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Posts tagged Iowa Association of School Boards

IFP News: Sales-tax sleight of hand in Iowa

NEWS RELEASE — Proposals test limits of authority, defy voters’ intent and expectations

View the report

IOWA CITY, Iowa (March 10, 2016) — Schools would lose revenue and Iowa voters’ intent would be distorted by new proposals on the state sales tax, according to a report from the Iowa Fiscal Partnership.

“This is the new sleight of hand in Iowa — pass a tax for one purpose, and then shift the way the money will be used. That’s what the Governor is proposing with his attempt to divert funding from the school infrastructure sales tax, and that’s only one example,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project and author of the report for the Iowa Fiscal Partnership.

“Another is a special sales-tax break for manufacturers that the Governor has set in place on his own, without legislative approval. This might change in current budget negotiations, but we likely would not be talking about it at all had the Governor not acted on his own.

“The precedents being set raise uncertainties for the future governance of our state.”
 
The six-page report is available here: http://www.iowafiscal.org/sales-tax-sleight-of-hand-in-iowa/.

In the paper, Owen looks at a sales-tax break implemented unilaterally by the Branstad administration, as well as various proposals that would extend a state sales tax currently designated for school facilities and equipment — but only if shares of the funding are diverted to other purposes.

 
The Iowa Association of School Boards (IASB) uses Department of Revenue data to project the Governor’s plan, now in the House as HF2382, would cause a loss of $426 million for school infrastructure from FY2017 through FY2029, when the current tax expires.

Schools would see a 20-year extension of the tax under the Governor’s plan, but would receive $4.7 billion less through FY2049 than under a straight 20-year extension of the sales tax for its currently defined use, according to IASB.

 
“That sales tax would not exist but for local votes across the state, for the revenues to go to school infrastructure, and secondarily to offset property taxes,” Owen said. “What the Governor and proposals in the Iowa House would do is to divert that funding to purposes never intended.

“They would do this in the near term, changing the rules of the current law set to expire in 2029, and they would do so in greater proportions over the following 20 years. Construction costs for schools will not be going down over that time.”

Proposals also would impose new restrictions on schools’ ability to spend the funds, and two would require voter approval by supermajority for even relatively small-scale construction projects, anything over $1 million.

 
“Once more, we see efforts to impose minority rule against efforts to improve our public infrastructure, to make it more difficult for school boards to do their jobs,” said Owen, who is serving his third term as an elected school board member in West Branch.

The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonprofit, nonpartisan organizations, the Iowa Policy Project in Iowa City and the Child & Family Policy Center in Des Moines. Reports are at www.iowafiscal.org.

State aid up 13 percent — for business breaks

Posted January 28th, 2016 to Blog

What do you expect would be the outcry if Iowa’s public schools asked for 13 percent growth in state aid?

Yet few bat an eye when this happens with business tax breaks, as we can expect for FY2017.*

The early scorecard gives business tax breaks the big edge, a 13 percent increase, vs. between 2 and 4 percent for schools.

The Senate approved 4 percent for FY2017 (covering next school year), but the Iowa House on Monday approved 2 percent — even though schools have averaged less than 2 percent for six years, from FY2011-16.

In fact, the Iowa Association of School Boards this year did not even ask for a specific growth number, but rather, that it be set in a timely manner (it’s almost a year late already), and “at a rate that adequately supports local districts’ efforts to plan, create and sustain world-class schools.”

That hasn’t happened for some time. Over the last six budgets, per-pupil growth has been held to 2 percent or below in all but one year. Depending on enrollment trends, some districts even see less.

Basic RGB

Business tax breaks do not face the same budget constraints — ironic, since the cost of those breaks limits what lawmakers permit themselves to spend on services that their constituents demand, not the least of which is education. Other areas — environmental quality, child care, health care and public safety — also are constrained.

A much greater percentage increase in business tax breaks is set in place, as shown below. The total increase of $71 million from this budget year to the one lawmakers are working on now actually may be understated. The $35 million for a new sales-tax exemption for manufacturers is considered a conservative estimate. Even at $71 million overall, however, it represents a 13 percent increase.

160108-IFP-Budget-Fig2FB

Spending on business tax breaks is rarely burdened by the public scrutiny and debate that comes with spending on schools and water programs, which must be approved annually.

Most business tax breaks, once passed, are never touched again unless they are expanded. And as shown by the sales-tax break for manufacturers scheduled to begin this summer, a break may never receive legislative approval but still become law. The Governor is implementing this one on his own, with a split legislature unable to stop him.

Budget choices? Instead of that $35 million in FY2017 for the new sales-tax break, the Legislature could provide about 1 percent growth in per-pupil school funding. We can expect to find another 1 percent in what we’ll spend in checks to companies that do not pay any state income tax, but have more research tax credits than they owe in taxes.

Perhaps one day we will treat all spending the same, whether the spending comes before or after revenues reach the state treasury. Then the wealthy corporations can compete directly for their tax breaks against education for the skilled people they want to work for them.

Owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Mike Owen is a member of the school board in the West Branch Community School District, first elected in 2006.
* For more about Iowa tax breaks for business, see Peter Fisher’s report for the Iowa Fiscal Partnership, “Here a tax break, there a tax break, everywhere a tax break.” http://www.iowafiscal.org/here-a-tax-break-there-a-tax-break-everywhere-a-tax-break/