Voice For Liberty

Tag: Wichita city government

  • Wichita migration not improving

    Wichita migration not improving

    Data from the United States Census Bureau shows that the Wichita metropolitan area has lost many people to domestic migration, and the situation is not improving.

    The Wichita metropolitan area population is growing, but at a rate slower than most metro areas. From 2010 to 2017, the Wichita metro area grew in population by 2.3 percent. For all U.S. metro areas, the population growth was 6.5 percent. Of the 382 metropolitan areas, Wichita ranked 245.

    Considering just the change from 2016 to 2017, Wichita’s population grew by 0.1 percent, ranking 268 of the 382 metro areas. All U.S. metro areas grew by 0.8 percent over the same period.

    For net domestic migration, Wichita experienced a loss of 2.9 percent of its population from 2010 to 2017. This ranked 295 among metro areas. For 2016 to 2017, Wichita lost 0.5 percent, ranking 293, nearly unchanged from the larger earlier period.

    This slow population growth and out-migration is happening at the same time Wichita-area leaders tell us that we have great momentum going forward. But the data — domestic migration, employment, gross domestic product, and personal income — don’t support what our leaders tell us.

    I get it: We want to be optimistic about our future. But a false optimism is dangerous. It makes us complacent, even proud, when actual accomplishments don’t support that. We may be led to believe that what our leaders are doing is working, when it isn’t working. That is dangerous.

    Politicians and bureaucrats can’t be trusted to be frank and truthful about this. They want to be reelected and keep their jobs. Their actions let us know they value their jobs more than the prosperity of Wichitans.

  • Wichita employment to grow in 2019

    Wichita employment to grow in 2019

    Jobs are forecasted to grow in Wichita in 2019, but the forecasted rate is low.

    The forecast for Wichita metro area employment in 2019 calls for modest growth of 0.9 percent, according to the Center for Economic Development and Business Research at Wichita State University. 1 This follows growth of 0.8 percent in 2018. 2

    Nationally, the economy is expected to continue strong growth. 3

    The nearby chart illustrates that since the end of the last recession, job growth in Wichita has been below job growth in the nation as a whole. Generally, job growth in Wichita has been at about half the rate of the nation. In 2017, Wichita lost jobs.

    Click for larger.

    Of Wichita job growth in 2018, the CEDBR forecast notes, “This marked a return to the level of growth experienced in the Wichita area from 2012 to 2016, after experiencing a contraction in overall employment in 2017.” The average annual rate of job growth for those years in Wichita was 0.83 percent. It was 1.82 percent for the nation, which is 2.2 times the rate for Wichita.

    CEDBR also notes, “Wichita’s unemployment rate declined throughout 2018 to a low of 3.5 percent in October 2018, the lowest unemployment rate for the area since 1999.” We should note that this decline is primarily due to a declining labor force in Wichita, rather than robust job growth.

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    Notes

    1. Center for Economic Development and Business Research at Wichita State University. Wichita Employment Forecast. January 8, 2019. Available at http://www.cedbr.org/forecast-blog/forecasts-wichita/1558-economic-outlook-wichita-2019-january-revision. ↩
    2. Employment figures are not available for December 2018, so I use a crude estimate for that month. ↩
    3. Minutes of the Federal Open Market Committee. December 18-19, 2018. Available at https://www.federalreserve.gov/monetarypolicy/fomcminutes20181219.htm. ↩
  • Wichita employment, November 2018

    Wichita employment, November 2018

    For the Wichita metropolitan area in November 2018, jobs are up, the labor force is up, and the unemployment rate is down, compared to the same month one year ago. Seasonal data shows a slowdown in the rate of job growth.

    Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving employment situation for the Wichita Metropolitan Statistical Area.

    Total nonfarm employment rose from 296,700 last November to 302,200 this November. That’s an increase of 5,500 jobs, or 1.9 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, jobs in the nation grew by 1.6 percent.

    The unemployment rate was 3.2 percent, down from 3.6 percent one year ago.

    Considering seasonally adjusted data from the household survey, the labor force rose by 391 persons (0.1 percent) in November 2018 from October 2018, the number of unemployed persons fell by 8 (0.1 percent), and the unemployment rate was unchanged at 3.5 percent. The number of employed persons not working on farms rose to 298,749 in November from 298,350 the prior month, an increase of 399 persons, or 0.1 percent.

    Click charts for larger versions.

  • Starlite loan isn’t needed

    Starlite loan isn’t needed

    The Wichita City Council seems poised to enter an unnecessarily complicated transaction.

    This week the Wichita City Council will consider a loan to the operator of the Starlite Drive-In Theater in Wichita. According to city documents, the proposal is for a five-year loan of $200,000 with an annual interest rate of one percent. The city is requiring both a personal guarantee and a letter of credit, presumably from a reputable bank. 1

    We have to wonder why the city asks for both a letter of credit and a personal guarantee. When issuing a letter of credit, a bank will be careful. It is, in effect, making a promise to issue credit to a borrower (the operator of the Starlite) if the borrower does not perform according to the agreement with the city. That alone ought to be enough security.

    Moreover, if a bank has enough confidence in a customer to issue a letter of credit for $200,000, it would probably make a loan for the same amount. But that would cost more than one percent in interest.

    This is really what the city is doing: Reducing the cost of a loan that a borrower ought to be able to obtain on his own.

    Given this, why doesn’t the city simply subsidize the interest cost of the loan? I don’t know what rate a bank would charge this borrower, but it might be 12 percent or so. Then the borrower would have interest costs of $24,000 per year as compared to $2,000 per year for the City of Wichita loan. If the city would simply pay the borrower the difference between the two, things would be much simpler for the city. It wouldn’t have to worry about the loan being repaid.

    Well, the city shouldn’t have to worry about repayment, because of the letter of credit. But if the borrower qualifies for that, he can also qualify for a loan.

    There are other reasons why the city shouldn’t get involved in the Starlite theater, but if it must, let’s try to keep things simple. Based on what we know so far, I don’t think we’re being told the entire story.

    Further evidence of lack of transparency is that this matter has been elevated to an emergency. According to city documents, the mayor will make this declaration regarding the enabling ordinance: “I, Jeff Longwell, Mayor of the City of Wichita, Kansas, hereby request that the City Council declare that a public emergency exists requiring the final adoption and passage on the day of its introduction, to wit, December 18, 2018 …” 2

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    Notes

    1. “The $200,000 loan from the City will be structured to be repaid over five years as an interest only loan with an interest rate of 1% per annum, with quarterly interest payments for the first four years. The borrower will pay one-twelfth of the principal amount plus interest in each month of year five. The borrower is Blake Smith through Starlite, LLC, a Kansas limited liability company. Smith will provide the City with a personal guarantee as well as a letter of credit securing the entire loan. The letter of credit will be structured as a declining letter of credit. If any principal amount of the loan is prepaid, the letter of credit can be reduced by an equal amount. For instance, if $25,000 is paid at the end of year one, the letter of credit may be reduced to $175,000, the remaining balance of the loan.” City of Wichita, Agenda Packet for December 18, 2018. Item V-5. ↩
    2. REQUEST FOR DECLARATION OF EMERGENCY
      REQUEST OF THE MAYOR OF THE CITY OF WICHITA, KANSAS, FOR THE DECLARATION BY THE CITY COUNCIL OF SAID CITY OF THE EXISTENCE OF A PUBLIC EMERGENCY REQUIRING THE ADOPTION OF AN ORDINANCE BELOW DESIGNATED.
      TO THE MEMBERS OF THE CITY COUNCIL OF THE CITY OF WICHITA, KANSAS:
      I, Jeff Longwell, Mayor of the City of Wichita, Kansas, hereby request that the City Council declare that a public emergency exists requiring the final adoption and passage on the day of its introduction, to wit, December 18, 2018 of an ordinance entitled:
      ORDINANCE NO. _____
      AMENDMENTS TO ORDINANCE 50-585 OF THE CITY OF WICHITA, KANSAS, PERTAINING TO HYATT GRANT PROCEEDS FOR COMMUNITY IMPROVEMENT PROJECTS, GRANTS AND GRANT PROGRAMS
      The general nature of such public emergency lies in the need to pass and publish this ordinance to authorize the release of funds for the purchase of special digital projection equipment and for costs related to its installation for Wichita’s Starlite Drive-In, which was recently purchased by an anonymous buyer to prevent its closure.
      It is therefore expedient at this time that the City Council find and determine that a public emergency exists by reason of the foregoing and that the above entitled Ordinance be finally adopted on the day of its introduction.
      Executed at Wichita, Kansas on this day of December 18, 2018.
      MAYOR OF THE CITY OF WICHITA, KANSAS. ibid. ↩
  • Sedgwick County tax exemptions

    Sedgwick County tax exemptions

    Unlike the City of Wichita, Sedgwick County has kept track of its tax exemptions.

    As part of an effort to increase efficiency and management of Sedgwick County government, former county manager Michael Scholes implemented numerous changes, as detailed in the document Efficiencies in Sedgwick County government. One management accomplishment was described as this:

    Developed a tax system and business intelligence query to identify Industrial Revenue Bonds (IRB) & Economic Development (EDX) tax exemptions and report foregone property tax revenues for Governmental Accounting Standards Board (GASB) 77 reporting. The report provides the ability to report by tax authority, company, and real or personal property for one (1) or up to four (4) years. Prior reporting was time consuming and error prone; requiring manual data entry into Excel spreadsheets.

    The county has not made this report available on its website. To access this report in an alternative manner, click here

    The City of Wichita, to my knowledge, does not provide information like this, except as a total amount in the city’s Comprehensive Annual Financial Report (CAFR). (The city and county numbers are not in agreement, and by a large amount.)

    Of note, the mayor’s page on the Wichita city government website holds this: “Mayor Longwell has championed many issues related to improving the community including government accountability, accessibility and transparency …” So far, the mayor’s leadership and stewardship has not produced this level of information.

    Of further note, a majority of the Sedgwick County Commission decided to fire Michael Scholes.

  • On big contracts, Wichita has had problems

    On big contracts, Wichita has had problems

    As Wichita prepares to award a large construction contract, let’s hope the city acts in an ethical manner this time.

    As the Wichita City Council prepares to make a decision regarding a contract for the new baseball stadium, the council’s past reputation in these matters can’t be overlooked.

    The controversy over the stadium contract has been covered by the Wichita Eagle: “The Wichita City Council hasn’t officially approved a design-build team for the city’s new $75 million Minor League ballpark, but there’s already been a protest over the recommended group. … At issue in a protest by a competing team is whether the JE Dunn team meets a key requirement to be selected, which is that it has built at least three similar Major or Minor League ballparks.” 1

    The biggest potential for unethical behavior comes from Wichita Mayor Jeff Longwell. In 2012, as the Wichita city council was considering the award of the contract for the new airport terminal, Longwell (then a council member) received campaign contributions from executives of Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal. 2

    Two Walbridge contributions were made on July 16, 2012, the day before the council, Longwell included, voted to award the contract to the Key/Walbridge partnership. More contributions from Walbridge arrived on July 20, according to Longwell’s campaign finance reports.

    When questioned about the Michigan contributions, Longwell told the Wichita Eagle, “We often get contributions from a wide variety of sources, including out-of-town people.” But analysis of past campaign finance documents filed by Longwell showed just three out-of-state contributions totaling $1,500. 3

    In deciding the airport contract issue, the council was asked to make decisions involving whether discretion was abused or whether laws were improperly applied. It’s not surprising that Jeff Longwell made these decisions in favor of his campaign contributors. But he shouldn’t have been involved in the decision.

    That was not the first time Jeff Longwell has placed the interests of his campaign contributors ahead of taxpayers. In 2011 the city council, with Longwell’s vote, decided to award Key a no-bid contract to build the parking garage that is part of the Ambassador Hotel project. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

    It’s not only Longwell with problematic behavior in the past. In 2012, before the vote on the airport contract, executives of Key Construction and spouses contributed heavily to the campaigns of both Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) and Wichita City Council Member James Clendenin (district 3, southeast and south Wichita). These contributions were not known to the public until months after the vote was cast.

    Williams is no longer on the council, but Clendenin remains.

    Former Wichita Mayor Carl Brewer had his own issues, with a curious set of ethics principles. 4

    The city needs an adult in the room. That person is, or should be, Wichita city manager Robert Layton. In the past he has implemented policies to end the practice of no-bid contracts. We don’t know what will happen this week.

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    Notes

    1. Rengers, Carrie. City selects ballpark design-build group; competing bidder questions qualifications. Wichita Eagle, November 29, 2018. Available at https://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article222372330.html (subscription may be required). ↩
    2. “A campaign finance report filed by Wichita City Council Member Jeff Longwell contains contributions from executives associated with Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal. … These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.” Weeks, Bob. Michigan company involved in disputed Wichita airport contract contributes to Jeff Longwell. Available at https://wichitaliberty.org/wichita-government/michigan-company-involved-in-disputed-wichita-airport-contract-contributes-to-jeff-longwell/. ↩
    3. “Analysis of Longwell’s July 30, 2012 campaign finance report shows that the only contributions received from addresses outside Kansas are the Walbridge contributions from Michigan, which contradicts Longwell’s claim. Additionally, analysis of ten recent campaign finance reports filed by Longwell going back to 2007 found three contributions totaling $1,500 from California addresses.” Weeks, Bob. Jeff Longwell out-of-town campaign contributions. Available at https://wichitaliberty.org/wichita-government/jeff-longwell-out-of-town-campaign-contributions/. ↩
    4. Weeks, Bob. The odd ethics of Wichita Mayor Carl Brewer. Available at https://wichitaliberty.org/wichita-government/odd-ethics-wichita-mayor-carl-brewer/. ↩
  • It’s not the bonds, it’s the taxes

    It’s not the bonds, it’s the taxes

    A Wichita Eagle headline reads “Wichita aircraft supplier plans 45 new jobs with $7.5 million bond request,” but important information is buried and incomplete.

    According to the agenda packet for the December 4, 2018 meeting of the Wichita City Council, a local aircraft supplier is “requesting issuance of bonds” worth $7.5 million. 1

    Even if you read the entire Wichita Eagle article2 on this matter, you wouldn’t really learn much about this item. You might think the city is lending the company this money, which many people assume is the purpose of the Industrial Revenue Bonds program. But in the IRB program, the city lends no money, nor does it guarantee repayment of the bonds. 3

    Instead, the purpose of the IRBs is to convey a tax holiday. In the very last paragraph, the article mentions this property tax abatement, but no dollar value is given, even though the “city documents” presumably used as a source for this story clearly state the dollar values. The sales tax exemption is also mentioned, with no dollar value given. City documents don’t hold that, either.

    The value of the tax holiday, according to the city, is estimated at $82,040 annually for up to ten years, shared among local taxing authorities thusly:

    City of Wichita: $22,837
    State of Kansas: $1,050
    Sedgwick County: $20,575
    USD 259 (Wichita school district): $37,578

    For the value of the sales tax exemption, no value is given. By city documents state the purpose of the bonds is to pay for “$4,000,000 for new machinery and equipment.” Sales tax on that would be $300,000. If the entire $7.5 million is spent on taxable purchases, sales tax savings would be $562,500.

    Why doesn’t the Wichita Eagle mention some of these important matters?

    The article also holds no mention of the important public policy issues involved. For example, why does the owner of the business want to escape paying the same taxes that (nearly) everyone else must pay? This question is especially pertinent as Kansas is one of the few states in which even low-income households pay the full sales tax rate on groceries.

    Perhaps the reason is that the cost of government makes this investment unprofitable. If that is true, we have a grave problem. If the city must issue bonds and create a tax holiday for this rather small investment, we have a capacity problem. A reader on Facebook left this wry comment to the Eagle story: “So, local area population 600,000+ people … About to add 45 jobs over 5 years?”

    The city justifies tax giveaways like this by using a benefit-cost analysis. That is, if the city gives up some taxes, it will receive even more in additional taxes. This analysis is useful to politicians and bureaucrats. But the analysis is valid and meaningful only if the investment is impossible without the tax giveaway.

    The question then becomes: Is this tax forgiveness necessary? City documents don’t say. Showing necessity is not a requirement of the IRB incentive program. We’re left wondering if the tax expenditure, which is potentially more than one million dollars over ten years, is truly needed.

    The city is proud of its requirements that the benefit-cost ratio must be at least 1.3 to 1. But for USD 259, the Wichita school district, the ratio is 1.17 to 1. So the city is pushing an “investment” on the school district that is below the standard it requires for itself. The school district has no say in the matter, based on Kansas state law. Note also that the school district gives up the most tax revenue, 1.6 times as much as the city.

    By the way, Wichita Mayor Jeff Longwell says the city is no longer using cash as economic development incentives. But when the city waves a magic legislative wand and says you don’t have to pay $82,040 per year in property tax, how is that different than giving the same amount in cash? Or when the city says don’t bother paying the sales tax on this, how is that different than giving a cash discount?

    The answer is there’s no difference. The mayor, city council members, and city bureaucrats hope you won’t notice the sleight of hand, that is, skillful deception. And with the Wichita Eagle being the watchdog, there’s little chance very many people will be informed.

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    Notes

    1. City of Wichita, agenda for December 4, 2018. V-2: Public Hearing and Issuance of Industrial Revenue Bonds, Etezazi Industries, Inc. Available at http://www.wichita.gov/Council/Agendas/12-04-2018%20Agenda.pdf. ↩
    2. Siebenmark, Jerry. Wichita aircraft supplier plans 45 new jobs with $7.5 million bond request. Wichita Eagle, November 30, 2018. ↩
    3. “Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to avoid paying property and sales taxes.” Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/. ↩
  • Sedgwick County income and poverty

    Sedgwick County income and poverty

    Census data show Sedgwick County continuing to fall behind the nation in two key measures.

    Data released today from the United States Census Bureau through the Small Area Income and Poverty Estimates (SAIPE) Program shows Sedgwick County median household income continues to fall farther behind the nation.

    In 1989, median household income in Sedgwick County was greater than that for Kansas and the nation. In 2017, however, Sedgwick County has fallen behind both.

    In 1989, the all-age poverty rate in Sedgwick County was less than the national rate, but now it is higher.

    As can be seen in the nearby charts produced by the Census Bureau’s visualization tool, the trend in economic performance between Sedgwick County and the nation started diverging around the time of the last recession. As time passes, the gap between the two generally grows larger, with Sedgwick County falling farther behind.

    Courtesy U.S. Census Bureau. Click for larger.
    Courtesy U.S. Census Bureau. Click for larger.
  • Wichita employment, October 2018

    Wichita employment, October 2018

    For the Wichita metropolitan area in October 2018, jobs are up, the labor force is up, and the unemployment rate is down, compared to the same month one year ago. Seasonal data shows a slowdown in the rate of job growth.

    Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving employment situation for the Wichita Metropolitan Statistical Area.

    Total nonfarm employment rose from 296,900 last October to 299,000 this October. That’s an increase of 2,100 jobs, or 0.7 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, jobs in the nation grew by 1.7 percent.

    The unemployment rate was 3.3 percent, down from 3.5 percent one year ago.

    Considering seasonally adjusted data from the household survey, the labor force rose by 719 persons (0.2 percent) in October 2018 from September 2018, the number of unemployed persons rose by 283 (2.7 percent), and the unemployment rate was unchanged at 3.5 percent. The number of employed persons not working on farms rose to 298,219 in October from 297,783 the prior month, an increase of 436 persons, or 0.1 percent.

    Click charts for larger versions.