Iowa can win the race to the bottom

However fascinating this experiment may be, make no mistake: People will be hurt.

Basic RGBIn the race to the bottom, all signs indicate that Iowa can beat the competition.

Yes, Iowa has a chance to shed hard-fought achievements toward respect for working families and compassion for the vulnerable. The coming two years will be fascinating if for no reason other than to see how much further we can fall behind, on wages and income, workplace protection, work supports such as child care and health care, and protection and enhancement of our land, air and water.

But however fascinating a low-road experiment may be, make no mistake: People will be hurt. These are Iowans. They are young people who could be our future if we were to invest properly in them. They are middle-aged parents struggling to support families. They are seniors who watch with trepidation as national political games are played with Social Security and Medicare, and as state politicians claim their earned, negotiated pensions are excessive.

The coming threat is to our civic fabric of public education. It is a threat to a safety net that protects individuals and can advance them toward their dreams.

An exaggeration, you say? Have you examined the policy goals of ALEC, the shadowy American Legislative Exchange Council, in which Iowa’s new legislative leadership are entrenched leaders? We at IPP have looked at ALEC. Its agenda is a recipe for fiscal instability and economic stagnation.

ALEC promotes tax cuts and tax structures that benefit the wealthy and corporations, even more than they do now. ALEC would erase already inadequate regulations of private industry that protect workers, communities, and public health.

Iowans, are you hoping for sustainable funding for public schools? A meaningful minimum wage increase? Regulation of polluters, or of unscrupulous employers who steal wages? Are you kidding?

These need to be our priorities. They are not the coming agenda.

The lobby of the Iowa State Capitol is littered with promises that remain unfulfilled. Special-interest forces have successfully put tax breaks and corporate welfare ahead of traditional, responsible approaches to a public infrastructure that serves all Iowans, not just the well-heeled and well-positioned few.

These forces have emerged from an era of divided government, and now they threaten to run the table. The 2017 race to the bottom already has begun. Do we really want to win it?

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

Contact: mikeowen@iowapolicyproject.org

IPP News: Scant progress against Iowa water pollution

FOR IMMEDIATE RELEASE THURSDAY, NOV. 17, 2016

Full report
Two-page executive summary

Scant progress against Iowa water pollution
New report examines water quality in Iowa and Mississippi River Basin

IOWA CITY, Iowa (Nov. 17, 2016) — Despite voluntary conservation efforts under Iowa’s Nutrient Reduction Strategy, progress against nutrient pollution remains elusive.

“All Iowans want to see progress in meeting our goals to improve water quality,” said Sara Conrad, research associate for the nonpartisan Iowa Policy Project (IPP) and lead author of a new report. “Not only do Iowans want cleaner water, but we deserve more accountability than we are getting for our state’s efforts to date.”

The new report from Conrad and David Osterberg of IPP and Michael Burkart, a former U.S. Department of Agriculture researcher and Iowa State University professor, “Water Quality in Iowa and the Mississippi River Basin,” is available at www.iowapolicyproject.org.

Osterberg noted billions of state and federal dollars have been spent to improve water quality.

“The nation is demanding more progress,” Osterberg said. “The Mississippi River Basin and the Gulf of Mexico are being damaged by continued nutrient pollution by nitrogen and phosphorus. This is a problem of land management, and no one is requiring the managers of the land to do better.”

The report examines progress toward goals of the 2013 Nutrient Reduction Strategy (NRS), Iowa’s voluntary approach to the environmental and health effects of nutrient pollution.

The report found:

  • No improvement in the size of the hypoxic zone — or “dead zone” — in the Gulf of Mexico.
  • Progress is overstated in the latest annual report for the NRS, with insufficient focus on long-term trends in conservation reserve acreage and instances where producers have abandoned conservation practices.
  • While the use of cover crops has expanded, the 400,000 acres in cover crops in 2015 represents less than 2 percent of the 24 million acres in harvested row crops.
  • Iowa farmers, in the Iowa State University Rural Life Poll, show more awareness of the NRS, but not necessarily of their need to participate in solutions.
  • Monitoring for particulate and dissolved phosphorus in Iowa lakes and reservoirs has been stagnant, though river and stream monitoring has increased.

“Monitoring nutrient loads in watersheds is critical to accurately reporting trends to both the taxpayers paying for conservation and farmers implementing them,” said Burkart.

Conrad said “the science is clear.”

“Iowa must continue efforts to reduce nutrient levels in Iowa watersheds to improve water quality in not only Iowa’s streams and rivers but also the overall Mississippi River Basin and Gulf of Mexico,” she said.

The NRS report noted the federal Conservation Reserve Program (CRP) shows increased acreage over the last five years. The IPP researchers said that isn’t the whole story.

“In fact, the longer-term trend is less positive,” Osterberg said. “Even with that recent improvement, Iowa remained a half million acres below the 2 million acres it once had in CRP.”

Researchers also noted farmers’ investment in conservation. In Iowa State University’s Farm and Rural Life Poll, 51 percent of farmers reported spending nothing on conservation in the 10 years prior to the 2011 survey. This improved by 2014, but even then, more than 40 percent of producers spent less than $5,000 over the previous 10 years, or less than $500 per year.

Moreover, the researchers pointed out, nearly half of farmers surveyed reported they were not certain their farms contribute to hypoxia in the Gulf.

“Clearly, awareness of the NRS is not enough to assure good practices are adopted voluntarily, and maintained.” Conrad said.

“Iowa’s efforts under the NRS show minimal if any progress on the health of the Gulf of Mexico, let alone Iowa’s waters. At best, we can say Iowa has not increased nutrient levels in streams. We need to actually reduce those levels to substantively reduce the size of the Gulf hypoxic zone and improve the health of Iowa water systems.”

The Iowa Policy Project is a nonpartisan, nonprofit public policy research organization based in Iowa City. Reports are available at www.iowapolicyproject.org.

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We gratefully acknowledge the generous support of the McKnight Foundation and the Fred and Charlotte Hubbell Foundation, which made the preparation of this report possible. While these funders support the research that went into this report, they may not necessarily agree with policy recommendations that are included. Policy recommendations are solely the perspective of the authors and the Iowa Policy Project.

Of course the $33 million matters, Governor

The Governor’s rose-colored glasses on Medicaid privatization do not obscure the very real cost of an extra $33 million out the door to private companies.

It seems no Governor Branstad costume is complete without rose-colored glasses, even after Halloween.

For on the final day of October, as goblins prepared to venture out to neighbors’ houses for treats, the Governor offered news on his unilateral decision to privatize Medicaid: It will cost the state an extra $33 million this fiscal year, payments to private companies not previously anticipated.

But he’s telling us not to worry about that spending. For example, the Des Moines Register story prominently noted reassurances from the Governor and his chief of staff, Michael Bousselot:

But the situation will not negatively impact the state budget because Medicaid cost savings will exceed $140 million when compared to the old Medicaid program, they said.

 

Hmmm. So, we’re going to spend $33 million more — $33 million we weren’t planning to spend — and that doesn’t “negatively impact” the state budget?

That is not what we’re told when it’s $33 million for schools, or cracking down on polluters or businesses that deliberately stiff their employees for wages owed. For those things, we just don’t have the money.

Think of it this way: Last month, the Revenue Estimating Conference projected that the state would take in $72 million less in FY2017 than it had estimated in March. That means those funds will not be coming in and may affect what can be spent. Now, we learn of an extra $33 million charge. Already, some $100 million less for the current year.

Of course the $33 million matters. There is an impact on the budget bottom line, and it is disingenuous to suggest otherwise.

Budget projections are always a difficult thing. But from the start of the Governor’s decision to privatize Medicaid, without legislative consent, we have been asked to accept optimistic assessments of what to expect. And if the optimism is misplaced? Education funding and other general-fund priorities inevitably lose.

Medicaid privatization already has scared a fair number of Iowans about their access to health care. Those fears are not resolved. Neither are concerns about the fiscal side of this issue.

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

Will local wage laws spark state action?

The question in October is a question for January: Will local minimum wage efforts force a serious debate and action on a meaningful minimum wage for Iowa?

The pressure is building in Iowa for a minimum wage increase.

Polk County last week became the latest county to take matters into its own hands as Iowa lawmakers and Congress have left the state and national minimum wages at $7.25. Four counties have now approved minimum wage increases above $10 per hour by 2019, with one of them — in Johnson County — scheduled to be fully phased in by Jan. 1.

Within several days of that, the Iowa Legislature will convene and the ball will be in state lawmakers’ court.

In the meantime, Iowans tired of the nine-year wait for an increase may keep acting locally to boost prosperity for low-income working families — which is critical as about 1 in 5 Iowa do not earn enough for a basic-needs household budget.

Here is the current local minimum-wage lineup in Iowa:

Johnson County is currently at $9.15 in the second step of its three-step increase to $10.10 on Jan. 1, indexed to inflation after that.
Linn County has approved an increase to $10.25 by 2019 (three $1 steps, Jan. 1, 2017-19).
Wapello County will move to $10.10 by 2019 (three 95-cent steps, Jan. 1, 2017-19).
Polk County approved a wage of $10.75 by 2019 (three steps: $1.50 April 2017, $1 more in January 2018 and 2019), indexed to inflation afterward. Includes exception for workers under age 18.

There has been discussion or interest in a similar move in at least four other counties: Lee, Woodbury, Des Moines and Black Hawk. For some, this has become a county supervisor campaign issue.

The question in October is a question for January: Will the pressure of these local efforts, which are growing, be enough to force a serious debate in the Legislature on a statewide increase? And if it is, will that effort produce a wage that pushes Iowa closer to a cost of living wage? (Hint: Even $10 an hour is nowhere close.)

Stay tuned.

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

Iowa plants cookies in data center megadeals

The report’s recommendation: Cap data-center subsidies at $50,000 per job and be ready to walk away from bidding wars that guarantee losses for taxpayers.

161011-gjf-datacenter5x5A new study by Good Jobs First shows Iowa has two of the 11 “megadeals” in which states have awarded a total of $2 billion to Google, Microsoft, Facebook, Apple and Amazon Web Services for data center projects.

“The average cost of their 11 ‘megadeals’ profiled here is astronomical: $1.95 million per job. At that price, taxpayers will always lose, because a worker will never pay $1.95 million more in state and local taxes than public services she and her dependents consume,” the report states.

Sound familiar? It should. Iowa has two of the cited “megadeals,” which the report describes as subsidy deals of $50 million-plus. Both Iowa deals were with Microsoft — a $107.3 million subsidy in 2014 and a $65.3 million subsidy in 2010 for its “megadeal” list. Both fell below the $2 million per job average cost, but the Microsoft megadeal costs per job were $1.28 million and $964,627, respectively. In addition, the report notes competition between Washington and Iowa in 2010 for a Microsoft center, and Nebraska and Iowa in 2013 for a Facebook project.

Good Jobs First’s recommendation to all states: Cap data-center subsidies at $50,000 per job and be ready to walk away from bidding wars that guarantee losses for taxpayers.

In the new report, “Money Lost to the Cloud,” author Kasia Tarcynzska finds that states routinely subsidize data-center projects with special tax breaks that are not central to companies’ choices on where to locate.

“Decisions on where to locate data centers — which consume large amounts of electricity but employ few workers — are primarily based on the availability of reliable, low-cost electricity,” she wrote.

“Despite their New Economy allure, internet companies have fully embraced Old Economy habits of playing states and localities against each other in bidding wars, putting public officials in a ‘prisoners’ dilemma’ and causing governments to grossly overspend for trophy deals.”

Iowa, which has made deals with the likes of Google, Microsoft and Facebook, is one of eight states with special sales and use tax exemptions on electricity purchased by data centers.

In addition, the report notes, property taxes are often the largest taxes paid by companies, and local property tax abatements can be the largest component of subsidy packages — but frequently are not disclosed.

“Data centers create very few permanent jobs, so one of the biggest benefits that a community can hope for is a stronger tax base. But that benefit fails to materialize when the major taxes such as sales, utility and property levies are abated,” the report states.

The report concludes with a “larger question,” one that should be asked of any subsidy at any time when state and local officials try to attract development from big, stable companies. Why, Tarcynzska asks, “should communities use their limited financial resources to subsidize such self-sufficient companies to build something the companies must have?”

See the report here and the news release here from Good Jobs First.

Posted by Mike Owen, executive director of the Iowa Policy Project
mikeowen@iowapolicyproject.org

 

Tying science to policy — for Iowa

Iowans can do better for the environment and should.

160915-59170_dox35x45The Iowa Policy Project has always enlisted the help of students and professors or former professors from Iowa colleges to help produce good research.

IPP founder and researcher David Osterberg, left, in his job as a professor of Public Health at the UI, has been part of the annual statement on climate change signed by researchers and teachers at all the colleges and universities in Iowa.

This year’s statement, released today with 187 signers from 39 Iowa colleges and universities, is about farming to sequester carbon and improve water quality: The Multiple Benefits of Climate-Smart Agriculture.

An excerpt:

Farmers and land managers who have implemented proven conservation practices have positioned Iowa to lead implementation of Climate‐Smart Agriculture. Iowa’s leadership through wider adoption of conservation practices will benefit our state, while these practices lessen human contribution to net greenhouse gas emissions. …

We, as Iowa educators, believe Iowa should play a leadership role in this vital effort, just as our state has already done for wind energy.

Find the full statement here.

Find the news release here.

The statement envisions “a multi‐faceted vision for land stewardship by vigorously implementing federal, state, and other conservation programs” to generate a more diverse landscape. It concludes:

Such a landscape would benefit all Iowans by transforming Iowa’s vast croplands into resources that simultaneously generate food, feed, fuel, a healthier climate, better soils, wildlife habitat, and cleaner waters.

The lead authors are Chris Anderson, who has served as assistant director of Iowa State University’s climate science program, and Jerry Schnoor, co-director of the UI Center for Global and Regional Environmental Research, with editorial assistance from senior science writer Connie Mutel of the UI.

Also contributing were: Gene Takle, Diane Debinski and David Swenson, ISU; David Courard-Hauri, Drake; Neil Bernstein, Mount Mercy; Peter Thorne, Greg Carmichael, Elizabeth Stone and David Osterberg, UI; and Kamyar Enshayan, University of Northern Iowa.

The issues raised in this statement fit well with our work at the Iowa Policy Project. We produce papers on water quality and confined animal agriculture, and connect these issues to public policy impacts. What we do at this small policy institute fits into larger questions addressed by academics and policy people in the state.

Iowans can do better for the environment and should.

‘Nothing to see here, folks,’ 2017 edition

What really drives state growth is the rate of new business formation. And what matters most for entrepreneurial vibrancy is the education level of the state’s residents.

slide_taxfoundation-cropBasic flaws remain in Tax Foundation business index

The Tax Foundation released the 14th edition of its State Business Tax Climate Index (SBTCI) today (Sept. 28). The basic flaws that have rendered it of little use as a guide to state economic policy remain. While a few methodological tweaks have been made, it is still a hodge-podge of over 100 different features of state tax law, mashed together into an index number. The components are weighted illogically, and the result is a ranking that bears little or no relation to the taxes businesses actually pay in one state versus another.

The Tax Foundation acknowledges that they are not measuring actual tax levels on business, but rather the states’ tax structure. But they provide no evidence that tax structure influences business decisions. If you were a business, what would you care more about: the bottom line amount you will pay, or whether there were three tax brackets or five tax brackets involved in the calculation that got you there? The Tax Foundation would have you count brackets, and ignore the dollars.

The SBTCI has separate components for the corporate income tax, the individual income tax, property taxes, etc. So let’s consider the corporate tax component. Even as a measure of “structure” somehow, it falls short because it leaves out two major determinants of corporate income tax liabilities — federal deductibility and the apportionment rule — while including numerous minor features. As a result, the corporate tax index is a meaningless number.

Furthermore, the corporate income tax is much less important than the property tax, for most businesses. According to the Council on State Taxation, the property tax accounted for 43 percent of all business taxes, the corporate income tax just 11 percent, in 2014. Yet in coming up with the overall state rankings, the latest Tax Foundation index weights the property tax 14.9 percent, the corporate income tax 19.7 percent. That makes states with high property taxes and low corporate income taxes look much better on the index than they really are, and penalizes the states with a robust corporate income tax, a high state share of education funding, and low property taxes.

To make matters worse, the index weights change every year. This makes it impossible to know if a change in a state’s rank from one year to the next is due to a change in tax law, or just a change in the weights.

More importantly, the whole focus on business tax competitiveness is misplaced. State and local taxes are a very small share of overall business costs. What really drives state growth is the rate of new business formation. And what matters most for entrepreneurial vibrancy is the education level of the state’s residents.

2010-PFw5464Editor’s Note: Peter Fisher, research director of the nonpartisan Iowa Policy Project (IPP), wrote this blog for GradingStates.org, IPP’s separate website devoted to promoting a better understanding of various state business climate rankings. For a look at components of state policies that can promote prosperity, see this page on the GradingStates.org site.