Work supports put Iowans ahead

Legislators are proposing costly, punitive rules for food and medical care that will fail to encourage work or boost health and financial security for low-income families.

Multiple bills moving through the Iowa Legislature attempt to take food and medical care away from Iowans. SF430 and HF2030 seek to impose harsh work requirements and a redundant eligibility verification system. Both of these costly proposals would needlessly expand bureaucracy while failing to enable work, financial security or health for Iowans.

Instead of promoting better circumstances for workers, work requirements do the opposite. They push families off of vital programs such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP) — even though access to adequate medical care and food is important for finding and maintaining employment.

Analysis by the Legislature’s nonpartisan fiscal staff in 2019 estimated that imposing parental work requirements on SNAP participants would add $2.5 million in administrative costs in the year implemented, followed by an ongoing annual cost of half a million dollars per year.[1]

Pushing an additional eligibility verification system would have cost $25 million per year after an initial $16 million in FY2020 to hire more than 520 state employees to verify eligibility for Iowans on work support programs including Medicaid and SNAP, according to another 2019 Legislative Services Agency fiscal note.[2] 

The sole result of such bills, if enacted, will be to get Iowans off of work-support programs — not to encourage work. IPP’s latest “Cost of Living in Iowa” analysis found that work-support programs such as SNAP and Medicaid are instrumental in helping Iowa working families bridge the gap between take-home earnings and basic needs. With 1 in 5 Iowa working households unable to meet basic needs on income alone, promoting access to work supports is important.[3]

Policies that enable work and economic prosperity include raising the minimum wage, expanding eligibility for Child Care Assistance, expanding family leave, and investing in job skills training. SF430 and HF2030 would penalize Iowans that are having difficulty making ends meet, in an economy with many low-wage jobs and inadequate benefits.

Remember, taking away food, prescriptions and doctor’s visits from Iowans in no way promotes work.

[1] Jess Benson, “SF 430 – Supplemental Nutrition Assistance Program (SNAP), Parent Work Requirements” March 2019. Legislative Services Agency. https://www.legis.iowa.gov/docs/publications/FN/1039301.pdf

[2] Jess Benson, “Fiscal Note: SF 334 – Medicaid, Supplemental Nutrition Assistance Program (SNAP) Eligibility Verification.” February 2019. Iowa Legislative Services Agency. https://www.legis.iowa.gov/docs/publications/FN/1038439.pdf

[3] Peter Fisher and Natalie Veldhouse, “Strengthening Pathways to the Middle Class: The Role of Work Supports. The Cost of Living in Iowa 2019 Edition, Supplement.” January 2020. Iowa Policy Project. http://iowapolicyproject.org/2020docs/200108-COL2.pdf

2018-NV-6w_3497(1)Natalie Veldhouse is a research associate at the nonpartisan Iowa Policy Project.

nvheldhouse@iowapolicyproject.org

 

 

How real Iowa tax reform would look

Don’t believe the anti-tax spinners driving Iowa to the low road with discredited “analysis” of our tax climate.

See IPP’s Roadmap for Opportunity piece on tax reform

Iowa is an average-tax state. Even before expensive tax cuts passed in 2018 to benefit the wealthiest, Iowans paid about 2.5 percent of their income toward income taxes, 2.4 percent for sales taxes, which earns us a rank of 20th and 21st, respectively, among the 50 states.[1] Business taxes in Iowa are actually below average according to recent studies by two accounting firms: one placed Iowa 31st, the other 36th.[2]

Basic RGBBut our tax system already failed the fairness test before those new tax cuts. The highest income Iowans pay a smaller share of their income to state and local taxes than lower and middle-income Iowans — our tax system is regressive. Those in the bottom fifth of Iowa households by income pay 12.4 percent of their income in state and local taxes, while those with incomes in the top 1 percent pay just 7.7 percent.[3] And hundreds of millions in tax revenue are lost every year to corporate loopholes and business tax credits that produce little or no public benefit. At the same time, the state struggles every year to adequately fund education, public safety, health care and other priorities.

Real tax reform, then, would mean three things: (1) ensuring adequate revenue, (2) reducing the regressivity of our tax system, and (3) reining in corporate tax credits and loopholes.

Iowa’s 2018 tax law fails the test, cutting back on both fairness and revenues

The legislation signed into law in 2018 does none of these things. It cuts revenue, makes the tax system more regressive by concentrating tax cuts on the rich, and fails to reform credits or loopholes.[4] The package had one true benefit: modernizing the sales tax to include online purchases and level the playing field for local and state-based businesses.

Under this legislation, however, the income tax savings to a middle-class family by 2021 amount to just $5 to $10 a week and much of that will be taken back by the sales-tax increase. Millionaires, on the other hand, will see on average a $24,636 cut for the year. Almost half of the tax cuts will go to the richest 2.5 percent of Iowa taxpayers, those making $250,000 or more.

The 2018 tax bill also piles $40 million in corporate tax cuts on top of commercial property tax cuts enacted several years ago that have cost local governments millions of dollars. A new special tax break for business owners who receive “pass-through” income will cost in excess of $65 million a year, with 60 percent of the benefit going to the top 2 percent of taxpayers.

Overall, the bill will take $300 to $400 million a year out of the budget that could have gone to adequately fund education or public safety or mental health care. Those revenue cuts will happen regardless of the state of the Iowa economy or the budget; no safeguards will prevent it, despite the bill’s much touted “triggers.”[5]

To add insult to injury, the tax bill is far more likely to hurt the Iowa economy than to help it. The tax cutting experiment in Kansas was a failure, harming the state economy rather than helping it.[6] And Iowa’s own experience with massive tax cutting, in the late 1990s, not only failed to stimulate growth, but likely contributed to the subsequent slowing of the state’s economy.[7] 

Policy Alternatives: The elements of real reform 

    • Ensure adequate funding for our schools, which have been underfunded for years, revenue failing to keep pace with costs. End cuts to state funding of Iowa’s public universities and community colleges, forcing higher tuition, and leaving students and families with rising debt.
    • Plug corporate tax loopholes that cost Iowa an estimated $200 million a year,[8] and rein in business tax credits that grew from $200 million to $423 million in six years.[9]
    • Make our tax system fairer, and better based on ability to pay. This should be done by providing enhanced recognition of the cost of raising a family by expanding the child tax credit and the child and dependent care credit, as well as the Earned Income Tax Credit. Less reliance on the sales tax, which has doubled since 1983 and is poised for another potential increase, or offsets to these increases can enhance opportunities for low- and moderate-income families now put at a disadvantage.

Rebalancing the tax code would reduce its current regressive nature, which imposes higher taxes as a share of income on lower- and middle-income Iowans than on the wealthy.

[1] Taxes as a percent of state personal income for the most recent five years available, 2013-2017, from the U.S. Census, Census of Government Finances.

[2] Iowa ranks 31st in business taxes as a percent of GSP according to Ernst & Young LLP, Total state and local business taxes, October 2019. Table 4, page 12. https://www.cost.org/globalassets/cost/stri/studies-and-reports/FY16-State-And-Local-Business-Tax-Burden-Study.pdf.pdf; Iowa ranks 36th (with #1 being the highest tax rate) in business taxes as a share of business pre-tax operating surplus by Anderson Economic Group LLC, June 2018. 2018 State Business Tax Burden Rankings, Exhibit I, page 17. https://www.andersoneconomicgroup.com/wp-content/uploads/AEGBusinessTaxBurdenStudy_2018_FINAL.pdf

[3] Institute on Taxation and Economic Policy. Who Pays? Sixth Edition. https://itep.org/whopays-map/

[4] See Charles Bruner and Peter Fisher, “Tax plan facts vs. spin.” Iowa Fiscal Partnership, May 5, 2018. http://www.iowafiscal.org/tax-plan-facts-vs-spin/

[5] All the triggers would do is save us from an even larger budget disaster in 2023 and beyond. The triggers are revenue targets; if the targets are not achieved, the last round of cuts will not take place as scheduled for tax year 2023.

[6] Michael Mazerov. “Kansas Provides Compelling Evidence of Failure of ‘Supply-Side’ Tax Cuts.” Center on Budget and Policy Priorities, January 22, 2018. https://www.cbpp.org/research/state-budget-and-tax/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts

[7] Peter Fisher. “Tax cuts: Already tried, failed.” Iowa Policy Points, April 23, 2018. https://iowapolicypoints.org/2018/04/23/tax-cuts-already-tried-failed/

[8] Iowa Policy Project analysis of Iowa Department of Revenue estimates.

[9] “Growing cost, lax oversight of Iowa business tax credits.” Iowa Fiscal Partnership, March 16, 2018. http://www.iowafiscal.org/wp/wp-content/uploads/2018/03/180319-IFP-taxcredit-bgd.pdf

Lip service to utility transparency

Transparency — a critical aspect of good governance that applies to a rate-regulated monopoly — was a casualty in the Alliant/IPL rate decision, gaining impressive lip service but little action.

I agreed to be a witness in the recent proposed rate increase by Alliant Energy (officially, Interstate Power & Light or IPL). The decision by the Iowa Utilities Board (IUB) was announced today (January 9, 2020).

The Winneshiek Energy District partners with IPP on energy issues. They were able to get the City of Decorah, Luther College, a local hospital and large retirement home to join them in forming the Decorah Area Group (DAG), which intervened in the rate case. DAG hired witnesses and worked to change the amount the company was proposing in rates.

DAG and other intervenors made some headway in the case. The total amount of increase was cut from $204 million to $127 million. Alliant was not able to punish residential customers like me who have solar panels or large solar users like Luther College. That was good.

But transparency — a critical aspect of good governance that applies to a rate-regulated monopoly — was a casualty, gaining impressive lip service but little action.

DAG was the main intervenor group to call for punishment to the company for misrepresenting their future rate increase plans when the city of Decorah tried to form a municipal utility. The vote in 2018 went down to defeat by just four votes. It might have passed if customers knew that Alliant was about to propose a 25 percent increase in rates. The $127 increase amounted to only 15 percent but still, the company had promised the citizens of Decorah to increase rates by about one percent per year.

The IUB talked about this mischaracterization of the facts in a section on Management efficiency, finding:

“(T)he actions taken by IPL in opposition to the Decorah municipalization effort demonstrate a lack of management efficiency by withholding from and not providing to the citizens of Decorah accurate information about anticipated rate increases. Because a rate-regulated electric utility is a monopoly in its service territory, it has the duty to be transparent and to provide accurate information to customers and communities in that service territory. The evidence in this case regarding IPL’s behavior during the Decorah municipalization campaign shows that IPL did not fulfill this responsibility and failed to meet the expected standard of conduct for a regulated monopoly.”

Great words, right? But that was all. There was no punishment, no reduction in the rate increase (Revenue Requirement) below the $127 million. The company profit was not reduced.

That got under the skin of one of the three board members, Commissioner Richard Lozier, who in a dissent stated:

“The majority’s position is unacceptable. Instead, the Board should reduce the level of IPL’s profit or adjust the revenue requirement until IPL demonstrates it has corrected its inefficient operations.”

I agree with the Commissioner. Decorah can try to municipalize again in two years. When and if they do you can be sure Commissioner Lozier’s words will be used by the proponents who want to buy out IPL and run a more efficient electric company.

David Osterberg is founder, former executive director and lead researcher at the nonpartisan Iowa Policy Project.

dosterberg@iowapolicyproject.org

Also: Hear David Osterberg’s interview on “The Devine Intervention” with KVFD’s Mike Devine.

Positive options for the 2020s

The failures of the 2010s spotlight how we can use public policy to make Iowa more equitable, inclusive and sustainable in the 2020s.

iowacapitol-rotundaWe would be remiss at the end of 2019 not to note the positive lessons of the last 10 years.

We have plenty of room to raise the minimum wage, now 12 years old at $7.25 an hour. Had the minimum simply kept up with inflation, it would be 22 percent higher, at $8.83 — but of course still short of a living wage. IPP research shows a single parent needs about $20 to $22 an hour working full time just to make a bare-bones household budget.

We can require polluters to stop ruining Iowa’s water, by putting some teeth in the so-called Nutrient Reduction Strategy, which is rendered meaningless by requiring nothing of polluters. Even the good actors in the ag community should be able to see their efforts are eroded like unprotected soil when neighbors’ farm practices contribute to nutrient pollution.

Without raising tax rates, we can raise significant revenue for education and other shortchanged services, by curtailing or ending research tax-credit checks for corporations that pay no income tax ($40 million), and by closing tax loopholes ($100 million). Instead, we have seen an average increase of less than 2 percent in permitted per-pupil K-12 spending in Iowa over 10 years. We see rising college tuition because of poor state support.

We can make our tax system more fair by shifting our increased reliance on sales taxes to revenue sources such as income tax. Our four-decade trend toward sales tax (and against income tax) may continue in 2020 with the push for environmental quality and recreation as directed by voters in 2010, but it can be paired with moves to make the overall system more fair. Note: That approach demands no new tax cuts for the wealthy.

That list is hardly exhaustive. Queue up child care assistance, wage theft enforcement, restoring and protecting collective bargaining rights, making pensions more commonplace instead of attacking workers who have them. We could even step up efforts to protect vulnerable communities in advance of the next flooding disaster,

The common theme: Since we’ve done nothing or virtually nothing meaningfully positive in 10 years in these areas, even small steps will look good in comparison. And, because of the pent-up frustration of those who would have been satisfied five years ago with small steps, visionary and dramatic steps might be possible.

But this is not a “woulda, coulda, shoulda” refrain like you would hear after a near-miss in a ballgame. For all their theme of decline, retrenchment and a “can’t-do” mindset, the failures of the 2010s really spotlight what we can do through public policy to work together for a stronger, more equitable, more inclusive, more sustainable Iowa in the 2020s.

This is a moment to start a rebound.

At the Iowa Policy Project, we have used solid information and years of perspective to spotlight challenges and ways to make life in Iowa better, next year, five years, even 10 years from now.

So, bring on 2020!

MMike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

The Iowa Policy Project is a 501c3 nonprofit organization funded by individual donations, organizations and foundation grants. Tax-deductible contributions may be made online at this link.

Missed opportunities combatting climate change

Solar could bring several benefits beyond power generation if installed on the campus of the University of Iowa, which is missing opportunities with recent decisions.

I recently watched part of the Hancher Auditorium parking lot ripped up and repaved at the University of Iowa. With the university community well aware of the impacts of flooding, I was surprised by the missed opportunity to rebuild the parking lot with more water retention features like bioswales or permeable pavers. We know that heavy rainfall impacts in Iowa will only grow as climate change accelerates.[1]

At the same time, I realized these types of interventions are expensive and perhaps outside the routine maintenance budget. So I turned my attention to other ideas for the campus: solar power opportunities and the university’s pledge to combat climate change through renewable power generation. Surely such an ambitious proposal would have resources enough to invest in solar power generation.

In 2017, UI President Bruce Harreld announced a goal to increase the university’s use of renewable resources for power and steam production and reduce coal firing for steam and energy production, and entirely phasing out coal by 2025.[2] This laudable goal addresses climate change, makes the university’s operations more sustainable, and improves air quality in Iowa City. Why not enhance this goal with solar panels?

The President’s message noted that the university would rely on a combination of biomass firing for renewable resources to hit a target of 40 percent of energy production by 2020. The university has pursued various options of biomass to be fired alongside coal for the time being (and presumably to be fired by itself once coal is eliminated). These options are:

      • Oat hulls, the byproduct of industrial processes, currently sourced from Quaker Oats in nearby Cedar Rapids. This fuel source is readily available, and by reusing formerly discarded ingredients the UI can prevent methane emissions from decomposition while burning a carbon-neutral fuel.
      • Miscanthus grass,[3] a non-native, but non-invasive grass, is often used for biomass around the world due to its high energy content and quick growing nature. The university has planted a few collection areas and buys harvest from local producers.
      • Energy pellets, another industrial byproduct that can be fired alongside coal. Like oat hulls, adding another use to an already ongoing industrial process is more sustainable than burning a non-renewable fuel source.

On its face, this strategy seems like an innovative use of natural ingredients that are carbon neutral and close by, obtainable from regional industry and agriculture.

But it’s still only 40 percent of the plan. Where does the remaining 60 percent come from? Natural gas,[4] which is “cleaner” than coal firing for particulate matter and CO2 , is readily available, and adds a power predictability that is hard to get from some renewable resources. But should natural gas be 60 percent of the university’s energy portfolio, when renewables could play a bigger role?

The university’s Office of Sustainability mentions, but dismisses, greater use of wind power and solar power. Both are mentioned as being implemented in a limited fashion on campus as demonstration projects for research purposes, but said to be too resource intensive (land and money) to fully replace other energy production methods for campus uses.

The message is a concern. If a complete replacement strategy were a qualifying criteria, why would it not apply to biomass firing sources as well. If not, why would the UI not consider solar and wind as a smaller scale, partial contribution to the university’s energy portfolio?

Other universities, including Maryland and Michigan State[5] have both solved cost concerns with public-private partnerships and power purchasing agreements. Indeed, UI researchers already note that the kilowatt cost of solar is below that of more traditional production requirements in some states, with the implication that similar cost comparisons will become more attainable through the country.[6]

Given the similarities between the UI and Michigan State (MSU) — both large public universities in the Midwest with similar climates and both governed by a quasi-public Board or Regents — the MSU example with solar power may prove fruitful. MSU followed the lead of several U.S. universities (including UC San Diego[7]) in deploying solar panels above parking lots on campus.

Solar could bring several benefits if installed at the Hancher lot, beyond power generation. Besides vehicle protection, it could offer research opportunities on solar generation, grid distribution methods, and power storage mechanisms for engineering faculty and students.[8]

Indeed, the University of Iowa already has experience in similar solar deployments. Its Facilities Management department already operates a solar power charging station for university vehicles, just on a much smaller scale.[9] The university has many surface parking lots that could reduce ongoing university expenses by harnessing the air rights just 10 feet above existing lots.

If this isn’t incentive enough, the university is ranked eighth in the Big Ten Conference for green power generation by the U.S. Environmental Protection Agency.[10] Surely Hawkeye pride can carry us to be No. 1. Forget Hancher. Perhaps the lots around Kinnick Stadium could be ground zero for a Hawkeye solar project — with a slogan ready to go: America Needs Solar.

[1] https://www.iowapolicyproject.org/2019Research/190905-Floods-Climate.html
[2] https://now.uiowa.edu/2017/02/ui-announces-it-will-be-coal-free-2025
[3] https://www.facilities.uiowa.edu/sites/www.facilities.uiowa.edu/files/wysiwyg_uploads/hawkeyecampusmiscanthus.pdf
[4] https://www.facilities.uiowa.edu/energy-environment/renewable-energy
[5] https://msutoday.msu.edu/news/2019/msu-helps-big-ten-achieve-largest-collective-green-energy-use/
[6] https://dailyiowan.com/2018/03/19/solar-energy-lights-up-on-campus/
[7] https://www.borregosolar.com/commercial-solar-systems/university-of-california-san-diego
[8] https://msutoday.msu.edu/news/2017/construction-begins-on-msu-solar-array-project/
[9] https://www.facilities.uiowa.edu/sustainable-energy-discovery-district
[10] https://www.epa.gov/greenpower/college-and-university-challenge

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. He was an intern at the Iowa Policy Project during the fall semester 2019.

Differences in Disaster: A series of observations

Providing the same resources to communities regardless of their ability and opportunity to recover results in inequitable outcomes.

Part 3: It all comes down to equity

Public policy to deal with flooding involves a lot of big-ticket items that carry big implications for the future of communities that by choice or by economic necessity stand in harm’s way.

This issue all comes down to one of equity and equality.

Matt Kinshella graphic, source info below*

Equality would ensure every community is provided the same resources and consideration regardless of their characteristics. But, as we have discussed, providing the same resources to a community that has less opportunity and ability to recover as one that is well positioned to do so results in the outcomes we have seen: Wealthy communities become wealthier while poorer communities fall further and further behind.

Equity calls for alleviating these disparities to create the opportunity for equal recovery rates and outcomes among disparate communities.

How do you do that? The following suggestions are a few items that will work toward leveling the playing field.

      • “Rebalance” mitigation efforts with an emphasis on community impact and vulnerability rather than up-front economic loss, the latter putting higher-value properties ahead of those less able to cope on their own.
      • Put more flexibility in FEMA guidelines to ease community burdens and allow for a creative use of funds.
      • Better direct Community Block Development Grant funds to the best place for mitigation efforts — not necessarily within the damage area, but outside if needed. Flood mitigation is best placed upstream.
      • Keep state funds flowing pending the arrival federal aid, which might be delayed after a federal disaster is declared and Iowa stops processing and paying disaster claims.

While these suggestions won’t fix everything, they offer a start to a discussion that needs to start now. Policy makers and recovery agents must take into account social vulnerability and community impacts to a greater extent than they already do if we are to break the downward spiral poor communities find themselves in following disasters.

Previous:
Part 1: Flooding hits different families differently
Part 2: Flood mitigation protects different families differently

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. Visit the Iowa Policy Project website for his December 2019 report, Flooding and Inequity: Policy Responses on the Front Line.

* Graphic credit: Matt Kinshella; culturalorganizing.org blog, “The problem with that equity-vs.equality graphic you’re using.” Copyright Paul Kuttner

Differences in disaster: A series of observations

A benefit-cost analysis on flood mitigation projects can miss the mark on equity if you only spend the big bucks to protect the big bucks. Communities already best-positioned to recover need less help doing so.

Part 2: Flood mitigation protects different families differently

In the first post about findings from my recent report for the Iowa Policy Project, I outlined impacts on low-income residents who have few options than to live in a flood-risk area, and few resources to cope or rebound.

Sand barriers in Cedar Rapids, Iowa Flood Center picture.
Photo: Iowa Flood Center

So what about preventing floods? Mitigation measures are great but are usually expensive and may be best positioned well upstream of the location where their protection helps most. Most people look to state or federal grant assistance in funding mitigation projects, but with resources being scarce — and they’re always scarce — a funding criterion has been established to assure mitigation measures must protect at least as much economic value as they cost.

On its face, this benefit cost analysis sounds quite reasonable, but it has a few consequences that, even if unintended, can be foreseen.

Consequence One: If you only spend the big bucks to protect the big bucks, then communities that may be best positioned to recover without help are given greater resources with which to protect themselves.

Consequence Two: How do you value the cost of displacement, lost economic opportunity from missed jobs, extra commute times, uninsured property loses, community fragmentation? Some of this can be valued, some cannot, and most of it is only clear after a disaster. This makes it hard to implement mitigation when funding justifications must happen first.

Consequence Three: Assuming you justify and pay for mitigation measures, have you just increased the value of the protected land to the point that current residents are suddenly priced out? Gentrification can be spurred by improved environmental and hazard risks as much as it can through beneficial tax codes, new transportation links or economic development incentives.

Previous, Part 1: Flooding hits different families differently
Next, Part 3: It all comes down to equity

Joseph Wilensky is a Master’s Degree candidate in the University of Iowa School of Urban and Regional Planning. Visit the Iowa Policy Project website for his December 2019 report, Flooding and Inequity: Policy Responses on the Front Line.