Posted tagged ‘Iowa Policy Project’

Beyond Battelle: Let’s broaden the dialogue of Iowa economic health

January 14, 2015

As Iowa legislators this week start work on a course to a more robust and diversified economy, discussion already has focused on a new privately funded report, Iowa’s Re-Envisioned Economic Development Roadmap.[1]

Produced by Battelle Technology Partnership Practice and commissioned by the Iowa Partnership for Economic Progress,[2] the $400,000 report makes some important points and deserves a careful look.

It focuses heavily on the importance of business to promote economic activity, but its core message acknowledges the significant role of public investments in providing the foundations for Iowa’s economy. This includes the education system needed to develop the skills, talents and capacity of the current and future workforce, including those who will become the future entrepreneurs and leaders for the 21st century.

While the report acknowledges the centrality of an educated and skilled workforce and a high quality of life to making Iowa an environment for business to flourish, it places very little focus upon how government can deliver on that role. It falls to government to educate that future workforce — at the early childhood, primary and secondary, and higher education levels.

The report does not adequately address the challenges Iowa faces in creating that higher skill level among its emerging workforce — in particular, the need to address lagging and stagnant educational achievement. To do so takes resources, and the report’s emphasis is to leave in place a business subsidy structure that has increasingly reduced the state’s ability to meet those needs.

The report itself was overseen largely by business leaders and economic development agency staff. However, these are not the only stakeholders in Iowa’s economic future; many others need to engage in the dialogue about Iowa government’s role in economic development.

The Battelle Report raises one perspective on economic development. Lawmakers, the media and the public need to insist that other perspectives and expertise also are fully considered and vetted.

More Iowans need an invitation to the table.

08-Bruner-5464Charles Bruner is executive director of the Child & Family Policy Center, www.cfpciowa.org, part of the Iowa Fiscal Partnership, www.iowafiscal.org.

Note: This piece also ran as an “Iowa View” in The Des Moines Register, Jan. 14, 2015.

[1] Technology Partnership Practice, Battelle Memorial Institute, December 2014, “Iowa’s Re-Envisioned Economic Development Roadmap.” http://www.iowaeconomicdevelopment.com/battelle
[2] Iowa Economic Development Authority, News release, Dec. 18, 2014, “Governor, IPEP Release Findings of 2014 Battelle Report, a New Economic Development Roadmap for Iowa,” http://www.iowaeconomicdevelopment.com/newsdetails/6051

Tired of waiting, Des Moines Water Works speaks for all Iowans

January 12, 2015

Last week, Des Moines Water Works’ Board of Trustees voted to issue a notice of intent to sue the Board of Supervisors in Sac, Buena Vista and Calhoun counties “in their role as governing authority for 10 drainage districts that are discharging pollutants into the Raccoon River,” which threaten Des Moines’ drinking water.

Why should no one be surprised by Des Moines Water Works going to court? It is because the Governor and his administration have failed to act.

The new Nutrient Reduction Strategy (NRS) was hailed as a promising effort to improve Iowa water quality by reducing nutrient pollution from the state by about half. Research behind the strategy showed that 90 percent of the nitrate pollution coming from Iowa came from nonpoint sources, mainly agriculture.

Despite this, state policy was to require cities and towns and industries to reduce their contribution to the nutrient pollution — but to let agriculture producers do whatever they wanted. For them reducing the pollution was voluntary.

An Iowa Policy Project report last July demonstrated the shortcomings of a voluntary approach and suggested a few ways to at least give the new strategy a chance. Had these suggestions been adopted maybe the Des Moines water utility would not have been forced to go to court. The following are what the report found as shortcomings of the NRS:

Insufficient funding — The year the NRS was adopted the Legislature responded with more than $20 million of new funding to support farmers who wanted to introduce new methods to reduce their pollution. In a bipartisan effort, legislators agreed to improve spending again in 2014. However, Governor Terry Branstad vetoed $11 million in similar funding and another $9 million in REAP natural resources and recreation funding — 20 percent of which would have gone to efforts to reduce soil loss that contributes to pollution of our rivers.

Insufficient monitoring — The state has supported more than a dozen efforts by local producers and ag businesses to work to improve soil and water protection practices in their own small section of a stream. This is a wonderful opportunity to do water testing to see if the new emphasis is doing any good. Yet, monitoring is not required for this expenditure of taxpayer dollars.

Pick two — The Iowa Soybean Association, the one commodity group that seems to take an interest in improving water quality, had supported six examples of methods to improve water quality, such as grassed waterways in fields and planting cover crops to follow corn and soybean crops. Our report suggested that each farmer voluntarily adopt any two of these measures. Not all measures would necessarily be best for each producer but two surely would work. We would let farmers decide which research-backed approaches to use.

Set benchmarks and a timeline — There is no timeline for the NRS to accomplish its goal of reducing nutrient pollution by nearly half. The Water Resources Coordinating Council, a voluntary citizen group that is to ride herd on the NRS, has never been allowed to vote on a timeline. Iowa’s Secretary of Agriculture is not interested in setting dates.

Will it take 100 years to accomplish the task? We don’t know. And Des Moines Water Works, standing up for all of Iowa, is reminding us all that we cannot wait.

IPP-osterberg-75Posted by David Osterberg

David Osterberg, co-founder of the nonpartisan Iowa Policy Project, is a professor of occupational and environmental health at the University of Iowa.

A brief, shining moment

January 8, 2015

It was a brief, shining moment for Iowa, and it came five years ago today.

A special Tax Credit Review Panel appointed by then-Governor Chet Culver, after an in-depth examination of all Iowa tax-credit programs, offered a 10-page review with some tough recommendations.

As the Iowa Fiscal Partnership* stated the day of the report’s release, Jan. 8, 2010, the panel “took an important step to make Iowa business subsidies more accountable and transparent.”

Major recommendations of the Tax Credit Review Panel were to:

•   Provide a five-year sunset on all tax credits;
•   Eliminate the refundability of the Research Activities Credit for large companies;
•   Eliminate the film tax credit;
•   Eliminate of the transferability of other credits;
•   Place all business credits under a $185 million cap;
•   Reduce the rate for the School Tuition Organization (STO) Tax Credit and lower the cap; and
•   Impose an income test for the Tuition and Textbook Tax Credit.

Action in the Legislature, unfortunately, fell well short of those bold proposals, as we noted in a report that spring. In their biggest moves, lawmakers set up a periodic review of tax credits but required no action to affirm the value of any credits, and they put light restrictions on some credits. Some of those limits already have been raised; the proposal to restrict the STO subsidy for private school tuition not only was ignored but the credit has been expanded.

In short, five years later, Iowa is as lax as ever in its treatment of these subsidies. Under the sunset clause recommended back then, we would in 2015 be preparing for a round of debate and action to keep, expand, limit or eliminate certain tax credits. Instead, we have no expectation of any debate, let alone any action. If the credits are working, we don’t know because beneficiaries are not forced to show it.

It is not too late for Iowa lawmakers to address these issues and include some water in the tax credit reform glass. We said that in 2010, and we can say it again in 2015.

The seven members of the Tax Credit Review Panel, by the way, were Richard Oshlo, then interim director of the Department of Management; Fred Hubbell, interim director of the Department of Economic Development; Rob Berntsen, chair of the Iowa Utilities Board; Bret Mills, executive director of the Iowa Finance Authority; Cyndi Pederson, director of the Iowa Department of Cultural Affairs; Mark Schuling, director of the Iowa Department of Revenue; and Jeff Ward, executive director of the Iowa Agricultural Development Authority.

Their work was good and important, and with hundreds of millions of dollars at stake, we should not forget it.

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

*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.

See ya later, Gator: Civics lesson from bowl game

December 31, 2014

ipp-kinnick6Of course we’re all excited that the Iowa Hawkeyes will be playing Jan. 2 against Tennessee in the — uh, what’s the name of that bowl again?

It has something to do with tax preparation. (No royalties are being paid for publication of this message, so no need to repeat it.) So for now, let’s just call it the Pay Your Taxes Bowl.

Or, to recognize what we do by preparing and paying our taxes, we could make it the Feed the Hungry Bowl, the Educate the Children Bowl, the Fix the Highways Bowl, or the Clean the Air and Water Bowl.

In years past, most bowl games promoted a tradition, or an image, related to their locale. This game in Jacksonville, Florida, used to be called the Gator Bowl, and that was the name of the stadium. Now it’s played in a rebuilt stadium named for a bank.

The Gator Bowl has a storied past, including a good game in 1983 between the Iowa Hawkeyes and the Florida Gators, who won 14-6.

Even the Beatles played there once — though it was for a concert, not a gridiron battle with the Beach Boys — and that seems more interesting than the heavy-handed advertising that dominates these games now. Maybe the Fab Four Bowl? Strawberry Fields Bowl? Hold Your Hand Bowl?

There was a time when the Orange Bowl wasn’t connected to the name of a delivery service or a credit card company. There was a Citrus Bowl in Florida and a Peach Bowl in Georgia. I remember going to the Alamo Bowl once, happy to see the name bound to the enduring history of San Antonio, with no connection to rental cars.

Almost all bowls now feature a corporate sponsor’s name, so it may be in the nature of things that when many Iowa fans remember “The Catch” by Warren Holloway to beat LSU as the clock expired, they involuntarily associate it with the name of a credit card.

Still, we should acknowledge the irony that with the corporatization of all that is good, like football bowl games, at least one bowl game is associated with paying taxes instead of avoiding them.

Just understand: Some of us will still think of it as the Gator Bowl.

Go Hawks!

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

Editor’s Note: This piece was published as an Iowa View in the Dec. 28, 2014, Des Moines Register

Leveling the playing field

December 11, 2014

Small business owners get it: They follow the rules, but preferential treatment for giant companies puts them at a disadvantage.

Case in point: Lora Fraracci, who had an excellent guest opinion in today’s Cedar Rapids Gazette about practices big companies use to avoid paying U.S. taxes. The problem is not exclusively an issue with the lax U.S. tax code. It is a big problem at the state level as well.

Ms. Fraracci runs a residential and commercial cleaning business. As she noted:

“As a small-business owner in Des Moines, I play by the rules and pay my taxes to support our American economy. I create jobs that will continue to support our local economy. When the playing field is so uneven it makes it hard to realize this dream.”

The issue has been receiving some national attention, but many may not realize the prevalence of this problem and its extension to state taxes. While Ms. Fraracci and other small businesses, or Iowa focused businesses, follow the rules, large companies they may serve can find a way to either (1) avoid the rules, or (2) block stronger rules.

The Iowa Fiscal Partnership has written about these issues for some time, and the reports are on our website.

The biggest Iowa breaks come in two ways: tax loopholes and tax credits.

Tax loopholes have been estimated to cost the state between $60 million and $100 million a year. Loosely written law is an invitation to big companies’ lawyers and accountants to find ways to lower their firms’ taxes. Multistate firms can shift profits to tax-haven states and avoid taxes they otherwise would be paying in Iowa. That creates the uneven playing field Ms. Fraracci sees.

Iowa could fix this by adopting something called “combined reporting,” which the business lobby has fought tooth and nail when proposed in the past by Governors Tom Vilsack and Chet Culver. Many states — including almost all our neighbors (Illinois, Wisconsin, Minnesota, Kansas and Nebraska) — already do this. See our 2007 report, which remains relevant because Iowa has refused to act.

Tax credits are particularly costly, rarely reviewed with any sense that they will be reformed. This is illustrated best with the Research Activities Credit, which provides a refundable credit to big companies to do something they are likely to anyway: research to keep their businesses relevant and competitive.

In 2013, that credit cost $53 million, with $36 million of that going to companies that paid no state income tax in Iowa. The default position must be that this is wasted money, because it is never reviewed in the regular budget process the way other spending is examined every year — on schools, law enforcement, worker protection and environmental quality. In Iowa, spending on tax credits is spending on autopilot.

Read here about Iowa’s accountability gap on tax-credit spending.

Looking ahead, as a new legislative session approaches and we hear repeatedly that things are tight, keep these points in mind to better understand the real fiscal picture facing Iowa. The more small-business owners understand this, the more likely pressure can build for real reform.

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

Where have you gone, Henry A. Wallace?

November 25, 2014

A call to leadership on climate change

437px-Henry_A._WallaceRepublican Henry A. Wallace was Secretary of Agriculture in Democratic President Franklin Roosevelt’s cabinet. In a Sunday column in the Cedar Rapids Gazette, Wallace’s grandson makes the case that his grandfather — an Iowan and a crop researcher — would put science ahead of politics to respond to climate change. He would recognize climate change endangers all of us — farmers included.

Solutions are more important than politics, but right now politics is blocking what science is teaching us. With climate change upon us, the oil industry still is able to set — or block — policy that could turn back this frightening attack on our economy and environment.

As an Iowan, a scientist and a political leader, Wallace would point out that Iowa exports include renewable fuels and wind power as well as corn and hogs. Climate science also fits with Iowa economic advantage.

Each new scientific study warns us that a policy of more digging of coal, more fracking for oil will be lead us to more problems. A recent letter signed by 180 researchers and teachers at 36 Iowa colleges and universities make that point that climate change is already adversely affecting the state.

Iowa and national leaders should follow Wallace’s example, and confront climate change just as Wallace and and other leaders of his day overcame the Dust Bowl and Depression of the 1930s. Let’s put science over politics.

Posted by David Osterberg

IPP-osterberg-75Osterberg, co-founder of the nonpartisan Iowa Policy Project, is a professor of occupational and environmental health at the University of Iowa. He is one of 180 scientists and teachers who signed the Iowa Climate statement, available here.

Also see his recent blog: Climate change impacts showing up now

And see the Cedar Rapids Gazette column by Henry Scott Wallace: What would Henry A. Wallace do?

Real issues, bogus commentary

November 11, 2014

An Eastern Iowa radio host recently ran a recording of Senator Tom Harkin noting — correctly — that people at the minimum wage work “essential and often difficult jobs.”

Alone on the air and safe from any retort by the senator or a minimum-wage worker, the host countered: “There is not a minimum wage job in the world that is a, quote, difficult job.”

Said the host: “There’s a reason they are minimum wage jobs. They are easy.” Strong emphasis on the “easy.”

The facts say otherwise. The Department of Labor provides information about people working at or below the minimum wage, now frozen at $7.25 in Iowa for almost seven years.

Look specifically at the “leisure and hospitality” sector — which includes low-wage restaurant and hotel/motel jobs.

  • Over half (55 percent) of all workers in hourly jobs at or below the minimum wage are in the leisure and hospitality sector.
  • About 1 in 5 hourly workers in that sector (19 percent) are at or below the minimum wage.

These are not jobs of “leisure and hospitality,” as a cavalier dismissal of their being “easy” might imply. They are jobs that provide “leisure and hospitality” to others, and they’re hard work: in kitchens, and laundries, and cleaning restrooms, and hustling meals and drinks for customers who might or might not leave a decent tip. In fact, these jobs are arguably harder than gabbing for a couple of hours on a radio show.

According to those official numbers, some 3.3 million workers in the United States toil at jobs paying at or below the minimum wage. Note: This figure does not include those who would be affected by an increase because they make more than $7.25 an hour but less than the proposed $10.10.

Probably a better observation about the issue is that our wage structure in this country does not necessarily value work, and when we have an artificially low minimum wage, neither does public policy.

So, whatever you say about raising the minimum wage, start with the facts. Click here for an IPP fact sheet on the issue.

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

 


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