Subsidy

What to do with others’ money

Writing from Pittsburgh, Pennsylvania In a June 20, 2006 Wichita Eagle editorial, Rhonda Holman writes about the WaterWalk project in Wichita. Evidently there is controversy over the public not knowing the name of the "destination restaurant" that is being courted and favored with a gift of $1 million. To me, the controversy is not the identify of the restaurant or when and how the city should conduct its negotiations, but that we are paying for a restaurant to be built. We are not lacking for fine restaurants in Wichita. On both the east and west sides of town (and other…
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The AirTran subsidy and its unseen effects

Writing from Natchez, Mississippi In a June 16, 2006 column, Wichita Eagle editorial writer Rhonda Holman again congratulates local and state government for its success in renewing the AirTran subsidy, and for getting the entire state of Kansas to help for it. We should take a moment to understand, however, that while the allure of the subsidy is undeniable, it may eventually extract a high price on Wichita. Currently, the legacy airlines provide service to Wichita and other small markets partly because they feel a duty to provide comprehensive, nationwide service. But that may be changing. In an article titled…
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Arts funding in Wichita produces controversy

As local government tries to decide which arts and cultural institutions are to receive government funds, controversy arises. A June 8, 2006 Wichita Eagle article titled "Arts panel biases alleged" tells how some funding applicants are upset that some of the members of the funding committee have ties to organizations that also applied for funds. In an editorial titled "Let Arts Funding Work" published in the June 10, 2006 Wichita Eagle, Rhonda Holman writes "The process may not be perfect, but it's a precious opportunity for public dollars to be invested in the arts and attractions in a merit-based way…
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As expected, price controls harm Wichita travelers

Writing from Tallahassee, Florida As reported in the Wichita Business Journal on May 12, 2005: "The average number of daily departures dropped to 45 in March 2006 from 54 in March 2005." The effect of the AirTran subsidy is to reduce the price of airfare to and from Wichita. That is its stated goal. If the subsidy did not work to reduce prices, we would be wasting our money. The fact is that the subsidy does work to reduce airfares to and from Wichita. It also does what any economist could predict: it reduces the supply of air transport to…
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AirTran subsidy is harmful

(This is a longer version of my opinion piece that appeared in The Wichita Eagle last week.) From the beginning, we in the Wichita area have been told each year that the AirTran subsidy was intended as a temporary measure, that soon AirTran would be able to stand on its own, and there will be no need to continue the subsidy. Mayor Mayans said as much last year, and so did City Manager Kolb this year. But State Senator Carolyn McGinn, R-Sedgwick, on a recent television program, may have made a revealing slip when she referred to the AirTran subsidy…
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The Mississippi beef plant has a lesson for us

Writing from Jackson, Miss. Jackson, Mississippi has a lively talk radio station, WJNT, featuring both local shows and national shows. The hot topic of discussion on my trip to this city was what to do with the MCI settlement money, as the state had just negotiated a settlement with MCI of $100 million, for taxes MCI owed. Some callers (and perhaps the host) suggested that the state use this money to pay for the "beef plant." I was curious as to what this meant. Why, I wondered, would Mississippi be paying for a beef packing plant? After a little research…
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Wichita City Council Meeting, April 19, 2005

Some quotes and my remarks from the April 19, 2005 meeting of the Wichita City Council, where the AirTran subsidy was considered. Representatives from Delta attended and spoke. Allen Bell, Economic Development Director for the City of Wichita: Previous contracts had a dollar amount cap on them. The new contact, we refer to it as a no-cap contract. There is not, in the terms of the agreement, a specific dollar amount that is the not-to-exceed amount. In place of that there is a termination clause that allows the City to terminate its contract with 75 days notice for whatever reason.…
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Wichita Eagle Says “AirTran Subsidies Foster Competition”

In an editorial in The Wichita Eagle published on April 19, 2005, Randy Scholfield writes: "Wichita should stick to its subsidies. They're fostering competition, not stifling it, and paying off big-time for the community by lowering airfares and boosting economic development." Competition, if it is to be meaningful, needs to be fair. It is not fair when one participant has a huge head start in the form of a government subsidy. The Eagle recognizes this when it suits their purpose. When endorsing Sam Brownback for reelection, this newspaper said "He includes in the former his stepped-up fight against the European…
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AirTran Subsidy Remarks

Following are remarks I am delivering to several groups, including the Wichita City Council, in April 2005. AirTran Subsidy is Moving in Wrong Direction We were persuaded to accept the AirTran subsidy in 2002 as a temporary measure, to allow AirTran to build a presence here, and that the subsidy would no longer be needed at some time. But now we see that the situation is moving in the opposite direction, as AirTran asks for even a larger subsidy. Economic Impact Overstated The argument that many Fair Fares supporters make is flawed. They are grossly -- I would say even…
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The downside of Being the Air Cap

Harry R. Clements of Wichita contributed this article, which is a summary of a larger study he performed. Click here to read the full study in pdf format. Mr. Clements's article makes a striking conclusion as to why airfares in Wichita were so high. I would be curious as to whether any of our government leaders have read the study. We should also ask why our government leaders are not performing research like this when they propose to spend large sums of taxpayer money. Wichita State's Center for Economic Development and Business Research recently placed a guest article of mine…
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