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Job 1 for Day 1 — putting Iowa families first

Posted November 6th, 2014 to Blog

As election dust settles, priorities remain clear for Iowa families

Now that the votes are counted, the real work begins. Job 1? It could be any of a number of areas where solid research and analysis have shown better public policy could make a difference for a more prosperous, healthier Iowa. Take a step back from the TV ads and “gotcha” politics and these issues come clearly in focus.

In Iowa, research shows solid approaches to economic prosperity for working families include:

In Iowa, research shows a fiscally responsible approach to both find revenues and do better with what we have includes:

  • Stopping tax giveaways to companies that pay no income tax — which occurs at a cost of between $32 million and $45 million a year through one research subsidy program alone, even though there is nothing to show this spending boosts the Iowa economy or produces activity that would not occur anyway. http://www.iowafiscal.org/big-money-big-companies-whose-benefit/
  • Reining in unnecessary “tax expenditures” — tax breaks, tax credits and other spending done through the tax code — could bring in tens or hundreds of millions of dollars for public services. A five-year sunset on all tax credits would force lawmakers to review and formally pass renewals of this kind of spending, now on autopilot. The last attempt at real reform fell woefully short. http://www.iowafiscal.org/tax-credit-reform-glass-half-full-maybe-some-moisture/
  • Plugging tax loopholes — a $60 to $100 million problem — would pay for a 2 or 3 percent annual increase in state per-pupil funding of K-12 schools. Twenty-three states, including 4 of 6 Iowa neighbors, don’t permit multistate corporations to shift profits out of state to avoid Iowa income tax and contribute their fair share to local education and other state services. http://iowapolicypoints.org/2013/05/22/will-outrage-translate-into-policy/
  • Reforming TIF — tax-increment financing, which is overused and often abused by cities around the state, has caught lawmakers’ attention in the past and should again. Like many tools that provide subsidies to private companies and developers, it should be redesigned to assure subsidies only go to projects with a public benefit and only where the project could not otherwise occur. Further, it should be designed to assure that only the taxpayers who benefit are the ones footing the bill, which is a problem with current TIF practice. http://www.iowafiscal.org/category/research/taxes/tax-increment-financing-tif/

In Iowa, research shows a healthy environment and smart energy choices for Iowa’s future includes:

  • Putting teeth into pollution law — which means reforms in Iowa’s Nutrient Reduction Strategy to eliminate pollution in waterways. http://www.iowapolicyproject.org/2014Research/140717-nutrient.html
  • Allowing local government to regulate frac sand mining — When it comes to cigarettes, guns and large hog facilities the Iowa Legislature took away the right of local government to listen to citizen desires. The General Assembly and the Governor should let democracy thrive and not take away local control of sand mining.
  • Encouraging more use of solar electricity in Iowa — Jobs are created while we confront climate change if we build better solar policy in Iowa. http://www.iowapolicyproject.org/110325-solar-release.html
  • Promoting local food and good food choices with school gardens — and a pilot project to offer stipends to Iowa school districts could encourage both learning and better nutrition. http://www.iowapolicyproject.org/2014Research/140514-school_gardens.html

None of these issues are new and it’s not an exhaustive list. But these were big issues for our state before the election and remain so, no matter who is in charge.

Together, we can build on the solid research cited above and lay the foundation for better public policy to support those priorities.

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


Issues in Waiting: Tax-Increment Financing Reform

Posted October 2nd, 2014 to Blog

Basic RGBThis is an excerpt from an interview with IPP’s Peter Fisher on “The Devine Intervention,” KVFD-AM 1400, Fort Dodge. Host Michael Devine discussed tax-increment financing, or TIF, with Fisher, whose reports on this issue have prompted many to call for reform. TIF is one of Iowa’s “Issues in Waiting” — issues discussed year after year, but not resolved. The quotes below are actual quotes from the interview; the questions are paraphrased.

What was the idea behind tax-increment financing, or TIF?

It was originally a tool to help cities redevelop blighted or declining areas and what it did was allowed a city to capture more of the tax revenue from redevelopment when the city undertook some project to try to turn around a declining neighborhood. If they were successful, businesses would come in, the tax base would go up.

And what TIF did was allow the city to use not just the city taxes on all that growth, but the county and school taxes as well for some period of time to pay the city back for their expenses for this project, for redevelopment. And in the long run the county and school districts were better off. The cities got their money back, they got more tax base. That was the idea.

How did the implementation of TIF look?

It worked that way for quite a while. And then about 20 years ago we opened the door to just about anything cities wanted to do by saying well it doesn’t have to be a blighted area, it doesn’t have to be a redevelopment. It just has to be “economic development.” And just about anything cities do it turns out they can call “economic development” and finance with TIF.

Is there a consequence if TIF is abused?

Not really — as long as they are doing something within the law. The county and the school district don’t have any say on whether the city is going to divert their taxes to the city’s TIF fund. And there’s no state regulation either, other than the court system.

To hear the full interview, click here.

For more resources from Peter Fisher and the Iowa Fiscal Partnership about TIF, click here.


Number of Poor Iowans Remains High, Income Growth Not Widely Shared

IOWA CITY, Iowa (September 18, 2014) — More Iowans remained in poverty four years after the recession than before, new data from the Census Bureau showed Thursday. 

The American Community Survey (ACS) indicated that 12.7 percent of Iowans — about 379,127 people — were in poverty in 2013, up from 11 percent in 2007, the year the last recession started.

“Nearly 1 in 8 Iowans were living in poverty in 2013, that’s less than $24,000 a year for a family of four and $12,000 a year for an individual. These new Census numbers highlight the fact that many people have not yet recovered from the recession and shows the need to do more to help struggling Iowans afford basics like decent housing, nutritious food, transportation and reliable child care,” said David Osterberg, founding director of the Iowa Policy Project, part of the Iowa Fiscal Partnership. 

In the region, Minnesota had the lowest poverty rate of 11.2 percent, while Illinois had the highest at 14.7 percent. Wisconsin was at 13.5 percent and Nebraska at 13.2 percent. But Iowa is still below the national rate of 15.8 percent. 

Other Key points for Iowa from the release of the 2013 ACS data:

  • Iowa’s poverty rate of 12.7 percent compared with 11 percent in 2007 and 9.7 percent in 2001. There was no change from the 2012 poverty rate of 12.7 percent
  • Child poverty was 15.7 percent in 2013 (about 111,119 children), up from 13.1 percent in 2007 and 12 percent in 2001.
  • Median income was $52,229 in 2013, changing little from the 2001 inflation-adjusted dollars, but dropping from $53,132 in 2007.

The median annual income in Iowa adjusted for inflation increased slightly between 2012 and 2013 but is down about $900 in real dollars since the start of the recession. Yet, other sources show that incomes at the top have grown and the gap between the top and bottom and top and middle have widened. 

“In addition to successful public policies like SNAP (food aid) and the Earned Income Tax Credit, increasing the federal minimum wage would be a step in the right direction to bring more Iowans out of poverty, ” said Heather Gibney, research associate at the Iowa Policy Project. “Making it a little easier for people to move up the economic ladder not only helps struggling families but also makes our economy stronger for all of us.”

 

Iowa Uninsured at 8 Percent in 2013

One of nation’s best rates leading up to ACA and Medicaid expansion

A greater percentage of Iowans had health insurance than in most other states leading up to the implementation of the new health care law, Census data showed Tuesday.

Data from the Census’ American Community Survey showed 248,000 Iowans, or 8.1 percent, were uninsured in 2013, down from 254,000, or 8.4 percent, in 2012. The change was not statistically significant, as it was within the margin of error.

Only three other states and the District of Columbia had lower percentages of people who identified themselves as uninsured.

“As good as the Iowa numbers look in comparison to other states, we still had a quarter of a million people without insurance heading up to implementation of the Affordable Care Act,” noted Peter Fisher, research director of the nonpartisan Iowa Policy Project, which is part of the Iowa Fiscal Partnership.

“The Census report demonstrates a need for policies that provide access to health insurance such as ACA, or Obamacare, and Iowa’s Medicaid expansion. Both can be expected to have reduced the number of uninsured. It will be interesting next year to see how these numbers have changed after more people have enrolled.”

Fisher noted one reason for optimism of better numbers in the future is that the state with the lowest uninsurance rate is Massachusetts, which has had a state plan for a number of years. The uninsurance rate in Massachusetts was 3.7 percent in 2013.

“As the ACA is implemented and we have a public policy response to the problem of uninsurance, you have to wonder if we’ll approach the Massachusetts number,” Fisher said.

Besides Massachusetts, only Hawaii and Washington, D.C., at 6.7 percent and Vermont at 7.2 percent had lower rates than Iowa. Minnesota at 8.2 percent was about the same as Iowa’s 8.1 percent, as both had a 0.3 percentage-point margin of error.

In the region, Iowa and Minnesota were well ahead of neighboring states, with uninsurance in Wisconsin at 9.1 percent and all others in double digits: Nebraska and South Dakota both at 11.3 percent, Kansas at 12.3 percent, Illinois at 12.7 percent, and Missouri 13 percent.

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

Ten years of balanced analysis

For 10 years, two organizations have stood together to help Iowans see the stakes for their families in good public policy.

110929-ifp-newlogo10Back then, these two nonpartisan, nonprofit organizations — the Iowa Policy Project (IPP) in Iowa City and the Child & Family Policy Center (CFPC) in Des Moines — merged their common state policy work under one banner, the Iowa Fiscal Partnership (IFP).

We focus on better informed and well-targeted state policies to provide adequate public services and better economic opportunity to more Iowans, particularly those at low incomes who have been pushed back, held down or shut out. IFP draws upon the expertise in various areas of policy work by IPP and CFPC. In short, it takes money — appropriately and equitably generated — to provide services necessary for the common good.

Success has many parents, but we can safely say that because of IFP:

  • Iowa’s Earned Income Tax Credit is twice as large as it was just a few short years ago, benefiting more families and boosting the economy.
  • There is new scrutiny on spending on tax subsidies for large corporations that pay little or no income tax in Iowa.
  • Iowa policymakers and advocates know more about who pays taxes in our state, and can identify exaggerated or false claims when they are made.
  • Work supports — such as child care assistance — are shown to make work pay for Iowa families, and to help the economy and family prosperity.

In our 10 years, a variety of circumstances shaped the political climate in which we work — governors of both parties, legislatures under divided leadership or full control of one political party. Serious attention to issues means not being distracted by who has or who does not have the reins of power. Our business is the arena of issues, not of party politics. In this, we are not alone.

Inside the state, good advocacy groups work tirelessly for Iowans’ best interests — on family budgets, on education, on health and nutrition, on child care, on clean air and water, and on safe neighborhoods. They want the independent analysis that sets our work apart, so they can make their case to their elected officials. Likewise, media quote our work for information and perspective — and the policymakers themselves use our reports in debate and decisionmaking.

sppartnershipIFP has been for these past 10 years a proud member of what has been known as the State Fiscal Analysis Initiative, which has grown to 41 states and this summer took on a new name: the State Priorities Partnership.

Our Iowa Fiscal Partnership is proud to be a part of this new national partnership of organizations focused on “the fight for a just and equitable America.” There is no better place to be.

Policy choices are about quality, not quantity

Posted May 28th, 2014 to Blog

The headline on my doorstep today says, “Legislature continues trend of passing fewer bills.” That lead story in the Cedar Rapids Gazette notes that for the fourth straight year, a divided Iowa Legislature has passed fewer than 150 pieces of legislation.

Ah, numbers. Can’t live with ’em. Can’t live without ’em. But in this case, they don’t make a lot of difference.

What matters are the words and the policies embodied in those 150 or fewer bills. It’s about quality, not quantity.

What have those bills included in recent years? Here are some key points:

  • A commercial property tax overhaul that is tainted by big benefits to huge out-of-state retailers that need no help and pay too little in Iowa tax as it is.
  • An expanded Earned Income Tax Credit that improves tax fairness for low- and moderate-income working families across Iowa.
  • Funding to assure a tuition freeze remains for a second year in regents institutions.
  • A small boost in child care assistance for working students, making them eligible for the benefit so they can get skills for better paying jobs to sustain their families.

What have those bills not included in recent years? Here are some noteworthy omissions:

  • No overhaul of the personal income-tax system to better balance tax responsibilities for all taxpayers regardless of income, or to assure revenues are kept adequate to meet costs of critical services.
  • No greater accountability on spending that is done through the corporate tax code, outside the budget process.
  • No increase in the minimum wage, stagnant at $7.25 for over six years now.
  • No broad expansion of child care access for struggling families who don’t make enough to cover costs, but make too much to receive assistance.
  • No move to battle wage theft, which we have estimated to be a $600 million annual problem in Iowa’s economy — not including the $60 million lost in uncollected taxes and unemployment insurance.
  • No long-term answers for funding of education at all levels, violating the promise of law for K-12 schools, and leaving a legacy of debt for many college students and their families.

Those are not exhaustive lists, but a statement of priorities established by agreement, stalemate or inertia. We covered some of these points in our end of session statement. Some will like the overall product of recent years, some will not. Few will ask how many bills were passed.

At least one theme weaved by this record cannot be disputed: Iowa is on record that we will not ask the wealthy and well-connected to do more. We pretend more often than not that we can meet our obligations to the citizens of Iowa without investing in the public services they require, that if we just keep cutting taxes all will be well. Every now and then we’ll say something about opportunity for all and mean it, but we’re not ready to make that a long-term commitment.

Sometimes, not passing something says as much about legislative priorities as passing it.

Owen-2013-57   Posted by Mike Owen, Executive Director


Steps forward in ’14 — more ahead?

IFP News: Statement on 2014 Legislative Session

Iowa families took a couple of important steps forward in the 2014 legislative session, but those steps paled in comparison to lawmakers’ refusal to address long-term funding challenges for critical services.

PDF (2 pages)

IOWA CITY, Iowa (May 7, 2014) — The Iowa Fiscal Partnership released the following statement today about the 2014 session of the Iowa Legislature:

Iowa families took a couple of important steps forward during the just-completed legislative session, while more — and more significant — advancements will have to wait as the General Assembly and Governor continue to focus excessive attention on giveaways to business.

Steps forward paled in comparison to lawmakers’ refusal to address long-term funding challenges for critical services including K-12 and early childhood education, and Child Care Assistance, among others.

And, inexplicably, lawmakers left Iowa’s minimum wage at a paltry $7.25 — stagnant now for over six years. Failure to improve the livelihoods of Iowa’s low-wage workers puts greater demands on families because public supports are not sufficiently funded. Eligibility for Child Care Assistance in particular has been held too low to help many low-income working families — one of the lowest eligibility ceilings in the country — and lawmakers passed up an opportunity to improve that.

One bright note from the session was that lawmakers approved increased eligibility for child care assistance to working parents who also go to school part time. They also passed a small improvement in the child and dependent care credit. Iowa Fiscal Partnership research has shown child care is expensive for low-income families, and is a major barrier for parents seeking to improve their education.

Another bright spot is that the state will provide 4 percent increases to Iowa, Iowa State and Northern Iowa to meet a commitment by the Board of Regents to freeze tuition for a second straight year. Likewise, community colleges received a 4.1 percent funding boost to restrain tuition. It is important to note, however, that many more years of increased funding will be needed to reverse the long-term trends that have turned tuition into the majority source of support for the Regents institutions and the community colleges. This causes rising debt for families, reduces access to higher education and lessens Iowa’s commitment to opportunity for all.

On the other end of the education spectrum — 4-year-old preschool — only the Senate passed legislation to help eliminate waiting lists and expand access to more families, so it will be at least next year before that can be considered.

Funding is critical to improvements in many areas. For the environment, the Resource Enhancement and Protection Act (REAP) has been around for a quarter century but only once funded at its authorized $20 million. If the Governor signs improvements passed by the Legislature, conservation and environmental advocates will see it at $25 million.

No noteworthy gains were made or seriously attempted to reform corporate tax credits and other tax breaks that have become a significant and chronic drain on Iowa’s treasury with little apparent return.

While poorly targeted “incentives” to business remain a serious problem for Iowa, one limited credit for solar power improvements was expanded and should be able to stand the kind of return-on-investment review that needs to be applied to all business tax credits.

It remains a contradiction that lawmakers can give away tens of millions of dollars to profitable businesses that pay no state income tax — without a vote and without concern about the impact on the budget — yet leave town claiming they cannot set school aid as required by law because they don’t know how much money will be coming in. If education is a priority, the money can be found from the pool now being given away before it hits the treasury.

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

Why the tuition freeze matters

Posted May 2nd, 2014 to Blog

A bright spot in the just completed session of the Iowa Legislature is that lawmakers for the second year in a row have assured a tuition freeze at Iowa’s Regents universities.

The 4 percent increase in state funding for FY2015 is an important investment. It means current students will be able to keep a little more money in their pockets, and prospective students will have greater access to higher education at the University of Iowa, Iowa State University or the University of Northern Iowa.

For now, the state has stalled its trend toward sharp tuition increases — a trend similar to what’s happened at public colleges and universities across the country. A new report from the Center on Policy and Budget Priorities found that from FY2008-FY14 state funding per student at Iowa’s Regent universities decreased by 23.8 percent, leading to a 12.2 percent change in average tuition after adjusting for inflation — $854 more a year per student.

It’s a simple equation: When state funding goes down, tuition goes up and/or resources to help students are reduced. Iowa Fiscal Partnership research has shown these trends in our state, as noted in the graph below covering tuition vs. state support of Regents institutions from 2001-13.

tuitionvsstateaid

These trends shift the cost of education from the state to the students and their families. The result is that students take on more debt or have fewer choices among institutions, if they choose to attend at all. At low incomes, some students may simply choose not to enroll even though education might be what they want, and necessary to their career goals.

Excessive student loan debt has broad economic implications. It is associated with lower rates of homeownership among young adults, it can create enough stress to decrease the probability of graduation and reduce the chance that graduates with majors in science, technology, engineering and mathematics will go on to graduate school.

The economic importance of higher education will continue to grow, as getting a college degree is increasingly a prerequisite to enter the middle class. And beyond those who receive the degree, everyone in the community benefits when more residents have college degrees. An area with a highly educated workforce attracts better employers who pay better wages and this can boost an area’s economic success.

Strong state revenues offer a time to reinvest in higher education, and to return funding of services to pre-recession levels.

IPP-gibney5464  Posted by Heather Gibney, Research Associate


How the EITC Hits Home

Across the state, the EITC benefits a significant share of households

How the EITC Hits Home

1 in 7 Iowa Households Value Working Family Credit; $439 Million to Economy

Backgrounder, 2 pages (PDF)

Low- and moderate-income working families in Iowa are benefiting in 2014 from an expansion of the state’s Earned Income Tax Credit, passed last year. Using an analysis from the Brookings Institution to illustrate where Iowans claim the credit, our map below breaks down the percentage of federal tax filers claiming the EITC in each Iowa House district. Brookings analysis (see table below) shows 15 percent of Iowa federal income tax filers in 2012 benefited from the credit — about 207,000 households.

Use of the Federal EITC, by Iowa State House District, 2012 Iowa EITC map 2012

Over 15 Percent of Iowans Filing for Federal EITC — by Iowa Senate and House Districts, 2012

EITC Table 2012 data

First Iowa Tax Day with expanded EITC

Posted April 30th, 2014 to Blog

Almost unnoticed as Iowans file their state income taxes today is that many thousands of families are benefiting from a newly expanded state Earned Income Tax Credit (EITC).

Iowa legislators last year passed and Governor Branstad signed an expansion of the working family credit, doubling it from 7 percent of the federal EITC to 14 percent for 2013, and bumping it to 15 percent for this year. The increase was barely mentioned by the Governor when he signed it as part of a larger package of tax changes. Yet, as we noted recently — the boost is “arguably the most important legislation he signed last year.”

arguably the most important legislation he signed last year: doubling the Earned Income Tax Credit. – See more at: http://www.iowafiscal.org/ifp-news-statement-on-governors-address/#sthash.NzN7o0IR.dpuf

New data from 2012, compiled by the Brookings Institution, sort out by legislative district the number and percentage of tax filers who benefit from the federal EITC, on which the state credit is based. We have put that information into a new Iowa Fiscal Partnership backgrounder; the two-pager is available here. In the map below, the golder and greener the district, the greater its constituents use the EITC. In the green areas, over 20 percent of filers use the EITC.

130506-EITCmap

Iowa’s Earned Income Tax Credit is an important tool in making work pay for low-income households. We have shown how a further expansion could better fill the gap between low-wage income and a basic-needs household budget, as well as improve Iowa’s tax treatment of low-wage families.

Owen-2013-57Posted by Mike Owen, Executive Director