Category Archives: Economy

Could be years to determine impact of state tax cuts

So far, the state’s income tax cuts haven’t acted like a shot of adrenaline into the heart of the Kansas economy, as Gov. Sam Brownback said they would. Nor is that likely in the near future, according to top economists at the Kansas Department of Labor. They said this week that it was too early to tell if the tax changes are having an effect on job growth, and that it might take up to five years to determine the impact on employment, the Lawrence Journal-World reported.

Kansas unemployment rate rises again

The seasonally adjusted unemployment rate in Kansas was 5.9 percent in July. That’s the third straight month that the unemployment rate has increased. The Kansas Department of Labor attributed the increase to more people entering the job market and noted that the number of private-sector jobs continued to grow. Others question the impact of Gov. Sam Brownback’s tax cuts. “Though advocates of substantial tax cuts promised a shot of adrenaline to the Kansas economy, so far it’s more like a shot of Valium,” said Annie McKay of the Kansas Center for Economic Growth and Amy Blouin of the Missouri Budget Project, writing in the St. Louis Post-Dispatch last week.

Fast food might be slow today in some cities

Some fast-food workers in seven cities, including Kansas City, are walking off the job today to protest low wages. The workers want to get paid $15 per hour, but industry officials say that the restaurants don’t have a high enough profit margin to afford that. Meanwhile, McDonald’s is getting grief for providing budgeting advice to its workers that included them working two jobs to get by (and assumed they needed to spend only $20 a month on health insurance).

State rankings improve but economy lags

The Brownback administration recently touted slight improvements in two state business rankings, but another report shows Kansas trailing most other states in economic growth. Kansas moved from eighth to sixth in the Pollina Corporate Real Estate annual rankings of states, and it moved from 15th to 14th in a CNBC ranking of state business environments. But a report by the Tax Policy Center found Kansas lagging most states in economic growth from February to May and predicted it will trail in the next six months, the Lawrence Journal-World reported. “Most states improved over the past quarter; only Alaska, Kansas, Nevada, Wisconsin and Wyoming experienced declines,” according to the report, which looked at nonfarm employment, average manufacturing hours worked, the state’s unemployment rate and real wages.

Kansas, Brownback average on job creation

Gov. Sam Brownback ranks No. 25 among governors for jobs created in their states since they’ve been in office, the Wichita Business Journal reported. The rankings were based on private-sector employment, which has increased about 4 percent since Brownback took office in 2011. It’s debatable how much influence governors have on job creation. Several of the states leading in job creation, including No. 1 North Dakota and No. 2 Texas, are benefiting from a boom in energy production.

Better news on the federal deficit

The federal budget deficit is expected to drop to $642 billion this year, congressional budget analysts said Tuesday. That’s still too high, but it’s the lowest level since the economic crisis hit in 2008, the Washington Post reported. The Congressional Budget Office predicts that the deficit will fall below 3 percent of the overall economy by 2015 but will rise again by the end of the decade as more baby boomers retire.

Kansas cities among worst-performing

Economically, Lawrence is the second-worst-performing small-metropolitan area in the nation, according to a new study. But other Kansas communities didn’t do that well, either. Of 179 small metro areas studied by the Milken Institute, Lawrence ranked 178th for creating and sustaining jobs and economic growth. Topeka came in 144th – better but not good. Among 200 large cities studied, Wichita was 146th while Kansas City was 104th. The ranking emphasized high-tech jobs, which is one reason why Kansas didn’t rank higher.

Welcome to Wichita

Some top U.S., Mexican and Canadian trade officials are in Wichita for the 37th-annual World Trade Week. Thursday’s conference, organized by the World Trade Council of Wichita, focuses on the North American Free Trade Agreement, the largest free-trade agreement in the world. Mexico and Canada are also the top two export markets for Kansas. Panel discussions include legal and trade regulations, tax policies, transportation and trade strategies. The conference is a good opportunity to network with trade officials and companies.

Kansas gaining jobs from Obamacare

Despite its continued resistance to anything associated with Obamacare, Kansas is set to benefit from it. Up to 9,000 jobs are expected to be created at Medicare call centers in six states, including one in Lawrence. The call centers will answer inquiries related to the federally run insurance marketplaces. Kansas will get an even bigger economic boost if it allows the federal expansion of Medicaid. A study by the Kansas Hospital Association concluded that the expansion would inject more than $3 billion into the state’s economy and create 4,000 jobs over the next seven years.

Update regulations, revitalize general aviation

Good for Rep. Mike Pompeo, R-Wichita, for trying to lower costs and increase innovation in the general aviation industry. Pompeo and four other lawmakers have introduced the Light Aircraft Revitalization Act, which would implement regulatory changes recommended by a Federal Aviation Administration committee of aviation authorities and industry representatives. Congress needs to review these recommendations to make sure they wouldn’t compromise safety. But Pompeo contends that the slow and burdensome certification process keeps products out of the market that could actually improve safety.

Moran right about Internet sales tax.

Sen. Pat Roberts, R-Kan., was one of only 27 senators to vote Monday against the Internet sales tax bill. Sen. Jerry Moran, R-Kan, missed the vote because of speaking commitment but supports the measure. As Moran noted earlier, the bill is about leveling the playing field between online retailers and brick-and-mortar vendors. States also lost $23 billion in sales tax collections last year on out-of-state Internet, catalog and mail order sales, according to a study by the National Conference of State Legislatures. The bill faces tougher odds in the House, where many lawmakers are afraid to vote for anything that might be considered a tax increase. But as Moran has said, “The legislation will not impose a new tax on the Internet or anyone. It will, however, protect small businesses and empower states with the ability to control fiscal policy as they see fit.” The Kansas House delegation should back

So much for KBA being independent, free from politics

The Kansas Bioscience Authority was set up with a separate governing board in an attempt to minimize political influence on funding decisions. But those walls have been crumbling in recent years. Wichita lawmakers intervened to get funding for a local project, and now Gov. Sam Brownback wants to use KBA’s funding to help pay for an adult stem cell research center. The Midwest Stem Cell Therapy Center was an idea hatched this year by some state senators and will be part of the University of Kansas Medical Center. KU never asked for the center, and the project’s medical and commercial merit was never vetted. As part of the spending adjustments that he released this week, Brownback proposed diverting almost $1.2 million from KBA next year to create the center and about $750,000 annually to help pay for its operation.

Rich are getting a lot richer

Another report documents how the rich are getting richer while most everyone else is treading water or sinking. According to a new study by the Pew Research Center, the upper 7 percent of American households saw their average net worth increase 28 percent from 2009 to 2011, while the wealth of the other 93 percent declined by an average of 4 percent. “The changes mean that the wealth gap separating the top 7 percent and everyone else increased from 18-to-1 to 24-to-1 between 2009 and 2011,” the Washington Post reported.

Pro-con: Does U.S. need increased tax revenue?

America’s economy is poised to roar ahead if only Washington would stop holding it back. Ever since the Great Recession officially ended, the private sector has been adding jobs. What’s kept the economy in low gear and the unemployment rate stubbornly high has been the shrinking of government workforces: cops, teachers and other valuable public employees let go in the face of inadequate tax revenue. What fiscal policy should Washington adopt to boost our economy rather than drag it down? The first thing is to acknowledge that our current debt-reduction efforts can’t be primarily focused on spending reductions. We can’t cut our way out of debt, especially if we want to support our economy at the same time. We need a balanced approach of thoughtful spending curbs and increased revenue. If we don’t want to go deeper in debt, we need sufficient tax revenue from those best able to supply it to support job-creating federal investment in our still-struggling economy. – William Rice, Americans for Democratic Action

Even though economic growth is what we badly need to hasten our recovery, many of our leaders in Washington are hungry for even more tax revenue. Some still champion a big-government agenda that requires greater resources to implement more programs. But a heavy tax burden means consumers have less of their income to spend in the economy and businesses have less for hiring, expansion and investment. So when taxes go up, the rate of economic growth goes down. In order to keep our economy humming and put the government back on sound fiscal footing, we must undertake comprehensive tax reform and exercise real spending restraint through fundamental entitlement reform. Comprehensive tax reform should broaden the tax base so more people are paying into the system and simplify compliance for all business entities. It is the responsibility of the business community to keep the pressure on. Let’s remind Congress and the administration that, when families and employers fall on hard financial times, they must make tough decisions. It’s time for Washington to follow suit. – Martin A. Regalia, U.S. Chamber of Commerce

It makes sense for REAP to oversee airfare program

Good for Kansas House budget negotiators for reinstating $5 million in state aid to bolster air service in Wichita and Garden City. The Kansas Affordable Airfares Program is key to economic development. But it’s strange that some lawmakers now want the funding to go directly to Sedgwick and Finney counties’ governments rather than through the Regional Economic Area Partnership of south-central Kansas, which has managed the program for years at the state’s request. It makes sense for REAP to oversee the funding, as the airports serve many counties. Was this move prompted by REAP’s support of sustainable planning, which some people think is a U.N. plot?

Good news on jobs

Maybe the economy really is improving. The Dow has returned to record highs, and official unemployment is now at a four-year low. Unemployment dropped to 7.7 percent, according to a Labor Department report released Friday. Also, the number of jobs in February increased by 236,000 from January. It will be interesting to see what impact the sequester has on jobs and unemployment.

Are zero-tolerance policies going too far?

The recent suspensions of young kids as a result of school districts’ zero-tolerance polices on weapons are renewing debate about whether these policies go too far. Among the examples cited in an Associated Press article was a kindergartner who was suspended after telling her friends she was going to shoot them with a Hello Kitty soap-bubble gun. While everyone agrees that schools need to be watchful, the mother of the bubble-gun girl complained that they are treating little kids like “mini-adults, making them grow up too fast, and robbing them of their imaginations.”

WATC proving value of its degrees

The Wichita Area Technical College is demonstrating the impressive value of its degrees among employers, even in a lackluster economy. WATC’s survey of 90 percent of its fall graduates revealed that 97 percent of them had found jobs already, mostly in the area. Meanwhile, spring enrollment is 19 percent higher than last spring, just as last fall saw a 25 percent increase over fall 2011. Much of the momentum can be linked to WATC’s strengthened partnership with USD 259, and to the state funding made available by the career and technical education initiative promoted by Gov. Sam Brownback. But credit also is due WATC president Tony Kinkel and the elected officials at all levels, led by Sedgwick County commissioners, who pressed ahead with the funding and construction of the National Center for Aviation Training, one of WATC’s three campuses. Because they didn’t let the downturn cloud their foresight about workforce needs, Wichita-area employers are able to look to WATC for the workers they need now.

From Wichita Falls to Wichita

Congratulations to Tim Chase on his new job as president of the Greater Wichita Economic Development Coalition. Chase comes to Wichita after 12 years as president of the Wichita Falls (Texas) Chamber of Commerce and Industry, and with an impressive range of experience in economic development. It’s been nearly two years since the last permanent GWEDC president left – too long, especially amid such a deep downturn. Expectations are high for Chase’s ability to coordinate our community’s efforts to attract and retain businesses and to market itself not only as a hub for aviation manufacturing, research and training but as a fertile place for high-tech innovation and entrepreneurship.

Real national debt is more than five times larger

Former GOP congressmen Chris Cox and Bill Archer contend that the reason the U.S. hasn’t already reformed Medicare and Social Security is that most people don’t know the size of the unfunded liabilities of the entitlement programs. That’s because the U.S. Treasury isn’t required to include those liabilities in its “balance sheet.” If those liabilities were included, the nation’s debt wouldn’t total $16 trillion but nearly $87 trillion, or 550 percent of the gross domestic product. “When the accrued expenses of the government’s entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually,” they wrote.

Income-tax cuts will reduce money available for bioscience

Among the little-discussed consequences of the state’s big tax-cut plan is how it will affect the Kansas Bioscience Authority, which gets the money it uses to fund bioscience initiatives from income-tax withholdings at bioscience companies. As they exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from state income taxes, “the tax cuts will reduce the withholding available for bioscience,” confirmed the spokeswoman for Revenue Secretary Nick Jordan, who was an architect of the Kansas Economic Growth Act that created the authority while he served in the state Senate. But the authority has seen the state cap its annual funding over the past four or five years to about $35 million, and the tax bill “shouldn’t have any impact on” that amount of funding, Jordan’s spokeswoman said. Still, if Gov. Sam Brownback and his allies eventually succeed in eliminating the state income tax entirely, the funding stream and goals of the 2004 bioscience law will be undermined.

Pro-con: Is President Obama too hard on business?

Most businesses’ main interaction with government is paying taxes. Government doesn’t help them succeed but rather only erects barriers to overcome. The cost of government taxes and regulations are part of the overhead of a business. The greater the cost of the government overhead, the fewer people a business can hire. The major challenge for President Obama is to realize there is little he can do to help the average business in our country. We want to make a profit so that we can invest to grow our businesses or reward our employees and ourselves for successfully taking on the challenges and uncertainty of business. We also would welcome a little respect for the long hours we put in without any guarantees of reward. We would appreciate some common sense on regulation where absolutes can’t apply but cost-benefit analysis makes sense. – Peter Rush

The canard that President Obama is anti-business is a propaganda remnant from Mitt Romney’s failed presidential campaign. Obama, after all, was the president who bailed out Wall Street with the Troubled Asset Relief Program. TARP and other Obama corporate rescue programs, after all, benefited such goliath corporations as Bank of America, Citigroup, AIG, General Motors and Chrysler – saving tens of thousands of jobs. Obama’s American Recovery and Reinvestment Act, the economic stimulus package of 2009, provided direct and indirect assistance to small and large businesses through the hiring of construction firms and related firms to rebuild roads, highways, rail lines, airports and telecommunications infrastructure. Obama actually is saving American capitalism by reining in its excesses and plowing under its inequities. – Wayne Madsen

Kansas Chamber can be at odds with local concerns

The Kansas Chamber of Commerce’s new president, Mike O’Neal (in photo), said that the focus of his organization is on what benefits the state as a whole from a business perspective. “There may be times there’s a local issue that affects you that may not fit squarely with the legislative agenda at the state level,” he told members of the Garden City Area Chamber of Commerce last week. The Kansas Chamber’s push for tax cuts, regardless of the impact on schools and other important services, and the hundreds of thousands of dollars it spent trying to defeat local legislative candidates have caused a number of local chambers to pull out of the state organization. O’Neal also said that he does not believe there will be a state budget deficit, even though state revenue estimators recently forecast a $705 million drop in tax collections next fiscal year.

Southwest flights are great news for Wichita

It is great news – both for business and leisure travelers – that Southwest Airlines has committed to operating five daily flights from Wichita Mid-Continent Airport, starting June 2. The discount carrier will have two daily flights to Dallas, two to Chicago and one to Las Vegas. The only unfortunate news in the announcement Monday was that Wichita will lose its three daily AirTran Airways flights to Atlanta. But the Southwest flights to three major markets will more than make up for this loss.

End of Learjet strike a win for community

Congratulations to the leaders on both sides of the negotiating table at the Machinists union and Bombardier Learjet, whose efforts led to Saturday’s vote to approve the contract offer and Monday’s end of the five-week strike. The best feature of the new five-year contract is that it gets Learjet’s skilled workers back to the business of manufacturing outstanding aircraft that will be needed as the economy rebounds.