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Policy Points from Iowa Fiscal Partners

Posts tagged Energy & Environment

How real Iowa tax reform would look

Posted January 17th, 2020 to Blog

See IPP’s Roadmap for Opportunity piece on tax reform

Iowa is an average-tax state. Even before expensive tax cuts passed in 2018 to benefit the wealthiest, Iowans paid about 2.5 percent of their income toward income taxes, 2.4 percent for sales taxes, which earns us a rank of 20th and 21st, respectively, among the 50 states.[1] Business taxes in Iowa are actually below average according to recent studies by two accounting firms: one placed Iowa 31st, the other 36th.[2]

Basic RGBBut our tax system already failed the fairness test before those new tax cuts. The highest income Iowans pay a smaller share of their income to state and local taxes than lower and middle-income Iowans — our tax system is regressive. Those in the bottom fifth of Iowa households by income pay 12.4 percent of their income in state and local taxes, while those with incomes in the top 1 percent pay just 7.7 percent.[3] And hundreds of millions in tax revenue are lost every year to corporate loopholes and business tax credits that produce little or no public benefit. At the same time, the state struggles every year to adequately fund education, public safety, health care and other priorities.

Real tax reform, then, would mean three things: (1) ensuring adequate revenue, (2) reducing the regressivity of our tax system, and (3) reining in corporate tax credits and loopholes.

Iowa’s 2018 tax law fails the test, cutting back on both fairness and revenues

The legislation signed into law in 2018 does none of these things. It cuts revenue, makes the tax system more regressive by concentrating tax cuts on the rich, and fails to reform credits or loopholes.[4] The package had one true benefit: modernizing the sales tax to include online purchases and level the playing field for local and state-based businesses.

Under this legislation, however, the income tax savings to a middle-class family by 2021 amount to just $5 to $10 a week and much of that will be taken back by the sales-tax increase. Millionaires, on the other hand, will see on average a $24,636 cut for the year. Almost half of the tax cuts will go to the richest 2.5 percent of Iowa taxpayers, those making $250,000 or more.

The 2018 tax bill also piles $40 million in corporate tax cuts on top of commercial property tax cuts enacted several years ago that have cost local governments millions of dollars. A new special tax break for business owners who receive “pass-through” income will cost in excess of $65 million a year, with 60 percent of the benefit going to the top 2 percent of taxpayers.

Overall, the bill will take $300 to $400 million a year out of the budget that could have gone to adequately fund education or public safety or mental health care. Those revenue cuts will happen regardless of the state of the Iowa economy or the budget; no safeguards will prevent it, despite the bill’s much touted “triggers.”[5]

To add insult to injury, the tax bill is far more likely to hurt the Iowa economy than to help it. The tax cutting experiment in Kansas was a failure, harming the state economy rather than helping it.[6] And Iowa’s own experience with massive tax cutting, in the late 1990s, not only failed to stimulate growth, but likely contributed to the subsequent slowing of the state’s economy.[7] 

Policy Alternatives: The elements of real reform 

  • Ensure adequate funding for our schools, which have been underfunded for years, revenue failing to keep pace with costs. End cuts to state funding of Iowa’s public universities and community colleges, forcing higher tuition, and leaving students and families with rising debt.
  • Plug corporate tax loopholes that cost Iowa an estimated $200 million a year,[8] and rein in business tax credits that grew from $200 million to $423 million in six years.[9]
  • Make our tax system fairer, and better based on ability to pay. This should be done by providing enhanced recognition of the cost of raising a family by expanding the child tax credit and the child and dependent care credit, as well as the Earned Income Tax Credit. Less reliance on the sales tax, which has doubled since 1983 and is poised for another potential increase, or offsets to these increases can enhance opportunities for low- and moderate-income families now put at a disadvantage.

Rebalancing the tax code would reduce its current regressive nature, which imposes higher taxes as a share of income on lower- and middle-income Iowans than on the wealthy.

[1] Taxes as a percent of state personal income for the most recent five years available, 2013-2017, from the U.S. Census, Census of Government Finances.
[2] Iowa ranks 31st in business taxes as a percent of GSP according to Ernst & Young LLP, Total state and local business taxes, October 2019. Table 4, page 12. https://www.cost.org/globalassets/cost/stri/studies-and-reports/FY16-State-And-Local-Business-Tax-Burden-Study.pdf.pdf; Iowa ranks 36th (with #1 being the highest tax rate) in business taxes as a share of business pre-tax operating surplus by Anderson Economic Group LLC, June 2018. 2018 State Business Tax Burden Rankings, Exhibit I, page 17. https://www.andersoneconomicgroup.com/wp-content/uploads/AEGBusinessTaxBurdenStudy_2018_FINAL.pdf
[3] Institute on Taxation and Economic Policy. Who Pays? Sixth Edition. https://itep.org/whopays-map/
[4] See Charles Bruner and Peter Fisher, “Tax plan facts vs. spin.” Iowa Fiscal Partnership, May 5, 2018. http://www.iowafiscal.org/tax-plan-facts-vs-spin/
[5] All the triggers would do is save us from an even larger budget disaster in 2023 and beyond. The triggers are revenue targets; if the targets are not achieved, the last round of cuts will not take place as scheduled for tax year 2023.
[6] Michael Mazerov. “Kansas Provides Compelling Evidence of Failure of ‘Supply-Side’ Tax Cuts.” Center on Budget and Policy Priorities, January 22, 2018. https://www.cbpp.org/research/state-budget-and-tax/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts
[7] Peter Fisher. “Tax cuts: Already tried, failed.” Iowa Policy Points, April 23, 2018. https://iowapolicypoints.org/2018/04/23/tax-cuts-already-tried-failed/
[8] Iowa Policy Project analysis of Iowa Department of Revenue estimates.
[9] “Growing cost, lax oversight of Iowa business tax credits.” Iowa Fiscal Partnership, March 16, 2018. http://www.iowafiscal.org/wp/wp-content/uploads/2018/03/180319-IFP-taxcredit-bgd.pdf

Positive options for the 2020s

Posted December 31st, 2019 to Blog

iowacapitol-rotundaWe would be remiss at the end of 2019 not to note the positive lessons of the last 10 years.

We have plenty of room to raise the minimum wage, now 12 years old at $7.25 an hour. Had the minimum simply kept up with inflation, it would be 22 percent higher, at $8.83 — but of course still short of a living wage. IPP research shows a single parent needs about $20 to $22 an hour working full time just to make a bare-bones household budget.

We can require polluters to stop ruining Iowa’s water, by putting some teeth in the so-called Nutrient Reduction Strategy, which is rendered meaningless by requiring nothing of polluters. Even the good actors in the ag community should be able to see their efforts are eroded like unprotected soil when neighbors’ farm practices contribute to nutrient pollution.

Without raising tax rates, we can raise significant revenue for education and other shortchanged services, by curtailing or ending research tax-credit checks for corporations that pay no income tax ($40 million), and by closing tax loopholes ($100 million). Instead, we have seen an average increase of less than 2 percent in permitted per-pupil K-12 spending in Iowa over 10 years. We see rising college tuition because of poor state support.

We can make our tax system more fair by shifting our increased reliance on sales taxes to revenue sources such as income tax. Our four-decade trend toward sales tax (and against income tax) may continue in 2020 with the push for environmental quality and recreation as directed by voters in 2010, but it can be paired with moves to make the overall system more fair. Note: That approach demands no new tax cuts for the wealthy.

That list is hardly exhaustive. Queue up child care assistance, wage theft enforcement, restoring and protecting collective bargaining rights, making pensions more commonplace instead of attacking workers who have them. We could even step up efforts to protect vulnerable communities in advance of the next flooding disaster,

The common theme: Since we’ve done nothing or virtually nothing meaningfully positive in 10 years in these areas, even small steps will look good in comparison. And, because of the pent-up frustration of those who would have been satisfied five years ago with small steps, visionary and dramatic steps might be possible.

But this is not a “woulda, coulda, shoulda” refrain like you would hear after a near-miss in a ballgame. For all their theme of decline, retrenchment and a “can’t-do” mindset, the failures of the 2010s really spotlight what we can do through public policy to work together for a stronger, more equitable, more inclusive, more sustainable Iowa in the 2020s.

This is a moment to start a rebound.

At the Iowa Policy Project, we have used solid information and years of perspective to spotlight challenges and ways to make life in Iowa better, next year, five years, even 10 years from now.

So, bring on 2020!

MMike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

The Iowa Policy Project is a 501c3 nonprofit organization funded by individual donations, organizations and foundation grants. Tax-deductible contributions may be made online at this link.

Missed opportunities combatting climate change

Posted December 23rd, 2019 to Blog

I recently watched part of the Hancher Auditorium parking lot ripped up and repaved at the University of Iowa. With the university community well aware of the impacts of flooding, I was surprised by the missed opportunity to rebuild the parking lot with more water retention features like bioswales or permeable pavers. We know that heavy rainfall impacts in Iowa will only grow as climate change accelerates.[1]

At the same time, I realized these types of interventions are expensive and perhaps outside the routine maintenance budget. So I turned my attention to other ideas for the campus: solar power opportunities and the university’s pledge to combat climate change through renewable power generation. Surely such an ambitious proposal would have resources enough to invest in solar power generation.

In 2017, UI President Bruce Harreld announced a goal to increase the university’s use of renewable resources for power and steam production and reduce coal firing for steam and energy production, and entirely phasing out coal by 2025.[2] This laudable goal addresses climate change, makes the university’s operations more sustainable, and improves air quality in Iowa City. Why not enhance this goal with solar panels?

The President’s message noted that the university would rely on a combination of biomass firing for renewable resources to hit a target of 40 percent of energy production by 2020. The university has pursued various options of biomass to be fired alongside coal for the time being (and presumably to be fired by itself once coal is eliminated). These options are:

      • Oat hulls, the byproduct of industrial processes, currently sourced from Quaker Oats in nearby Cedar Rapids. This fuel source is readily available, and by reusing formerly discarded ingredients the UI can prevent methane emissions from decomposition while burning a carbon-neutral fuel.
      • Miscanthus grass,[3] a non-native, but non-invasive grass, is often used for biomass around the world due to its high energy content and quick growing nature. The university has planted a few collection areas and buys harvest from local producers.
      • Energy pellets, another industrial byproduct that can be fired alongside coal. Like oat hulls, adding another use to an already ongoing industrial process is more sustainable than burning a non-renewable fuel source.

On its face, this strategy seems like an innovative use of natural ingredients that are carbon neutral and close by, obtainable from regional industry and agriculture.

But it’s still only 40 percent of the plan. Where does the remaining 60 percent come from? Natural gas,[4] which is “cleaner” than coal firing for particulate matter and CO2 , is readily available, and adds a power predictability that is hard to get from some renewable resources. But should natural gas be 60 percent of the university’s energy portfolio, when renewables could play a bigger role?

The university’s Office of Sustainability mentions, but dismisses, greater use of wind power and solar power. Both are mentioned as being implemented in a limited fashion on campus as demonstration projects for research purposes, but said to be too resource intensive (land and money) to fully replace other energy production methods for campus uses.

The message is a concern. If a complete replacement strategy were a qualifying criteria, why would it not apply to biomass firing sources as well. If not, why would the UI not consider solar and wind as a smaller scale, partial contribution to the university’s energy portfolio?

Other universities, including Maryland and Michigan State[5] have both solved cost concerns with public-private partnerships and power purchasing agreements. Indeed, UI researchers already note that the kilowatt cost of solar is below that of more traditional production requirements in some states, with the implication that similar cost comparisons will become more attainable through the country.[6]

Given the similarities between the UI and Michigan State (MSU) — both large public universities in the Midwest with similar climates and both governed by a quasi-public Board or Regents — the MSU example with solar power may prove fruitful. MSU followed the lead of several U.S. universities (including UC San Diego[7]) in deploying solar panels above parking lots on campus.

Solar could bring several benefits if installed at the Hancher lot, beyond power generation. Besides vehicle protection, it could offer research opportunities on solar generation, grid distribution methods, and power storage mechanisms for engineering faculty and students.[8]

Indeed, the University of Iowa already has experience in similar solar deployments. Its Facilities Management department already operates a solar power charging station for university vehicles, just on a much smaller scale.[9] The university has many surface parking lots that could reduce ongoing university expenses by harnessing the air rights just 10 feet above existing lots.

If this isn’t incentive enough, the university is ranked eighth in the Big Ten Conference for green power generation by the U.S. Environmental Protection Agency.[10] Surely Hawkeye pride can carry us to be No. 1. Forget Hancher. Perhaps the lots around Kinnick Stadium could be ground zero for a Hawkeye solar project — with a slogan ready to go: America Needs Solar.

[1] https://www.iowapolicyproject.org/2019Research/190905-Floods-Climate.html
[2] https://now.uiowa.edu/2017/02/ui-announces-it-will-be-coal-free-2025
[3] https://www.facilities.uiowa.edu/sites/www.facilities.uiowa.edu/files/wysiwyg_uploads/hawkeyecampusmiscanthus.pdf
[4] https://www.facilities.uiowa.edu/energy-environment/renewable-energy
[5] https://msutoday.msu.edu/news/2019/msu-helps-big-ten-achieve-largest-collective-green-energy-use/
[6] https://dailyiowan.com/2018/03/19/solar-energy-lights-up-on-campus/
[7] https://www.borregosolar.com/commercial-solar-systems/university-of-california-san-diego
[8] https://msutoday.msu.edu/news/2017/construction-begins-on-msu-solar-array-project/
[9] https://www.facilities.uiowa.edu/sustainable-energy-discovery-district
[10] https://www.epa.gov/greenpower/college-and-university-challenge

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. He was an intern at the Iowa Policy Project during the fall semester 2019.

Differences in Disaster: A series of observations

Posted December 21st, 2019 to Blog

Part 3: It all comes down to equity

Public policy to deal with flooding involves a lot of big-ticket items that carry big implications for the future of communities that, by choice or by economic necessity stand in harm’s way.

This issue all comes down to one of equity and equality.

Matt Kinshella graphic, source info below*

Equality would ensure every community is provided the same resources and consideration regardless of their characteristics. But, as we have discussed, providing the same resources to a community that has less opportunity and ability to recover as one that is well positioned to do so results in the outcomes we have seen: Wealthy communities become wealthier while poorer communities fall further and further behind.

Equity calls for alleviating these disparities to create the opportunity for equal recovery rates and outcomes among disparate communities.

How do you do that? The following suggestions are a few items that will work toward leveling the playing field.

      • “Rebalance” mitigation efforts with an emphasis on community impact and vulnerability rather than up-front economic loss, the latter putting higher-value properties ahead of those less able to cope on their own.
      • Put more flexibility in FEMA guidelines to ease community burdens and allow for a creative use of funds.
      • Better direct Community Block Development Grant funds to the best place for mitigation efforts — not necessarily within the damage area, but outside if needed. Flood mitigation is best placed upstream.
      • Keep state funds flowing pending the arrival federal aid, which might be delayed after a federal disaster is declared and Iowa stops processing and paying disaster claims.

While these suggestions won’t fix everything, they offer a start to a discussion that needs to start now. Policy makers and recovery agents must take into account social vulnerability and community impacts to a greater extent than they already do if we are to break the downward spiral poor communities find themselves in following disasters.

Previous:
Part 1: Flooding hits different families differently
Part 2: Flood mitigation protects different families differently

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. Visit the Iowa Policy Project website for his December 2019 report, Flooding and Inequity: Policy Responses on the Front Line.

 

* Graphic credit: Matt Kinshella; culturalorganizing.org blog, “The problem with that equity-vs.equality graphic you’re using.” Copyright Paul Kuttner

Differences in disaster: A series of observations

Posted December 20th, 2019 to Blog

Part 2: Flood mitigation protects different families differently

In the first post about findings from my recent report for the Iowa Policy Project, I outlined impacts on low-income residents who have few options than to live in a flood-risk area, and few resources to cope or rebound.

Sand barriers in Cedar Rapids, Iowa Flood Center picture.
Photo: Iowa Flood Center

So what about preventing floods? Mitigation measures are great but are usually expensive and may be best positioned well upstream of the location where their protection helps most. Most people look to state or federal grant assistance in funding mitigation projects, but with resources being scarce — and they’re always scarce — a funding criterion has been established to assure mitigation measures must protect at least as much economic value as they cost.

On its face, this benefit cost analysis sounds quite reasonable, but it has a few consequences that, even if unintended, can be foreseen.

Consequence One: If you only spend the big bucks to protect the big bucks, then communities that may be best positioned to recover without help are given greater resources with which to protect themselves.

Consequence Two: How do you value the cost of displacement, lost economic opportunity from missed jobs, extra commute times, uninsured property loses, community fragmentation? Some of this can be valued, some cannot, and most of it is only clear after a disaster. This makes it hard to implement mitigation when funding justifications must happen first.

Consequence Three: Assuming you justify and pay for mitigation measures, have you just increased the value of the protected land to the point that current residents are suddenly priced out? Gentrification can be spurred by improved environmental and hazard risks as much as it can through beneficial tax codes, new transportation links or economic development incentives.

Previous, Part 1: Flooding hits different families differently
Next, Part 3: It all comes down to equity

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. Visit the Iowa Policy Project website for his December 2019 report, Flooding and Inequity: Policy Responses on the Front Line.

Differences in Disaster: A series of observations

Posted December 19th, 2019 to Blog

Part 1: Flooding hits different families differently

I’ve just wrapped up a paper on the different outcomes people experience following a disastrous flood destroying their world. Not only is a family’s experience different from the world they lived in prior to the flood, but depending on who they are, a lower income family’s experience can be profoundly different from that of a family of greater means.

It’s not shocking to hear that the poor in America live in a different world than anyone else, but Americans living in poverty are more likely to die in a disaster event and less likely to recover after one. Additionally, when Americans living in poverty recover, they usually recover worse off them they were before disaster struck. This is not the case for the well off. The well off tend to increase their net worth following a disaster.

Why is that? First, and most obvious, if people can afford to live in areas not prone to disaster, they usually choose to do so. Beach-view mansions in Malibu notwithstanding, people don’t usually build their home in known flood plains if they can afford to live elsewhere.

So if you’re located in a dangerous area, you usually can’t afford not to be there. Disaster strikes, the flood waters have started to recede and in preparing to rebuild you look to disaster recovery assistance to help you out. But there’s a problem. Disaster recovery assistance doesn’t come quickly, especially assistance from the federal government. This delay presents a real problem for those unable to absorb the cost of replacement shelter, replacement clothes, increased commutes to work (assuming the job is still there following a disaster).

The delay leaves people desperate for help , willing to jump on any assistance money that appears (even if doing so bars them from participating in larger programs later) or willing to sell their home or property to opportunistic investors who do have the ability to wait out assistance program delays. Having sold, or having grabbed available funds, you are worse off than you were before. Some with more resources can to weather the paper storm that follows an actual one, and come out better than they were before.

Next, Part 2: Flood mitigation protects different families differently

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. Visit the Iowa Policy Project website for his December 2019 report, Flooding and Inequity: Policy Responses on the Front Line.

Improve water quality funding equitably

Posted July 5th, 2019 to Blog

Iowa has an opportunity to advance equity while improving water quality. The constitutional amendment voters overwhelmingly passed in 2010 gave us the option to fund water quality programs with the sales tax, but it’s only a starting place, and we need to explore more equitable funding solutions.

The sales-tax option needs to be paired with options that enhance equity in the way we fund all public services. A comprehensive approach adds other sources — even as we recognize that Iowa policy makers have refused the voters’ clearly stated desire for action.

A new IPP report offers policy options to improve water quality in an equitable way. Iowa voters, in a 2010 statewide referendum, showed their willingness to raise the sales tax in order to fund water quality efforts. The trust fund they authorized remains empty today, nine years later.

As we noted in an April 2019 report, Iowa water quality funding is inadequate.[1] Some will claim new water-quality funding passed in 2018, but it was at best window dressing. New programs had no new revenue source and added little to the mainly federal nutrient reduction funding that exists now.

The sales-tax option remains on the table and is promoted by serious advocates for action. The challenge is to find a way to offset the impact of a sales-tax increase on lower- and moderate-income households. Already, those lower-income families pay the most of any income group, as a percentage of their income, on sales tax. This drives the overall regressive nature of Iowa’s state and local tax system.[2] Analysis from the Institute on Taxation and Economic Policy (ITEP) shows why a tax on purchases hits lower income families harder (see graph). Lower-income families spend most of what they earn, and they spend a large share of it on goods and services that are subject to the state sales tax. This is less the case the higher you go on the income scale.

Basic RGB

 

How to fix it? We see two immediate options using existing programs: Boost the Earned Income Tax Credit (EITC) to help working families, and expand Disabled and Senior Citizen Property Tax Credit and Rent Reimbursement Program.

How to pay for it? Use at least part of the revenue from a 1-cent sales tax increase. The constitutional amendment directs three-eights of the first cent to the clean water and recreation trust fund. The key is what happens with the other five-eighths.

According to ITEP data, increasing the state EITC to 20.5 percent of the federal credit (from the current 15 percent) would fully offset that average $124 yearly sales-tax increase for a working family eligible for the EITC. The Rent Reimbursement program can contribute for other low-income families. Those two steps — EITC and Rent Reimbursement — would cost an estimated $30 million,[3] only a small share of the “extra” sales-tax revenue from a 1-cent increase

Taxing the polluter is another policy option for addressing a broader equity concern. Fertilizer used in the agricultural sector is the source of the contamination, yet it is exempt from the general Iowa sales tax. Removing the fertilizer exemption would bring a substantial source of water quality funding: about $110 million annually.[4]

In an already tax system favoring the highest earners, raising the sales tax is not a preferred option. But it can be improved and turned into an opportunity to both improve services and the overall balance in Iowa’s tax system. Those interested in both equity and clean water could embrace that opportunity.

[1] David Osterberg and Natalie Veldhouse, “Lip Service: Iowa’s Inadequate Commitment to Clean Water.” April 2019. Iowa Policy Project. http://iowapolicyproject.org/2019docs/190424-WQfunding.pdf

[2] Institute on Taxation and Economic Policy, “Iowa: Who Pays? 6th Edition.” October 2018. https://itep.org/whopays/iowa/

[3] EITC: $124 for each of the 209,000 taxpayers who receive this credit equals $25,916,000. Renters’ credit: $124 for each of the 32,000 who receive the credit equals $3,968,000. Total about $30 million for the two programs.

[4] $1,845,469,000 X 6 % = $ 110,728,140. The total in the 2017 Census of Agriculture was much smaller than the 2012 figure $2,587,059,000.

 

2018-NV-6w_3497(1)

Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

Water funding exposes shallow commitment

Posted May 6th, 2019 to Blog
Voters have indicated their support for increasing funding to improve water quality in Iowa, earmarking part of the next sales tax increase for clean water. So far, the protected trust fund for outdoor recreation and water quality remains empty. Our latest water quality report addresses these issues:
  • What has been the state’s spending commitment to water quality over the past 15 years?
  • How much of state and federal dollars goes to reduce nutrient pollution in Iowa?
  • How much spending is needed to make meaningful water quality progress?
  • How can the state raise adequate revenue to make an impact?
We identified 16 primarily state-level programs that fund water quality improvements. Funding in the most recent year hasn’t even reached 2008 to 2009 levels. The Nutrient Reduction Strategy (NRS), implemented in 2013, was created to reduce nutrient pollution that creates a hypoxic dead zone in the Gulf of Mexico. The strategy was advertised as a new commitment by the state to reduce Iowa’s pollution of our own rivers and the Gulf of Mexico. Even with the NRS, we find that state water quality spending has dropped off and struggled to return to pre-2008 recession levels. 190424-WQ-Fig1 The Water Resources Coordinating Council is tasked with overseeing NRS progress, and measures the financial resources dedicated to reducing nutrient pollution from the state of Iowa to the Mississippi River system. The most recent NRS report shows $512 million was spent in state and federal dollars on Iowa nutrient reduction in 2017.[1] However, the state is largely riding the wave here; the real money comes from federal funding. While it was assumed that adopting the NRS would increase Iowa’s commitment to water quality, it did not — though at the same time pollution has increased. Recent research indicates Iowa’s share of nutrient loading into the Mississippi and Missouri river watersheds actually increased between 2000 and 2016.[2] In 2018, Governor Kim Reynolds signed a bill that appropriates $282 million to water quality efforts over the next 12 years.[3] This gesture compares poorly even to existing — and lacking — government water quality spending. Iowa is nowhere near to what is needed. How much money does it really take to make a meaningful impact on Iowa water quality? The NRS document, written mainly by Iowa State University, estimated the cost of reducing nonpoint contamination under three scenarios. All were in the billions of dollars. The Iowa Soybean Association estimates for nutrient reduction costs in just one river basin, the Lime Creek Watershed,[4] implies a statewide need of $1.4 billion a year for about 15 years. These estimates demonstrate the inadequacy of the 2018 spending bill. Current investments are not resulting in discernible improvements in Iowa’s water quality. Two options available for generating the amount of revenue needed include removing the exemption of fertilizer used in agriculture and taxing it like other commodities. A second option is fully funding the environmental trust that voters approved in a statewide referendum in 2010. Estimated revenue from either of these sources would bring more than $100 million per year. We need to tap new sources to make our state commitment to water quality equal to the task. Until then, we are only paying lip service to the problem. [1] Iowa Water Resources Coordinating Council, “Iowa Nutrient Reduction Strategy 2017-2018 Annual Progress Report. Page 9. http://www.nutrientstrategy.iastate.edu/sites/default/files/documents/NRS2018AnnualReportDocs/INRS_2018_AnnualReport_PartOne_Final_R20190304_WithSummary.pdf [2] Christopher Jones, Jacob Nielsen, Keith Schilling, & Larry Weber, “Iowa stream nitrate in the Gulf of Mexico.” April 2018. PLOS. https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0195930&type=printable [3] Brianne Pfannenstiel, “Reynolds signs water quality bill, her first as governor.” January 2018. https://www.desmoinesregister.com/story/news/politics/2018/01/31/reynolds-signs-water-quality-bill-her-first-governor/1082084001/ [4] Iowa Soybean Association Environmental Programs & Services, “Lime Creek Watershed Improvement Plan: A roadmap for improved water quality, sustained agricultural productivity & reduced flood risk. N.D. https://www.iasoybeans.com/search/?q=lime+creek   2018-NV-6w_3497(1)   Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

Courageous words about ‘timid’ funding

Posted May 2nd, 2019 to Blog

Even farm groups dare not question the timid funding of water quality

Recently the Cedar Rapids Gazette reported a slapdown of the Iowa Soybean Association by the Iowa Legislature.

Thanks to reporting by Erin Jordan of The Gazette, we learn now that a year ago, legislators were angered by comments from Iowa’s main soybean group that Governor Kim Reynolds’ first bill as governor — new money for water quality — was “timid.”

Partly because of that remark, the Gazette reported, legislators stuck back against the group by taking $300,000 in state funds away. Ironically, those funds had gone for research on water quality improvement.

In her article, Soybean group pays price for calling water bill ‘timid’, Jordan reported:

The Soybean Association had received $400,000 a year in state funding for the On-Farm Network, a program that helps farmers gather data to better manage nitrate fertilizer application on their cornfields. More precise application means less money spent on fertilizer and less excess nitrate washing into lakes and waterways.

IPP used some of the data collected by the Iowa Soybean Association in our recent report on water quality funding by the state. We called our paper “Lip Service” since that is about all Iowans are getting from their top leaders in response to widespread concerns about water quality in the state.

The Iowa Soybean Association research was very good. We found it to be the best out there on what improving nutrient pollution from agriculture was likely to cost. Now, that research has been curtailed because that organization had the temerity to tell the truth about the big talk and little money the state gives to improve water quality in the state.

To read our report or a one-page executive summary, visit the Iowa Policy Project website at http://www.iowapolicyproject.org.

David Osterberg is lead environment and energy researcher at the Iowa Policy Project, which he co-founded in 2001.

dosterberg@iowapolicyproject.org

Perspective for the common good on Tax Day

Posted April 15th, 2019 to Blog
It is so tempting, as we are seeing on social media over the last several days, to talk about filing your taxes and the fact that you (1) paid more or (2) paid less.
Is that really what matters? Let’s take a step back and look at the big picture — the common good. There are three main points to remember:
1) First, what are taxes for? Schools. Roads. National defense. Health care. Fairness and protection in the workplace. Clean air. Clean water. Recreational opportunities. Libraries. There are more examples you may put out front. But in any case, none of those services funded now by taxpayers will be provided without taxes. They will not be provided by the private sector, at least on any scale that provides access to all Americans.
Go ahead. Chart a road to opportunity for all that does not include taxes. You cannot do it. It is integral to the mission, which is why tax reform is an essential stop we identify on our Roadmap for Opportunity. Unfortunately, Iowans have not received tax reform, but a doubling down on bad tax policy trends of the last 20 or 30 years.
2) Our Iowa tax code is inequitable. The rich pay less as a share of their income than people who live paycheck to paycheck. It was already a long-term trend in Iowa (and in many states) and it was worsened by the 2018 tax overhaul. Our state and local tax system is upside down.
3) Cleaning up and restoring balance to our tax code would better assure public money is going to public purposes, rather than subsidizing tax breaks and loopholes for those most politically well-connected. As we have shown: •     Tax credits for business already cost more than $300 million a year. •     Tax loopholes for multistate and multinational corporations already cost between $60 million and $100 million. On Tax Day — and every day — we must ask whether those choices are the best use of public money, when we know education, public safety and environmental quality are being compromised by short-sighted budget decisions in Des Moines. Mike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org