“I can understand why they want to be free of regulations and scrutiny, but I cannot understand why we should let them.” That is a famous quote from Drew Edmondson, the former Atty. Gen. of Oklahoma who sued Tyson for polluting the scenic rivers of eastern Oklahoma. Tyson responded by helping to elect an attorney general and a governor who were less concerned about regulations and pollution. Tyson now wants to expand their business into Kansas, and the Kansas Legislators seems amenable to “letting them”.

The Kansas Legislature recently passed HB 405, which changes the animal conversion rate ( i.e., the number of chickens whose manure weight equals that from one cow) from 0.008, the previous value, to 0.003. That small change has big consequences. The result is that now a chicken farm may house 330,000 chickens, and it may be placed within 1/4 of a mile of neighboring houses and within 100 feet of neighboring property lines.

Some Legislators were unconcerned about the effect on property rights. Representative John Whitmer, who voted for the bill, justified his vote by saying, “local councils and county governments will still have to change current zoning and planning maps.” That may not be the case. The September KC Business Journal suggested that some Tonganoxie residents think Tyson “may have reason to believe they can declare their operation an agricultural rather than an industrial use to avoid rezoning.”

Also, 51 counties have no zoning laws. SB 405 needed an amendment for home rule, where county residents could have the right to file petitions against industrial-agricultural chicken barns and have a county-wide vote. That amendment failed. Apparently, our Legislators are for local rule and property rights when they ask for our vote, but not when they pass legislation.

This was published in the Kansas Times Sentinel on April 5, 2018.

(C) 2018 – JC Moore

The proposed Kansas House Bill 2641 will limit the amount of  fracking disposal fluids that can be injected at a given site. It is a start, but Kansas needs to learn from Oklahoma’s experience and be proactive in limiting induced earthquakes from disposal wells.

Rationale:  Historically, Oklahoma has had very few earthquakes. The graph below shows that Oklahoma had an average of about two earthquakes per year up until about 2008, when horizontal drilling and fracking began to be used to recover gas and oil. Along with the increase in fracking, came the need for disposal wells to get rid of the waste water from the fracking operations. And along with the wastewater disposal wells, came an increase in earthquakes.

For some reason, it took Oklahoma a long time to link the two and take effective action, even though the link has been known for decades. When the U.S. Army’s Rocky Mountain Arsenal built a disposal well in 1961 to get rid of waste fluids, seismic activity in the area increased. The well was plugged and the earthquakes stopped. A study by the U.S. Army Corps of Engineers and the U.S. Geological Survey (USGS) determined that the “deep, hazardous waste disposal well at the Rocky Mountain Arsenal was causing significant seismic events in the vicinity of Denver, Colorado.”

Our experience:  In November of 2011, an earthquake measuring 5.6 rattled Oklahoma and was felt as far away as Illinois. We were living in Terlton, Oklahoma at the time and felt several earthquakes, including that one. Small cracks appeared in our sheet rock and in the foundation of our house. When we sold our house in Terlton to move back to Kansas, the mortgage company insisted the damage be inspected by a structural engineer. Structural engineers were in great demand at the time to inspect earthquake damage and it caused a long delay. Our house passed the inspection but we had the added delays and expense of hiring the structural engineer. Other people have not been so lucky.

Damage: A search on Google for “newspaper articles on earthquake damage in Oklahoma”, gave 2,270,000 hits and there are thousands of pictures showing the earthquake damage in Oklahoma, such as these:

Some of the damage has extended as far north as Wichita, as shown by these pictures:

Fracking related earthquakes have caused millions of dollars of property damage in Oklahoma, and many Oklahoma residents are now purchasing earthquake insurance, when it was never needed before. Many Kansas residents are also wondering if they need to undergo the additional expense of earthquake insurance. The damage costs to public utilities, buildings, roads, and bridges are born by taxpayers. Although there have been several lawsuits in Oklahoma against disposal well companies, very little money has been recovered to pay for induced earthquake damages.

Further action:  Kansas has a unique opportunity to learn from what happened in Oklahoma, and take action to limit induced earthquakes and the cost to Kansas citizens. Effective legislation is needed to:

1) restrict the location of disposal wells.
2) limit the amount of wastewater that can be disposed of at a site.
3) limit the pressure which can be used to inject the wastewater.
4) require that any disposal well linked to significant seismic activity be further regulated.
5) require that disposal well companies carry liability insurance and pay earthquake damage claims promptly.

Kansas House Bill 2641 is certainly a step in the right direction. It addresses number 2) above and asks that every county in Kansas be under the same regulations by the KCC to keep volume at 8,000 barrels per day, which is considered a level that minimizes earthquakes. That is a start, but more legislation is needed.

Note! It wasn’t a start after all. KS HB 2641 died in committee.

(c) 2018  – J.C. Moore

“The Largest Tax Hike in Kansas History: Now What?” That was a title of the talk given by Jonathan Williams, from the American Legislative Exchange Council (ALEC), when he spoke to the Wichita Pachyderm Club on July 28.

When the title of the talk is misleading, then what?

In 2012, Kansas Gov. Brownback tried Laffer’s theory by cutting the income tax rates and exempting 330,000 businesses from paying taxes on pass-through income, called the LLC loophole. Because of the decline in tax income, Kansas cut school funding, deferred payments to the states pension fund, and borrowed heavily from the highway fund. To fill the budget holes, the legislature in 2015 increased sales taxes and cut state income tax deductions. The state’s major newspapers labeled that tax increase as a largest in state history.

After Gov. Brownback’s experiment with Arthur Laffer’s trickle-down theory left the state’s finances in shambles, the 2017 Legislature restored the taxes to their 2012 level and overrode Gov. Brownback’s veto of the budget. Mr. Williams claimed that was the largest tax increase in Kansas history. Is restoring taxes to a previous level actually a tax increase? When someone in the audience pointed out to him that Kansas’ major newspapers labeled the 2015 sales tax increase as a largest in state history, he disparagingly commented, “First of all, I don’t put a lot of stock in the state’s newspapers.”  He should.

The failure of Gov. Brownback’s tax experiment has been of great concern to ALEC, who represents the interests of Corporation and the wealthy. Laffer’s trickle-down theory has been one of ALEC’s main justifications for cutting state taxes in ways that benefit corporations and the wealthy. ALEC had hoped to persuade more states, and even the federal government, to  try Laffer’s tax cuts. Did he not realize that Kansas just tried cutting taxes, with disastrous effects?

According to Mr. Duane Goossen, a previous Kansas state treasurer, “ After five years of the Brownback experiment in Kansas, we know the real result. Kansas has an anemic economy and one of the lowest rates of job growth in the nation. A dramatic drop in revenue broke the state budget, wiped out reserves, significantly boosted state debt, and put public education at risk. And that part about everyone benefiting — well, it turns out that the bulk of the benefits went to the wealthiest Kansans while the tax bill to low-income Kansans went up.”

Mr. Williams apparently wanted to convince us that states with low taxes experience revenue growth, job growth, and a growing economy. To that end, Mr. Williams referred to Laffer’s research which claimed  that the nine states that have no income tax had the highest rates of job creation. But most of the growth was in Texas and in a carefully chosen time period when job growth was strong because of oil revenues and population growth.  Besides carefully picking his data, Laffer also ignored other economic indicators – and didn’t do a comparison with high tax states. If Laffer were correct, the nine States  with the highest income taxes should have failing economies. However, that is not the case, as shown below:

The nine states with high income taxes had higher economic growth , a much smaller decline in household income, and almost exactly the same unemployment rate. Laffer’s research was biased and would never stand up to peer review, yet many states have used it as a justification for income tax cuts for the wealthy.

When Gov. Brownback’s experiment was failing, he paid Arthur Laffer $75,000 in consultation fees to help him find what went wrong. Mr. Laffer’s advice was to just keep on with the experiment. Kansas did, and the budget deficit just got worse. It was also Mr. Williams’ opinion that we had not tried the tax cut experiment long enough.  But did we need to? Laffer convinced Reagan to cut taxes, and much of our current national debt can be traced back to then, as in the graph below.

While the link between tax cuts, economic growth, and revenue growth is tenuous, there is certainly a link between tax cuts and public debt. Kansas proved that.