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Posts tagged Des Moines Register

Does Iowa know when to walk away?

Posted September 5th, 2012 to Blog
Peter Fisher

Peter Fisher

There’s Texas Hold ’Em,” and then there’s “Iowa Fold ’Em.”

Wouldn’t you just love to play poker against the folks who run this state?

They never call a bluff. Companies come calling with demands for tax breaks and big checks, or they’ll build somewhere else. And Iowa just happily falls in line with the demands. You can almost hear Kenny Rogers singing in the background: “Know when to walk away, and know when to run.”

The latest: Today the board of the Iowa Economic Development Authority (IEDA) is scheduled to consider sweetening its already generous offer to Orascom — $35 million to build a $1.3 billion fertilizer plant in Lee County — to about $110 million with a slew of new tax credits. As The Des Moines Register points out today, that’s $110 million for 165 “permanent” jobs paying on average $48,000 a year, plus construction jobs that will be gone when the project is finished.

The state tax credits are in addition to the enormous benefit the state is providing by allocating federal tax-exempt flood recovery bonds to this project. If the interest rate difference — between taxable and tax-exempt bonds — were 1 percentage point, the company would save $320 million in interest payments over the life of the $1.2 billion bond. That would bring the firm’s total benefits to $2.7 million per permanent job, a truly astounding number. Even without considering the federal interest subsidy, the state tax credits would total $687,500 per job, many times the typical level of subsidy in deals such as this.

There are no estimates available about the potential environmental costs that will be caused by this plant. Since Iowa does a poor job of monitoring for pollution damage, those ongoing costs might be low, but if there is an accident, it could be costly.

The Register also quotes Debi Durham, head of IEDA, that incentives wouldn’t be needed if Iowa were to reduce corporate income tax rates. Nonsense. Research has shown repeatedly that this is a myth, and that in fact, Iowa’s income taxes paid by corporations are competitive with other states. In many cases, giant corporations are paying not a dime in income tax yet getting huge subsidy checks from the state to do things they would do without incentives.

This hand is the one we are dealt from years of unaccountable economic development strategies by Iowa state government.

Time for a fresh deck.

Posted by Peter Fisher, Research 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.