Iowa Fiscal Partnership / Iowa Policy Project
SHARE:
Policy Points from Iowa Fiscal Partners

Posts tagged Iowa Policy Project

Sales-tax break didn’t add jobs

Posted June 6th, 2017 to Blog

Pushes for lower taxes on business routinely come with promises for more jobs. On that score, the more-costly-than-expected manufacturing sales-tax break has not produced for Iowans.

Since the start of the current fiscal year, when the new law took effect, Iowa manufacturing jobs are even lower than where they started. Clearly the new break did not cause the drop — a decline in manufacturing jobs started over two years ago after some recovery from the 2007-09 Great Recession. Iowa lost more than 30,000 manufacturing jobs from the peak in those years and never fully recovered. Manufacturing jobs dipped below 211,000 in April for the third time in six months, to nearly their lowest level in five years.

Thus, whatever can be said about the expensive new sales-tax break for business, creating jobs in manufacturing is not one of them.

It does appear the break is more costly than had been expected. An April memo from the Legislative Services Agency (LSA) has received significant attention in recent days, as sales-tax revenues are on pace to be down about $100 million from what was expected for the fiscal year ending June 30. The cost of the sales-tax break for an expanded list of items used in manufacturing had been projected at $21.3 million for the state.

The LSA analysis suggests that at least part of the unexpected revenue loss might be due to underestimated costs of that special sales-tax break.

It is true that the manufacturing sales-tax break was promoted on larger grounds than just job growth. In a break from its usual promotion of a hodgepodge of inequitable breaks creating a severely unbalanced playing field, the business lobby had promoted this as a fairness issue for businesses. That political strategy worked.

But increasing jobs was the steady drumbeat from Governor Branstad for his economic policies throughout the six years of his return to office in 2011, so it is reasonable to look for any job impacts.

In this case, none are immediately apparent. What we can see is that without the change, and with more careful budget projections, new Governor Kim Reynolds quite likely would not be facing the added revenue challenges she has before her.

owen-2013-57Posted by IPP Executive Director Mike Owen

mikeowen@iowapolicyproject.org


An opportunity for Governor Reynolds

IFP Statement:

New Governor Takes Office Facing Issues that Demand Leadership

 Basic RGB

Statement of Iowa Fiscal Partnership • Mike Owen, Iowa Policy Project

 

Iowa-StateSealIowa has a new Governor. We cannot say that very often, as only four individuals previously held the office over the last 48 years. The swearing-in today of Governor Kim Reynolds offers all Iowans, including the Governor, an opportunity to lead us past the divisive and cloistered decision making of the last six years.

  • Over 367,000 Iowans are in poverty, including 105,000 children, despite their families’ hard work and long hours. A 12 percent poverty rate is daunting, but far greater shares of Iowa households — particularly single and single-parent households — cannot make ends meet on what they earn in our low-wage state. This imposes extra demands on taxpayers who also frequently subsidize low-wage employers due to poorly designed economic development strategies.
  • Nearly 239,000 Iowans are employed in state and local government. Legislative attacks in 2017 dishonored their service. Trust needs to be restored. That starts by recognizing the contribution of these workers to our economy, and honoring our commitments to them.
  • More than 300,000 Iowa workers — about 1 in 10 Iowans, plus the families they support — would benefit from a meager minimum wage increase to $10.10. Anything less than that is inadequate, especially when federal policy changes in the works would undermine work-support programs such as the Earned Income Tax Credit.
  • Iowa spends hundreds of millions of dollars on tax breaks that have no demonstrated net benefit to the state, while underfunding our most important investment opportunity — in public education, from pre-K through post-secondary institutions.
  • Iowa water quality is an embarrassment as well as a health hazard. It’s time to get it cleaned up and to demand that those causing the pollution contribute to the solutions.

The most controversial policy changes of 2017 came in a climate that undermined Iowa’s longstanding reputation of good governance. Backroom dealing and abbreviated debate must not become the norm.

We stated at the end of the legislative session that history “will mark 2017 as a low point in Iowans’ respect and care for each other.” Governor Reynolds could change that. The legacy of 2017 does not have to be limited to the failure of vision, and the lack of compassion, stewardship and justice, that marked the legislative session. And, it is fair to note, 2018 could be even worse unless we change course.

Governor Reynolds has a chance to help us do more, and do it better. We wish her the best, and hope she will reach out to all Iowans to achieve collaboration on the way forward for Iowa.

#     #     #     #     #

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. Find reports at www.iowafiscal.org, and the IPP and CFPC websites, www.iowapolicyproject.org and www.cfpciowa.org.

Jeopardy for women, rural health

Posted May 16th, 2017 to Budget, Economic Security

IFP NEWS — 

House bill jeopardizes health for women and rural Iowans

National reports pinpoint issues for Iowans with loss of Medicaid expansion

Basic RGB

 

Capitol-DSC_0119-240200IOWA CITY, Iowa (March 16, 2017) — The House plan to cap and cut Medicaid — and effectively end the Medicaid expansion — will have a disproportionate impact on women and hinder coverage as well in rural communities.

Two new reports by the Center on Budget and Policy Priorities (CBPP) illustrate the challenges as attention turns to the Senate. Of particular note is the threat to the expansion of Medicaid in Iowa and 30 other states to low-income adults previously not covered.

“Previous analysis has shown the Medicaid expansion currently assures coverage to as many as 150,000 Iowans. The call to ‘repeal and replace’ the Affordable Care Act is a hollow one in that we have yet to see a replacement that protects access to health care to this vulnerable population,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP), part of the Iowa Fiscal Partnership (IFP).

A summary by IFP and CBPP of the previous House Republican plan had estimated that the earlier House Republican plan not only would cut health coverage, but also cut taxes for the wealthy while making health care more expensive for poor and rural Iowans. The report noted the Congressional Budget Office had projected the plan would wipe out all gains in health coverage achieved under the ACA.

The new reports by the Center on Budget and Policy Priorities — last week on women’s coverage and Tuesday on rural communities — clarify the challenges further. (See links to the CBPP reports below.

Not only do women make up a majority of Iowa’s Medicaid beneficiaries, but they also are the primary users of family planning and maternity benefits, and are more likely to use Medicaid’s long-term services, CBPP analysts reported.

“The Medicaid expansion loss alone is critical for women, even though it is not the only impact,” Owen said. According to the analysis, women are 54.6 percent of the Medicaid population in Iowa, but 50.4 percent of the total population of the state. In addition, the report stated, 40 percent of total births in Iowa in 2010 were covered by Medicaid.

CBPP’s report Tuesday notes that Medicaid “has long played an essential role in delivering health care in rural America.” It also notes that the rural share of the 11 million people — 14 percent — who gained coverage through the Medicaid expansion is greater than the rural makeup of the population as a whole (12 percent).

Iowa is among the eight Medicaid expansion states where more than one-third of expansion enrollees live in rural areas, the report stated. It estimates 61,600 — or 44 percent of all expansion enrollees in Iowa —live in rural areas.

“If rural health matters, then clearly the Medicaid expansion needs to be a priority and not an afterthought tossed aside for political purposes,” Owen said.

The Iowa Fiscal Partnership (IFP) is a joint initiative of the Iowa Policy Project and another nonpartisan organization, the Child & Family Policy Center in Des Moines. Iowa Fiscal Partnership reports are at http://www.iowafiscal.org.

 

#     #     #     #     #

 

For more information, see:

Interactive map with county-by-county and congressional district breakdown of Medicaid expansion enrollment (January 2017) http://www.iowapolicyproject.org/2017Research/170325-ACA-MedicaidExp.html

IFP backgrounder, “Replacing ACA: What You Need to Know About the AHCA.” March 16, 2017. http://www.iowapolicyproject.org/2017docs/170316-acha-bgd.pdf

Center on Budget and Policy Priorities report: “House-Passed Bill Would Devastate Health Care in Rural America,” May 16, 2017. http://www.cbpp.org/research/health/house-passed-bill-would-devastate-health-care-in-rural-america

Center on Budget and Policy Priorities report: “Medicaid Works for Women — But Proposed Cuts Would Have Harsh, Disproportionate Impact,” May 11, 2017. http://www.cbpp.org/research/health/medicaid-works-for-women-but-proposed-cuts-would-have-harsh-disproportionate-impact

Health care ‘reform’ gets worse

Posted April 27th, 2017 to Blog

The House Republican plan to replace Obamacare (the Affordable Care Act) with the American Health Care Act (AHCA), which a few weeks ago failed to even come to a vote, has been reincarnated. The new version of the AHCA has apparently won the support of the Freedom Caucus in the House, but in so doing has become significantly worse for millions of Americans.

Here are the key points about this new attempt to “repeal and replace” Obamacare:

  • Despite repeated promises to keep the most popular part of Obamacare, the provision prohibiting insurance companies from refusing to cover those with pre-existing conditions, the new version returns us to the bad old days. While a particular state may choose to keep the prohibition, there is no longer any nationwide requirement that insurance companies issue affordable policies regardless of pre-existing conditions.
  • Nationwide standards for health insurance policies will be rolled back; plans will no longer be required to cover services such as mental health, maternity care, or substance abuse treatment.
  • The nationwide prohibition on lifetime and annual limits on benefits will be gone, meaning the possibility of medical bankruptcy will loom once again for many.
  • The modified version of the bill still effectively ends the Medicaid expansion; about 150,000 Iowans now covered under that provision could lose insurance altogether.
  • The bill still cuts $840 billion from Medicaid over 10 years, most of the savings going to wealthy individuals, drug companies, insurance companies, and other corporations.
  • Premiums and deductibles will still rise for large numbers of persons buying insurance on the exchanges, especially for the elderly, those with lower incomes, and those in high-cost states or areas, such as most of rural Iowa.
  • Under the bill, there would be no limit on the premium an insurance company can charge based on medical history; thus someone with pre-existing conditions could in theory be offered coverage, but at a cost that is simply unaffordable. There is little difference between this situation and straight denial of coverage. A state could choose to prohibit this practice (i.e., to keep the Obamacare provision in place), but few states chose to do so before Obamacare.

While the proponents of this revised plan may argue that it keeps the prohibition on gender discrimination, a woman would pay substantially more for a plan that included maternity coverage. Such coverage would not be a required part of all plans, but instead would be an expensive option.

Just how this revised bill would affect overall coverage rates, premiums, and out-of-pocket costs, awaits a new analysis by the Congressional Budget Office. But it is quite possible that the bill will be voted on in the house without the benefit of that analysis. Part of the pressure to pass the bill now comes from the desire on the part of the Trump administration to come up with large savings to the federal government that can then be used to finance cuts to corporate and individual income taxes.

The bottom line: worse health care coverage at higher cost to millions, loss of coverage entirely to millions more, in order to finance tax cuts for corporations (and probably millionaires as well).

Posted by Peter Fisher, research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org

Also see Fisher’s March 2017 policy brief for the Iowa Fiscal Partnership: “Replacing ACA: What you need to know about the AHCA.”


Session Recap: ‘Historic’ — not label of pride

Posted April 25th, 2017 to Blog

By

4/22/17

IFP Statement: ‘Historic’ session not a label of pride

Legislative session hits working families and traditions of good governance

Basic RGB

Statement of Iowa Fiscal Partnership • Mike Owen, Iowa Policy Project

To describe the 2017 Iowa legislative session as “historic” is not a label its leaders should wear with pride.

Iowans needed a legislative session that worked to raise family incomes and expand educational opportunity. Iowans had long demanded water-quality improvement measures. Many called for lawmakers to address the lack of fairness, adequacy and accountability in a tax system laden with special-interest breaks and costly subsidies to corporations.

Instead, Iowans got a continued ratcheting down of funding for PK-12 public education. There were significant and serious cuts in post-secondary education that will lead to tuition increases. We saw cuts to early-childhood education and other programs that serve our most at-risk children and neglect of the child-care assistance program that helps working families struggling to get by.

The Legislature continues to demand little or nothing of industrial agriculture in cleaning up the mess it has left in our waters. Lawmakers tried to dismantle the Des Moines Water Works board, limited neighbors’ right to complain in court about pollution, and eliminated scientific research at the Leopold Center. Their ultimate action on water merely diverts resources from other priorities, such as education and public safety.

Lawmakers largely left the tax issue to the next session. An overture in the House to reform Iowa’s reckless system of tax credits was a welcome acknowledgment that this issue needs attention, but devils in the details make further discussion of this issue during the interim even more welcome.

Perhaps as troubling as the destructive nature of policy content this session, Iowa’s image of adherence to good governance took a big hit. The most controversial policy changes came not through collaborative, public discussion in committee, let alone the 2016 political campaigns, but were often dumped into lawmakers’ laps with little opportunity for amendments.

In what could accurately be called a “session of suppression,” lawmakers achieved:

  • Wage suppression, with a bill to preempt local minimum wage increases while refusing to raise Iowa’s repressive, 9-year-old minimum of $7.25.
  • Workplace suppression, gutting collective bargaining protections for public employees, and making it more difficult for Iowans recover financially from injuries on the job.
  • Health-care suppression, achieved in workers’ compensation legislation while also refusing to reverse Governor Branstad’s disastrous move to privatize Medicaid.
  • Local suppression, whacking at local government control in a variety of areas: minimum wage, legal defenses against concentrated animal feeding operations (CAFOs), fireworks sales, and collective bargaining options.
  • Voter suppression, with a bill to make it more difficult for many citizens, particularly low-income and senior voters, to exercise their right to vote.
  • Suppression of children’s healthy development, with additional cuts to Early Childhood Iowa and Shared Visions that will reduce access to critical home visitation, child care and preschool services for some of our most at-risk youngsters.

Some legislators may boast of a “historic” session. History will mark 2017 as a low point in Iowans’ respect and care for each other, a legacy that will not be celebrated when future Iowans look back on this session and the closing act of Governor Branstad’s long tenure in office.

#     #     #     #     #

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 available at www.iowafiscal.org, and on the websites of the two partner organizations, www.iowapolicyproject.org and www.cfpciowa.org.


Lost legacy of science and research?

Posted April 19th, 2017 to Blog

Editor’s Note: The Cedar Rapids Gazette published a version of this piece online Tuesday, April 18, 2017.

While Iowans and others celebrate Earth Day on Saturday with a March for Science, many legislators have already tripped over their own votes.

Besides several cuts to higher education Iowa legislators have taken aim at particular scientific centers at the University of Iowa and Iowa State University.

With the state’s second largest city and its largest university both almost recovered from massive flooding, they attacked the Flood Center at the UI, which may survive with a 20 percent cut to reward how its data and research have helped citizens of the state.

Certainly as troubling is the pending elimination of the Leopold Center for Sustainable Agriculture at ISU, and the farming out of duties at the Energy Center at ISU to the Iowa Economic Development Authority. So much for independent research.

One thing lost in these assaults is a sense of institutional memory. Those of us who started the Leopold Center some 30 years ago found agreement to assure Iowans a lasting resource independent of industry control and other research funding. And it has worked.

Much of the research on how to reduce agricultural damage to water quality has been started by the Leopold Center — more than 600 research projects, according to Leopold’s director, Professor Mark Rasmussen.

You drink the water. You breathe the air. Are you comfortable that Iowa’s premier research universities are being blocked from conducting research on topics including water quality, manure management, livestock grazing, cover crops, alternative conservation practices, biomass production, soil health and local food systems development?

In fact, as Rasmussen notes, many practices recommended in Iowa’s Nutrient Reduction Strategy to reduce agricultural pollution — including streamside buffers, erosion control measures, and bioreactors — “were first researched through Leopold Center funding.”

Now, the history of the Leopold Center is being reinvented by lawmakers attempting to erase a three-decade, bipartisan commitment to sustainable funding of independent research. They would eliminate the publicly directed mission and turn it over to businesses.

It is hard to know if these attacks are driven by politics or corporate interest. Maybe it is just Iowa’s version of an attack on science generally.

Either way, the bill eliminating the Leopold Center has passed the Senate and Iowans have only a short time to demand more from their elected officials in the House and the Governor. Voices rising helped to save the Flood Center with only a cut. Concerned Iowans may yet save the Leopold Center, but the clock is ticking.

 

David Osterberg, a state representative from Mount Vernon from 1983-1994, is co-founder and lead environmental researcher at the nonpartisan Iowa Policy Project. Osterberg and fellow legislators Ralph Rosenberg and Paul Johnson were co-authors of the law that created the Leopold Center at Iowa State University.


Today’s virtual House graphic: Risky fix to non-problem

Posted March 27th, 2017 to Blog

Under the radar at the Iowa Statehouse, a significant and dangerous change is being promoted through a proposed constitutional amendment to cap spending in a state where spending is below the U.S. average.

The amendment — approved by the Senate and soon to be considered in the House — is a gimmick rather than real reform. In fact, because the amendment would require two-thirds approval of both legislative changes to prohibit spending more than an arbitrary limit, it would impede elected representatives from making the kinds of public investments in Iowa’s children, the state’s infrastructure, and our environment that the people of Iowa say they want. To learn more about this issue, click here for Peter Fisher’s brief report for the Iowa Fiscal Partnership.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session the Iowa Policy Project is offering examples. In today’s graphic, we illustrate the realities of state spending in Iowa, often inflated in political rhetoric.


Curtains for tax reform

Posted March 27th, 2017 to Blog

If there’s anything we need less of this legislative session, it is back-room dealing where major changes in public policy are hatched, then rammed through the Legislature without sufficient public vetting.

Senate Majority Leader Bill Dix is quoted in media that a tax plan is coming in the next two weeks. It’s staying under wraps until then — a terrible disservice to the responsible setting of public policy. Senator Dix should pull back the curtains, right now.

But, since the senator is not going to let the rest of us in on his big secret tax plan, we should all go into this recognizing at least two major points at the start:

(1) Iowa taxes are in the middle of the pack or below average by any responsible measure, something the business lobby and far-right ideologues never want to acknowledge; and

(2) any discussion of tax changes should take a comprehensive approach that should be grounded in widely accepted principles of taxation.

Point 2 is something that is always a problem in Iowa. The typical approach is to target one tax, cut it, and move on to the next one. Meanwhile, the impact on the overall adequacy and fairness of the tax structure (two of the important tax principles), and on the critical public service that the tax system supports, is left to a “let the chips fall” mentality.

Take the curtains away, Senator Dix. It’s the business of all Iowans, right now. A late-session rush job to make a major overhaul of Iowa taxes is not only wrong from a civics-textbook standpoint, but it is bound to create problems that its authors cannot predict.

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

mikeowen@iowapolicyproject.org

Repeal of Obamacare: Following the money

Posted March 21st, 2017 to Blog

Congressional Republicans have proposed replacing the Affordable Care Act, known as Obamacare, with the American Health Care Act, or AHCA. To understand why, suppose we follow the money — who loses, who gains?

On the losing side are thousands of Iowans who would find themselves facing higher costs for health insurance. Consider a married couple with two young children, and with $40,000 annual income. In Iowa’s metropolitan counties, this family’s tax credits for the purchase of health insurance would fall by $3,469 annually. In rural areas, where health insurance is much more expensive, the same family would face nearly an $8,000 reduction in credits — in other words, an $8,000 increase in the cost of health insurance. For couples in their late 50s or early 60s, the jump in costs is much higher: $11,300 in urban areas, over $17,000 in rural counties. (See an earlier IPP report for details.)

The much greater impact on rural Iowans is because the Republican plan gives everyone the same credit, whether they are in a high-cost or low-cost county. While the credit rises with age,  the credits for older Iowans cover a far smaller share of their much higher insurance costs. Overall, the average Iowa family currently receiving subsidies for the purchase of insurance would see a $2,512 drop in the subsidy.[1]

But who are the winners? The Republican plan includes tax cuts primarily for the wealthiest Americans, as well as drug and insurance companies. The 400 highest-income taxpayers nationally would get annual tax cuts averaging about $7 million each. These taxpayers, whose annual incomes average more than $300 million, would receive tax cuts totaling about $2.8 billion a year.[2]

We now know how two of these cuts, amounting to $31 billion a year, would impact Iowans. The Affordable Care Act was financed in part by these two new taxes. One is the Net Investment Income Tax, the other the Additional Medicare Tax. Both fall primarily on the wealthiest. Repeal of these two ACA taxes would shower $116.7 million in tax cuts each year on just 1.9 percent of Iowa taxpayers. A full 92 percent of those tax cuts would go to the richest 1 percent of Iowa taxpayers — those making $444,000 a year or more, and with an average income of $1.17 million. Those taxpayers would receive on average $7,004 a year.[3]

Basic RGB“Follow the money” is good advice. But what you find when you get there is often not a pretty picture.

[1] Aviva Aron-Dine and Tara Straw. House Tax Credits Would Make Health Insurance Far Less Affordable in High-Cost States. Center on Budget and Policy Priorities, March 9, 2017.

[2] Chye-Ching Huang. House Republicans’ ACA Repeal Plan Would Mean Big Tax Cuts for Wealthy, Insurers, Drug Companies. Center on Budget and Policy Priorities. March 8, 2017. http://www.cbpp.org/research/federal-tax/house-republicans-aca-repeal-plan-would-mean-big-tax-cuts-for-wealthy-insurers

[3] Institute on Taxation and Economic Policy. Affordable Care Act Repeal Includes a $31 Billion Tax Cut for a Handful of the Wealthiest Taxpayers. March 2017. http://itep.org/itep_reports/2017/03/affordable-care-act-repeal-includes-a-31-billion-tax-cut-for-a-handful-of-the-wealthiest-taxpayers-5.php

Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org


A spotlight, not a floodlight, on business breaks

Posted March 21st, 2017 to Blog

A bill in the Iowa House, HSB187, would cut a range of Iowa tax credits, eliminating refundability and capping overall spending on credits. There is significant opposition, because people like their tax breaks. But the issue is suddenly in the spotlight because these and other giveaways are responsible for Iowa’s serious revenue challenge.

There are solutions to the state’s rampant and often unaccountable spending on tax credits and other tax breaks. It is interesting that an interim committee that meets every year to examine a rotating set of tax credits has not produced any reforms. It’s not because reforms are not necessary. Rather, it’s a lack of resolve.

One of several strong recommendations in January 2010 by a Special Tax Credit Review Panel appointed by then-Gov. Culver in the wake of the film credit scandal was for a five-year sunset on all tax credits. This would require the Legislature to re-approve every tax credit.

That would be a start. Another option: Instead of eliminating refundability for all credits, which affects even credits where refundability makes sense (Earned Income Tax Credit), limit it where it does not. The Special Tax Credit Review Panel recommended eliminating refundability for big recipients of the Research Activities Credit (companies with gross receipts over $20 million). Another option would be to cap refundability for all credits at $250,000, which would not harm small players, either businesses or individuals, and would reduce the excessive checks to big businesses.

The scrutiny and demand for a return on investment on these credits would be too much for many of these special arrangements to withstand. Eliminating or capping wasteful credits would free up revenues for other priorities; some would invest more here or there — education, or public safety, or the environment — and some would simply use it to reduce overall spending. But either way, we would have the opportunity for a debate.

There is a danger in putting everything on the table at once. It presents a false equivalency of tax credits — that they are somehow all the same. It ignores the fact that some are for private gain and some for the common good, and some are a mixture. Some work, and some do not.

Some meet the purpose for which they were advertised (the Earned Income Tax Credit, for example, which benefits low-income working families), and some miss the mark with tens of millions of dollars every year (the Research Activities Credit, where most of the money goes to huge, profitable corporations that pay little or no income tax instead of to small start-ups as envisioned).

Iowa’s business tax credits will have risen by half from 2011 to 2021 under current official projections. That is where the spotlight needs to be.

Challenging all credits at the same time gets everyone’s backs up. That is a recipe to assure continued unwillingness to take on any of it. And that will not serve Iowa very well.

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

mikeowen@iowapolicyproject.org