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Posts tagged David Osterberg

Rosy forecasts bring thorny budgets

Capitol-DSC_0119-7inA memo from the Legislative Services Agency (LSA) indicates a higher-than-anticipated cost of a special-interest sales-tax break primarily for manufacturers.

We could not afford it when Governor Terry Branstad attempted to implement it by rule in 2015, or when a scaled-back version passed in 2016, and we cannot afford it now.

But it appears likely that the new break is at least part of the reason sales-and-use taxes are flattening out, putting fresh pressure on the budget even after FY2017 cuts and continued reliance of state policy makers to push tax breaks that divert millions from critical services such as education.

There is great irony in this report coming as Governor Branstad was turning over the keys to Kim Reynolds, especially given this comment in the LSA piece by senior fiscal legislative analyst Jeff Robinson:

One potential explanation for the recent sales/use tax downturn is an underestimated fiscal impact of the sales/use tax exemption for manufacturing supplies and replacement parts. For proposed legislation in previous years, estimates of the impact of exempting manufacturing supplies and replacement parts from the State sales/use tax had been much higher.

As Robinson suggests, there was ample reason to think the cost would be “much higher” and that should have been taken into account in revenue estimates and crafting the FY17 budget.

Likewise, the four of us were present in the Iowa House chamber in 1983 when new Governor Branstad proposed a sales-tax increase, just a few months after bludgeoning his election opponent, Roxanne Conlin, with a “tax and spend” refrain. The new Governor inherited a budget shortfall right out of the gate, a product of overly rosy revenue projections by the Ray administration.

To be fair to Governor Ray, the farm crisis was unfolding back then, and the landscape was not necessarily as clear.

This time, the continuing revenue problem is due principally to out-of-control tax giveaways, which have accelerated long since Governor Ray left office. Just this one perk for manufacturing was expected to cost $21.3 million from the state budget.* However, the latest LSA analysis suggests, the cost to the state may be two or three times what was expected.

Odd that Governor Branstad, burned so early in his tenure by optimistic revenue estimates, would let this happen to his very own successor as she took office. Maybe he just forgot.

We did not forget.

 

* That cost figure grows to $25.6 million when including the dedicated revenue for local school infrastructure, and $29.2 million when including lost local-option tax revenue.

Posted by IPP Executive Director Mike Owen, IPP Founder David Osterberg, IPP Board President Janet Carl, and IPP Board Member Lyle Krewson. Owen was the Statehouse correspondent for the Quad-City Times and Osterberg, Carl and Krewson were state representatives from Mount Vernon, Grinnell and Urbandale, respectively — in 1983.


Lost legacy of science and research?

Posted April 19th, 2017 to Blog

Editor’s Note: The Cedar Rapids Gazette published a version of this piece online Tuesday, April 18, 2017.

While Iowans and others celebrate Earth Day on Saturday with a March for Science, many legislators have already tripped over their own votes.

Besides several cuts to higher education Iowa legislators have taken aim at particular scientific centers at the University of Iowa and Iowa State University.

With the state’s second largest city and its largest university both almost recovered from massive flooding, they attacked the Flood Center at the UI, which may survive with a 20 percent cut to reward how its data and research have helped citizens of the state.

Certainly as troubling is the pending elimination of the Leopold Center for Sustainable Agriculture at ISU, and the farming out of duties at the Energy Center at ISU to the Iowa Economic Development Authority. So much for independent research.

One thing lost in these assaults is a sense of institutional memory. Those of us who started the Leopold Center some 30 years ago found agreement to assure Iowans a lasting resource independent of industry control and other research funding. And it has worked.

Much of the research on how to reduce agricultural damage to water quality has been started by the Leopold Center — more than 600 research projects, according to Leopold’s director, Professor Mark Rasmussen.

You drink the water. You breathe the air. Are you comfortable that Iowa’s premier research universities are being blocked from conducting research on topics including water quality, manure management, livestock grazing, cover crops, alternative conservation practices, biomass production, soil health and local food systems development?

In fact, as Rasmussen notes, many practices recommended in Iowa’s Nutrient Reduction Strategy to reduce agricultural pollution — including streamside buffers, erosion control measures, and bioreactors — “were first researched through Leopold Center funding.”

Now, the history of the Leopold Center is being reinvented by lawmakers attempting to erase a three-decade, bipartisan commitment to sustainable funding of independent research. They would eliminate the publicly directed mission and turn it over to businesses.

It is hard to know if these attacks are driven by politics or corporate interest. Maybe it is just Iowa’s version of an attack on science generally.

Either way, the bill eliminating the Leopold Center has passed the Senate and Iowans have only a short time to demand more from their elected officials in the House and the Governor. Voices rising helped to save the Flood Center with only a cut. Concerned Iowans may yet save the Leopold Center, but the clock is ticking.

 

David Osterberg, a state representative from Mount Vernon from 1983-1994, is co-founder and lead environmental researcher at the nonpartisan Iowa Policy Project. Osterberg and fellow legislators Ralph Rosenberg and Paul Johnson were co-authors of the law that created the Leopold Center at Iowa State University.


IPP Statement: IPERS is strong

Posted January 31st, 2017 to Blog

Governor Branstad and Lieutenant Governor Reynolds are discussing a potential task force to examine whether to replace the IPERS defined benefit pension plan with a defined contribution plan, like 401(k) plans.

The Iowa Policy Project, which has researched this issue already, today released this statement:

The governor’s proposed task force on public pensions is unnecessary. The evidence is clear that a defined contribution plan is inferior to a defined benefit plan in the fundamental purpose of a pension: to assure a secure retirement for an employee. The IPERS law also clearly states its purpose of reducing turnover and attracting high-quality public workers.

Therefore, any task force should be charged with those two fundamental tasks: (1) assuring a secure retirement for public employees, and (2) enhancing the ability of the state to attract and maintain good workers. Public employment should not be reduced to temp work.

It is noteworthy that the assurances offered current employees — which include the Governor, Lieutenant Governor and state legislators — pit current employees against future employees. It would replace a secure retirement with one at the mercy of the ups and downs of the stock market.

IPERS is strong — stronger than most such systems and stronger than it was after ill-advised underfunding and a recession. As long as legislators do not take the easy way out and choose to underfund this fundamental responsibility again, there is no reason to consider a change. A fair task force will discover this.

The effort to change this stable and secure pension plan for public employees is driven by political arguments — not economic or fiscal arguments. To better understand the issues and the political spin that is clouding them, see also these newspaper guest opinion pieces:

Alarmist rhetoric sells Iowa pension plan short,” by David Osterberg in the Cedar Rapids Gazette, December 2013

Strengthen, don’t break, Iowa pension plans,” by Peter Fisher in the Iowa City Press-Citizen, March 2014

 

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project

Contact: mikeowen@iowapolicyproject.org


Ignore ideologues — IPERS sound, stronger

Posted May 21st, 2016 to Blog

Time seems to be running out on those who do not want a stable, secure and sustainable retirement program for public employees. IPERS, the Iowa Public Employment Retirement System, is well on the way to recovery before its opponents can kill it. But they’re still trying.

The criticism this time comes in a Des Moines Register opinion piece, from a familiar source, the Public Interest Institute (PII) in Mount Pleasant.

In its latest ideological attack on IPERS, PII offers no data — not a single financial indicator — to demonstrate a problem. In fact, IPERS is rebounding from troubles brought on by the Great Recession and inadequate state contributions in the latter half of the last decade.

According to the latest IPERS annual report, IPERS’s ratio of funded actuarial assets to liabilities — which had dropped from 89.1 percent in FY2008 to a low of 79.9 percent in FY2011 — has continued to rebound, rising in FY2015 from 82.7 percent to 83.7 percent.

In an Iowa Policy Project report in late 2013, Imran Farooqi, Peter Fisher and David Osterberg showed that contrary to high-profile examples of public pension problems with the city of Detroit and the state of Illinois, the public employee pension systems in Iowa and most states were generally healthy and well-managed for the long term.

“Iowa’s public pension plans have sufficient assets to pay benefits now and well into the future. And recent improvement in the plans’ designs have already enabled them to begin recouping losses incurred during the recessionary stock market decline,” they wrote. Now, 2 1/2 years later, there is no indication of a change in that positive trend.

That report did recommend ways to strengthen IPERS and other public employee retirement plans in Iowa, such as increasing contributions and meeting actuarial recommendations for those contributions.

What we need to remember is that the purpose of IPERS is not to see how little we can pay public employees, but to attract good employees partly with a promise of a secure retirement. It is to “improve public employment within the state, reduce excessive personnel turnover, and offer suitable attraction to high-grade men and women to enter public service in the state.” This is the stated purpose of the law, Chapter 97B.2.

The biggest problem for PII is that IPERS may fully recover before PII gets the law changed to a less secure “defined contribution” system. A defined benefit system provides financial security by pooling risk in the group — more efficient than having everyone on their own based on defined contributions that they might outlive.

So let’s be clear: Shifting from a defined benefit plan like IPERS to a defined contribution plan, such as a 401(k), is a way to cut benefits and reduce retirement security.

We can spend our time better addressing real concerns to assure our public employees can deliver on public education, overseeing human services, policing our streets and guarding prisoners — and making sure they can retire securely when they are done working for us.

owen-2013-57Posted by Mike Owen, Executive Director of the nonpartisan Iowa Policy Project
mikeowen@iowapolicyproject.org

Ignore ideologues — IPERS sound, stronger

Posted May 21st, 2016 to Blog

Time seems to be running out on those who do not want a stable, secure and sustainable retirement program for public employees. IPERS, the Iowa Public Employment Retirement System, is well on the way to recovery before its opponents can kill it. But they’re still trying.

The criticism this time comes in a Des Moines Register opinion piece, from a familiar source, the Public Interest Institute (PII) in Mount Pleasant.

In its latest ideological attack on IPERS, PII offers no data — not a single financial indicator — to demonstrate a problem. In fact, IPERS is rebounding from troubles brought on by the Great Recession and inadequate state contributions in the latter half of the last decade.

According to the latest IPERS annual report, IPERS’s ratio of funded actuarial assets to liabilities — which had dropped from 89.1 percent in FY2008 to a low of 79.9 percent in FY2011 — has continued to rebound, rising in FY2015 from 82.7 percent to 83.7 percent.

In an Iowa Policy Project report in late 2013, Imran Farooqi, Peter Fisher and David Osterberg showed that contrary to high-profile examples of public pension problems with the city of Detroit and the state of Illinois, the public employee pension systems in Iowa and most states were generally healthy and well-managed for the long term.

“Iowa’s public pension plans have sufficient assets to pay benefits now and well into the future. And recent improvement in the plans’ designs have already enabled them to begin recouping losses incurred during the recessionary stock market decline,” they wrote. Now, 2 1/2 years later, there is no indication of a change in that positive trend.

That report did recommend ways to strengthen IPERS and other public employee retirement plans in Iowa, such as increasing contributions and meeting actuarial recommendations for those contributions.

What we need to remember is that the purpose of IPERS is not to see how little we can pay public employees, but to attract good employees partly with a promise of a secure retirement. It is to “improve public employment within the state, reduce excessive personnel turnover, and offer suitable attraction to high-grade men and women to enter public service in the state.” This is the stated purpose of the law, Chapter 97B.2.

The biggest problem for PII is that IPERS may fully recover before PII gets the law changed to a less secure “defined contribution” system. A defined benefit system provides financial security by pooling risk in the group — more efficient than having everyone on their own based on defined contributions that they might outlive.

So let’s be clear: Shifting from a defined benefit plan like IPERS to a defined contribution plan, such as a 401(k), is a way to cut benefits and reduce retirement security.

We can spend our time better addressing real concerns to assure our public employees can deliver on public education, overseeing human services, policing our streets and guarding prisoners — and making sure they can retire securely when they are done working for us.

owen-2013-57Posted by Mike Owen, Executive Director of the nonpartisan Iowa Policy Project
mikeowen@iowapolicyproject.org

To fund water solutions, why not the obvious? Tax pollutants

Posted March 7th, 2016 to Blog
Note: A version of this piece ran as a guest opinion in the Sunday, March 6, 2016, Cedar Rapids Gazette.

———

One answer to the issue of funding water-quality solutions is right in front of us: Tax the pollutants.

The pollutants are Nitrogen (N) and Phosphorus (P). This is well established by the Iowa Nutrient Reduction Strategy (NRS) that Governor Terry Branstad and the farm industry support. The NRS blames N and P for the pollution that harms Iowa waters and causes the hypoxic or dead zone at the bottom of the Mississippi River.

More than 90 percent of N and two-thirds of the P come from non-point sources, almost all agriculture, according to Iowa State University.

And there is a lot of it. The U.S. Department of Agriculture’s latest Census of Agriculture, for 2012, shows about $2.6 billion was spent on “commercial fertilizer, lime and soil conditioners” in that year in Iowa.

Yet, while debate proceeds on how to deal with the pollution caused by those chemicals, it is worth noting that normal Iowa sales tax does not apply to the N or P used in agriculture.

I stopped by my local hardware store to ask if I, a non-farmer, would pay tax on the standard Scotts 10-10-10 garden fertilizer they sell. I would. But farmers do not pay sales tax for theirs. (There is a small fee on chemicals, including N and P for groundwater protection programs, but no general sales tax.)

Since the debate about how to pay for cleaning our waters is in full swing it is time to propose the obvious. Since N and P are the culprits, let’s tax them at the same rate as, say, pickup trucks.

Farmers pay a 5 percent tax on the pickups they use on the farm and off, to pay for their impact on the roads we all use. Since their fertilizer is used on the farm but also flows into the rivers and streams and lakes we all use, costing us all, a similar tax on fertilizer makes sense.

A 5 percent tax on the $2.6 billion in annual farm fertilizer sales in Iowa would bring in roughly $129 million a year, close to the numbers being thrown about to address water quality in the state. It is roughly comparable to what would come from three-eighths of a cent on the general sales tax for the Natural Resource and Outdoor Recreation Trust Fund that Iowa taxpayers approved — but which legislators have refused to fund. Over the next 30 years the fertilizer fee would bring in something close to what the Governor wants to take from a tax designed for school infrastructure.

Why not the obvious solution? Tax the chemicals that pollute Iowa waters.

IPP-osterberg-75Posted by David Osterberg

David Osterberg co-founded the Iowa Policy Project in 2001 and was director of the organization for 12 years. He continues to lead IPP research on environmental and energy policy for IPP and is a professor in the Department of Occupational and Environmental Health at the University of Iowa. He served six terms as a member of the Iowa House of Representatives, and served as chair of the House Agriculture Committee. Contact: dosterberg@iowapolicyproject.org.


Mark Smith ‘passionate and tireless’ leader

Posted December 5th, 2015 to Blog
Mark Smith at the dedication of the IPP conference room in his honor, May 2009.

Mark Smith at the dedication of the IPP conference room in his honor, May 2009.

IOWA CITY, Iowa (Dec. 5, 2015) — The Iowa Policy Project today issued the following statement from Jennifer Sherer, president of the organization’s board of directors, about the passing of Mark Smith, who co-founded IPP in 2001 with David Osterberg. Mark Smith was 71.

“It is with deep sadness that we mark the passing of Iowa Policy Project co-founder Mark Smith.
“Mark will be remembered for his passionate and tireless leadership on behalf of workers, families, the poor, and all who struggle to reverse inequity or discrimination. As a labor and civic leader, he devoted his life to strengthening the voices of Iowans seeking fairness and equal opportunity in their workplaces, communities, and at the state Capitol.
“Mark started his career as an educator and maintained a lifelong commitment to the power of organized people and good ideas to transform the world. He leaves behind a remarkable legacy of building durable institutions — including the Iowa Policy Project — that continue to make a difference in the lives of Iowans.
“All of us at the Iowa Policy Project mourn our loss — and Iowa’s loss — of Mark Smith.”
The Iowa Policy Project is a nonpartisan, nonprofit public policy research and analysis organization based in Iowa City. Reports are at www.iowapolicyproject.org.

REAP: Long on Promise, Short on Support

Posted July 30th, 2015 to Blog

When Iowa’s Resource Enhancement and Protection program (REAP) was established in 1989, the Legislature set its spending authority at $30 million, but funded it at only half that — $15 million. The next year, funding (FY1991) was set at $20 million, an amount we thought was sustainable.

It never again reached that level — though lawmakers attempted to set it at $25 million for the 25th anniversary of the program in the just-completed fiscal year. Governor Branstad vetoed $9 million that year, leaving REAP at $16 million for FY2015, where it stands for FY2016 as well.

Ironically, the 2014 veto came as the state was promoting its voluntary Nutrient Reduction Strategy. Twenty percent of REAP goes to these programs. The veto reduced funds available to help farmers implement new nutrient runoff reduction and filtration measures that could contribute to the goals of the nutrient strategy. Actions like these contributed to a long-term REAP shortfall of more than $220 million.

Basic RGB

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See our new Iowa Policy Project report, REAP: A Case Study of Stewardship. With a more clear understanding of how REAP can make a difference in our quality of life, all Iowans may evaluate how it should be funded. In practice, REAP is kept well short of the $20 million annual support that had been envisioned — a nearly 25-year trend that keeps REAP well short of its potential.

IPP-osterberg-75Posted by David Osterberg, IPP co-founder and environmental researcher

Beyond politics: Teacher pay in context

Posted March 4th, 2015 to Blog

Funding for Iowa schools has been under discussion for nearly the entire legislative session. The Iowa House has one version of a funding bill and the Iowa Senate has one with a higher funding level. Schools use their money for a variety of things that support the education of students from kindergarten to the senior year of high school. One obvious part of funding is teacher salaries.

During debate at the Capitol, State Representative Greg Forristall called for a salary freeze for teachers. According to Iowa Public Radio, Forristall stated in the Education Committee that farmers are expected to make 30 percent less in this coming year. “Maybe this is the year that teachers could accept last year’s salary,” he said.[1]

Also according to Iowa Public Radio, the speaker of the Iowa House, Kraig Paulsen, said teachers are bargaining for raises that cost too much money.[2]

So how have salaries changed over the years in Iowa? The National Center for Educational Statistics gathers average annual salary for teachers in public elementary and secondary schools by state going back to school year 1969-70.[3]

In that year salaries for Iowa teachers converted to present dollars averaged $51,170. In the school year 2012-13, the most recent figures, the same average teacher earned $51,528. That’s a difference of only $360 over almost 45 years.

Put another way: The Mrs. Brown or Ms. Green who taught you was paid about the same as your kid’s teacher gets today.

Secondly, Iowa average salaries are below the national average of $56,383.

Iowa teachers could go over our northern border and earn almost $5,000 more in Minnesota. On the other hand, South Dakota teachers on average earn $12,000 less. (South Dakota teachers even make less than teachers do in Mississippi.) Iowa is near the middle of average salaries for all teachers compared to other states.

When it comes to starting teacher salaries, however, Iowa ranks 33rd in the nation at $33,226.[4] We are similar to Wisconsin and Kansas. We are below Illinois and Minnesota as expected. What is surprising is that starting salaries here are almost $3,000 below Alabama and even lower than in Texas.

The disagreement in funding for schools includes many aspects. Before one should believe that teachers have bargained for too much or need a pay freeze, it might be good to look at this data.

[1] http://iowapublicradio.org/post/republican-lawmaker-freeze-teacher-salaries
[2] http://iowapublicradio.org/post/paulsen-teacher-raises-too-big
[3] http://nces.ed.gov/programs/digest/d13/tables/dt13_211.60.asp
[4] http://www.nea.org/home/2012-2013-average-starting-teacher-salary.html
IPP-osterberg-75Posted by David Osterberg, Co-founder of the Iowa Policy Project

Stop politicizing water quality

Posted August 26th, 2014 to Blog

Water quality in Iowa is so bad that any new initiative to improve our waters is probably a good thing. That said, Iowa farm groups’ new initiative to take action on agricultural pollution of our waters comes with a troubling rollout.

Making the announcement with Governor Branstad not only politicizes water quality, something that should be above politics, but masks the governor’s own decision this year to delay action.

The Governor’s veto of $11 million for water quality — funding passed by a divided legislature — makes an important statement about water quality. In addition, the governor also vetoed $9 million in funding for the REAP program, which is used by counties and cities to acquire and protect natural areas and to preserve Iowa’s environment.

Twenty percent of REAP goes to farmers to improve soil and water practices. If you are promoting a voluntary system to reduce nutrient runoff, shouldn’t you make sure farmers have resources to put sensible measures into practice?

The new group established to improve water quality needs to be taken seriously by the environmental community and by all Iowans. But this rollout does not engender trust.

The Iowa Policy Project recently released a report on water quality in Iowa. [See A Threat Unmet: Why Iowa’s Nutrient Reduction Strategy Falls Short Against Water Pollution] We showed that the addition of six new policies to the state’s new Nutrient Reduction Strategy would make it possible for the strategy to succeed.

One of those policies is the kind of effort the new farm group plans to push — bringing attention to the problem. A second policy is more funding, and farm group muscle could improve the chances in the Legislature. However, even if the Legislature acts, as in the 2014 session, legislation still has to get by a governor’s veto.

Maybe the best starting place to build broad support would be to invite an environmental group to the table, rather than a politician in the middle of a heated campaign. We know plenty who could help.

IPP-osterberg-75 Posted by David Osterberg, co-founder of the Iowa Policy Project