IFP End of Session Statement
Four months we won’t get back
IOWA CITY, Iowa — The Iowa Fiscal Partnership today issued this statement on the conclusion of the 2016 session of the Iowa General Assembly:
When the 2016 session began, Iowa faced a host of critical challenges: polluted water, slow job growth, a tax system skewed to benefit those at the top and those with strong lobbyists, and a wavering commitment to investments in education and services for low- and moderate-income working families — those most vulnerable in our state. There were fresh uncertainties about health care due to plans to privatize Medicaid.
This session has done little to ease any of those concerns, and nothing to meet those challenges for the long term. Public policy stands tall when it supports long-held, long-promoted values of our state. Education and a clean environment are among those. Neither had victories of note.
Work supports and wages
• Iowa remains one of only 21 states that has refused to raise the minimum wage above the spartan $7.25 per hour. Iowa’s minimum wage has remained at $7.25 longer than any state minimum wage — over eight years — and likely is guaranteed to reach the nine-year mark before the Legislature returns to the Capitol.
More: “Iowa: Once a Leader, Now a Laggard on Minimum Wage,” updated March 2016
• Once again, lawmakers left in place Iowa’s severe eligibility limits for child care assistance, which can make it more costly for families to take a higher paying job.
More: “Reducing Cliff Effects in Iowa Child Care Assistance,” March 2014
• No action was taken to combat the problem of wage theft.
More: “Stolen Chances: Low-Wage Work and Wage Theft in Iowa,” September 2015
Education School funding remains too little and too late. Lawmakers in the House and Senate set State Supplemental Aid (SSA), which governs growth in per-pupil spending in Iowa schools, at 2.25 percent for Fiscal Year 2017 — a compromise below even the Governor’s meager proposal of 2.45 percent. With this, average per-pupil spending growth in Iowa will have been below 2 percent for seven years. School districts have already begun reducing teaching staff to cope with this low funding level, while property tax increases will be necessary in several districts that have declining enrollment. Money existed in the treasury to do much better.
In addition, the Legislature — which acted on FY2017 SSA about 13 months past the legal deadline — chose once again to violate the law by failing to set funding for the following budget year. SSA for Fiscal Year 2018 was to have been set by mid-February.
More: “Sensible context on school aid growth” blog post, March 29, 2016
Water quality and school infrastructure
Another legislative session has come and gone without agreement on a sustainable strategy to improve Iowa’s water quality, which is threatened by agricultural pollution — either with regulation, funding or a combination of both. Iowa voters gave lawmakers a roadmap to a funding solution in 2010 with a constitutional amendment designating the next 3/8-cent sales tax increase to go toward land and water protection and enhancement. Neither the Governor nor a majority of legislators has taken that step, nor have they taken it to a vote even though the amendment passed the Legislature in two consecutive general assemblies before it went to the voters. Other proposals offered during the session would have diverted funds from existing and designated uses toward water quality, but not in sufficient amounts or without damaging other services.
More: “To fund water solutions, why not the obvious? Tax pollutants,” blog post, March 7, 2016
Continued state spending for business
The Governor’s unilateral action to expand a sales tax exemption for manufacturers was left in place; though scaled back, it will still take $21 million from next year’s budget at a time when schools and universities are scrapping for every dollar. Moreover, the exemption was combined with a more costly decision to “couple” with federal tax code changes for the current budget year. The coupling cost in the current year, $98 million, was not budgeted by the Governor and Legislature, has no value to incentivize investment, and comes at a time other identified state priorities have seen funding held down or reduced on grounds that revenue is not available. The Legislature left open the question of whether coupling will continue next year, and thus uncertainties on new unbudgeted costs. Iowa policy makers are too quick to provide tax breaks without finding ways to fund our traditional priorities.
More: “High Cost of Conformity,” IFP Policy Brief, March 2, 2016
Business tax credits have become an increasing share of state spending and are rising in cost at a faster pace than priorities in education and human services. Iowa taxpayers will see more of their dollars going to business subsidies next year, with little or no accountability for the public return on investment.
The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonpartisan, nonprofit Iowa-based organizations, the Iowa Policy Project in Iowa City and the Child & Family Policy Center in Des Moines. Reports are at www.iowafiscal.org.
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