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IPP Statement: IPERS is strong

Posted January 31st, 2017 to Blog

Governor Branstad and Lieutenant Governor Reynolds are discussing a potential task force to examine whether to replace the IPERS defined benefit pension plan with a defined contribution plan, like 401(k) plans.

The Iowa Policy Project, which has researched this issue already, today released this statement:

The governor’s proposed task force on public pensions is unnecessary. The evidence is clear that a defined contribution plan is inferior to a defined benefit plan in the fundamental purpose of a pension: to assure a secure retirement for an employee. The IPERS law also clearly states its purpose of reducing turnover and attracting high-quality public workers.

Therefore, any task force should be charged with those two fundamental tasks: (1) assuring a secure retirement for public employees, and (2) enhancing the ability of the state to attract and maintain good workers. Public employment should not be reduced to temp work.

It is noteworthy that the assurances offered current employees — which include the Governor, Lieutenant Governor and state legislators — pit current employees against future employees. It would replace a secure retirement with one at the mercy of the ups and downs of the stock market.

IPERS is strong — stronger than most such systems and stronger than it was after ill-advised underfunding and a recession. As long as legislators do not take the easy way out and choose to underfund this fundamental responsibility again, there is no reason to consider a change. A fair task force will discover this.

The effort to change this stable and secure pension plan for public employees is driven by political arguments — not economic or fiscal arguments. To better understand the issues and the political spin that is clouding them, see also these newspaper guest opinion pieces:

Alarmist rhetoric sells Iowa pension plan short,” by David Osterberg in the Cedar Rapids Gazette, December 2013

Strengthen, don’t break, Iowa pension plans,” by Peter Fisher in the Iowa City Press-Citizen, March 2014

 

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

Contact: mikeowen@iowapolicyproject.org


Repealing ACA: Pushing thousands of Iowans to the brink

Likely turmoil in insurance market, higher premiums, and harm to the economy

Instead of incentives to invest, the proposals reward decisions made with no subsidy needed

Updated March 2017

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By Peter S. Fisher

Repealing the Affordable Care Act (ACA) without an adequate replacement, as Congress and the incoming Trump administration appear poised to do, jeopardizes the health care coverage and economic well-being of the most vulnerable Iowans. About 230,000 fewer Iowans would have health coverage in 2019 if the law is repealed, including 25,000 children. Thousands of adults working in low-wage jobs — such as those waiting tables, working on construction sites, bagging groceries, or providing care to children, the sick, and the elderly — would lose coverage if the Medicaid expansion is repealed. For families unable to afford health coverage on the individual market prior to health reform, coverage subsidized by tax credits could disappear, and 42,000 individuals would lose their insurance. More people would turn to hospitals and other health providers for uncompensated care, which would likely be provided in emergency rooms, leaving those who are insured to pay the bill through their own premiums, or for health-care providers to swallow the cost. Iowa’s economy would suffer as $626 million in federal funds would be withdrawn from the state, costing Iowa 6,700 jobs. The insurance market would be thrown into immediate disarray, raising premiums and reducing insurance options. Such are the prospects for Iowa as decisions loom in Washington on the ACA.  

The Affordable Care Act dramatically expanded health insurance coverage in Iowa

The number of Iowans without health insurance declined by almost 93,000 between 2013 (prior to implementation of the Affordable Care Act) and 2015, the second year in which the ACA and the insurance exchange were fully implemented in Iowa. This represents a 37 percent decline in the number of uninsured. Statewide, the percent of persons without insurance declined from 8.1 percent to 5 percent. Increased coverage came in two ways: (1) about 47,000 more individuals purchased private insurance directly, with subsidies available to most of those through the ACA, and (2) about 70,000 more Iowans obtained health insurance from Medicaid.

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At the same time that options expanded for people to access publicly funded or subsidized coverage, the number of Iowans obtaining health insurance through their employer actually increased by 28,000 over the two-year period. The ACA, in other words, does not appear to have caused employers to eliminate health insurance and push employees onto public plans.

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The most dramatic decrease in the number of uninsured occurred for non-Hispanic white Iowans, among whom the number dropped by 85,000, accounting for 92 percent of the decrease statewide. The uninsured rate for this population declined from 7 percent to about 4 percent. The ACA had much less dramatic effect in reducing the uninsurance rates among Hispanics, African Americans and other non-white Iowans, where the uninsured share remained at 12 percent or higher.

The percent of the population that was uninsured dropped in nine of the 10 most populous counties in Iowa, in most cases by a substantial amount. The uninsured rate in the more rural remainder of the state also declined dramatically, from 9.2 percent to 5.3 percent. All told, about 41,000 fewer Iowans in the 10 largest counties were uninsured in 2015, while 52,000 fewer Iowans in the remainder of the state had coverage.

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Repeal would increase the number of uninsured Iowans

The ACA has made good-quality health insurance available to thousands of low-income individuals and families in Iowa who otherwise could not afford coverage. About 55,000 Iowans purchased insurance on the exchange during the 2016 enrollment period, and 85 percent of them qualified for the premium tax credit.[1] The average monthly premium for those purchasing insurance on the exchange was $425, with $303, or 71 percent of this cost, covered by the credit. The ACA subsidy that is now in danger reduced the average cost to ACA enrollees to $122 per month.  Nearly 28,000 people in this group also received cost-sharing reductions (CSRs), which lowered deductibles and other out-of-pocket costs for them by roughly $28 million that year.

The Urban Institute has estimated that if the ACA is repealed, 230,000 fewer Iowans will have health insurance coverage in 2019 than if the law is left as is.[2] Of these, 42,000 are individuals who will receive tax credits for the purchase of health insurance if the ACA continues, credits worth on average $4,281 per recipient per year. The credit covers over two-thirds of the cost of health insurance on average. Few people could afford to keep their coverage if they lose that subsidy.

As a result of these losses in coverage, the Urban Institute projects that ACA repeal would increase the number of uninsured in Iowa from 153,000 to 383,000, a 150 percent increase.[3] This includes an increase of 25,000 in the number of uninsured children, as well as 68,000 more uninsured parents.[4]  The percentage of Iowa children without health insurance would more than double, from 3 percent to 6.2 percent.

Taking Medicaid coverage away from thousands of adults would likely lead to an increase in the number of uninsured children. This is because adults who are uninsured are less likely to enroll their children in Medicaid or hawk-I.[5]  For many children in Iowa, this will mean not just poorer health, but poorer long-term prospects overall. Research has shown that better health care as a child is associated with greater educational attainment and higher earnings as an adult.[6]

Repeal of the Medicaid expansion would cut eligibility below pre-ACA levels

In 2014 Iowa created its own version of the Medicaid expansion, called the Iowa Health and Wellness Plan. As of January 2017, 151,000 people were enrolled in the Wellness Plan. See Appendix Table for enrollment by county. All of those individuals now in the Wellness Plan are at risk of losing health insurance if the Medicaid expansion portion of the ACA is repealed.

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Prior to the ACA, Iowa had created a Medicaid waiver program called IowaCare that extended Medicaid benefits to many adults not eligible under traditional Medicaid.[7] There were 69,000 people enrolled in IowaCare in FY2013.[8] With the advent of the ACA in 2014, those enrolled in IowaCare were automatically shifted to the Iowa Wellness Program, and IowaCare ceased to exist. If Congress repeals the Medicaid expansion, all those in the Wellness Program would be at risk of losing coverage. People losing coverage would include those formerly in IowaCare, unless the state re-created such a program under a waiver request once again and got approval for that waiver from the federal government. This is unlikely. Thus the repeal of the ACA could leave tens of thousands of adults uninsured who actually were insured prior to the ACA, or who could have been covered if IowaCare still existed.  This would leave low-income Iowans worse off than they were in 2013, prior to health reform taking effect.

Working Iowans would be hurt by Medicaid expansion repeal

The majority of the non-elderly adults receiving Medicaid are working Iowans. In 2015, 61 percent of Medicaid recipients age 18 to 64 were working at least part time. A third of those were working full time at low-wage jobs that left them earning near the poverty line. Many of these adults get their health coverage through the Iowa Wellness Program and are thus at risk of becoming uninsured if the Medicaid expansion is repealed.

Basic RGBAmong the adult Medicaid recipients in Iowa who are working, about 45 percent work in 10 industries. They are waiting tables, working on construction, bagging groceries, or serving children, the sick, and the elderly. They are working in jobs that pay little and provide few if any benefits.

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Uncompensated care would rise with repeal

The ACA expanded insurance coverage to thousands of Iowans who would otherwise have sought emergency room or other care that they could not pay for, but which hospitals and doctors nonetheless are obligated to provide. This “uncompensated care” was greatly reduced by the ACA. With repeal and the loss of insurance coverage for 230,000 Iowans, it is estimated that total uncompensated care in Iowa in 2019 (assumed to be the first year in which repeal is fully in effect) would more than triple, from $345 million to $1.2 billion.[9] Over a 10-year period, a $10 billion rise in uncompensated care in Iowa is anticipated. All Iowans would feel the effects, as hospital fees and insurance rates would rise to make up for these costs, and as hospitals retrench.

The decline in health insurance coverage and the rise in uncompensated care could be especially challenging for Iowa’s rural hospitals. Rural hospitals are more likely to be in a precarious financial situation if they are in a state that did not expand Medicaid, and repeal would throw all Iowa hospitals into that situation. Since 2010, 80 rural hospitals across the country have closed, the majority in non-expansion states.

Repealing the ACA would cause immediate harm

Repeal of the ACA would likely follow the provisions of the repeal bill passed by Congress last year. This would eliminate immediately the individual mandate to purchase insurance or pay a penalty, while retaining popular provisions such as the requirement that insurance companies not deny coverage because of pre-existing conditions. The result is that many healthy individuals would drop their coverage.  Insurance companies would be left with the sickest and most expensive customers, which would prompt some to leave the state’s individual insurance market or to raise rates for remaining customers if they stayed.  The health insurance market would thus be devastated quickly, even though full repeal of the subsidies and other provisions of ACA would be delayed, possibly until 2019.

Repeal would also endanger some of the ACA’s most important consumer protections. No “replacement” plan has been proposed, but it is likely that the quality of insurance policies in the individual market would deteriorate, with rising deductibles, the return of limits on how much insurers will pay out in benefits each year or over a person’s lifetime, and failure to cover such things as maternity care, mental health, or prescription drugs.

With repeal of the individual mandate and the subsidies, it would be untenable to maintain the ACA’s protections for people with pre-existing health conditions. In Iowa, the number of adults with pre-existing conditions that would have led to denial of insurance coverage prior to the ACA has been conservatively estimated at 448,000, or about 24 percent of non-elderly adults in the state.[10] Ensuring the individual insurance market is accessible and affordable for this group, should they need to purchase coverage there, has been a major achievement of the ACA , but one made possible only because of the mandate and the marketplace subsidies, which broadened the pool of individuals the insurance companies were covering to include many healthier adults. Without the broader pool, insurance companies will not continue to offer quality, affordable policies, to the detriment of all those buying health insurance in Iowa.

Contrary to what some in Congress have been saying, the exchanges are not in a death spiral — higher premiums causing healthy individuals to forgo insurance, leaving the insurance companies with a more costly pool, leading to higher premiums, etc. Enrollment through the exchanges has increased each year since inception in 2014, and 2017 enrollment is ahead of last year’s. There is evidence that the premium increases this year are a one-time correction for underpricing in previous years, not the beginning of a trend.[11] In fact it is repeal, not continuation, of the ACA that would push the exchanges into a death spiral.

Repeal would shower benefits on the wealthy

Repeal of the taxes financing the ACA would lavish tax cuts on the highest-income households in the country. The Medicare taxes imposed by the ACA fall only on individuals with incomes above $200,000 or couples with incomes above $250,000. The 400 richest households in the country would receive a $2.8 billion windfall in 2017 if these taxes were ended, for an average tax cut of about $7 million a year for each household.[12] Without the revenue from these and other taxes imposed by the ACA, it would be difficult or impossible to finance a replacement.

Repeal would harm Iowa’s economy

The repeal of the ACA would have a substantial impact on the Iowa economy, cutting off billions in federal money flowing into the state, and reducing income and employment, not just in the health care industry, but throughout the economy.

Repeal of the ACA would result in the loss of $626 million in federal funds in 2019, and a total of $7.4 billion from 2019-2028.[13] That would reduce payments to health care providers throughout the state, who in turn would reduce purchases from vendors and cut employment. Ripple effects would follow: vendors would cut payroll, and the reduced spending by employees both of the health care providers and of the vendors would mean reduced purchases of goods and services in Iowa, and reduced state taxes. Repeal of the ACA (including the taxes that finance it) would cost Iowa 6,700 jobs,[14] not just in the health care sector, but also in sectors such as construction, retail, finance and services.

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[1] U.S. Department of Health and Human Services, ASPE Issue Brief, March 11, 2016. Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report For the period: November 1, 2015 – February 1, 2016.

[2] Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available online at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

[3] Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

[4] Matthew Buettgens, Genevieve Kenney, and Clare Pan. Partial Repeal of the ACA through Reconciliation: Coverage Implications for Parents and Children. Washington, DC: The Urban Institute, December 21, 2016. Available at: http://www.urban.org/research/publication/partial-repeal-aca-through-reconciliation-coverage-implications-parents-and-children. 

[5] Government Accountability Office. Medicaid and CHIP: Given the Association between Parent and Child Insurance Status, New Expansion May Benefit Families. February 2011. Available at:  http://www.gao.gov/new.items/d11264.pdf .Georgetown Center for Children and Families, Medicaid Expansion: Good for Parents and Children. January 2014. Available at: http://ccf.georgetown.edu/wp-content/uploads/2013/12/Expanding-Coverage-for-Parents-Helps-Children-2013.pdf  

[6] Medicaid’s Long-Term Earnings and Health Benefits. Center on Budget and Policy Priorities, May 12, 2015. Available at: http://www.cbpp.org/blog/medicaids-long-term-earnings-and-health-benefits   Medicaid at 50: Covering Children Has Long-term Educational Benefits. Center on Budget and Policy Priorities, July 7, 2015. Available at: http://www.cbpp.org/blog/medicaid-at-50-covering-children-has-long-term-educational-benefits

[7] Traditional Medicaid covers low-income individuals who are aged, blind, disabled, pregnant women, children, or parents of children on Medicaid.

[8] https://dhs.iowa.gov/sites/default/files/IowaCare_Narrative.pdf

[9] Matthew Buettgens, Linda J. Blumberg, and John Holahan. The Impact on Health Care Providers of Partial ACA

Repeal through Reconciliation. The Robert Wood Johnson Foundation and the Urban Institute, January 2017.

http://www.urban.org/sites/default/files/publication/86916/2001046-the-impact-on-health-care-providers-of-partial-aca-repeal-through-reconciliation_0.pdf

[10] Gary Claxton, Cynthia Cox, Anthony Damico, Larry Levitt, and Karen Pollitz.Pre-existing Conditions and Medical Underwriting in the Individual Insurance Market Prior to the ACA. Kaiser Family Foundation, December 12, 2016. Available at: http://kff.org/health-reform/issue-brief/pre-existing-conditions-and-medical-underwriting-in-the-individual-insurance-market-prior-to-the-aca/

[11] Sarah Lueck. “Commentary: Even as Insurance Market Improves, GOP’s ACA Repeal Would Kill It.” Center on Budget and Policy Priorities, January 17, 2017. Available at: http://www.cbpp.org/health/commentary-even-as-insurance-market-improves-gops-aca-repeal-would-kill-it

[12] Brandon DeBot, Chye-Ching Huang, and Chuck Marr  ACA Repeal Would Lavish Medicare Tax Cuts on 400 Highest-Income Households. Center on Budget and Policy Priorities, January 12, 2017 Available at: http://www.cbpp.org/research/federal-tax/aca-repeal-would-lavish-medicare-tax-cuts-on-400-highest-income-households

[13] Includes Medicaid expansion funding and insurance subsidies. Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available online at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

[14] Josh Bivens. Repealing the Affordable Care Act Would Cost Jobs in Every State. Economic Policy Institute, January 31, 2017. http://www.epi.org/publication/repealing-the-affordable-care-act-would-cost-jobs-in-every-state/

 

pfisher240200Peter S. Fisher is Research Director for the Iowa Policy Project. He holds a Ph.D. in economics from the University of Wisconsin-Madison and is professor emeritus of Urban and Regional Planning at the University of Iowa. A national expert on public finance, Fisher is frequently quoted in the Iowa and national media on issues involving tax policy and economic development strategies. His critiques of various state business climate rankings are posted on a website, Grading the States, at www.gradingstates.org.

County Minimum Wages Spread their Benefits Widely

Posted January 4th, 2017 to Blog

It’s not just four counties that benefit from the higher local minimum wages that go into effect this year. Those four counties — Polk, Linn, Johnson and Wapello — account for a third of all private-sector jobs in the state. And a large number of people holding those jobs live in neighboring counties.

Polk, Linn and Johnson counties are the hubs of metropolitan areas, surrounded by counties where a sizeable share of the workforce commutes to the hub. Those commuters earn higher wages thanks to the county supervisors in the three counties. And they come home to spend those higher wages at local gas stations, restaurants, grocery stores and other retail shops. They hire local plumbers and builders and electricians. In all, at least 12 counties in addition to Polk, Linn and Johnson will see a substantial increase in resident incomes and local purchases as a result of those three county minimum wages.

The map below shows the percentage of lower wage workers in each suburban county who are employed in the hub county with the higher minimum wage.[1] Clearly, any action by the Iowa Legislature to roll back county minimum wages would harm the workers and the local economies in many of the state’s most populous counties.

Iowa 03-BLUE-counties

[1] Lower wage is defined as earnings of $3,333 per month or less. Restricting it to those earning $1,250 or less results in very similar percentages; the lower figure, however, would represent a wage of even less than the current minimum for someone working full time, whereas the county minimums when fully phased in will benefit all those earning under $10.10 (Johnson) to $10.75 (Polk), and some workers above those levels. These earnings cutoffs were the only ones provided in the Census data.

2010-PFw5464Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org


Mission accomplished — no cuts needed

Posted December 30th, 2016 to Blog

Tax-cutters are in hog heaven in Iowa these days. They soon assume the levers of power at the State Capitol and they are planning to use them — no matter the consequences.

But if they truly believed their own mantra about the economic glories of low taxes, they would be shouting “Mission Accomplished” from the top of the Capitol dome. For all their talk of making Iowa “competitive,” they would realize we are already there, and have been for many, many years.

Once again, the national accounting firm Ernst & Young has examined the range of state and local taxes affecting businesses in every state plus Washington, D.C., and found Iowa is in the same place it always lands — the middle of the pack.

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Twenty-three states and D.C. tax business more heavily than Iowa, which is tied for 25th with six other states including neighboring Minnesota. Even South Dakota, despite a low-tax image trumpeted by western Iowa politicians, is slightly higher than Iowa.

That is because responsible tax policy demands a comprehensive look at the impact of all pieces of the tax structure, as Ernst & Young does. Cherry picking only one tax that appears high — appears being the key word because this can be complex — ignores other offsets in the tax code.

Yet, the post-election rhetoric has been a lot about tax cuts — tax cuts we cannot afford.

To the extent state and local taxes matter in business decisions — and there is considerable evidence that they do not, despite the political spin — Iowa already is well-situated. In other words, the concept of “competitiveness” can be overstated easily. A tax structure would have to be markedly different from others, producing high-tax results that we certainly don’t see in Iowa, to make a difference in business expansion and location decisions.

As we pointed out in 2014, Iowa is a low-tax state. This remains so. Why aren’t our elected officials promoting that if it is so important to them?

Having already implemented what the Governor promoted as the largest tax cut in Iowa history with massive property tax giveaways benefiting big-box retailers in 2013, and recognizing state revenues are coming in more slowly than expected, our leaders need to take a deep breath.

We cannot afford new tax cuts for business. For stronger economic growth, let’s turn the page and look at things that matter.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
mikeowen@iowapolicyproject.org

Iceberg ahead — but how big?

Posted December 21st, 2016 to Blog
060426-capitol-swwThe Des Moines Register disclosed Wednesday afternoon in a copyright story that the private, for-profit companies now running Iowa’s Medicaid program are finding big problems in the first year.

With big policy decisions ahead on the future of Medicaid, not only in Iowa but in Washington with a new administration, it is reasonable to wonder if Governor Terry Branstad’s go-it-alone Medicaid privatization is only the tip of the iceberg — and how big the iceberg may be.

Besides the great uncertainty for health-insurance coverage for millions if Congress repeals the Affordable Care Act (ACA) without a replacement, there is the idea that Congress might block-grant Medicaid. The goal would be to save the federal government money — not to assure health care for the most vulnerable as Medicaid now provides.

A block-grant approach means states would be allotted a share of funds for Medicaid, and when it is gone, that’s it — services would be cut. In that scenario, the decisions would be made in the states. As noted by Edwin Park of the Center on Budget and Policy Priorities:

Such a block grant would push states to cut their Medicaid programs deeply.  To compensate for the federal Medicaid funding cuts a block grant would institute, states would either have to contribute much more of their own funding or, as is far more likely, use the greater flexibility the block grant would give them to make draconian cuts to eligibility, benefits, and provider payments.

Maybe someone can provide the campaign literature from the 2016 legislative races that illustrates successful candidates’ thoughts on whose coverage would be the first to go. Who gets cut off? Someone will have to decide that if we go to a block-grant program.

It probably won’t be Governor Branstad making that tough decision, by the way. The new ambassador-to-be will be off doing diplomatic stuff in China when these hard decisions are made.

Is that what these new legislators signed up to do when they put their names on the ballot? But they could check in with Senator Grassley and Senator Ernst to find out if Iowa Statehouse job descriptions might change in the months ahead.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org

Oversight on the overseers of tax credits

Posted December 19th, 2016 to Blog
You might have heard about a big meeting at the State Capitol today.

No, not that one, about whose portrait will hang in the Iowa House and Senate behind the presiding officer.

The meetings where there’s always some mystery are the annual reviews of selected tax credits. Only a few credits are reviewed each year by a panel of legislators. One meeting was in November; the other is today.

One tax giveaway — er, tax credit — on the agenda for today is the Research Activities Credit, or RAC.
No such review since these sessions started has produced meaningful reform, but the exercise does put information on the table and does put a spotlight on spending choices being made outside the budget process.

What we already know from previous evaluations and annual reports about the RAC is that it is costly — over $50 million a year — and that routinely at least two-thirds of the cost (and usually over four-fifths) goes to companies as so-called “refunds.” These are not refunds of taxes owed, but of tax credits the companies didn’t need because they owe so little, or no, corporate income tax.

Remember that when you hear the Iowa Taxpayers Association and others bleating about Iowa’s corporate taxes, which are actually low.
For perspective on the RAC, the $42 million given away in tax credit refunds under this program in 2015 would have paid for about 1 percent more in school aid, at the same time schools were told we didn’t have the money for it. Of course we did. Our legislators just chose to give it away, mainly to huge, profitable corporations.
In Room 103 of the State Capitol, 1:15 p.m., the public and legislators can hear from the Department of Revenue about the Research Activities Credit. And the session that follows at 2:15 on the Earned Income Tax Credit may be worth listening to as well, for contrast, as the EITC is a demonstrated boost to the economy while the RAC has never been demonstrated to be more than a drain on revenue.

You never know what legislators at the table will have to say about these issues, but we may get some insights.
As for that other meeting, we all now how it will come out.
owen-2013-57Posted by Mike Owen
Executive Director of the Iowa Policy Project
Project Director of the Iowa Fiscal Partnership
mikeowen@iowapolicyproject.org

Spin and ideology are no substitute for good policy

Posted December 15th, 2016 to Blog

Basic RGBBrace yourselves for public policy backed by nothing but spin and ideology in Iowa. A good example: tax policy.

Senator Bill Dix, who will be the new majority leader in the Iowa Senate with a comfortable nine or potentially 10-vote edge, offers a strident approach for the coming legislative session in this story by veteran Statehouse reporter Rod Boshart:

“The states that are growing the fastest today are the ones that have recognized that economic policy and tax policy makes a big difference,” he said. “High income tax punishes people who want to work, save and make investments in our state. We need to recognize that. States that have grown the fastest the last couple of decades across our country today are the ones that have either lowered their rates, broadened their base and kept things simple or moved to no income tax at all.”

The tax cutters have a big microphone now but amplified volume does not substitute for good content. Research is clear. So are the facts, and Senator Dix is missing them.

On IPP’s GradingStates.org website, Peter Fisher sorts out the fact from fiction with so-called “business climate” rankings that are certifiably unreliable. But they get a lot of attention from legislators who want something to back their ideological approach to policy.

Senator Dix is one of three Iowa state chairs for the American Legislative Exchange Council, or ALEC, which peddles much of the nonsense about tax cuts promoting economic growth.

Notes Fisher about the ALEC analysis, “when we can compare states ranked the best by ALEC with states ranked the worst, it turns out that ALEC’s 20 ‘best’ states have lower per capita income, lower median family income, and a lower median annual wage than the 20 ‘worst’ states. ALEC’s ‘best’ states also have higher poverty rates: 15.4 percent on average from 2007 through 2014, vs. 13.8 percent in the ‘worst’ states. The states favored by ALEC include the likes of Utah, North Dakota, and North Carolina, whereas ALEC’s ‘worst’ states include New York, California, and Vermont.”

Even if the prescriptions for lower taxes, etc. were right, they would not apply in Iowa. Our state has repeatedly been shown to be average or below average by any measure on taxes paid. In fact, few states can get below Iowa on corporate taxes, something the business lobby will not admit. So we start the legislative session with competitiveness not an issue for Iowa except in the minds of well-placed lobbyists and certain legislators.

And another angle not on their agenda: accountability on the large number of tax breaks already in Iowa law — something the Cedar Rapids Gazette noted today in an excellent editorial:

Over the years, lawmakers from both parties have given away tax exemptions, deductions and credits to an array of special interests lobbying for a break. Individually, the cuts look small. Added together, they have a significant budgetary impact.

They’re sold as an economic boost, but there’s rarely any follow up to find out if the tax cuts actually delivered on those promises.

And the real path to growth — the path lined with investments in human capital and public infrastructure? We’ll see how many of those demonstrated, positive approaches to prosperity even get a hearing in 2017.

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

Contact: mikeowen@iowapolicyproject.org


Recruiting minimum-wage jobs?

Posted December 10th, 2016 to Blog

For some time, we’ve seen Iowa House Speaker Linda Upmeyer defend inaction on a state minimum wage increase with the excuse that they’re focused on better paying jobs.

Now, many lawmakers and the business promotion groups of the Iowa Chamber Alliance are zeroed in on making sure no county or city officials should act locally to correct an indefensibly low state minimum wage of $7.25.

These folks really need to get their stories straight. It appears their real interest may be in recruiting low-wage employers.

In Saturday’s Cedar Rapids Gazette, Cedar Rapids Metro Economic Alliance policy strategist Barbra Solberg says “it’s hard for recruiting purposes to tell a company that we have 65 different minimum wages throughout the state.”

Well, which is it? Are we focused on high-paying or at least living-wage jobs, or are we actively recruiting companies that will pay the minimum wage? And how much is the Alliance hoping to give away to those companies with the “full funding” it wants for tax breaks? How much will Iowans pay for low-wage jobs?

While we’re at it, what is this nonsense about “65 different” minimums?

Four counties — not 65 — have embraced the demands of leadership and acted to raise local minimums, phasing in increases to between $10.10 and $10.75 from Iowa’s 9-year-old minimum wage of $7.25.

The Alliance does not even suggest an increase — only keeping it the same statewide “regardless of what it would be,” Solberg says. While the wage has remained stagnant, business tax credits have roughly tripled over that time.

Iowa needs a more responsible statewide wage, but local wage markets can easily justify setting that higher — as elected officials in four counties have determined is necessary to promote their local prosperity.

If uniformity is such a concern, is the Quad Cities Chamber pushing for the state of Iowa to raise the wage to Illinois’ level — $8.25 — or to Nebraska’s $9, since a statewide uniform wage is the Iowa chambers’ goal? Or are the Iowa chambers just happy to compete for the lowest wage jobs and to let Illinois and Nebraska and South Dakota ($8.55) and Minnesota ($9.50) get the better paying ones?

For an illustration of real-world ingredients of prosperity, see the analysis here by Peter Fisher of the Iowa Policy Project: http://www.gradingstates.org/the-real-path-to-state-prosperity/

A smart, high-road approach would start there, and get Iowa off the race to the bottom. Our track is already paved with excessive, costly and unaccountable tax breaks, weak services and increased poverty. We don’t need more of any of that.
owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org

 

 


Recruiting minimum-wage jobs?

Posted December 10th, 2016 to Blog

For some time, we’ve seen Iowa House Speaker Linda Upmeyer defend inaction on a state minimum wage increase with the excuse that they’re focused on better paying jobs.

Now, many lawmakers and the business promotion groups of the Iowa Chamber Alliance are zeroed in on making sure no county or city officials should act locally to correct an indefensibly low state minimum wage of $7.25.

These folks really need to get their stories straight. It appears their real interest may be in recruiting low-wage employers.

In Saturday’s Cedar Rapids Gazette, Cedar Rapids Metro Economic Alliance policy strategist Barbra Solberg says “it’s hard for recruiting purposes to tell a company that we have 65 different minimum wages throughout the state.”

Well, which is it? Are we focused on high-paying or at least living-wage jobs, or are we actively recruiting companies that will pay the minimum wage? And how much is the Alliance hoping to give away to those companies with the “full funding” it wants for tax breaks? How much will Iowans pay for low-wage jobs?

While we’re at it, what is this nonsense about “65 different” minimums?

Four counties — not 65 — have embraced the demands of leadership and acted to raise local minimums, phasing in increases to between $10.10 and $10.75 from Iowa’s 9-year-old minimum wage of $7.25.

The Alliance does not even suggest an increase — only keeping it the same statewide “regardless of what it would be,” Solberg says. While the wage has remained stagnant, business tax credits have roughly tripled over that time.

Iowa needs a more responsible statewide wage, but local wage markets can easily justify setting that higher — as elected officials in four counties have determined is necessary to promote their local prosperity.

If uniformity is such a concern, is the Quad Cities Chamber pushing for the state of Iowa to raise the wage to Illinois’ level — $8.25 — or to Nebraska’s $9, since a statewide uniform wage is the Iowa chambers’ goal? Or are the Iowa chambers just happy to compete for the lowest wage jobs and to let Illinois and Nebraska and South Dakota ($8.55) and Minnesota ($9.50) get the better paying ones?

For an illustration of real-world ingredients of prosperity, see the analysis here by Peter Fisher of the Iowa Policy Project: http://www.gradingstates.org/the-real-path-to-state-prosperity/

A smart, high-road approach would start there, and get Iowa off the race to the bottom. Our track is already paved with excessive, costly and unaccountable tax breaks, weak services and increased poverty. We don’t need more of any of that.
owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org

 

 


Recruiting minimum-wage jobs?

Posted December 10th, 2016 to Blog

For some time, we’ve seen Iowa House Speaker Linda Upmeyer defend inaction on a state minimum wage increase with the excuse that they’re focused on better paying jobs.

Now, many lawmakers and the business promotion groups of the Iowa Chamber Alliance are zeroed in on making sure no county or city officials should act locally to correct an indefensibly low state minimum wage of $7.25.

These folks really need to get their stories straight. It appears their real interest may be in recruiting low-wage employers.

In Saturday’s Cedar Rapids Gazette, Cedar Rapids Metro Economic Alliance policy strategist Barbra Solberg says “it’s hard for recruiting purposes to tell a company that we have 65 different minimum wages throughout the state.”

Well, which is it? Are we focused on high-paying or at least living-wage jobs, or are we actively recruiting companies that will pay the minimum wage? And how much is the Alliance hoping to give away to those companies with the “full funding” it wants for tax breaks? How much will Iowans pay for low-wage jobs?

While we’re at it, what is this nonsense about “65 different” minimums?

Four counties — not 65 — have embraced the demands of leadership and acted to raise local minimums, phasing in increases to between $10.10 and $10.75 from Iowa’s 9-year-old minimum wage of $7.25.

The Alliance does not even suggest an increase — only keeping it the same statewide “regardless of what it would be,” Solberg says. While the wage has remained stagnant, business tax credits have roughly tripled over that time.

Iowa needs a more responsible statewide wage, but local wage markets can easily justify setting that higher — as elected officials in four counties have determined is necessary to promote their local prosperity.

If uniformity is such a concern, is the Quad Cities Chamber pushing for the state of Iowa to raise the wage to Illinois’ level — $8.25 — or to Nebraska’s $9, since a statewide uniform wage is the Iowa chambers’ goal? Or are the Iowa chambers just happy to compete for the lowest wage jobs and to let Illinois and Nebraska and South Dakota ($8.55) and Minnesota ($9.50) get the better paying ones?

For an illustration of real-world ingredients of prosperity, see the analysis here by Peter Fisher of the Iowa Policy Project: http://www.gradingstates.org/the-real-path-to-state-prosperity/

A smart, high-road approach would start there, and get Iowa off the race to the bottom. Our track is already paved with excessive, costly and unaccountable tax breaks, weak services and increased poverty. We don’t need more of any of that.
owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org