May 4, 2014

Analysts: Buy-in needed to pass sales tax increase in Wichita

Wichita voters would have to be sold on a sales tax increase to help pay for a $90 million local economic development fund, political analysts say.

Wichita voters would have to be sold on a sales tax increase to help pay for a $90 million local economic development fund, political analysts say.

That work begins with a Wichita City Council vote later this month on whether to send a sales tax increase, possibly 1 percent, to voters this fall to pay for a variety of projects, including a new water source and job creation. Mayor Carl Brewer said he thinks there are enough votes on the council to get that done.

Then the real work would begin – convincing voters that their $90 million will be transparently accounted for and effective, said public finance expert Ken Kriz at Wichita State University and politics expert Chapman Rackaway at Fort Hays State University.

How much work? The Kansas Policy Institute, an anti-tax group, cites results of a poll done for it in late April by Survey USA: 63 percent of respondents oppose a sales tax increase to provide incentives to businesses; 28 percent support the idea.

The survey, by Survey USA, polled 502 Wichitans between April 21-25. The margin of error is between 3.7 percent and 4.5 percent.

Steve Martens, former chairman of the Greater Wichita Economic Development Coalition, said he supports the creation of a revenue stream to recruit and retain jobs. But creating it won’t be easy, he said.

“I do tend to believe this will be a difficult sell,” he said. “Not impossible, but there will be a lot of resistance and there will be a lot of questions.”

The traditional lack of transparency in most government-funded economic development operations is a hurdle, Rackaway said.

“I know that here in Hays, economic development is kind of like opposition research,” he said. “It’s a bit of a black art. A lot of money goes in, and we’re never quite sure about the ROI (return on investment), about how anything gets done, about how folks get recruited and retained.

“People are always going to be curious when there’s no clear plan attached to something.”

Martens agreed.

“The perception with many people I visit with is a lack of transparency in economic development,” he said. “We have to get beyond that to make this happen, and that’s early on through local elected leadership, the city manager, his staff and the GWEDC.”

Rackaway cited school bond issues as an example.

“There would have to be a facilities plan in place to get voter buy-in,” he said. “It would have to be documented with, ‘We’re going to do this, we’re going to do that.’ ”

He said the nature of economic development – secret site visits, anonymous visitors, incentives – “makes something like this a tough sell. If you want public support for an initiative like this, being transparent is essential to get it.

“A lack of transparency – even when people are being ethical and above board – suggests there’s something to hide.”

Kriz also points to transparency as essential for voter buy-in.

“It’s just one of those things that it’s tough to point to an individual deal and say the incentives made the difference,” he said.

Organizers of the economic development plan pledged transparency last week.

Intrust Bank’s Gary Schmitt, who chairs the GWEDC, said a commission overseeing the fund would report back to the public, at least yearly and perhaps quarterly.

“We have to be transparent,” Schmitt said. “These are public dollars that are being spent.”

However, there won’t be any real-time reporting to the public, Schmitt said, given the confidentiality of deal-making.

“The challenge you have with the GWEDC is you don’t want to report any deal until after you’re done,” he said, “to avoid revealing any ongoing negotiations or any proprietary business information.”

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