Iowa Fiscal Partnership / David Osterberg
SHARE:
Policy Points from Iowa Fiscal Partners

Posts tagged David Osterberg

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


Too few inspectors to assure clean water

Posted May 12th, 2014 to Blog

The Iowa Department of Natural Resources (DNR) is currently seeking public comments on proposed rule changes required by the Iowa Legislature that would bring Iowa’s requirements for concentrated animal feeding operations into agreement with federal regulations.

The changes would also satisfy the terms of a work plan signed by the DNR and the U.S. Environmental Protection Agency.

Rules need enforcement and the agency — by its own admission — has not maintained enough inspectors. Even the recent changes since the agency was reprimanded by the U.S. Environmental Protection Agency in 2012 have not replaced enough employees to get the number of inspectors back to the level that existed in 2004.

Originally in answer to U.S. EPA complaints, the department envisioned a 13 staff-person increase that would only bring numbers back to approximately the 2004 staffing levels — before the addition of many more confinement operations. However, the Governor and General Assembly did not even authorize this number.

Let me repeat, rules need adequate enforcement. DNR does not appear to have enough staff.

See this passage from a DNR 2011 report on manure on frozen and snow-covered ground:

“The scope and complexity of confinement program work increased disproportionately beginning with legislation in the late ’90s. With this, public awareness of environmental issues also grew, resulting in a significant increase in local demand for education, compliance assistance and compliance assurance. To address these needs, animal feeding operations field staffing gradually increased to a high of 23 by SFY 2004.* In SFY 2008, four staff people were shifted into a newly established open feedlots program. Then in the fall of 2009, as General Fund expenditures declined, confinement staffing was reduced again. This reduced staff numbers from 19 to 11.5. Further reductions leave the total of field staff for confinement work at 8.75 full time equivalents. This reduction means that the DNR will not be able to maintain an adequate level of compliance and enforcement activity in confinements.”**

*State Fiscal Year 2004
**http://www.iowadnr.gov/Portals/idnr/uploads/afo/2011%202011%20DNR%20Manure%20on%20Frozen%20Ground%20Report%20FINAL.pdf

IPP-osterberg-75  Posted by David Osterberg, IPP Founding Director


Why is the dream fading?

Posted October 7th, 2013 to Blog
David Osterberg

David Osterberg

“American dream is fading for middle class”

I took this headline from the October 7 Cedar Rapids Gazette. You can imagine what the article says — that many Americans’ faith in a brighter tomorrow has been eroded.

What is not mentioned in the article are simple numbers — 50 percent of all income in the country goes to the top 10 percent and nearly half that goes to the top 1 percent. There is just not much income left for the vast majority of us.

Statistics on income distribution come from two sources, the Census and the Internal Revenue Service (IRS). Data from both agencies say about the same thing. We are a very unequal country and it is getting worse.

The newest data I found comes from a University of California-Berkeley economist, Emmanuel Saez, and available on his website. IRS data shows that the top 10 percent, families with more than $114,000 per year in income took home 50.4 percent of all income in U.S. in 2012. This is the highest percentage ever recorded for this group in a data series going back to 1917.

The top 1 percent — families above $394,000 per year in income — took home 23.5 percent of all income. Their share was slightly higher in the late 1920s, but not much.

If you want more bad news for the middle class, Saez’ analysis shows that the top 1 percent of families captured just over two-thirds of the overall growth of real incomes per family over the period 1993-2012. The 99 percent shared the remaining third. So why is that American Dream fading?

Posted by David Osterberg, Founding Director


IFP News: Income Down, Poverty Up Since ’07

Iowans in slow recovery from Great Recession

PDF of this release

IOWA CITY, Iowa — More Iowans remained in poverty three years after the recession, new data from the Census Bureau showed Thursday.

The American Community Survey (ACS) indicated 12.7 percent of Iowans — about 377,500 people — were in poverty in 2012, up from 11 percent in 2007, the year the last recession started.

“These are the signs we have been seeing across the board in our research,” said David Osterberg, founding director of the Iowa Policy Project, part of the Iowa Fiscal Partnership. “Whether you’re looking at jobs, or income, or poverty, or food insecurity, we simply have not caught up with where we were before the Great Recession.”

Other key points for Iowa from the release of 2012 ACS data:

•       Iowa’s poverty rate of 12.7 percent compared with 11 percent in 2007 and 9.7 percent in 2001. The change from 2011 — a drop of 0.1 of a percentage point — was not statistically significant.

•       Child poverty was 15.6 percent in 2012 (about 110,200 children), up from 13.1 percent in 2007 and 12 percent in 2001.

•       Median income was $50,957 in 2012, changing little from 2001 in inflation-adjusted dollars, but it dropped from $52,371 in 2007.

“Public policy needs to give people the tools to lift themselves out of poverty, and at the same time boost the economy,” said Charles Bruner, executive director of the Child & Family Policy Center, also part of the Iowa Fiscal Partnership. “We have those kinds of tools in place — such as SNAP, or Food Stamps — but many of those same tools are under assault in Congress.”

In the U.S. House, lawmakers Thursday debated legislation that would cut SNAP benefits to an estimated 3.8 million beneficiaries.

“Look at these numbers today,” Osterberg said. “How can we see over 100,000 kids in Iowa in poverty and not realize this is a problem that needs to be addressed?”

Reports from the Iowa Fiscal Partnership are at www.iowafiscal.org.

#     #     #     #     #

Note: A simple comparison of the Current Population Survey and the American Community Survey is available at http://www.census.gov/hhes/www/poverty/about/datasources/factsheet.html.

 

IFP News: Iowa Paid $33 Million in Research Checks in 2012

Posted February 15th, 2013 to Budget, Corporate Taxes, Tax Credits, Taxes

Rockwell Collins, Deere & Dupont Again Lead RAC Beneficiaries

Download this news release — 2-page PDF and Department of Revenue report 3-page PDF

IOWA CITY, Iowa (Feb. 15, 2013) — The largest recipients of a state research credit shared $28.5 million in subsidy checks as some or all paid no income tax in 2012, according to a new report from the Iowa Department of Revenue.

The report released Friday shows that overall, 178 corporations claimed a total of $46.1 million from the Research Activities Credit (RAC) in 2012, including both the regular RAC and a separate supplemental credit, but nine corporations claimed over 90 percent of those funds.

Of those credits, $32.5 million was paid to 130 claimants as “refunds,” the amount paid as checks because the claimants had more credits than income tax liability. Most of those “refunds” went to some or all of the nine largest beneficiaries of the credit.

“This report is the latest evidence of the need for reform of this poorly named ‘tax credit,’” said Charles Bruner, executive director of the Child & Family Policy Center. “The credit is used less to reduce taxes than to provide straight subsidies to big companies through the tax code, outside the budget process.

“It was never designed or promoted for huge subsidies for highly profitable businesses. These state reports are showing not only that the program is very expensive, but that most of the money — over 70 percent in 2012 — is paid out as checks to companies that already have wiped away all their income tax liability.”

A special tax-credit review panel appointed in 2009 by then-Governor Chet Culver urged lawmakers to eliminate the refundability of the credit for large companies, capping its cost and setting a five-year sunset that would require fresh approval to continue the credit. None of these proposals have been followed.

This latest state report shows that eliminating refundability in FY2012 would have cut the cost of corporate RAC credits from $46.1 million to $13.5 million.

“The difference would be enough to fund about 1 percent of allowable growth for K-12 schools in Iowa,” noted David Osterberg, executive director of the nonpartisan Iowa Policy Project.

The state, which spent $21.2 million on the credit in FY2010, is projected to spend $72.2 million on it in FY2017 if there are no changes.

Bruner noted that the RAC began as a way to support start-up companies to do research in Iowa, but that very large, profitable multinational companies dominate its use.

The biggest claimants in 2012, the same top three recipients as in the previous two years, were:
• Rockwell Collins Inc. and subsidiaries, $13.8 million;
• Deere and Co., $11.9 million; and
• Dupont, $8.5 million.

table

As a group, the largest claimants — those with over $500,000 in claims — received credits of $42.1 million — $28.5 million of that in checks considered “refunds,” not as a return for an overpayment of taxes, but for tax credit value beyond their tax liability. The report further disclosed that 91 percent of the credits were claimed by only 5 percent of the corporations (nine).

This is the fourth annual report from the Department of Revenue as a result of a 2009 law requiring disclosure of the overall amount of individual and corporate RAC claims and refunds, and individual company claim amounts in excess of $500,000 for a year. While the law requires reporting of claims for large beneficiaries, it does not require that the amount of “refunds” be individually disclosed.

“The disclosure we have now is an improvement, but remains limited,” Bruner said, noting a stronger law would specify how much of individual corporate claims are paid out as checks, as opposed to credits that remove tax liability.

“Even with revenues coming in strong, the Research Activities Credit is expensive. What disclosure we have, and the limits on that disclosure, show that the RAC is a poster child for the need for accountability on the state’s corporate subsidies,” Bruner said.

Osterberg agreed.

“There simply can be no question that if we are going to spend over $40 million on these subsidies, they should be transparent in the budget process. These resources could be going toward education or water-quality enforcement,” Osterberg said.

“Why do we subsidize something that we know will happen anyway? Rockwell Collins, Deere and DuPont all need to do research to thrive; they will do what research is necessary for their business — they don’t need their taxes cut to persuade them of the need. But even if we think taxes should be reduced to encourage research, why do we send these companies a check on top of eliminating their taxes?

“Perhaps the biggest question is this: Why isn’t the Legislature asking more about it, and demanding answers on behalf of their constituents?”

Besides the top three claimants, John Deere Construction had $3.4 million in claims, Monsanto $1.7 million, with four other companies — Vermeer, CNH America, Kemin Industries and Skyworks — above $500,000.

In addition, the report showed 1,144 individuals claimed a total of $4.5 million from the RAC, with $1.7 million of that paid as refunds to 307 claimants. Individual claimants are not identified in the report.

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.

# # # # #

How to make Iowa’s tax system more unfair

Posted February 5th, 2013 to Blog
David Osterberg

David Osterberg

How odd that a new proposal to make Iowa’s tax system more regressive and unfair comes out just when new evidence shows it already is unfair. HF3 would make the Iowa income tax rate flat where it needs to reflect ability to pay. Since higher income people pay more in income tax, and because they are expected to pay a greater percentage as their income rises, moving to a flat or flatter income tax is a reward to them. It does not help low- and moderate-income people.

As shown in the recent “Who Pays?” report by the Institute on Taxation and Economic Policy (ITEP), the poorest pay the highest portion of their income in taxes. (See graph.) The sales tax is much steeper as a share of income from low-income Iowans than it is from high-income Iowans, and the property tax is marginally more expensive to low-income people as a share of income than it is to those with high incomes. The income tax is the only progressive element of Iowa’s state and local tax system.

graph of Who Pays Iowa taxesTo flatten the only progressive feature of Iowa’s tax system would make the overall tax system more regressive. That would be the inevitable effect of HF3.

The problem with Iowa’s tax system is not that it’s too progressive. In fact, it is regressive — taking a larger share of the income of people at low incomes and middle incomes than of people at the top. HF3 would compound this.

Posted by David Osterberg, Executive Director


IFP News: Who Pays Taxes in Iowa?

Posted January 30th, 2013 to Taxes, Who Pays Taxes in Iowa?

Making Wealth Pay: Richest Iowans Pay Lower Tax Rate

Study Shows Poorest or Middle-Income Families Pay Larger Share of Income;
New Report ‘Illustrates Unfairness’ of Proposed $750 Income Tax Credit

Download this news release — 2-page PDF and Iowa fact sheet 2-page PDF

IOWA CITY, Iowa (Jan. 30, 2013) — A new national report shows Iowa taxes — like those in most states — are much greater as a share of income from middle- and low-income families than from wealthy families.

The report, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, by the Washington-based Institute on Taxation and Economic Policy (ITEP), shows the effect of sales taxes and property taxes on lower-income households tilts Iowa’s overall tax system so the poorest pay the highest percentage in taxes.

“The latest findings confirm a nagging problem of inequity in Iowa’s overall tax system,” said David Osterberg, executive director of the nonpartisan Iowa Policy Project, part of the Iowa Fiscal Partnership (IFP).

“In fact, the ITEP report illustrates the unfairness of a new proposal at the State Capitol to give away Iowa’s surplus in $750 chunks through income-tax credits. Many Iowans who pay most of their taxes on sales and property would not benefit from the proposed income-tax credit.”

According to the ITEP report, the average effective overall tax rate for the non-elderly taxpayers in the bottom 20 percent is 10.9 percent. The rate drops steadily to a 6 percent level for the top 1 percent of taxpayers. In the middle 20 percent, the level is 10.1 percent.

The report — available at www.whopays.org and www.iowafiscal.org — separately examines the share of income paid at various income levels for sales and excise taxes, personal income tax and property tax. It also calculates the reduction, a tax offset going mainly for higher-income families, caused by the ability to deduct state and local taxes from federal income tax. In addition, Iowa state income-tax payers may deduct their federal income taxes paid, again a device that disproportionately benefits higher-income earners.

 “The state’s present surplus is a poor excuse to give one more break to the wealthiest — at the expense of fairness for lower-income earners, and at the expense of critical public services that need to be funded,” said Charles Bruner, executive director of the Child & Family Policy Center, also part of IFP.

For low-income families (earning below $21,000 per year), sales and excise taxes take a 6.4 percent share of family income, compared with 0.9 percent in the top 1 percent (income of $312,000 and higher).

“We know that governors nationwide are promising to cut or eliminate taxes, but the question is who’s going to pay for it,” said Matthew Gardner, executive director of ITEP and an author of the study. “There’s a good chance it’s the so-called takers who spend so much on necessities that they pay an effective tax rate of 10 or more percent, due largely to sales and property taxes. In too many states, these are the people being asked to make up the revenues lost to income tax cuts that overwhelmingly benefit the wealthiest taxpayers.”

State consumption taxes (mainly sales taxes) are particularly regressive — meaning they take a greater share of income from people at low incomes than people at high incomes. Overall, those rates average 7 percent for the poor, 4.6 percent for middle incomes and a 0.9 percent for the wealthiest taxpayers nationwide.

Gardner noted that in some states, there are efforts to cut or eliminate the income tax, and that of the 10 most regressive tax states, four do not have any taxes on personal income and one applies it only to interest and dividends. The other five have a personal income tax that is flat or virtually flat across all income groups. 

“Cutting the income tax and relying on sales taxes to make up the lost revenues is the surest way to make an already upside down tax system even more so,” Gardner stated.

The data in Who Pays? also demonstrates that states commended as “low tax” are often high-tax states for low- and middle- income families. 

“When you hear people brag about their low tax state, you have to ask them, low tax for whom?” Gardner said.

The fourth edition of Who Pays? measures the state and local taxes paid by different income groups in 2013 (at 2010 income levels including the impact of tax changes enacted through January 2, 2013) as shares of income for every state and the District of Columbia.  The report is available online at www.whopays.org.

Low-Income Iowans Pay Greater Share of Income in State/Local Tax Than Higher Income Iowans

who pays graph

who pays 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 & Family Policy Center in Des Moines. Reports are at www.iowafiscal.org.

The Institute on Taxation and Economic Policy (ITEP) is a 501 (c) (3) nonprofit, nonpartisan research organization that works on federal, state, and local tax policy issues. ITEP’s mission is to ensure that elected officials, the media, and the general public have access to accurate, timely, and straightforward information that allows them to understand the effects of current and proposed tax policies. www.itep.org.

 

Talk is cheap

Posted November 20th, 2012 to Blog
David Osterberg

David Osterberg

There are three principal problems with the Governor’s proposed Nutrient Reduction Strategy, and they can be summed up in three words: Talk is cheap.

Solutions to this problem start with enforcement, and that takes money. The state of Iowa shortchanges water quality, underfunding it even compared to what we did a decade ago. Our March 2012 report, Drops in the Bucket: The Erosion of Iowa Water Quality Funding, found that this water-quality funding decline came despite greater needs for water protection and public willingness to fund it.

Second, inadequate enforcement of environmental rules for Iowa’s livestock industry has resulted in the state’s censure by the U.S. Environmental Protection Agency, and this threatens our ability to write permits and otherwise enforce our obligations under the Clean Water Act. The strategy bases enforcement on voluntary acceptance of state rules. This has not worked.

Finally, it says much about Iowa’s commitment to water quality — or lack of commitment — when the state proposes a major nutrient reduction strategy and offers no new money to get the job done. The strategy proposes nothing to make sure Iowa does better in assuring clean water for its residents, for states downstream, and the future.

In short, we need a strategy that recognizes the serious water quality problem we have and offers a realistic approach to addressing it. This must be more than a goal — but a guarantee to all Iowans.

Posted by David Osterberg, Executive Director


Does Iowa have the will to govern itself?

Posted November 13th, 2012 to Blog

Does Iowa have the will to govern itself?

How ironic that we have reason to ask that question, a week after a presidential election that capped three-plus years of courting of Iowa voters, and a few days before a potential 2016 candidate visits to start all of it brewing again.

Yet the question is unavoidable. Consider two pieces in today’s Des Moines Register.

First, the Register reports, the federal Environmental Protection Agency may take over water quality enforcement in Iowa due to weak efforts by Iowa’s state Department of Natural Resources (DNR).

As IPP’s David Osterberg recently told EPA officials to hold DNR more accountable because the state is underfunding water protection.

“EPA should help the agency in bargaining with a legislature that has shown itself to be less concerned with water quality protection than tax cuts. … There is no question that if EPA simply accepts the agency’s agreement to try to do better, water quality will not improve in this state.”

If the EPA admonishment of Iowa’s lax environmental enforcement were not enough, we also are waiting for the state to offer its long-overdue decision on how to proceed on health reform. The 2012 election affirms the Affordable Care Act will not be repealed, so the state’s dragging its heels on creating a health insurance exchange no longer makes sense — if it ever did.

Yet, we now have a real question of whether it’s a good idea for the state to move ahead on its own with an exchange, where Iowans can shop for affordable insurance and not be denied coverage, or having the federal government do it for us. As the Register opined in an editorial today, “It is too important for this state to mess up.” Citing problems implementing temporary high-risk pools, and political dealings in previous legislative attempts to create an exchange, the Register noted:

“Iowans need the coming insurance marketplace to work for them in years to come. But state leaders have shown they are not the ones to design it.”

Can we govern ourselves? Apparently national candidates will come calling in Iowa without worrying about that. So maybe we should answer if for ourselves.

Posted by Mike Owen, Assistant Director


Osterberg: Reduced funding impedes DNR’s ability to do its job

Posted July 31st, 2012 to Budget, IFP in the News, Op-eds

David Osterberg, Executive Director of IPPBy David Osterberg, Executive Director, IPP

PDF — As published in the July 31, 2012, Des Moines Register

The Des Moines Register’s July 19 editorial “EPA Letter Should Be a Wakeup Call” rightly pointed out the considerable headwinds facing efforts to clean up Iowa’s waters, most notably the inability of Iowa legislators to stand up to the powerful farm lobby in this state.

The EPA’s investigation clearly showed that there are serious inadequacies in the Iowa Department of Natural Resources’ efforts to watch over Iowa’s animal feeding operations.

We know that this is not the fault of DNR staff members, who work hard and make do with the limited resources they have. It is, instead, a problem of the agency not getting the resources to do its job from the Legislature and the governor.

If it were not for the efforts of groups like Citizens for Community Improvement, the Sierra Club and the Environmental Integrity Project, who submitted a letter to the U.S. Environmental Protection Agency back in 2007 outlining their concerns, the public (and the EPA) might be unaware of DNR’s inadequate job keeping our waters clean.

DNR data are showing that permits applied for and issued for animal feeding operations in the first half of 2012 are higher than the 12-month totals seen in most years.

The EPA was already concerned that DNR staffing levels devoted to monitoring these feeding operations had fallen over the last decade and now there are even more facilities to inspect. The EPA believes this decline in field staff plays a role in preventing the DNR from carrying out its duties.

The DNR cannot carry out its responsibilities without adequate funding. As the Iowa Policy Project pointed out in a March 2012 report on Iowa water quality funding, inflation has slowly eroded the agency’s budgets for water quality.

Some programs have seen dramatic declines in funding (up to 70 percent) since fiscal year 2002. It would take at least $5 million per year just to get these programs back to funding levels of a decade ago, funding levels that probably were inadequate even then.

Iowans spoke two years ago when they overwhelmingly supported the creation of a trust fund devoted to protecting the state’s natural resources. The DNR has a new director in Chuck Gipp, who understands agriculture and has in the past shown a willingness to work on environmental initiatives.

Gipp needs to explain to legislators and his boss, Gov. Terry Branstad, that when the EPA steps in, it is a signal to Iowans that their state leaders have fallen short.

The way to keep the EPA out is for our lawmakers to give the DNR the resources the Iowa department needs to protect what Iowans want protected — our rivers, lakes and streams.

 

David Osterberg is executive director of the Iowa Policy Project, a public policy research organization in Iowa City. Osterberg served in the Iowa House of Representatives from 1983 to 1994.

Contact: dosterberg (at)iowapolicyproject.org.