Voice For Liberty

Tag: Wichita city government

  • New Wichita water plant

    New Wichita water plant

    Next week the Wichita City Council will consider a major step in proceeding with a new Wichita water plant.

    The central water plant in Wichita is old, and the city has been planning a new plant. The new facility is called the Northwest Water Treatment Facility (NWWTF). Much information is available in the agenda packet for the July 10, 2018 city council meeting.

    The city plans to issue a letter of interest (LOI) to apply for a Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) federal loan for up to 49 percent of the project cost, which at this time is estimated as $524,200,000.

    The Environmental Protection Agency says that “Based on the information provided in the letter of interest, EPA will invite selected prospective borrowers to submit an application for WIFIA credit assistance.” This will not be the first time the city has attempted to use this financing source, according to city documents: “The City submitted a WIFIA LOI in 2017 but was not invited to apply.”

    For the balance of the financing, the city says it intends to apply for a loan from the Kansas State Revolving Loan Fund (SRLF). The advantage to using these government financing sources, says the city, is “Both programs offer low, fixed interest rates and have less expensive financing costs compared to traditional revenue bonds. Repayment of WIFIA is not required until five years after construction is completed and repayment of SRLF begins two years after the first disbursement is received. The delayed repayment allows rates to be smoothed over time to minimize customer impacts, and the low cost of financing keeps the overall project cost down.”

    Of note, the city intends to use an acquisition process that is different from the usual:

    City staff have analyzed different project delivery methods and determined that a Hybrid DBo is the most beneficial approach. It pairs the lowest cost source of financing, which is available exclusively to the City, with the cost containment and project quality that can be delivered under a public-private partnership. This expertise also provides value-added engineering and access to advanced technologies that may lower total project costs. The key to getting the best of both approaches is to hire a Construction Management company with expertise in constructing similar treatment facilities. The City will also issue an RFP to select a Construction Management company that will oversee the selected DBo team.

    In the LOI to the EPA, the city included this:

    The City has considered and evaluated multiple project delivery approaches, including a range of possibilities from traditional design-bid-build to full privatization through a design-build-own- finance-operate and maintain model. Through these deliberations, the City has concluded that design-build with short-term operations presents the least risk and highest value. The City refers to this delivery approach as DBo, in which the operations component is a relatively short term of up to 5 years, including transitioning operations to the City. The City has selected a DBo approach for the following reasons:

    • Accelerated project delivery by overlapping design, permitting, and equipment procurement tasks (see Attachment 6, Project Schedule).
    • Optimal risk allocation by assigning risk to the party or parties that can best control those risks (see Table A-1).
    • Early cost certainty.
    • Highest value for money derived by leveraging the experience and capability of the designer, builder, and operator to achieve the optimal balance of capital and lifecycle costs.
    • Ability to “staff up” through the use of a contract operator during startup and commissioning of the NWWTF.
    • Ability to prepare for transition to City operation through robust training of the City’s operations leadership.
    • Ability to “staff down” once the City’s own operations forces are trained and available

    Wichita water users need to follow this process carefully. The ASR project — a $247 million Wichita water project — has been underperforming by a large amount.

  • Project Wichita survey

    Project Wichita survey

    The Project Wichita survey is about to end. Will it have collected useful data?

    Project Wichita is “a community engagement process to identify the future we want for our home and the steps necessary to achieve it.” 1 So far it has held focus groups that collected ideas for the future of Wichita, in which “an astounding 3,800+ people 2 shared their vision in 239+ focus groups,” according to the project’s Facebook page. The survey, which is ending on July 6, is another component of the “listen” phase of the project, with “focus” and “share” phases still to come.

    The survey may be taken on-line or by paper. The online survey is implemented as a number of pages, each concerning a topic. The first page is titled “Vision for Our Region: Please indicate your level of agreement with the following for developing a vision for the Wichita region. Our region should be a place that:” Following are several items like “all children have the chance to succeed.” Respondents are asked to select one of these responses for each item:

    • Strongly Disagree
    • Disagree
    • Undecided
    • Agree
    • Strongly Agree

    The second page is titled “Strong Neighborhoods. Please indicate the importance of investing resources (time, human resources, money) in the following for developing and supporting safe and strong neighborhoods throughout our region.” A sample item is “Repair deteriorating homes to improve neighborhoods.” Respondents may choose from these responses:

    • Not important investment
    • Slightly important investment
    • Moderately important investment
    • Very important investment
    • Essential investment

    There is no opportunity to answer in any way other than these responses. There is no possibility of leaving a comment.

    The question of the importance of investment continues with slight variation for six more pages on these topics:

    • Economic Advantage and Opportunity
    • Transportation
    • Cultural Arts
    • Attractions and Entertainment
    • Education; Community Wellness
    • Wichita Riverfront and Downtown Development

    Then a page titled Regional Perspectives: “Please tell us your thoughts about the following regional questions” where participants are asked to indicate their degree of agreement or disagreement with the following:

    • I think an increase in population would make the Wichita region thrive.
    • I am optimistic about the future of the Wichita region.
    • I think the Wichita region has to be willing to change to keep and attract the next generation.

    Then there are some demographic questions.

    Problems

    First, the responses that the project will collect are from a self-selected group of respondents. There is no way to guarantee or know that the respondents are a representative sample of area residents. The focus groups had the same problem. This has been a problem with Wichita’s outreach in the past. In 2014 the city was quite proud of its engagement and positive response regarding the proposed city sales tax. Then, on election day, 62 percent of voters said no. 3 (Of course, those who vote are also a self-selected group of respondents. On the sales tax question, 103,290 people cast a vote. 4 For that year, the Census Bureau estimated there were 283,780 people of voting age in Wichita. 5 So 36.4 percent of the eligible voters made the decision for the rest, voters and non-voters, and also for those too young or ineligible to vote. But when we ask to settle issues by voting, voters are the people who make the decisions.)

    Another problem has to do with the preface to the many questions asking about the importance of making investments in various things. What is missing is whose resources are to be invested? Yours? Mine? Someone we don’t know?

    Related is that almost all the items participants are asked to rate are things that almost everyone agrees are good. Who could not strongly agree with investing so that “all children have the chance to succeed?” I suppose that some people might select “Very important investment” instead of “Essential investment” for some items. That might produce a shade of difference in the importance of items.

    What would really be useful, however, is asking participants to rank the importance of investing in each item, from most important to least important, with no ties allowed. Instructions might be worded like “Rank the importance of investing in the following five areas. 1 is the most important investment, while 5 is the least important. You must assign a rank to each item, and there may be no ties.”

    Then, to make things really useful: Ask participants to produce rankings for the importance of public sector investment, and separate rankings for the importance of private sector investment.

    Understanding and distinguishing the difference between public and private investment is vital. When people believe that others will be paying, there is no limit to what people want. Milton Friedman knew this: “When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else’s money to buy something for himself, he is very careful about what he buys, but doesn’t care at all how much he spends. And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.” (For more, see Friedman: The fallacy of the welfare state.)

    People recognize this. Remarks left on Facebook on the Project Wichita page 6 included this by one writer:

    Just took survey! One would think “they” want to convert Wichita or Kansas to socialism. I’m a liberal conservative Democrat and yet questions are very concerning and disturbing.

    Following up, the same person wrote:

    Applaud the effort however many of the questions concerning me as it relates to governments role in community and well-being of such. … At what point should community and individuals be primarily responsible for many of the topics you address in your survey?

    Another Facebook user wrote:

    Your survey is great but you left out a very important piece of information. WHO is going to provide the money for the investments that are queried in your survey? A lot of areas need investment of funds but, those funds should come from the private sector, not public sector. As a result of the inability to discern a difference in the source of required investments, the survey is somewhat useless.”

    Yet another from Facebook:

    Each of your questions should be followed by the question, “How much are you personally willing to pay for this line item” or “Which government service should be eliminated to pay for this line item”. Your list will get quite short when people are asked to spend their own money rather than other people’s money.

    These basic defects preclude this effort as being serious social science research. Yet, that is likely how it will be presented, especially since a university agency is involved.

    Of note: Project Wichita has no official opinion as who should pay for these investments. Cynics — that is, realists — believe that programs like Project Wichita are designed to convince citizens to support increased taxes or debt issues to be repaid with future taxes, with those future taxes undoubtedly higher.

    One reason for this suspicion is that portions of the Project Wichita process are being managed by Wichita State University’s Public Policy and Management Center. 7 Its director and its associated academics have a clear preference for higher taxes, at one time writing a paper advising cities to create “more willing taxpayers.” 8

    Other people and companies that Project Wichita identifies as part of the “Vision Team” (or “funders”) also made large contributions to the campaign for a Wichita City sales tax in 2014:

    • Allen Gibbs & Houlik, L.C.
    • Jon Rolph and his company Sasnak
    • The Chandler family and Intrust Bank
    • GLMV Architecture
    • Emprise Bank
    • Spirit Aerosystems
    • Commerce Bank
    • Equity Bank
    • Cox Machine
    • Westar Energy
    • Professional Engineering Consultants
    • Star Lumber
    • Bothner & Bradley and its principals
    • Envision
    • Lubrication Engineers
    • Jeff Fluhr, head of Downtown Wichita and now also Greater Wichita Partnership

    Some of these companies regularly receive economic development incentives from the City of Wichita or do business with the city. Some are subject to the city’s regulations such as zoning and permitting.

    It’s difficult to digest all this without concluding that Project Wichita project is designed to develop a case — an appetite — for higher taxes. That’s even before realizing that the driving force behind Project Wichita — according to word on the street — is Jon Rolph, who was the chair of the campaign for the Wichita city sales tax in 2014. Further, Project Wichita is sharing offices with the Greater Wichita Partnership and Downtown Wichita, two organizations always in favor of the expansion of government.

    Individual questions

    Besides general problems with the survey instrument, there are these problems with individual items:

    “Improve the current public transit system (e.g. expand routes, expand hours).” There may be support for spending public funds on this, even if it means raising taxes. This was one of the uses for the proposed Wichita city sales tax in 2014. It was bundled with other items, and voters defeated the tax.

    “Make flights from Wichita Eisenhower National Airport more affordable.” We’ve spent a lot doing this. The city and the airport say the programs have been successful.

    “Increase direct flights from Wichita Eisenhower National Airport.” This is an area that could use improvement. The number of departures and the number of available seats on departing flights has been underperforming the nation, despite much investment in the forms of tax-funded subsidies for airlines. There is also a new airport terminal.

    “Offer more diverse entertainment options (e.g. music festivals, restaurants, theme parks).” There are many people trying to figure out what type of restaurants are wanted in Wichita, and where. These people are motivated by profit. It’s difficult to believe that government could do a better job of deciding upon, and operating, restaurants.

    “Support entrepreneurial opportunities.” There is an organization doing this, e2e. More broadly, when the city offers economic development incentives, it makes it harder for young, entrepreneurial companies to survive as they must bear the cost of incentives and compete with incentivized companies for labor and capital. 9

    Under education, a topic that is glaringly omitted is school choice. Parents like having the possibility of school choice, especially parents who can’t afford private school tuition. Plus, school choice, like charter schools, could help control “sprawl,” something that is often seen as a negative factor. If parents who want to live in central Wichita could have access to school choice in nearby schools, it might counter the commonly-held perception that if you want good schools for your children, you must buy a home outside the Wichita school district.

    “Provide modern performing arts center (e.g. symphony, music theater, opera) that meets the region’s needs.” and “Provide a modern convention center that attracts more conventions and events.” These are topics that Wichita will likely be grappling with soon, and in a real way. Wichita has already hired a consultant to study this issue. (More information is at Century II resource center.) A task force is studying the issue. Soon, it is quite likely that residents of Wichita or Sedgwick County may be asked to approve a sales tax to fund a convention center and possible a performing arts center. Or, citizens suffer the implementation of Design Build Finance Operate and Maintain (DBFOM), or P3. In this model as applied to Wichita, a third party would do all the work of designing, financing, building, and operating a convention center and possibly a performing arts center. Then, the city simply pays a fee each year to use the center, called an “availability payment.” This is simple a way to disguise long-term debt. See Wichita about to commit to more spending. Bigly. for more about this.

    Cynics — that is, realists — believe that programs like Project Wichita are designed to convince citizens to support these taxes or debt issues. (By the way, the convention center business is a poor way to build a city’s economy. See Should Wichita expand its convention facilities?.)

    —
    Notes

    1. Project Wichita. Available at https://www.projectwichita.org/. ↩
    2. With the population of the city of Wichita at about 388,000, (U.S. Census Bureau. 2012-2016 American Community Survey 5-Year Estimates), nearly one percent participated. ↩
    3. Sedgwick County Election Office. Available at https://www.sedgwickcounty.org/elections/election-results/2014-general/. ↩
    4. Ibid. ↩
    5. U.S. Census Bureau. 2010-2014 American Community Survey 5-Year Estimates. ↩
    6. Available at https://www.facebook.com/ProjectWichita/. ↩
    7. “Volunteers wanted the regional 10-year vision and action plan Project Wichita process to include big discussions from as many people as possible. So Wichita State University’s (WSU) Public Policy and Management Center team built a custom process for gathering input across the region. The process includes focus groups with individuals and organizations, gathering feedback at diverse community events, online surveys and robust social media engagement.” Project Wichita. Process. Available at https://www.projectwichita.org/process. ↩
    8. Misty Bruckner is the Director. A few years ago Brucker she and her colleagues co-authored a paper titled “Citizen Attachment: Building Sustainable Communities. See http://www.gfoa.org/sites/default/files/GFR_OCT_10_24.pdf. My reporting on it was titled Wichita needs more, and willing, taxpayers. An excerpt: “Increasingly, citizens are retreating from their responsibilities to community and demanding more from government than they are willing to pay for. But changes in local government behavior can be instrumental in reversing this trend, by strengthening citizens’ commitment to the well-being of their communities. Citizens who are committed to community are more willing to accept responsibility for the well-being of their fellow citizens and are also more likely to join with government and other parties to improve their communities. Citizens who are committed to community are also more willing taxpayers — that is, when government demonstrates that it can be trusted to invest public resources in ways that strengthen the community. The central thrust of this model is getting citizens and governments to work together, but realistically, many communities will require new revenue — including additional tax dollars — if they are to assemble the critical mass of resources necessary for meaningful change. Accordingly, citizens who are willing to pay increased taxes are an important component of building sustainable communities.” (emphasis added) ↩
    9. See Weeks, Bob. Job creation at young firms declines. https://wichitaliberty.org/economics/job-creation-at-young-firms-declines/. Also: “Part of the cost of these companies’ investment, along with the accompanying risk, is spread to a class of business firms that can’t afford additional cost and risk. These are young startup firms, the entrepreneurial firms that we need to nurture in order to have real and sustainable economic growth and jobs. But we can’t identify which firms will be successful. So we need an economic development strategy that creates an environment where these young entrepreneurial firms have the greatest chance to survive. The action the Wichita city council is considering this week works against entrepreneurial firms.” Weeks, Bob. Wichita to grant property and sales tax relief. Available at https://wichitaliberty.org/wichita-government/wichita-grant-property-sales-tax-relief/. ↩
  • Wichita jobs up

    Wichita jobs up

    Wichita employment trends are positive for three consecutive months.

    Seasonally adjusted data from the Bureau of Labor Statistics, part of the United States Department of Labor, shows a rise in the Wichita metropolitan area labor force and job count. This data is through May 2018 and shows three consecutive months of rising employment.

    This is a reversal of the long term trend for Wichita, in which the labor force and employment have been falling or trending steady while the nation’s economy has been growing. An interactive visualization of employment data for all metropolitan areas is available here.

    While the upward trend is welcome, it is not known whether Wichita can sustain positive growth.

    In May, the forecast for Wichita from Center for Economic Development and Business Research (CEDBR) at Wichita State University was pessimistic: “The production sectors are projected to remain approximately flat in 2018. Natural resources and construction employment is forecast to increase by less than 100 jobs while manufacturing employment is projected to decline by less than 100 jobs.”

    This decline in manufacturing employment is forecast even after the new Spirit Aerosystems jobs are accounted for. In its reporting on this forecast, the Wichita Eagle wrote:

    Late last year, Spirit, the city’s largest employer, announced plans to hire an additional 1,000 mostly production workers over two years, with the bulk of the hiring expected in 2018. Bombardier announced plans to add 100 jobs when it moves its Global 5000 business jet interior completions work from Canada to Wichita later this year.

    “I’m not so sure all of the positive news means we’re growing,” [CEDBR director Jeremy] Hill said.

    He said the gains at Bombardier and Spirit are offset by contraction and consolidation by smaller manufacturers that supply parts to Spirit and other aircraft manufacturers. In some cases, work the smaller firms have done has been taken back by larger manufacturers, who are now doing it themselves. Retirements in aircraft manufacturing may also be affecting the numbers, Hill said, but he doesn’t have the data to confirm that.

    “It is hard to get your hands on,” he said. “It’s definitely not showing up in the (employment) numbers, not showing up in output in durables manufacturing.”

    Wichita and U.S. employment. Click for larger.
  • Wichita and Midwest income

    Wichita and Midwest income

    A look at income in Wichita compared to other Midwest cities.

    How much do Wichitans earn at their jobs, compared to other cities?

    Click for larger.
    This data is of interest as recently James Chung told an audience that “average income” is $10,000 higher in Midwest comparable cities than in Wichita. He didn’t define the term “income,” he didn’t define the comparable cities, and he didn’t provide any sources of data. But mention of this is a good time to look at income in Wichita and other cities.

    Occupational salaries

    The Bureau of Labor Statistics, part of the United States Department of Labor, collects data regarding salaries of occupations in different cities in a program called Occupational Employment Statistics. More information about this program may be found here.

    One way to examine income in different cities is to compare the salaries for different jobs using the OES data collected by BLS. I selected some cities to compare with Wichita: Cedar Rapids, IA; Colorado Springs, CO; Des Moines-West Des Moines, IA; Fayetteville-Springdale-Rogers, AR-MO; Kansas City, MO-KS; Oklahoma City, OK; Omaha-Council Bluffs, NE-IA; and Tulsa, OK. (The data is collected for Metropolitan Statistical Areas (MSAs), not cities. But it seems more natural to use the term city.)

    The OES dataset is large, holding data on over 800 occupations, and it’s unwieldy to make apt comparisons. Besides what I report below, I’ve also created an interactive visualization of the OES data. In the interactive visualization, you may select any cities and occupations for comparison. Click here to learn more and use it.

    Occupational salary example. Click for larger.
    Considering all occupations for this sampling of cities, the annual salary in Wichita is $43,880, while it is $50,600 in Des Moines. That’s $6,720 lower in Wichita, or 13 percent.

    Considering a few semi-random occupations: For buyers and purchasing agents, the highest salary is in Cedar Rapids at $75,830. The Wichita salary is $9,640 less, while the Des Moines salary is $15,070 less.

    For food service managers, the highest salary is in Colorado Springs at $66,300. The Wichita salary is $1,520 less, while the Des Moines salary is $21,270 less.

    For police officers, the highest salary is in Colorado Springs at $68,980. The Wichita salary is $21,670 less, while the Des Moines salary is $4,310 less.

    For telemarketers, the highest salary is in Fayetteville at $27,760. The Wichita salary is $1,860 less, while the Des Moines salary is $2,100 less.

    For the broad category of architecture and engineering occupations, Wichita is the leader in the sample at $82,710. Des Moines is at $71.930, which is $10,780 lower.

    For the broad category of production workers, Wichita again leads the sample at $44,950, while Des Moines is at $35,190, which is $9,760 lower.

    Personal income

    Another set of data that can help is personal income. For Des Moines, personal income per person is $50,677 (complete year 2016). For Wichita, the value is $47,395, which is $3,282 less. (For an interactive visualization of personal income, see Visualization: Personal income by metropolitan area.)

    Click for larger.

    Difficulties

    Comparing average salaries for groups of occupations in different cities has problems. One is the number of workers in occupations. Considering management occupations, there are few chief executive officers but many other managers. The weight of the number of workers needs to be considered.

    Also, the magnitude of salaries is an issue. Chief executive officer salaries vary widely, by tens of thousands of dollars. The data tells us that a CEO in Wichita earns $65,400 less than in Des Moines. That variation is greater than the average salary across all occupations, and provides little insight into the salaries of the majority of workers.

    The per capita personal income figures overcome these obstacles.

    $10,000

    Do Wichitans earn $10,000 less than in comparable Midwest cities, as James Chung recently presented? Based on per capita personal income, the answer is no. Not even close to that, although Wichita’s per capita income is not encouraging.

    Based on occupational salaries, Wichitans earn less than many comparable Midwest cities, but nothing near $10,000 less when all occupations are considered. In specific occupations, Wichita salaries are much less, but in some cases Wichita salaries are highest.

  • Airport traffic statistics, 2017

    Airport traffic statistics, 2017

    Airport traffic data presented in an interactive visualization, updated through 2017.

    A few observations regarding Wichita airport traffic as compared to the nation:

    • Since 2014, passenger traffic at the Wichita airport is slightly higher, while rising sharply for the nation.
    • The number of departures has been declining in Wichita, while level and now increasing for the nation.
    • The number of available seats on departing flights from Wichita has been mostly level, while rising sharply for the nation.

    To view and use the interactive visualization, click here.

    Example from the visualization, showing Wichita compared to all airports. Click for larger.
  • Wichita unemployment rate falls

    Wichita unemployment rate falls

    For April 2018, the unemployment rate in the Wichita metropolitan area fell, and the number of jobs grew.

    Today the Bureau of Labor Statistics released employment statistics for metropolitan areas through April 2018. These are numbers that are not seasonally adjusted, so it’s not very useful to compare any month with the month before. But it is appropriate to compare a month with the same month of the prior year.

    The good news, sort of: The unemployment rate for the Wichita metro area declined to 3.6 percent in April 2018, down from 3.9 percent in April 2017. The number of unemployed persons also declined by 8.9 percent for the same period.

    These numbers should be good news. But these two statistics don’t exist in a vacuum. Specifically, the unemployment rate is the ratio of the number of unemployed persons to the labor force. While the number of unemployed persons fell, so too did the labor force. It declined by 2,676 persons over the year, while the number of unemployed persons fell by 1,071. This produces a lower unemployment rate, but a shrinking labor force is not the sign of a healthy economy.

    Click for larger.

    A further indication of the health of the Wichita MSA economy is the number of nonfarm jobs. This rose by 100 from April 2017 to April 2018, an increase of 0.03 percent. This follows a decline of 0.5 percent from March 2017 to March 2018.

    For April 2018, BLS reports:

    Unemployment rates were lower in April than a year earlier in 305 of the 388 metropolitan areas, higher in 63 areas, and unchanged in 20 areas, the U.S. Bureau of Labor Statistics reported today. Eighty-eight areas had jobless rates of less than 3.0 percent and three areas had rates of at least 10.0 percent. Nonfarm payroll employment increased over the year in 312 metropolitan areas, decreased in 70 areas, and was unchanged in 6 areas. The national unemployment rate in April was 3.7 percent, not seasonally adjusted, down from 4.1 percent a year earlier. 1

    Sources:
    Bureau of Labor Statistics. Table 1. Civilian labor force and unemployment by state and metropolitan area, not seasonally adjusted. Available at https://www.bls.gov/news.release/metro.t01.htm.
    Bureau of Labor Statistics. Table 3. Employees on nonfarm payrolls by state and metropolitan area, not seasonally adjusted. Available at https://www.bls.gov/news.release/metro.t03.htm.

    —
    Notes

    1. Bureau of Labor Statistics. Metropolitan Area Employment and Unemployment Summary. Wednesday, May 30, 2018. Available at https://www.bls.gov/news.release/metro.nr0.htm. ↩
  • Wichita property tax still high on commercial property

    Wichita property tax still high on commercial property

    An ongoing study reports that property taxes on commercial and industrial property in Wichita are high. In particular, taxes on commercial property in Wichita are among the highest in the nation.

    Click for larger.
    The study is produced by Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence. It’s titled “50 State Property Tax Comparison Study, June 2017” and may be read here. It uses a variety of residential, apartment, commercial, and industrial property scenarios to analyze the nature of property taxation across the country. I’ve gathered data from selected tables for Wichita.

    In Kansas, residential property is assessed at 11.5 percent of its appraised value. Commercial property is assessed at 25 percent of appraised value, and public utility property at 33 percent. (Appraised value is the market value as determined by the assessor. Assessed value is multiplied by the mill levy rates of taxing jurisdictions to compute tax.)

    This means that commercial property faces 2.18 times the property tax rate as residential property. The U.S. average is 1.67. Whether higher assessment ratios on commercial property as compared to residential property is desirable public policy is a subject for debate. But because Wichita’s ratio is high, it leads to high property taxes on commercial property.

    For residential property taxes, Wichita ranks below the national average. For a property valued at $150,000, the effective property tax rate in Wichita is 1.22 percent, while the national average is 1.39 percent. The results for a $300,000 property were similar.

    Of note is the property taxes on a median-valued home. In this case Wichita is a bargain, due to our lower housing prices. A home at the median value in Wichita pays $1,513 in taxes, while the nationwide average is $3,343. (The median home value in Wichita is $124,400, and for the nation, $262,772, according to this report.)

    Looking at commercial property, Wichita taxes are high. For example, for a $100,000 valued property, the study found that the national average for property tax is $2,319 or 1.93 percent of the property value. For Wichita the corresponding values are $3,261 or 2.72 percent, ranking ninth highest among the 50 largest cities. Wichita property taxes are 41 percent higher than the national average, for this scenario.

    For industrial property taxes, the situation in Wichita is better, with Wichita ranking near the middle of the 50 largest cities. For an industrial property worth $1,000,000, taxes in Wichita are $29,681. The national average is $32,264.

  • Downtown Wichita business trends

    Downtown Wichita business trends

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    There has been much public and private investment in Downtown Wichita. What has been the trend in business activity during this time?

    According to the 2017 report from Wichita Downtown Development Corporation (now known as Downtown Wichita), over the past decade there has been $593,868,858 in private investment, $160,522,002 in public investment, and $171,087,276 investment in Intrust Bank Arena. That’s $925 million of investment in downtown over this period, with more before. 1

    What has been the result of this investment? If you expected business growth in downtown Wichita, you may be disappointed. For the past decade business activity in downtown Wichita has been on a downhill trend. The data for 2016 is a bit of good news, with the decline stopping and business activity remaining mostly unchanged. It isn’t the vibrant growth we’ve been told is happening in downtown Wichita, but at least things are not getting worse.

    The data

    Click for larger.
    The United States Census Bureau tracks business data by zip code. 2 The data that is available includes the number of business establishments, the number of employees, and the annual payroll, expressed in thousands of dollars not adjusted for inflation. It includes private-sector workers only, so it does not count all workers.

    Nearby are results for zip code 67202, which has nearly the same boundaries as the Self-Supporting Municipal Improvement District (SSMID). This is a district that pays extra property tax for supporting the WDDC. Its boundaries, roughly, are from Kellogg north to Central, and the Arkansas River east to Washington. It is greater Downtown Wichita plus Old Town.

    The results since 2007 show fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In nearly all cases for nearly all years, the trend is lower — except for 2016.

    For 2016 the numbers are nearly unchanged, with only small changes from the previous year. The number of business establishments is down slightly, while the number of employees and annual payroll rose, also slightly.

    Except for 2016, this is movement in the wrong direction, the opposite of progress. And 2016 represents merely a stop in the downhill slide, not growth. There may be good news in that the number of people living downtown may be rising. But in estimating the population of downtown Wichita, economic development officials use a circuitous method. The result of their calculations is a population much higher than Census Bureau estimates, far outside the range of probable results. 3

    But business activity has been declining.

    Click for larger.

    —
    Notes

    1. Downtown Wichita. State of Downtown Report, 2017. https://downtownwichita.org/user/file/2017-state-of-downtown-report-download.pdf. ↩
    2. U.S. Census Bureau. County Business Patterns (CBP). https://www.census.gov/programs-surveys/cbp/data.html. ↩
    3. Weeks, Bob. Living in downtown Wichita. Available at https://wichitaliberty.org/wichita-government/living-downtown-wichita/. ↩
  • Wichita in ‘Best Cities for Jobs 2018’

    Wichita in ‘Best Cities for Jobs 2018’

    Wichita continues to decline in economic vitality, compared to other areas.

    NewGeography.com is a joint venture of Joel Kotkin and Praxis Strategy Group. Its annual “Best Cities for Jobs” project ranks metropolitan areas according to growth in employment.

    Of 422 metropolitan areas considered, Wichita ranked 383, dropping 28 spots since the previous year.

    Among 100 medium size metropolitan areas, Wichita ranked 93, dropping 5 spots from the previous year.

    NewGeography.com uses employment data from the United States Bureau of Labor Statistics from November 2006 to January 2018. 1 Last year’s publication contains a more detailed explanation of how the rankings capture current year-growth, mid-term growth, and momentum. 2

    In the analysis for 2017, Wichita had also fallen in ranking.

    Wichita has momentum, they say

    Despite this news, Wichita leaders are in denial. Recently Greater Wichita Partnership president Jeff Fluhr told a group of young people this:

    From the innovation campus at Wichita State University and development along the Arkansas River in downtown, including a new baseball stadium, to the conversations happening now about a new convention center and performing arts facility, Fluhr said the momentum is pushing to keep Wichita on par with the development of other communities around the country.

    That development, which has in recent years expanded to incorporate the entire region, is a critical component to attracting and retaining talent — the exact kind of talent in the ICT Millennial Summit crowd. 3

    In January Wichita Mayor Jeff Longwell said, “It’s hard to find a time when we’ve had more momentum.” 4

    In March Sedgwick County Commissioner David Dennis penned a column for the Wichita Eagle praising the county’s efforts in economic development. 5 Dennis is also chair of the commission this year. In his column, the commissioner wrote: “Economic development is a key topic for the Board of County Commissioners and for me in particular. Right now we have a lot of momentum to make our community a more attractive place for people and businesses.”

    At the same time, the Wichita Eagle editorialized: “Wichita’s economy struggled to rebound from the last recession, which held the city back. But there have been positive economic signs of late, including a renewed focus on innovation and regional cooperation. … There also is a sense of momentum about Wichita. Yes, challenges remain, but the city seems to have turned a corner, with even greater things ahead.”6

    In announcing his candidacy for Sedgwick County Commission, Wichita city council member Wichita City Council Member Pete Meitzner (district 2, east Wichita) said, “We have enjoyed great progress and growth during my two terms as a City Council member and I plan to do my part to assure Sedgwick County is part of this continued success.” 7

    Given all this, it ought to be easy to find economic data supporting momentum, progress, and growth. Besides the NewGeography.com report cited above, let’s look at some other indicators.

    Personal income. For the Wichita metropolitan statistical area, personal income in 2016 rose slightly from the 2015 level, but is still below the 2014 level. In real (inflation-adjusted) dollars, personal income fell in 2016. 8

    Personal Income Summary, Wichita, through 2016. Click for larger.

    Population. In 2000 Wichita was the 80th largest metropolitan area. In 2017 its ranking had fallen to 89. See Wichita metropolitan area population in context for more on this topic.

    Trends of business activity in downtown Wichita. Click for larger.
    Downtown Wichita. There’s been a lot of investment in downtown Wichita, both public and private. But since 2008 the trend is fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. Almost every year these numbers are lower than the year before. This is movement in the wrong direction, the opposite of progress. There may be good news in that the number of people living downtown may be rising, but business activity is declining. 9

    Employment. While officials promote the low Wichita-area unemployment rate, there is an alternative interpretation. First, the good news: The unemployment rate for the Wichita metro area declined to 3.9 percent in March 2018, down from 4.2 percent in March 2017. The number of unemployed persons declined by 8.3 percent for the same period. 10

    Is Wichita’s declining unemployment rate good news, or a byproduct of something else? The unemployment rate is the ratio of the number of unemployed persons to the labor force. While the number of unemployed persons fell, so too did the labor force. It declined by 3,367 persons over the year, while the number of unemployed persons fell by 1,056. This produces a lower unemployment rate, but a shrinking labor force is not the sign of a healthy economy.

    A further indication of the health of the Wichita-area economy is the number of nonfarm jobs. This number declined by 1,200 from March 2017 to March 2018, a decline of 0.4 percent. This follows a decline of 0.7 percent from February 2017 to February 2018.

    Of the metropolitan areas in the United States, BLS reports that 308 had over-the-year increases in nonfarm payroll employment, 72 (including Wichita) had decreases, and 8 had no change.

    Growth in output. The worst news, however, is that the Wichita-area economy shrank from 2015 to 2016. In real (inflation-adjusted) dollars, the Wichita metropolitan area gross domestic product fell by 1.4 percent. For all metropolitan areas, GDP grew by 1.7 percent. Since 2001, GDP for all metropolitan areas grew by 29.3 percent, while Wichita had 12.3 percent growth. 11

    Wichita MSA employment, annual change. Click for larger.
    The GDP figures are for 2016, and figures for 2017 won’t be available until September. So what happened in 2017? Could 2017 be the genesis of momentum to drive our economy forward?

    While GDP figures aren’t available, jobs numbers are. For the year 2016, total nonfarm employment in the Wichita metropolitan area grew by 0.62 percent. For 2017, the growth rate was 0.56 percent — a slowdown in the rate of job growth. These job growth figures are far below the rate for the nation, which were 1.79 and 1.58 percent respectively.

    Annual change in job growth, Wichita and USA through 2017. Click for larger.

    Furthermore, Wichita’s job growth rate in 2016 was lower than 2015’s rate of 1.07 percent. This is momentum in the wrong direction. Nearby charts illustrate. 12

    What to do?

    The failure of the Wichita-area economy to thrive is a tragedy. This is compounded by Wichita leaders failing to acknowledge this, at least publicly. While we expect people like the mayor, council members, and the chamber of commerce to be cheerleaders for our city, we must wonder: Do these people know the economic statistics, or do they choose to ignore or disbelieve them?

    From private conversations with some of these leaders and others, I think it’s a mix of both. Some are simply uninformed, while others are deliberately distorting the truth about the Wichita economy for political or personal gain. The people who are uninformed or misinformed can be educated, but the liars are beyond rehabilitation and should be replaced.

    —
    Notes

    1. “The methodology for our 2018 ranking largely corresponds to that used in previous years. We seek to measure the robustness of metro areas’ growth both recently and over time, with some minor corrections to mitigate the volatility that the Great Recession has introduced into the earlier parts of the time series. The ranking is based on three-month rolling averages of the U.S. Bureau of Labor Statistics’ ‘state and area’ unadjusted employment data reported from November 2006 to January 2018.” 2018 How We Pick The Best Cities For Job Growth. Available at http://www.newgeography.com/content/005973-2018-how-we-pick-best-cities-job-growth. ↩
    2. 2017 How We Pick The Best Cities For Job Growth. Available at http://www.newgeography.com/content/005618-2017-how-we-pick-best-cities-job-growth. ↩
    3. Daniel McCoy. ICT Millennial Summit: Wichita is having a moment. Wichita Business Journal, November 30, 3017. Available at https://www.bizjournals.com/wichita/news/2017/11/30/ict-millennial-summit-wichita-is-having-a-moment.html. ↩
    4. Heck, Josh. Emerging Leaders panel offers insight into eco-devo strategies. Available at https://www.bizjournals.com/wichita/news/2018/01/11/emerging-leaders-panel-offers-insight-into-eco.html. ↩
    5. David Dennis. Sedgwick County part of drive to strengthen area workforce. Wichita Eagle, March 5, 2018. Available at http://www.kansas.com/opinion/opn-columns-blogs/article203559734.html. ↩
    6. Wichita is moving forward. March 1, 2018. Available at http://www.kansas.com/opinion/editorials/article135573253.html. ↩
    7. Bill Wilson. Wichita council member unveils bid for county commission. Wichita Business Journal, November 30, 3017. Available at https://www.bizjournals.com/wichita/news/2018/02/13/wichita-council-member-unveils-bid-for-county.html. ↩
    8. Weeks, Bob. Wichita personal income up, a little. Available at https://wichitaliberty.org/wichita-government/wichita-personal-income-up-2016/. ↩
    9. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
    10. Weeks, Bob. Wichita unemployment rate falls. Available at https://wichitaliberty.org/economics/wichita-unemployment-rate-falls-2018-03/. ↩
    11. Weeks, Bob. Wichita economy shrinks. Available at https://wichitaliberty.org/economics/wichita-economy-shrinks/. ↩
    12. In some presentations these figures may differ slightly due to data revisions and methods of aggregation. These differences are small and not material. ↩