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Posts tagged Child and Family Policy Center

IPP, CFPC form Common Good Iowa

Posted August 6th, 2020 to Blog

Today we have exciting news. The Iowa Policy Project has joined with our longtime partners at the Child and Family Policy Center to formally create a new organization, Common Good Iowa.

Look to Common Good Iowa for the solid research, rigorous policy analysis and focused advocacy that Iowans have come to expect from both organizations. Expect the same attention to critical issues that you have seen from IPP over two decades — and a new, invigorated approach to advancing a bold policy agenda. By joining to together we will have more capacity to coordinate our expertise on issues and communications, and wage successful campaigns to improve the lives of every person who calls Iowa home.

The creation of one organization out of two is the result of many months of discussions among board and staff members at both IPP and CFPC. We have always recognized that as each group has focused on some issues that the other has not, we share a common focus in other areas, including budget priorities and tax policy needed to fairly and adequately support those priorities. But we also have recognized that we need to connect the dots better between these many issues if we want our friends in the advocacy community to do so as well.

Common Good Iowa will, with one voice, draw attention to policy that connects these issues for the benefit of our entire community in Iowa — as we say, “the common good.”

Since the early discussions in 2000 that led to our founding in 2001, IPP has followed the vision of a “three-legged stool” for our work: economic opportunity (to include wages, jobs, education, wage theft, collective bargaining, economic development, pensions, and work supports including child care and Food Stamps); tax and budget issues, particularly tax fairness and revenue adequacy; and energy and the environment, including policy opportunities toward clean, sustainable energy choices and better water quality.

As you may know, IPP’s work on tax fairness and tax credits, as well as some of our research and advocacy on work support and safety-net programs, has been in cooperation and coordination with CFPC as the “Iowa Fiscal Partnership.” That brand on our work will go away as we are now formally one organization.

Common Good Iowa will carry on CFPC’s example as a leading advocate in Iowa on early childhood; children’s health, development and well-being; and family economic opportunity. As CFPC has done for many years, our new organization will continue to share data, link research to policy and promote best practices for improving child well-being as part of the nationwide Kids Count initiative.

Every staff member for both IPP and CFPC has a place in the new organization. Anne Discher, who has served as executive director of CFPC, will be the executive director of Common Good Iowa, headquartered in Des Moines. We will retain an Iowa City office, with IPP executive director Mike Owen becoming deputy director of Common Good Iowa. I invite you to reach out to Anne or Mike if you have questions about this new arrangement.

The name “Common Good Iowa” was chosen after great deliberation among staff and board of both organizations. It reflects our vision of public policy in Iowa. Philosophers, economists and political scientists have long debated and defined the common good, and there’s a powerful theme that links those conversations: public systems and structures for the benefit of all people, achieved through collective action in policymaking and public service. It feels utterly right for our new endeavor.

This is a great opportunity to reimagine our work. We’re at a moment when the devastating impact of racism, intolerance in our civic discussions, and years of neglect of our public systems have been laid bare for all to see. No Iowa community can thrive when some community members are systemically deprived of opportunity by our health, educational, human service and justice systems. We must do better.

As a largely white organization, we pledge to listen to and learn from our partners of color around our state, and to be not be just not racist, but, to borrow from scholar Dr. Ibram X. Kendi, to be anti-racist: to actively advance concrete policies and practices to dismantle the persistent inequities experienced by Black, Latinx, Asian, Native and other marginalized communities. We also commit to the internal work to become an organization that itself is attractive to a diverse, talented staff.

The merger is official now, although we will be putting finishing touches on our new brand over the next months. You’ll be hearing more about how you can celebrate virtually with us when we unveil our new logo, website, social channels and policy roadmap later in the year.

Until then you can reach Common Good Iowa staff at their existing CFPC and IPP email addresses, websites and social media accounts.

Sincerely,

 

Janet Carl

Vice President, Common Good Iowa Board of Directors
Former President, Iowa Policy Project Board of Directors

Back to business at Statehouse

Posted May 27th, 2020 to

Finding best uses of Iowa relief funds as legislators prepare to resume the 2020 session June 3

Over 18,000 Iowans have been sickened with the coronavirus. Over 313,000 Iowans — nearly 1 in 5 workers — have applied for unemployment since the middle of March. Many small businesses have closed or are operating at only limited capacity and suffering drastic losses.

While the misery is widespread, low-wage workers and persons of color have disproportionately felt the health and the economic consequences of the crisis. Both groups are more likely to be exposed to the virus — because they are more likely to be “essential workers” — and more likely to experience health and social disadvantages associated with poverty and racism that increase the odds of serious effects when exposed.[1]

Congress on March 27 passed the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act, which created the Coronavirus Relief Fund (CRF) to cover expenses of state and local governments related to the COVID-19 health and economic emergency. Of $139 billion for states, Iowa’s share is $1.25 billion. Because we have no cities with a population over 500,000, no funding went directly to local governments, but the state is free to allocate funds to localities.

Quick and effective use of these funds is important not just to help the thousands of Iowans suffering from the effects of this crisis, but also to boost the state economy. It has been shown that the most effective way of stimulating economic activity is to get more money in the hands of lower and middle income households, who can be counted on to spend in the local economy and support Iowa’s businesses. That in turn will boost state sales tax and income tax revenues, moderating the state’s fiscal problems.

How can the state use CRF funds, and what are the best uses?

CRF money must go for expenditures necessitated by the coronavirus emergency through December 30, 2020.[2] Congress made it explicit that these funds are for unforeseen and necessary additional expenditures, not to replace revenue lost because of the falloff in economic activity.[3] Still, the range of allowable uses is quite broad.[4] Eligible expenditures include not only direct expenses for public health needs but also expenses “incurred to respond to second order effects of the emergency, such as providing economic support to those suffering from employment or business interruptions due to COVID-19 related business closures.”[5]

As of this writing, Iowa plans to spend $100 million of the $1.25 billion, all to the Small Business Relief Program.[6] The Governor also will use $20 million to fund a new rental and mortgage assistance program. Lawmakers should use the remaining $1.13 billion to prioritize protecting state and local finances — key to long-term recovery — and meet the needs of low-wage workers and people of color who have borne the brunt of the virus.

Here are ways legislators should allocate CRF funds or adjust state priorities when they reconvene June 3:

  • Pay salaries and benefits of state government employees who have been diverted from their usual activities to respond to the current emergency. By using CRF for some state payroll costs, Iowa would face a smaller budget shortfall from the expected precipitous drop in state revenues.
  • Transfer funds to cities and counties to cover additional costs associated with the emergency, including payroll. Cities and counties face sizable costs for emergency management, purchase of personal protective equipment, sanitizing of facilities, technology needed for staff to work remotely, overtime for public safety workers, and elections costs with greater use of voting by mail.[7]
  • Transfer funds to school districts, which face added costs to divert education staff to online learning programs, facility cleaning, and ensuring that all students have access to educational programs while schools remain closed. Funds provided directly to schools by the CARES Act represent just 1 percent of school district budgets and are unlikely to cover all of these costs.
  • Bolster the federal Low-Income Home Energy Assistance Program (LIHEAP) with state funds and create a parallel program to prevent water shutoffs.
  • Strengthen the state’s Child Care Assistance program by increasing the maximum family income eligibility level and raising provider reimbursement rates. These boosts will support essential workers unable to afford the full cost of child care, help stabilize the child care industry by bringing new families into the system and improve its underlying financial structure.
  • Expand cash assistance under the Family Investment Program to help families meet basic needs and avert serious hardship.
  • Expand food assistance by increasing income eligibility for the Supplemental Nutrition Assistance Program (SNAP) to 200 percent of the federal poverty level, easing access with broad-based categorical eligibility and initiating a Disaster SNAP (D-SNAP) program to reach currently excluded Iowans. SNAP puts food on the table and is an important way to stimulate local economies.
  • Hire more staff at Iowa Workforce Development to facilitate applications for unemployment benefits, and create a network of navigators to help individuals apply for various forms of public assistance needed now by those affected by the crisis, particularly those with language barriers.
  • Provide additional funds to counties for general cash assistance to individuals in emergency situations and those left out of traditional assistance programs.
  • Expand internet access for remote work and education, access to TestIowa and online commerce.
  • Assess the need for financial support to hospitals beyond the $691 million in “provider relief funds” to Iowa health care providers already included in the CARES Act. Hospitals are seeing revenues drop as people avoid seeking care for fear of contracting the virus, a trend that could well continue even after hospitals reopen for elective procedures.

[1] Harvard Center on the Developing Child, “Thinking About Racial Disparities in COVID-19 Impacts Through a Science-Informed, Early Childhood Lens.” https://developingchild.harvard.edu/thinking-about-racial-disparities-in-covid-19-impacts-through-a-science-informed-early-childhood-lens/

[2] Legislative Services Agency, Fiscal Update, March 31, 2020. “H.R. 748 Coronavirus Aid, Relief, And Economic Security Act Appropriations.”

[3] The CARES Act states: “Coronavirus Relief Fund payments may not be used to directly account for revenue shortfalls related to the COVID-19 outbreak.”

[4] U.S. Department of the Treasury: “Coronavirus Relief Fund: Frequently Asked Questions,” updated as of May 4, 2020. A summary of allowable expenses described in this document can be found in the IFP report: “Iowa will need more fiscal relief than Congress has given.” https://bit.ly/2WKMp4o

[5] Legislative Services Agency, Fiscal Update, May 15, 2020, “COVID-19 – Iowa Coronavirus Relief Fund.”

[6] Legislative Services Agency, Fiscal Update, May 15, 2020, “COVID-19 – Iowa Coronavirus Relief Fund” and Legislative Services Agency, Fiscal Update, May 12, 2020, “COVID-19 — Iowa Small Business Relief Program Update.”

[7] An Iowa State Association of Counties found $5.8 million in additional spending required in 11 counties, the majority for emergency management, public safety, public health, courthouse expenses and IT. https://www.iowacounties.org/wp-content/uploads/2020/05/ISAC-COVID-Financial-Impacts-on-Iowa-Counties-Report.pdf The League of Cities is in the process of surveying members, https://bit.ly/2yvMQ9m.

Sheltering the data in place

Posted April 8th, 2020 to Blog

Governor Kim Reynolds over the past few weeks has moved incrementally to close more kinds of businesses, to the point where Iowa’s restrictions now resemble those of states that have a blanket statewide “shelter in place” order. Significant distinctions remain: a proper and comprehensive shelter in place order closes all businesses except those specified as essential, leaving no ambiguities and loopholes, and comes with clear and enforceable restrictions on travel and social activities.

The governor continues to assert that her recommendations are driven by the same four metrics that have guided her since the beginning and that only recently became partly public information due to efforts by the press. We provided a thorough analysis of that guidance several days ago. On Tuesday, we finally learned about one of those metrics: There are three long-term care facilities with a sufficient number of COVID-19 cases to be classified as a facility with an outbreak.

We now know enough to construct the point system in spite of stonewalling by the Governor’s Office.

The first of the four measures — percent of population age 65 or over — can be found from census data. The second — cases per 100,000 population — can be calculated because the number of cases has been released by IDPH by county. The third — outbreaks at care facilities — is now known, with locations, because of a question at a press conference.

That leaves the fourth — hospitalizations as a percent of cases — that is unknown by county or region because the governor still refuses to release the data. But we know the total score by region because it shows up on the maps that are intermittently released at press conferences (but remain unavailable on the IDPH website). Thus by subtraction we can determine that all four regions must be at the highest level, a 3, on the hospitalization rate score.

From here on out, the only thing that can change is the cases per 100,000 population and the number of care facility outbreaks. Region 5 is already at the maximum on the cases measure, and regions 1 and 6 will likely get there soon, leaving all three regions with a score of 9, 1 short of 10, the number that supposedly triggers shelter in place. So those regions, covering a large majority of the state’s population and COVID-19 cases, can get to 10 only with another outbreak at a care facility.

The governor on the one hand argues that we already have the equivalent of shelter in place, and at the same time the metric that she says still guides her decisions shows that shelter in place is not yet warranted anywhere in the state. Has that metric really been used thus far, and in what way? How do you get from the metrics to a list of particular additional businesses to close? What will happen when a region reaches 10? Will the governor order more stringent measures in just that region? Or will the whole thing be scrapped once a proper forecasting model is developed that meets with her approval?

One thing is clear: transparency has been sadly lacking, and for no apparent reason.

Peter Fisher is research director of the nonpartisan Iowa Policy Project.

pfisher@iowapolicyproject.org

IFP Statement: Disclose data, plans

It is past time to provide all Iowans with COVID-19 data, plans

A new policy brief by Iowa Policy Project research director Peter Fisher examines the arbitrary and backward-facing approach of the metrics that the administration of Governor Kim Reynolds has disclosed that Iowa officials are using in their response to the spread of the novel coronavirus. See that brief on the Iowa Fiscal Partnership (IFP) website.

The Iowa Fiscal Partnership released the following statement from Mike Owen, executive director of the Iowa Policy Project, about the lack of transparency in Iowa’s COVID-19 response.

“In a public health crisis like living Iowans and Americans have never seen, our leaders should welcome the value public scrutiny and perspective can bring to decision-making.

“It should not have taken an enterprising news reporter to coax out the short list of metrics[1] that Governor Kim Reynolds and her administration are using to make decisions about public safety. Responding to the crisis is public business, as consequential as most of us have seen. Iowans not only need to know what data is being used, and its sources, but how choices are being made with that information.

“Are other measures being considered? What measures have been dismissed? Who are the analysts? What comparisons are being made to other data and other states’ actions? These are only a few of the questions that logically arise. Not enough testing is being done to make the Governor’s metric of an infection rate meaningful, for one thing.

“The Governor asserts her actions thus far are as strong as official ‘shelter-in-place’ orders in other states. Even if comparisons wind up backing that claim, we need more information.

“Do we have the resources to make sure front-line health workers and all public and private workers handling essential services are protected? From medical care to corrections to seniors’ housing to day-care centers, do workers have the personal protective equipment to do their jobs safely? Do they have sufficient resources to protect the people in their care? Any of us could be among those needing care in the coming weeks.

“It is fair for Iowans to ask how they can expect that the state will avoid an overwhelmed health care system when we are relying on looser rules for social interaction than they are seeing in other states. Should we not build into public policy the findings of analysis that illustrate the benefit of reducing travel in preventing the spread of the virus?[2]

“It is not possible for Iowa to have all hands on deck to respond without knowing what resources we have, what we can reasonably expect to need, and to know how our leaders plan to bridge any gap.

“Yes, we are owed the information. It affects us all, and without it we cannot contribute with ideas to make solutions better or bring them along faster.

“It is time — past time — that all Iowans are brought to the table.”

                                            #     #     #     #     #

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 and Family Policy Center in Des Moines. Find reports at www.iowafiscal.org, and the IPP and CFPC websites, www.iowapolicyproject.org and www.cfpciowa.org.

[1] Zachary Oren Smith, Barbara Rodriguez, Jason Clayworth, Des Moines Register, April 2, 2020. https://www.desmoinesregister.com/story/news/health/2020/04/02/shelter-in-place-iowa-covid-19-benchmark-guidance-tool-waits-for-hospitalization-outbreaks/5111747002/

[2] The New York Times, “Where America Didn’t Stay Home Even as the Virus Spread.” April 2, 2020. https://www.nytimes.com/interactive/2020/04/02/us/coronavirus-social-distancing.html?algo=top_conversion&fellback=false&imp_id=603400842&imp_id=967213594&action=click&module=trending&pgtype=Article&region=Footer

IFP News: Giveaway costs grow

  • Research Activities Credit cost leaps in 2019 to record $78 million
  • Non-taxpaying companies receive record $53 million in ‘refund’ checks

IOWA CITY, Iowa (March 12, 2020) — Iowa businesses large and small made record use of the state’s generous research tax credit in 2019, a $78.4 million cost to taxpayers with most —$53.5 million — going out as checks to companies that paid no income tax.

The cost of the credit has risen 62 percent in 10 years, with very large businesses taking 78 percent of the benefit in 2019, or $60.8 million.

“Over the last 10 years, this unaccountable program has given away nearly $600 million — 73 percent of it in checks to companies that pay no state income tax,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP).

“This troubling trend comes as Governor Kim Reynolds continues to push legislators to give new tax breaks to the wealthiest Iowans at the expense of poor- and moderate-income taxpayers, and of public services including education and health care,” Owen said.

The Iowa Department of Revenue on Thursday issued its 2019 annual report on the Research Activities Credit (RAC), the 10th full-year report since lawmakers required the disclosure in 2009.

The report showed:

  • Both tax credit claims and so-called “refunds” — checks for the value of tax credits not needed to meet tax obligations — hit record levels for corporations in 2019: $55.8 million in claims and $46.6 million in refund checks.
  • The number of individual claims — by businesses filing as individuals — expanded dramatically in 2019, from 5,305 claims in 2018 to 7,083 in 2019. The cost also has grown sharply, from $11.3 million in 2017, to $15 million in 2018, to $22.5 million last year.
  • Rockwell Collins and Deere, and associated businesses, are the largest claimants as usual, accounting in 2019 for $23.4 million, or 30 percent of all claims.
  • Very large companies, with more than $500,000 in claims, accounted for 78 percent of the cost of the credit, and 81 percent of the “refunds.”

The RAC and a supplemental credit are refundable, which means companies receive a payment from the state for the amount of their credits above what they need to reduce or eliminate taxes.

“The dominance of large operations is important,” Owen said, “because this tax credit was designed to help small start-up operations. Deere, Rockwell Collins and many others do not need state help to do research, and certainly do not need refunds for taxes they didn’t have to pay.”

A special tax-credit review panel urged an end to RAC refunds for large companies in 2010. Lawmakers in recent years have acknowledged the concern about those uncontrolled subsidies but have not acted to restrain them, and the most powerful business lobbying interests have fought to keep them in place.

“How can Iowa defend giving so many millions to giant companies for research they would do anyway?” said Anne Discher, executive director of the Child and Family Policy Center (CFPC) in Des Moines. IPP and CFPC form the Iowa Fiscal Partnership, which has tracked fiscal accountability issues with the research credit since before the official annual reports were provided.

“Iowa families need access to child care, pre-K-12 and higher education, and mental health services,” Discher added. “Somehow, lawmakers can never find enough money for those public priorities. But big companies never have to worry — their entitlement keeps coming, even when they don’t owe any taxes.”

Other noteworthy elements of the report, in the context of reports for recent years, are that ethanol operations have become big users of the credit, and in 2019, there was another big jump in the number of claims by businesses filing as individuals rather than as corporations.

The amount of individual claims nearly doubled in two years, to $22.5 million in 2019, and nearly quadrupled in five years, from $5.9 million in 2014.

The Iowa Fiscal Partnership reports are available at www.iowafiscal.org.

The official Department of Revenue report is available at this link: https://tax.iowa.gov/sites/default/files/2020-03/RACAnnualReport2019_rev03112020.pdf

Breaking trust with the Trust

View news release

By Peter Fisher and David Osterberg

Iowa voters in 2010 approved a constitutional amendment to create a trust fund to guarantee more funding for outdoor recreation and water quality. In that same election they put Kim Reynolds into statewide office, as lieutenant governor with returning Governor Terry Branstad.

Ten years later, a governor has finally put forward a plan to put money into the trust fund — Branstad never did, and Reynolds waited until her third legislative session to do so. But she is not offering simply what voters approved. The actual priorities Iowa voters overwhelmingly supported in 2010 would only get about two-fifths of what they should receive from the sales-tax increase voters authorized if her proposal passes. The figure below shows each of the areas of funding voters approved and what these programs will actually receive in new money under the governor’s plan.[1]

There are three reasons for the shortfalls: The total pie would shrink, program allocations would change, and a majority of the funds are not new money — a stipulation of the law that told voters what to expect.

Voters knew the ground rules for the trust fund because they had a law to consult. And that law — which with approval of the amendment became section 461.31.2(c) of the Iowa Code — specified how the funding would be apportioned among various purposes. It prescribed taking the first three-eighths cent of the next increase in the state sales tax. It also specified that this would be new money. As the law states:

“Trust fund moneys shall supplement and not replace moneys appropriated by the general assembly to support the constitutional purposes provided in section 461.3.” (emphasis added)

‘Voters, I shrunk the pie’

The state sales tax, as typically understood inside and outside the Capitol, means the sales and use tax, the latter applying to purchases from elsewhere brought into the state. They are tied together; when the sales tax rate has changed, the use tax rate has changed as well. The Governor has proposed raising both rates by a penny, but her first breach of trust is to interpret the will of the voters in approving the three-eighths of a cent as applying only to the sales tax portion. She also excludes the new sales taxes on digital goods and services. The result is $31 million less going into the voter-created Natural Resources and Outdoor Recreation Trust Fund (known widely as IWILL, for the Iowa Water and Land Legacy group that promoted it in 2010).[2]

Re-slicing the pie

The next violation of trust comes with the Governor’s after-the-fact revisions to the formula voters had reason to expect would be followed when the funding ultimately was approved.

The Governor claims “the challenges we face today and will face tomorrow are different than what we understood them to be 10 years ago, so it’s time to amend the formula.”

In fact, she has presented no case that these challenges themselves are inherently different — they indeed might be quite more substantial in 2020 than they were in 2010 because of a decade of inaction on the part of both Governor Reynolds and the Legislature.

The 2010 law lays out the formula for use of the trust fund:

  • Natural resources establishment, restoration and enhancement, 23 percent.
  • Soil conservation and water protection, 20 percent.
  • Watershed protection, 14 percent.
  • Iowa Resources Enhancement and Protection fund (REAP), 13 percent.
  • Local conservation initiatives, 13 percent.
  • Trails design, maintenance and expansion, 10 percent.
  • Lake restoration and water quality improvement, 7 percent.

The proposed new formula gets rid of much of the outdoor recreation funding that voters would have expected, and cuts trails, REAP and much of the funding to the Department of Natural Resources. This re-slicing of the pie better reflects special interests in industrial agriculture that have successfully blocked meaningful regulation of practices that have created Iowa’s water pollution problems than it does the intent of people who sought the constitutional amendment vote in the first place.

Substituting old pie for new pie

Despite the statute clearly specifying that the revenue going into the fund should be new and additional funding, over half of the funds allocated under the Governor’s plan are simply transfers from existing programs. The REAP program, for example, funds projects like county and city parks, soil conservation, and Iowa’s historical structures; it already has an annual budget. She takes $12 million of that current budget and relabels it as IWILL funding, then adds $5.1 million in new funding from the sales tax increase. The result is $17 million for REAP as part of IWILL, but most of that was already in the budget.

Data from the Legislative Services Agency shows the “new funds” violation of trust in the Trust Fund by Governor Kim Reynolds. Her proposal generates just $82 million in new funding for the purposes voters wanted expanded by creating the Trust Fund, instead of the $200 million or more voters should expect.

Table 1. Governor’s proposal changes the rules voters understood in approving Trust Fund

Already existing administration for the Iowa Department of Natural Resources and Agriculture and Land Stewardship cannot be considered money that “shall supplement and not replace” outdoor recreation and water quality.

Funding for trails stands out as a betrayal of the constitutional amendment voters approved and the legislation passed to inform voters of the amendment’s intentions. The original three-eighths of sales and the original formula would have put about $20 million into trails, greatly increasing the present funding for a purpose most urban Iowans have as a recreation priority. With the changes there is only another $3 million and much of it is destined to water trails and not bicycle and walking trails.

Shifting taxes from the rich to lower income Iowans

Finally, the Governor is agreeing to deliver on the voters’ consent to a tax increase only on the condition that she can cut other taxes.[3] She is proposing unwarranted and significant income-tax cuts that disproportionately benefit those at the top. Lower- and middle-income taxpayers already pay a greater share of their income in sales tax than those who have greater income. (Figure 2) The net result of this plan is a reduction in revenue going to the general fund, which will necessitate cuts in other services, from education to corrections to safety-net supports.

The Governor’s proposal does not reflect the position of the voters in 2010. To twist their intent 10 years later is a violation of their trust. In addition, already inequitable funding for Iowa state and local government will become more unfair if the Governor has her way.[4]

What are those who voted for the constitutional amendment getting?

In a cruel irony, voters who supported the trust fund and agreed to a sales tax to fund it will find that farm operations that cause the pollution problems will be the big winners. Their operations will not pay the increased sales tax. From fertilizer and soil amendments to combines and tractors, farm operations are exempt from the sales taxes.

The Governor’s proposal breaks the trust established by voters’ approval of the constitutional amendment — approval that came, by the way, with greater support than the Branstad-Reynolds ticket got that year.

The Farm Bureau Federation delegates who passed a resolution at their 2010 convention opposing the referendum[5] are no doubt happy with the Governor’s changes. Some agricultural groups have pushed back against proposals that would make polluters foot the bill for problems they have created. Yes, that means the agriculture industry, which is responsible for the lion’s share of nutrient pollution that contaminates Iowa waters, is not required by this governor or the Legislature either to act more responsibly or to clean up its mess.

Not all farm groups have taken this extreme position. Five hundred elected county soil and water district commissioners and others attending the Conservation Districts of Iowa meeting last fall voted for mandatory 30-foot buffers along Iowa streams. The resolution, passed with a supermajority, supports legislation similar to a Minnesota law that requires buffer strips or comparable conservation practices.[6] This buffer idea was shot down by the state Soil Conservation and Water Committee picked by this governor and previous ones, but soil and water district commissioners’ actions show some farmers are taking responsibility. 

Water quality is a severe problem in Iowa and the state needs more recreation opportunities. The voters in 2010 recognized this, and a response is long overdue — but not just any response. The word “trust” is in the name of act that modified the Iowa Constitution. Any law that flows from it should reflect the voters’ will.


[1] The data in Table 1 are based on the information available as of February 13 and may change as additional details are released by the Governor’s office. Sources are: Legislative Services Agency, Analysis of the Governor’s Budget, FY2021, February 16, 2020, pages 15, 86-91, and 194-197; and Legislative Service Agency, Fiscal Note for SF 512, Water Quality, January 31, 2018. The table counts as transfers rather than new money all of the revenue that would have gone into the water quality infrastructure fund and the water quality financial assistance fund from the water service excise tax in fiscal year 2021 if that tax were not repealed by the Governor’s bill.

[2] The table assumes that an additional penny on the sales and use tax would generate $540 million, a figure used by many commentators. This is conservative. The December 2019 estimate from the Revenue Estimating Conference was that the sales and use tax would generate $555 million in FY2021.

[3] Governor Reynolds’ news release on the “Condition of the State” address. January 14, 2020. “I have no interest in raising taxes, so any increase in revenue from a sales tax must be more than offset by additional tax cuts. That starts with continuing to reduce our uncompetitive income-tax rates.” https://governor.iowa.gov/press-release/gov-reynolds-delivers-condition-of-the-state

[4] Iowa Fiscal Partnership, “Tax Inequity: Iowa’s continuing story,” October 17, 2018. http://www.iowafiscal.org/tax-inequity-iowas-continuing-story/

[5] Ballotpedia. Iowa Natural Resources and Outdoor Recreation Trust Fund, Amendment 1 (2010). https://ballotpedia.org/Iowa_Natural_Resources_and_Outdoor_Recreation_Trust_Fund,_Amendment_1_(2010)

[6] Erin Jordan. “Some Iowa farmers push for law prohibiting crops near rivers, streams; Conservation district vote at odds with state’s voluntary measures.” The Gazette, Cedar Rapids, November 22, 2019. https://www.thegazette.com/subject/news/government/some-farmers-call-for-iowa-law-buffering-crops-from-streams-20191122

Peter Fisher is research director and David Osterberg is co-founder and lead environmental researcher at the nonpartisan Iowa Policy Project, which formed the Iowa Fiscal Partnership with another nonpartisan organization, the Child and Family Policy Center. Find reports at www.iowafiscal.org.

Tax credits: Just review them!

Posted November 11th, 2019 to Blog

Iowa lawmakers are making the issue of tax credit reform much more difficult than it needs to be.

Put another way, consider tax credit reform as a different task: If we were setting out to design the first wheel, no cars would be on the road today.

The latest foot-dragging came in late October, with the first meeting of a so-called “Tax Credit Review Committee,” which if not for the delay was a rare, promising nugget in an ill-conceived, expensive and inequitable income-tax cut bill in 2018.

It was 10 years ago this fall that a scandal in the Iowa Film Tax Credit program led Governor Chet Culver to order a review of all state tax credits. A special panel of state department heads went through the credits and offered a set of reforms in January 2010.

Virtually nothing was done in response. Tax credits, particularly those for business, have gone merrily along, rising to a projected $434 million for this budget year. Of that, about 7 out of every 10 dollars, or $314 million, is for businesses. State revenue analysts expect under current law for these numbers to be similar through FY2024.

Basic RGB

While the tax credits themselves can be complicated, the fundamental issues are not.

  • Tax credits are expensive.
  • Tax credits are regularly and extensively analyzed by the Department of Revenue, making plenty of information available.
  • Tax credits, like any spending of public money — and this is, in fact, spending ordered outside the budget process — demand accountability and a demonstration of a public benefit.
  • The Legislature creates these exceptions to our tax code; thus, it falls to the Legislature to review them to determine if they meet their expected purpose.
  • Even if a given credit may benefit the public, it must be shown to be a better public expenditure than something else, like education or health care services.

As it is, the 2020 legislative session will open without anything serious being done about a review ordered two years before.

Truly it is easier not to do anything, to keep the gravy train running for the corporate lobbyists who benefit from these credits. But if you’re going to talk the talk about accountability in public spending, you should walk the walk.

The low-hanging fruit that could start lawmakers on that path is the Research Activities Credit, or RAC. The RAC is a refundable credit, which means that if you have more credits than you owe in taxes, you get a check from the state for the balance. The annual cost of the RAC is about one-fifth of the cost of all business and family tax credits.

As we have shown repeatedly — using data from an annual state report by the Department of Revenue — most of the RAC is paid as so-called “refunds,” not of taxes owed, but of tax credits not needed, and most of the benefit goes to very large firms.

Basic RGB

DOR evaluations — here and here as examples — provide evidence that is at best sketchy on whether the RAC promotes significant new research in the state. Companies that benefit from the RAC have to do the research anyway, just to be in business, or they wouldn’t bother with it.

In the case of a small startup firm, a credit for some period of time might help the firm get established. For multinational corporations with hundreds of millions or billions in profit, good luck proving the need.

Think of it this way: You could reduce or even eliminate the refundability of the RAC and not raise taxes on a single company or individual. But you’d have $40 million more available to put into public schools, or clean water projects, or any number of public priorities.

Incoming House Speaker Pat Grassley said tax credit reform “is kind of a long process.” But if one never starts, one will never design that wheel.

These are budget choices, ultimately. Why are legislators so afraid to even start on them?

MMike Owen is executive director of the nonpartisan Iowa Policy Project.

mikeowen@iowapolicyproject.org

Tax credits: Just review them!

Posted November 11th, 2019 to Blog

Iowa lawmakers are making the issue of tax credit reform much more difficult than it needs to be.

Put another way, consider tax credit reform as a different task: If we were setting out to design the first wheel, no cars would be on the road today.

The latest foot-dragging came in late October, with the first meeting of a so-called “Tax Credit Review Committee,” which if not for the delay was a rare, promising nugget in an ill-conceived, expensive and inequitable income-tax cut bill in 2018.

It was 10 years ago this fall that a scandal in the Iowa Film Tax Credit program led Governor Chet Culver to order a review of all state tax credits. A special panel of state department heads went through the credits and offered a set of reforms in January 2010.

Virtually nothing was done in response. Tax credits, particularly those for business, have gone merrily along, rising to a projected $434 million for this budget year. Of that, about 7 out of every 10 dollars, or $314 million, is for businesses. State revenue analysts expect under current law for these numbers to be similar through FY2024.

Basic RGB

While the tax credits themselves can be complicated, the fundamental issues are not.

  • Tax credits are expensive.
  • Tax credits are regularly and extensively analyzed by the Department of Revenue, making plenty of information available.
  • Tax credits, like any spending of public money — and this is, in fact, spending ordered outside the budget process — demand accountability and a demonstration of a public benefit.
  • The Legislature creates these exceptions to our tax code; thus, it falls to the Legislature to review them to determine if they meet their expected purpose.
  • Even if a given credit may benefit the public, it must be shown to be a better public expenditure than something else, like education or health care services.

As it is, the 2020 legislative session will open without anything serious being done about a review ordered two years before.

Truly it is easier not to do anything, to keep the gravy train running for the corporate lobbyists who benefit from these credits. But if you’re going to talk the talk about accountability in public spending, you should walk the walk.

The low-hanging fruit that could start lawmakers on that path is the Research Activities Credit, or RAC. The RAC is a refundable credit, which means that if you have more credits than you owe in taxes, you get a check from the state for the balance. The annual cost of the RAC is about one-fifth of the cost of all business and family tax credits.

As we have shown repeatedly — using data from an annual state report by the Department of Revenue — most of the RAC is paid as so-called “refunds,” not of taxes owed, but of tax credits not needed, and most of the benefit goes to very large firms.

Basic RGB

DOR evaluations — here and here as examples — provide evidence that is at best sketchy on whether the RAC promotes significant new research in the state. Companies that benefit from the RAC have to do the research anyway, just to be in business, or they wouldn’t bother with it.

In the case of a small startup firm, a credit for some period of time might help the firm get established. For multinational corporations with hundreds of millions or billions in profit, good luck proving the need.

Think of it this way: You could reduce or even eliminate the refundability of the RAC and not raise taxes on a single company or individual. But you’d have $40 million more available to put into public schools, or clean water projects, or any number of public priorities.

Incoming House Speaker Pat Grassley said tax credit reform “is kind of a long process.” But if one never starts, one will never design that wheel.

These are budget choices, ultimately. Why are legislators so afraid to even start on them?

MMike Owen is executive director of the nonpartisan Iowa Policy Project.

mikeowen@iowapolicyproject.org

Tax credits: Just review them!

Posted November 11th, 2019 to Blog
Iowa lawmakers are making the issue of tax credit reform much more difficult than it needs to be. Put another way, consider tax credit reform as a different task: If we were setting out to design the first wheel, no cars would be on the road today. The latest foot-dragging came in late October, with the first meeting of a so-called “Tax Credit Review Committee,” which if not for the delay was a rare, promising nugget in an ill-conceived, expensive and inequitable income-tax cut bill in 2018. It was 10 years ago this fall that a scandal in the Iowa Film Tax Credit program led Governor Chet Culver to order a review of all state tax credits. A special panel of state department heads went through the credits and offered a set of reforms in January 2010. Virtually nothing was done in response. Tax credits, particularly those for business, have gone merrily along, rising to a projected $434 million for this budget year. Of that, about 7 out of every 10 dollars, or $314 million, is for businesses. State revenue analysts expect under current law for these numbers to be similar through FY2024. Basic RGB While the tax credits themselves can be complicated, the fundamental issues are not.
  • Tax credits are expensive.
  • Tax credits are regularly and extensively analyzed by the Department of Revenue, making plenty of information available.
  • Tax credits, like any spending of public money — and this is, in fact, spending ordered outside the budget process — demand accountability and a demonstration of a public benefit.
  • The Legislature creates these exceptions to our tax code; thus, it falls to the Legislature to review them to determine if they meet their expected purpose.
  • Even if a given credit may benefit the public, it must be shown to be a better public expenditure than something else, like education or health care services.
As it is, the 2020 legislative session will open without anything serious being done about a review ordered two years before. Truly it is easier not to do anything, to keep the gravy train running for the corporate lobbyists who benefit from these credits. But if you’re going to talk the talk about accountability in public spending, you should walk the walk. The low-hanging fruit that could start lawmakers on that path is the Research Activities Credit, or RAC. The RAC is a refundable credit, which means that if you have more credits than you owe in taxes, you get a check from the state for the balance. The annual cost of the RAC is about one-fifth of the cost of all business and family tax credits. As we have shown repeatedly — using data from an annual state report by the Department of Revenue — most of the RAC is paid as so-called “refunds,” not of taxes owed, but of tax credits not needed, and most of the benefit goes to very large firms. Basic RGB DOR evaluations — here and here as examples — provide evidence that is at best sketchy on whether the RAC promotes significant new research in the state. Companies that benefit from the RAC have to do the research anyway, just to be in business, or they wouldn’t bother with it. In the case of a small startup firm, a credit for some period of time might help the firm get established. For multinational corporations with hundreds of millions or billions in profit, good luck proving the need. Think of it this way: You could reduce or even eliminate the refundability of the RAC and not raise taxes on a single company or individual. But you’d have $40 million more available to put into public schools, or clean water projects, or any number of public priorities. Incoming House Speaker Pat Grassley said tax credit reform “is kind of a long process.” But if one never starts, one will never design that wheel. These are budget choices, ultimately. Why are legislators so afraid to even start on them? MMike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

Tax-cutters’ lack of confidence

Posted June 13th, 2019 to Blog

In the confidence game of cutting taxes, where the world is promised to all but delivered mainly to the wealthy, Iowa’s tax-cutters are showing how little confidence they have in their own political talk.

State Senator Randy Feenstra of Hull is backing off his chairmanship of the Senate Ways and Means Committee as he runs for Congress in 2020, leaving the door open to Senator Jake Chapman of Adel.

Both have been big talkers painting the glories of tax cuts while running down Iowa’s competitive tax structure, and they have been successful using that political spin to make big changes — many of which are scheduled but yet to take effect.

Even then, they apparently will waste no time in rushing through new tax cuts, as evidenced by this story in the Cedar Rapids Gazette. There, Chapman is quoted that “he expected the Legislature would continue next session ‘to reform income taxes and reduce some of the highest tax rates in the country.’”

Before addressing the fundamental inaccuracy of the senator’s comment, one must wonder at least two things:

•   Are they not confident what they have passed already will not deliver what they promised?
•   Are they not confident they will retain political power through the Statehouse (the House is a much closer partisan split than the Senate) past the 2020 election?

Answering “yes” to either would explain their perceived need to rush more ill-advised tax policy into law.

In a very short span, Iowa lawmakers have eroded revenues with new tax giveaways to the wealthy and powerful, leaving scraps to working families in the middle and below. This has come with changes in personal income taxes, corporate income taxes and property taxes.

As Peter Fisher and Charles Bruner pointed out in an Iowa Fiscal Partnership analysis, he income-tax cuts passed in 2018 give almost half of the overall benefit to the highest-earning 2.5 percent of taxpayers — those making $250,000 or more.

 

 

 

 

 

Senator Chapman plays games with the term “tax rates” as if the highest tax rate is what anyone ever paid on all their income. It’s an illusion.

The highest rate — already reduced from 8.98 percent to 8.53 percent this year under the 2018 law — is a marginal rate; it is paid on only the highest share of income. The same taxpayer who pays the highest rate on one share of income also pays the lowest rate on the share of income where that rate applies.

In short, it’s a mix of rates — and they are applied to taxable income, which has many adjustments to lower that amount. Most notable among those is Iowa’s unusual provision to allow taxpayers to deduct federal income tax from state taxable income, which benefits higher-income people the most.

The tax-rate myth promoted by Senator Chapman is an old game, but the people who want to reduce public services and investments in the future keep playing it. And why not? They’re getting away with it.

The 2018 legislation includes ongoing rate cuts — if revenues reach high-enough levels. One reason to pass rate cuts again in 2020, before that deadline, is that you don’t expect the revenue targets to be met.

These changes have come at great cost to public services, including poor funding of public education from K-12 through community colleges and universities.

Looking ahead to the future of our state, and beyond the next election, would be the wisest course for Iowa tax policy. That is not what we’re getting.

Mike Owen is executive director of the nonpartisan Iowa Policy Project and director of the Iowa Fiscal Partnership, a joint effort of IPP and the nonpartisan Child and Family Policy Center in Des Moines. mikeowen@iowapolicyproject.org