas school establishment won’t consider them. For a list of reforms that are needed, but resisted, see Kansas school reform issues.

    Kansas Democrats should consider themselves fortunate that our governor isn’t pressing for the reform that Democrats really hate: school choice.