Voice For Liberty

Tag: Sam Brownback

  • KPERS solution not likely this session

    With little time left for the Kansas Legislature to meet this year, and with the budget still not passed, it’s not very likely that action will be taken to reform the Kansas Public Employees Retirement System (KPERS). Especially when there’s a study commission waiting in the wings to take the pressure off lawmakers to take action now. It should be noted that the “best” plan, in terms of making a start on the reforms KPERS needs, still falls short of making the fundamental reforms that are required. Below, Kansas Reporter provides details of the political wrangling.

    Lawmakers spar over Kansas pension proposal

    By Gene Meyer
    April 28, 2011

    (KansasReporter) TOPEKA, Kan. — Kansas House and Senate negotiators offered sharply differing approaches Thursday to one of the biggest changes proposed for the state’s underfunded government employees pensions plans.

    House negotiators, led by state Rep. Mitch Holmes, a St. John Republican and chairman of that chamber’s Pension and Benefits Committee, are adamantly backing a House proposal that would convert what now is a traditional pension plan for Kansas teachers, state employees and local government workers into what’s known as a defined contribution plan for workers hired after July 1, 2013.

    Such plans, including the 401(k) plan versions many private employers offer, provide retiring workers with pools of savings with which to supplement Social Security or other resources, but not guaranteed lifetime pensions. That would limit future exposure of Kansas taxpayers — who pay the employers’ current contributions equal to 8 percent or more of each workers’ salary into the system — to rising pension plan costs. Those costs, according to Kansas Public Employees Retirement Systems projections presented in February, could rise to equal more than 21 percent of some workers’ paychecks in two decades and still leave one group of penson funds, for Kansas teachers, out of balance.

    “What my colleagues in the House, and even some Senators, are telling me is, ‘don’t back down,’” Holmes said after negotiators met Thursday to define the broad outlines of differences between the House and Senate plans.

    “The Senate rejects defined contributions,” said state Sen. Jeff King, an Independence Republican and vice chair of the Senate Select Committee on KPERS, who is leading the Senate negotiators.

    Senate negotiators want a special KPERS commission to study the defined contribution idea along with other potential solutions between now and the end of next year’s legislative session. Critics of the defined contribution proposal worry that such a plan would worsen the cash bind to which KPERS appears to be heading because it would reduce what is paid into the plan for traditional pension benefits current workers would continue to earn for another few decades.

    “Defined contributions are a non starter as far as the Senate is concerned,” King said.

    But that is just for 2013 as the House has proposed, he said; “Everything would be on the table for the study commission.”

    The proposed commission is the brainchild of state Senate President Steve Morris, a Hugoton Republican who Kansas Gov. Sam Brownback last winter named as point man for legislative efforts to deal with the pension funding gap. Brownback has been quoted as saying he thinks some version of a defined contribution plan is inevitable for KPERS, whether it’s a relatively pure version such as private employers offer or a hybrid plan that would include some pension-like guarantees.

    The funding hole that legislators are trying to fill is an officially projected $7.7 billion gap between benefits that KPERS has promised to pay its approximately 250,000 members over the next few decades and the money it is projected to have by then to pay those benefits. Unofficial estimates put the gap in the $9 billion to $12 billion range, based on a combination of lower market level of rates of investment returns than KPERS presumes for planning purposes and longer recovery times that will be needed to recoup market setbacks.

    House and Senate negotiators were agreed Thursday on a few broad ideas for closing the gap. Both broadly agree to offer employees a choice between increasing workers contributions to maintain current formulas for calculating retirement benefits or leaving contribution rates unchanged and reducing the formulas for future benefit calculations. Some of these proposed changes would require Internal Revenue Service approval.

    Both also broadly agree to accelerate the rate at which taxpayer contributions are increased — now capped at 0.6 percent per year — to at least 1.2 percent by 2017.

  • Kansas Chamber finds voters favor cuts, not tax increases to balance budget

    A survey of Kansas voters conducted on behalf of the Kansas Chamber of Commerce found widespread support for cutting spending rather than raising taxes as the way to balance the Kansas budget. Support was also found for cutting state worker salaries, or reducing the number of state employees.

    The survey was conducted on April 21 and 25 by Cole Hargrave Snodgrass & Associates, Inc. of Oklahoma City. 500 registered voters participated. The survey margin of error is given as 4.3 percent. The company says respondents were balanced for geographic region, gender, and partisan registration.

    One question asked respondents’ opinion of the general course of the state: “Generally speaking, do you think that things in Kansas are going in the right direction or do you think that things have pretty seriously gotten off on the wrong track?” 31 percent responded “right track,” while 47 percent said “wrong track” with the remainder undecided.

    As a point of comparison, a recent Rasmussen poll asked a similar question of voters across the country. 71 percent said the country is heading down the wrong track, with 21 percent saying the country is headed in the right direction.

    When presented with the fact that Kansas is faced with a $500 million budget shortfall, 13 percent said the state should raise taxes, 69 percent said to cut spending, and 18 percent were undecided among these options.

    The survey found widespread support for cutting spending across demographic groups. Among self-identified liberals, 56 percent said to cut spending, with 27 percent wanting to raise taxes. Of those in homes with less than $40,000 income, 75 percent said cut spending, with nine percent in favor of raising taxes. For respondents who favored reelecting President Barack Obama, cutting spending was favored by 48 percent, with only 28 percent of those in favor of tax increases. For those who disapprove of the job Governor Sam Brownback is doing, the numbers were similar, with spending cuts favored 43 percent to 33 percent wanting tax hikes.

    The issue of possible pay cuts for state employees has been considered by the Legislature and has been in the news. The survey asked this question with the following results:

    It has been discussed that state employees may be forced
to take a pay cut in order to balance the budget.
Which of the following best describes how you 
think the state deal with this situation?
State emp. salaries should not be cut            13%
State emp. salaries should be cut up to 3%       17%
State emp. salaries should be cut 3 to 5%        16%
State emp. salaries should be cut 5 to 10%        3%
State emp. salaries should be cut more than 10%   2%
Instead of cutting salaries, we should cut the
number of state employees                        31%
Undecided (vol.)                                 18%

    In its analysis of the responses to this question, Cole Hargrave wrote “Kansas voters also demonstrate a desire to make real cuts and are not just reacting with an anti-tax sentiment. When asked about how much the salaries of state employees should be cut, only 13% said they should not be cut. Most remarkable is that 31% of voters said that instead of cutting salaries, the total number of state employees should be reduced. Fully 67% of Kansas voters support either elimination of employee positions are at least a 3% cut.”

    The governor’s budget calls for not filling some 2,000 vacant state jobs.

    The survey also asked about attitudes toward state government competing with private sector provision of a service when the private sector is doing a good job. 73 percent of respondents agreed strongly or somewhat that the state should not compete, with 12 percent disagreeing and 16 percent undecided. The survey did not provide respondents with an example of a competitive situation.

    Respondents showed disapproval of the job President Obama is doing, with 28 percent favoring his reelection, and 57 percent desiring someone else to be elected. Governor Brownback fared better, with 49 percent approving to some degree the job he has been doing. 21 percent disapproved to some degree, with 29 percent undecided.

  • 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.

  • Kansas and Wichita quick takes: Thursday April 21, 2011

    Can anything Think Progress says about the Kochs be believed? Mark Tapscott, Washington Examiner Beltway Confidential: “Almost certainly not, to answer the question posed by the headline above. Here’s the latest example of why. Think Progress is all atwitter about a Nation magazine report concerning the Koch Industries 2010 Election Packet. This dastardly document, according to Think Progress, was “mailed to 50,000 employees instructing them on who to vote for in the 2010 midterm elections.” Curious, I clicked over to the Nation and read the cover letter in the packet. Here’s what it said about how Koch employees should decide for whom to vote: “For most of you, we’ve also enclosed a listing of candidates supported by Koch companies and KOCHPAC, the political action committee for Koch companies. Of course, deciding who to vote for is a decision that is yours and yours alone, based on factors important to you. (emphasis added)” … At RedState, Erick Erickson contrasts the behavior of unions: “Think Progress and Lee Fang love them some unions. And what do unions do? Unions send out fliers encouraging union members to vote for union backed candidates. Hell, unions even get union members to go door to door for candidates and give union dues to candidates — something KOCHPAC cannot do with all employees, just executives. Additionally, unions will often bus employees to the polls and have a poll monitor watch to make sure the union members have voted. Koch Industries does not do that. But here’s where the real intellectual dishonesty or stupidity come in. Lee Fang and Think Progress support card check. They want unions to be able to stand over a business’s employees and find out whether or not the employee has signed a card to unionize and, if not, intimidate and cajole the employee until he does (not that Think Progress or Lee Fang are on record supporting that last bit).” … Lee Fang is apparently assigned full time to digging up dirt on Charles and David Koch, and Fang’s reporting has been found to be unreliable and misinformed.

    Kansas governor on first 100 days. In a press release, Kansas Governor Sam Brownback listed some accomplishments of the first 100 days of his administration. Highlights mentioned were: “First Month Commitments” in the Governor’s Road Map for Kansas accomplished, including releasing a Strategic Economic Development Plan and establishing the Office of the Repealer. … Six Executive Reorganization Orders designed to restructure state government to become law on July 1, 2011 to increase efficiency, restructure government, and cut overhead costs. … Numerous Road Map for Kansas goals achieved through bi-partisan-supported legislation signed into law including the “Rural Opportunity Zones” bill, several deregulation bills, two pro-life bills, a voter ID bill, and a workers compensation reform bill. … On challenges ahead, the Governor said: “I am pleased with what we have accomplished in our first 100 days but our state continues to face a multitude of fiscal challenges that need to be addressed. More than 100,000 Kansans are still out of work. This administration will continue to focus on building a pro-growth environment that includes allowing businesses of all sizes to expense their investments and abolishing burdensome regulations to protect Kansans and encourage job creation.”

    Freeloaders come in all types. Recently John Stossel had an hour-long special show that focused on freeloaders. The show is now available on the free hulu service by clicking on Stossel: Freeloaders. The freeloaders Stossel profiles are not just panhandlers, although Stossel did work in disguise as a panhandler and discovered he could make over $90 a day — tax free, he added. One segment of the show uncovered farmers who received $50,000 because they were discriminated against by lenders. But — some of these farmers merely grew potted plants or fertilized their lawn to qualify as a farmer. Another reported on homeowners who stopped paying their mortgages on advice of a website. The homeowners and the website operator said there is no moral obligation to pay their mortgage loans. Corporate freeloaders didn’t escape, as General Electric was mentioned as a large recipient of government handouts. And, they won’t pay taxes: “Despite billions in profit, they’ll pay no taxes this year,” reported Stossel. … The severe poverty of American Indian tribes that live on government-managed reservations and living on government handouts is contrasted with a tribe that accepts no handouts and has no casinos. … Stossel covered his own beach house, which was covered by low-cost subsidized federal fund insurance. It suffered losses twice. … Standing in front of the U.S. Capitol, Stossel said “We rich people freeload off you taxpayers all the time, because the over-promisers in there keep churning out special deals for politically-favored groups. And they tend to be rich people, because the rich can afford lobbyists. … Think about how much money we could save if these guys just didn’t pass so many laws that encourage freeloading. But they do, year after year. They micromanage life with subsidies. And the winners are not so much the needy, but people like Bon Jovi, Ted Turner, Maurice Wilder, and — me. So let’s hope for an end to all this freeloading.”

    Are taxes the solution? From Bankrupting America: “It’s Tax Day 2011! And while it isn’t the most pleasant thing to think about, it doesn’t sting as bad as when you consider we’re $14 trillion in debt and face a $1.6 trillion deficit. So what got us into this mess? We’ve had an unfortunate habit of spending far more than we can afford — and have been doing it for years. The logical solution is to … well … stop doing that. But some have suggested we should tax our way out of the hole. Beyond the question of whether we should, there’s a more important question: can we?” … The site has an interesting infographic relating to taxes.

    The spontaneous society — centralized planning not required. In the following excerpt from Austrian Economics — A Primer Eamonn Butler explains that we don’t need centralized government planning in order to have great human accomplishment. Also, markets process far more information than any central planner could: Many people find it hard to believe that a society or an economy could survive — much less create and distribute wealth in any organised and rational way — without central planning and authority. Hayek has provided the explanation, however: the liberal human society and economy is, he says, an example of a spontaneous order. Just because something is not planned from the centre does not mean that it is wild, unkempt, random and disorderly, he points out. Societies of bees and termites are very orderly, but they are hardly planned. Human language, similarly, was never “invented”, but evolved, and grew and survived because it is useful. … The market and the price system, similarly, was never planned, but evolved as people exchanged different goods. Nor do they need any central command structure to maintain them: they have survived and expanded because they deliver such enormous benefit to us. In other words, there is a great deal of wisdom in these institutions, despite the fact that they have never been consciously designed and planned. The price system, for example, quickly and efficiently steers resources to their highest value uses, without anyone ever having deliberately invented it. The fact that there is no central planning does not mean that it is “unplanned” and irrational. We are all planners, says Hayek, in that we consciously act in order to satisfy our ambitions with the materials and information that are available to us. In the market order there is in fact far more planning taking place, and far more information being used and acted upon, than could ever be achieved by the single mind of any central authority. … In the case of the liberal market order, the rules are principles like the respect for private property and the right to hold or dispose of it, the rejection of violence and coercion, the freedom of people to enter into voluntary contracts, and the honouring of such contractual promises. Astonishingly, a few simple liberal rules such as these are sufficient to create what Rothbard calls an “awe-inspiring” harmony and co-ordination between individuals, and a precise, swift arrangement to guide resources to the greatest possible satisfaction of consumers’ desires.

  • Kansas and Wichita quick takes: Monday March 28, 2011

    Wichita Eagle endorsements. Yesterday the Wichita Eagle released its endorsements for Mayor, Wichita City Council, and Wichita school board. It is no surprise that in each case the newspaper editorial board recommended that voters select the candidate most likely to support the board’s big-government interventionist policies, thereby (unwittingly?) providing a guide as to who not to vote for, if you value limited government and economic freedom.

    Wichita City Council this week. As it is the fifth Tuesday of the month, the Wichita City Council will not meet. While some might say the mayor and council members need to get to work and do their jobs, I’m more aligned with Will Rogers when he quipped: “Be thankful we’re not getting all the government we’re paying for.”

    Sedgwick County commission this week. At Wednesday’s meeting, the Sedgwick County Commission has two economic development incentives to consider. These are forgivable loans, essentially grants of money, to be made to MoJack Distributors, LLC and Apex Engineering International LLC. Each has already received a forgivable loan from the City of Wichita, as well as other subsidy of various forms from governments state and local. More discussion is at Wichita again to bet on corporate welfare as economic development. The commission’s agenda is available at Board of Sedgwick County Commissioners, March 30, 2011.

    Kansas judicial selection. A legislative maneuver could force the Kansas Senate to debate and possibly vote on the method of selecting judges for the Kansas Court of Appeals. This is despite the efforts of Senator Tim Owens, an attorney and Republican from Overland Park, to block the bill in his committee. See Method of choosing judges could see debate.

    Kansas Department of Labor computer system. From Kansas Reporter: “A $50 million, six year project to upgrade unemployment claims technology within the Kansas Department of Labor was grossly mismanaged, resulting in massive system flaws according to Labor Secretary Karin Brownlee.” Brownlee took office earlier this year after being appointed by Kansas Governor Sam Brownback. More at Massive waste, inefficiency in Labor Department technology upgrade, secretary says .

    General Electric: no taxes for me. Competitive Enterprise Institute explains how General Electric, one of the largest companies in the world, earns large profits and manages to pay no income tax.

    Freeloaders come in all types. This weekend John Stossel had an hour-long special show that focused on freeloaders. Not just panhandlers, although Stossel did work in disguise as a panhandler and discovered he could make over $90 a day. Tax free, he added. One segment of the show uncovered farmers who received $50,000 because they were discriminated against by lenders. But — some of these farmers merely grew potted plants or fertilized their lawn to qualify as a farmer. Another reported on homeowners who stopped paying their mortgages on advice of a website. The homeowners and the website operator said there is no moral obligation to pay their mortgage loans. Corporate freeloaders didn’t escape, as General Electric was mentioned as a large recipient of government handouts. And, they won’t pay taxes: “Despite billions in profit, they’ll pay no taxes this year,” reported Stossel. … The severe poverty of American Indian tribes that live on government-managed reservations and living on government handouts is contrasted with a tribe that accepts no handouts and has no casinos. … Stossel covered his own beach house, which was covered by low-cost subsidized federal fund insurance. It suffered losses twice. … Standing in front of the U.S. Capitol, Stossel said “We rich people freeload off you taxpayers all the time, because the over-promisers in there keep churning out special deals for politically-favored groups. And they tend to be rich people, because the rich can afford lobbyists. … Think about how much money we could save if these guys just didn’t pass so many laws that encourage freeloading. But they do, year after year. They micromanage life with subsidies. And the winners are not so much the needy, but people like Bon Jovi, Ted Turner, Maurice Wilder, and — me. So let’s hope for an end to all this freeloading.”

    New York City may seek waiver from ObamaCare. One of the strongest advocates for ObamaCare may seek an exemption for the city he represents. Politico reports in Anthony Weiner: Waiver might work for New York. … So far over 1,000 waviers have been issued, exempting businesses, labor groups and a handful of states from at least some of the requirements of the Affordable Health Care Act.

    Economic freedom and a better life. Economics professor Josh Hall explains that economic freedom leads to greater human well-being. If we look at average income, life expectancy, income of the poorest 10%, and other factors, we see that when governments let citizens make economic decisions for themselves, this leads to greater human flourishing. This video refers to the Economic Freedom of the World index, which was the subject of a lecture delivered last year in Wichita by Robert Lawson. In that lecture, Lawson warned of the path of the United States in terms of economic freedom, as I reported: “Speaking about the United States, Lawson said that the numbers are likely to go down in the future. While the U.S. ranks above the world average, its measurement of freedom has been declining since 2000. At the same time, the rest of the world is on an upward trend. ‘It’s no longer accurate to say the United States is among the very top tier in the economic freedom index,’ Lawson said, adding that he blames George Bush for this. The decline is partly due to the increasing size of government, but the largest cause of the decline is in the area of property rights. This area is measured largely by surveys asking people how they feel about property rights in America. The perception, Lawson, said, is that the security of property rights are on the decline.”

    Government investment specialty. Gene Callahan, in his book Economics for Real People: An Introduction to the Austrian School, explains some of the problems inherent in government acting as investor. Writing about a plan to build a sports stadium in Hartford: “The Public Choice School has pointed out another force weakening that incentive, indeed, in most cases, completely negating it. Strong incentives exist for politicians to favor special-interest groups at the expense of the general public. Those upon whom benefits are concentrated are motivated to campaign hard for those benefits. As the costs of most political actions are spread across the public as a whole, the average person has little motivation to become involved. In the context of the stadium project, we can see that, even at a total cost of $374 million, the cost to each Connecticut resident is only about $100. It is simply not worth much of any individual citizen’s time to become devoted to the cause of stopping the stadium. However, for the construction companies who hope to get work on the stadium and the owners of businesses and land nearby, the potential benefits are enormous. They have a strong incentive to lobby hard for the project, to donate to the campaigns of politicians who support it, and to sponsor studies that will make the project look good. In fact, if there were a profit to be made in some particular investment, private investors would be likely to act quickly to take advantage of the opportunity with their own funds. … Private investors will turn to the risky business of lobbying the government to support a project only when it is not clear to them that it is profitable without taxpayer subsidies. Thus, the government is likely to specialize in money-losing projects.”

  • Kansas loses chance to improve tax climate

    Legislation that would have improved the tax climate in Kansas over time appears dead this year. It’s something that we need in Kansas, but Kansas Senate leadership is not in favor of the bill.

    The bill, named the March to Economic Growth, would have used increases in Kansas revenue to reduce state personal and corporate income tax rates. This is something that is needed, as new rankings published by the Tax Foundation indicate that the business tax climate in Kansas is poor. Kansas ranks 35th among the 50 states, just 15 spots from the bottom. In last year’s ranking, Kansas placed 32nd, so our state is slipping relative to other states.

    The economic development strategy of Kansas and Wichita has been to offer tax abatements as an inventive to lure or retain industry. The study authors note the problem with this: “State lawmakers are always mindful of their states’ business tax climates but they are often tempted to lure business with lucrative tax incentives and subsidies instead of broad-based tax reform. … Lawmakers create these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for a woeful business tax climate. A far more effective approach is to systematically improve the business tax climate for the long term so as to improve the state’s competitiveness.”

    New Kansas Governor Sam Brownback has an economic development plan that includes parts of Dr. Art Hall’s “embracing dynamism” strategy. This strategy recognizes the futility of bureaucrats attempting to dish out economic development incentives, and recommends a strategy of creating an environment favorable to all businesses of all sizes. In particular, research has shown that it is new, young firms that are the dynamic driver of growth and innovation, but economic development policies are slanted towards old, established firms.

    While it is refreshing to see the governor’s plan recognize the need for an environment that promotes dynamism, the plan still contains mechanisms for targeted economic development, including incentives to retain companies that threaten to leave Kansas. As for Wichita, city council members and bureaucrats yearn for “more tools in the toolbox.” The governor’s message hasn’t quite reached them.

    Are taxes and tax policy important? After a review of the literature, the Tax Foundation report concludes: “… the general consensus of the literature has progressed to the view that taxes are a substantial factor in the decision-making process for businesses.” But there are some authors who disagree.

    The state business climate index considers these factors: corporate taxes, individual income taxes, sales tax, unemployment tax, and property taxes. Kansas performs best on unemployment taxes, ranking 7th among the states. Our worst raking is 41st in property taxes. In sales tax, Kansas ranks 32nd, and this does take into account the statewide sales tax increase of one cent per dollar that started July 1.

    The report recognizes that taxes are only one of many factors that companies use when deciding where to locate facilities. Kansas’ low ranking means we can make large improvements in this area. If we don’t, we are likely to have to keep up our ad hoc approach to economic development, were we craft special deals under the conceited belief that we know which deals to make.

    The full report is available at the Tax Foundation by clicking on 2011 State Business Tax Climate Index. An introductory article is at Background paper: 2011 State Business Tax Climate Index (Eighth Edition).

  • Kansas Office of the Repealer now open

    Shortly after taking office, Kansas Governor Sam Brownback announced the “Office of the Repealer” which would look for unnecessary laws and regulations that should be repealed. Now the office has a website and is ready for business.

    In the press release announcing the availability of the website that citizens can use to make suggestions, Brownback said: “The top priorities of my administration are to grow the state’s economy and get the more than 110,000 unemployed Kansans back to work. With the help of Kansans, the Office of the Repealer is working to identify laws and regulations that are out of date, unreasonable, and burdensome. State laws and regulations shouldn’t hinder opportunities for Kansans and Kansas businesses.”

    Kansas Department of Administration Secretary Dennis Taylor is the Repealer. He said “My staff and I will run a cost-benefit analysis on each law or regulation that is submitted for review. The focus of the review will be on consumer protection. Laws picked for repeal will be sent to the originating body.”

    It is promised that Taylor and his staff will send a status update within 30 days of receiving a recommendation.

    The website for making suggestions is at Office of the Repealer. I’ve already made a suggestion, based on my article Kansas auto dealers have anti-competitive law on their side.

  • Because arts are important, government funding should be avoided

    Yesterday’s forum of Wichita City Council and mayoral candidates that focused on the arts found broad agreement among candidates and incumbents for continued funding of the arts by Wichita city government, according to Wichita Eagle reporting.

    The city has a dedicated one mill property tax levy dedicated to arts funding, and it generates about $3 million per year. Then a commission decides how to distribute the funds. This taxation and spending is said to be good for Wichita’s economy. But every special interest group produces economic impact studies that show that government spending on their projects has a magical “multiplier” effect that produces great amounts of wealth and prosperity. These are so commonly produced that they are meaningless. Every group that seeks public funds produces them.

    But besides this factor, 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, 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.

    Facing an intense lobbying effort by those seeking taxpayer funds for their special interests, the Kansas Senate last week overturned Governor Sam Brownback‘s order eliminating the Kansas Arts Commission. The KAC must still be appropriated funds if it is to survive, and if appropriated, it faces a potential line item veto by the governor.

  • Kansas Arts Commission survives

    Yesterday the Kansas Senate voted to overturn an order by Governor Sam Brownback to eliminate the Kansas Arts Commission.

    The governor had issued an Executive Reorganization Order to implement his goal. Either chamber of the legislature may then vote on a resolution objecting to the ERO. If such a resolution passes either chamber, the ERO is canceled, and that’s what happened. No action by the House of Representatives is needed.

    The vote in the Senate was 24 to 13, with three not voting. Wichita-area legislators voting to override the governor and save the KAC include Carolyn McGinn and Jean Schodorf. Voting against the KAC were Steve Abrams, Dick Kelsey, Ty Masterson, and Susan Wagle. Les Donovan did not vote.

    Going forward, the KAC has to be funded through appropriations each year just like any other agency or program. While it appears the Senate would be able to pass an appropriations bill with funding for the KAC — it received about $800,000 this year — the House is less likely to pass such an appropriation. In either case, the governor in Kansas has a line-item veto, which he could use on KAC funding.

    Politically, the passage of this resolution against the wishes of the governor is a reminder that there was an election in Kansas last year, but not for senators. (There are a handful of new senators due to resignations, but the new members seem largely aligned with the views of the senators they replaced, so the character of the body has not changed in a significant way.) It is commonly thought that voters sent a message last November that they want less government spending, not more. To that end, voters elected a governor that ran on a platform of fiscal conservatism, and many conservative members were elected to the House.

    The defeat of the governor’s plan is also a lesson in how entrenched special interest groups can become. Even in this case, where the amount of money is relatively small — some $800,000 from the state that generated another $1,200,000 from other sources — an intense lobbying effort was undertaken to save the KAC. This effort included the use of taxpayer-funded or state-owned resources such as the KAC website and KAC staff time to lobby the legislature for money.