Water funding exposes shallow commitment

Recent initiative fails to meet needs to improve Iowa water quality

Voters have indicated their support for increasing funding to improve water quality in Iowa, earmarking part of the next sales tax increase for clean water. So far, the protected trust fund for outdoor recreation and water quality remains empty.

Our latest water quality report addresses these issues:

  • What has been the state’s spending commitment to water quality over the past 15 years?
  • How much of state and federal dollars goes to reduce nutrient pollution in Iowa?
  • How much spending is needed to make meaningful water quality progress?
  • How can the state raise adequate revenue to make an impact?

We identified 16 primarily state-level programs that fund water quality improvements. Funding in the most recent year hasn’t even reached 2008 to 2009 levels.

The Nutrient Reduction Strategy (NRS), implemented in 2013, was created to reduce nutrient pollution that creates a hypoxic dead zone in the Gulf of Mexico. The strategy was advertised as a new commitment by the state to reduce Iowa’s pollution of our own rivers and the Gulf of Mexico. Even with the NRS, we find that state water quality spending has dropped off and struggled to return to pre-2008 recession levels.

190424-WQ-Fig1

The Water Resources Coordinating Council is tasked with overseeing NRS progress, and measures the financial resources dedicated to reducing nutrient pollution from the state of Iowa to the Mississippi River system. The most recent NRS report shows $512 million was spent in state and federal dollars on Iowa nutrient reduction in 2017.[1] However, the state is largely riding the wave here; the real money comes from federal funding.

While it was assumed that adopting the NRS would increase Iowa’s commitment to water quality, it did not — though at the same time pollution has increased. Recent research indicates Iowa’s share of nutrient loading into the Mississippi and Missouri river watersheds actually increased between 2000 and 2016.[2]

In 2018, Governor Kim Reynolds signed a bill that appropriates $282 million to water quality efforts over the next 12 years.[3] This gesture compares poorly even to existing — and lacking — government water quality spending. Iowa is nowhere near to what is needed.

How much money does it really take to make a meaningful impact on Iowa water quality? The NRS document, written mainly by Iowa State University, estimated the cost of reducing nonpoint contamination under three scenarios. All were in the billions of dollars.

The Iowa Soybean Association estimates for nutrient reduction costs in just one river basin, the Lime Creek Watershed,[4] implies a statewide need of $1.4 billion a year for about 15 years. These estimates demonstrate the inadequacy of the 2018 spending bill.

Current investments are not resulting in discernible improvements in Iowa’s water quality. Two options available for generating the amount of revenue needed include removing the exemption of fertilizer used in agriculture and taxing it like other commodities.

A second option is fully funding the environmental trust that voters approved in a statewide referendum in 2010. Estimated revenue from either of these sources would bring more than $100 million per year. We need to tap new sources to make our state commitment to water quality equal to the task. Until then, we are only paying lip service to the problem.

[1] Iowa Water Resources Coordinating Council, “Iowa Nutrient Reduction Strategy 2017-2018 Annual Progress Report. Page 9.

http://www.nutrientstrategy.iastate.edu/sites/default/files/documents/NRS2018AnnualReportDocs/INRS_2018_AnnualReport_PartOne_Final_R20190304_WithSummary.pdf

[2] Christopher Jones, Jacob Nielsen, Keith Schilling, & Larry Weber, “Iowa stream nitrate in the Gulf of Mexico.” April 2018. PLOS. https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0195930&type=printable

[3] Brianne Pfannenstiel, “Reynolds signs water quality bill, her first as governor.” January 2018. https://www.desmoinesregister.com/story/news/politics/2018/01/31/reynolds-signs-water-quality-bill-her-first-governor/1082084001/

[4] Iowa Soybean Association Environmental Programs & Services, “Lime Creek Watershed Improvement Plan: A roadmap for improved water quality, sustained agricultural productivity & reduced flood risk. N.D. https://www.iasoybeans.com/search/?q=lime+creek

 

2018-NV-6w_3497(1)

 

Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

Courageous words about ‘timid’ funding

Even a farm group may face consequences for daring to challenge Iowa’s poor funding of water quality efforts.

Even farm groups dare not question the timid funding of water quality

Recently the Cedar Rapids Gazette reported a slapdown of the Iowa Soybean Association by the Iowa Legislature.

Thanks to reporting by Erin Jordan of The Gazette, we learn now that a year ago, legislators were angered by comments from Iowa’s main soybean group that Governor Kim Reynolds’ first bill as governor — new money for water quality — was “timid.”

Partly because of that remark, the Gazette reported, legislators stuck back against the group by taking $300,000 in state funds away. Ironically, those funds had gone for research on water quality improvement.

In her article, Soybean group pays price for calling water bill ‘timid’, Jordan reported:

The Soybean Association had received $400,000 a year in state funding for the On-Farm Network, a program that helps farmers gather data to better manage nitrate fertilizer application on their cornfields. More precise application means less money spent on fertilizer and less excess nitrate washing into lakes and waterways.

IPP used some of the data collected by the Iowa Soybean Association in our recent report on water quality funding by the state. We called our paper “Lip Service” since that is about all Iowans are getting from their top leaders in response to widespread concerns about water quality in the state.

The Iowa Soybean Association research was very good. We found it to be the best out there on what improving nutrient pollution from agriculture was likely to cost. Now, that research has been curtailed because that organization had the temerity to tell the truth about the big talk and little money the state gives to improve water quality in the state.

To read our report or a one-page executive summary, visit the Iowa Policy Project website at http://www.iowapolicyproject.org.

David Osterberg is lead environment and energy researcher at the Iowa Policy Project, which he co-founded in 2001.

dosterberg@iowapolicyproject.org

New tax limits mock transparency

In one bill, lawmakers enshrine minority rule, punish public workers (again), penalize economic growth and hamstring cities recovering from natural disaster.

curtains-tighterMocking transparency for voters, taxpayers

In the wee hours of Thursday morning, while most Iowans slept, the Iowa House enacted a sweeping change to the way city and county governments fund public services, approving a bill that had passed the Senate just the evening before. In this one bill, the Legislature managed to enshrine minority rule, punish public-sector workers (yet again), penalize economic growth, and hamstring cities recovering from a natural disaster. With no apparent sense of irony or hypocrisy, the bill’s supporters argued the purpose was to increase transparency for voters.

Removing democracy in local decisions

The bill would limit the growth of property taxes levied by cities and counties to 2 percent each year. If local officials, elected to set budgets and decide how to finance them, find that the services their constituents are demanding require that revenues exceed that 2 percent, they cannot do so unless two-thirds of the council or board agree. So much for majority rule and local democracy.

Eroding employee benefits and security

How does this bill hurt city and county employees? Under current law, tax rates for the city and county general funds, and the county rural services fund, are limited. But the law recognizes that increases in employee benefits are to a large degree outside the control of local elected officials. The state sets the employer contributions required each year to maintain the solvency of public employee pension funds, while increases in premiums for health insurance are set by the insurance companies.

Both costs have been increasing more than 2 percent annually, often much more.[1] Under current law, a separate property tax levy for employee benefits can be increased to the rate needed to fund those benefits.

No longer. Under the bill just passed, employee benefits must now be financed along with all other public services, under the 2 percent cap. When pension contributions and health insurance premiums increase more than 2 percent, the cost of providing services goes up but the city or county may be unable to accommodate the cost increases without cutting services which means laying off the workers who provide them to keep overall spending growth under the cap. The bill pits taxpayers against the people who plow their streets, protect their homes, build roads, or maintain parks and libraries. When services are cut, public employees can be portrayed as the scapegoats.

Imposing a penalty on economic growth

The new bill also penalizes local governments for pursuing growth. There were earlier House and Senate bills that sought to limit property taxes, and the fiscal notes explaining those bills and their impact were just released on Tuesday. Both of those bills would have repealed the tax rate limits under current law, replacing them with the revenue growth caps, and would have applied the growth caps only to taxes from the revaluation of existing properties. New construction for a given year, which generates new property tax base that pays for the additional services needed to accommodate growth, would not count against a city’s new limit on property tax revenue. Under those earlier proposals, the taxes generated by new construction would not be part of the revenue increase that is limited.

But on Wednesday evening, the Senate replaced the existing bill with a new one, and then passed it and sent it on to the House. The new version keeps the rate limits in place, in addition to imposing the growth limit, and it does not exempt new construction from the limit. The effect is to severely penalize cities and counties that experience economic growth.

Under the previous versions, a city experiencing annual growth through the revaluation of existing properties at 2 percent or less would not be constrained by the law if they keep the property tax rate the same from year to year, regardless of how fast they grow. But under the new version that passed, a city levying at the maximum $8.10 levy rate and experiencing 2 percent increases in the value of existing properties, but growing from new construction at the rate of 3 percent as well, would see revenues decline by 13 percent within five years compared to current law, or the previous bills. Increase that growth rate to 4 percent, and the penalty becomes 17 percent in five years.

Will cities and counties even want to grow, knowing that they are not going to be allowed to raise the revenue needed to service the new business and new population? Did legislators even recognize that the new bill contained this growth penalty when they voted for it? Or was that the idea — to penalize the growing areas, which are predominantly urban?

Imposing a penalty on economic disaster

At the same time, the bill would hamstring cities trying to recover from a natural disaster, or from a loss in taxable value due to an economic downturn or from the vagaries of Iowa’s assessment rollbacks. Cities and counties now would face two caps: the existing rate cap, and the revenue growth cap. The combination could be devastating. When taxable value declines, say to a loss of property value after a major flood or recession, the rate cap ensures that revenues will decline with the loss in tax base, for any city or county at or near the rate limit. But as the recession ends or the city rebuilds, the new 2 percent revenue cap could now undermine recovery. The reduced revenue becomes the new starting point, so as taxable value increases again, they may be unable to restore revenues even to the previous level because they are constrained to 2 percent increases per year. And this just at a time when extraordinary measures are needed to help the recovery.

[1] The average premium for group health insurance provided by governmental bodies in the Midwest has increased on average 3.5 percent per year for the past three years, according to a survey by the Kaiser Family Foundation.

2010-PFw5464Peter Fisher is research director of the nonpartisan Iowa Policy Project in Iowa City. pfisher@iowapolicyproject.org

Bill Stowe: Water quality hero

Bill Stowe’s courageous fight for clean water lives on.

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Bill Stowe speaks at IPP’s 15th anniversary event in September 2016. (Photo: Lance Coles)

Bill Stowe, dead at 60. The average American male born in 1959 should live about another 10 years. But there was nothing average about Bill Stowe.

The average male does not get three advanced degrees from three different institutions. The average American, male or female, does not take on the strongest and most powerful to change public debate, and force accountability where it was lacking.

Bill ran the Des Moines Water Works (DMWW), the largest supplier of clean drinking water in Iowa. It was a surface water system. That means it had to deal with the serious pollution that unrestrained agricultural practices put into Iowa waters — a costly and unsustainable proposition.

Realizing he could not continue to pass on the costs of treating that water to his customers alone, he took action — courageous action in an agricultural state — to either get the polluters to stop, or at least to pay for the problems they are causing.

The case of the Des Moines Water Works vs. three Iowa counties with drainage districts that were some of the main polluters of the Raccoon River went to federal court. It scared agricultural organizations like the various state Farm Bureau federations.

As Stowe and DMWW fought “dark money”-funded interests in court, he gained both foes who favor the status quo and allies who shared either the lawsuit’s goals or the desire to help Iowans see what big industry was up to. Others joined the fight, including one small-town journalist who won a Pulitzer Prize, and activists who keep his fight alive today.

Bill lost his case in court, but pushed water quality more squarely into Iowa’s political and policy spotlight, forcing politicians including Terry Branstad to concede a need to do something — even though their actions have fallen short.

Bill Stowe was generous with his time and talked to groups about treating water to make it safe. He taught a class of mine.

160314-Stowe-DO classThe picture above was from three years ago when we visited the treatment works he served. He spoke often to groups about his passion for clean water all around the state — including as the featured speaker for the 15th anniversary of our organization in 2016.

When IPP considers what papers to investigate we often ask knowledgeable people around the state for thoughts on what would be helpful to better inform public debate. Bill had suggestions for our latest series of reports on water quality.

When IPP researcher Natalie Veldhouse and I met with him and his DMWW colleague Laura Sarcone in November, they had good suggestions that helped us in the development of our latest paper. When I sent a copy of that paper to Laura for her thoughts, I did not know that Bill was already in hospice.

Bill died too soon. His fight for clean water remains important for all Iowans.

2016-osterberg_5464David Osterberg is co-founder, former executive director and lead environment and energy researcher for the Iowa Policy Project. dosterberg@iowapolicyproject.org

Perspective for the common good on Tax Day

On Tax Day — and every day — we must ask whether rampant tax breaks, subsidies and tax cuts are wise choices with public dollars from taxpayers.

It is so tempting, as we are seeing on social media over the last several days, to talk about filing your taxes and the fact that you (1) paid more or (2) paid less.

Is that really what matters? Let’s take a step back and look at the big picture — the common good. There are three main points to remember:

1) First, what are taxes for? Schools. Roads. National defense. Health care. Fairness and protection in the workplace. Clean air. Clean water. Recreational opportunities. Libraries. There are more examples you may put out front.

But in any case, none of those services funded now by taxpayers will be provided without taxes. They will not be provided by the private sector, at least on any scale that provides access to all Americans.

Go ahead. Chart a road to opportunity for all that does not include taxes. You cannot do it. It is integral to the mission, which is why tax reform is an essential stop we identify on our Roadmap for Opportunity. Unfortunately, Iowans have not received tax reform, but a doubling down on bad tax policy trends of the last 20 or 30 years.

2) Our Iowa tax code is inequitable. The rich pay less as a share of their income than people who live paycheck to paycheck.

It was already a long-term trend in Iowa (and in many states) and it was worsened by the 2018 tax overhaul. Our state and local tax system is upside down.

3) Cleaning up and restoring balance to our tax code would better assure public money is going to public purposes, rather than subsidizing tax breaks and loopholes for those most politically well-connected.

As we have shown:
•     Tax credits for business already cost more than $300 million a year.
•     Tax loopholes for multistate and multinational corporations already cost between $60 million and $100 million.

On Tax Day — and every day — we must ask whether those choices are the best use of public money, when we know education, public safety and environmental quality are being compromised by short-sighted budget decisions in Des Moines.

Mike Owen is executive director of the nonpartisan Iowa Policy Project.

mikeowen@iowapolicyproject.org

No ‘I’ in sports bets

But is prohibiting bets on individuals enough to assure integrity in college games?

An admitted political compromise would legalize sports betting in Iowa while keeping bets on Iowa student athletes illegal — but only on their individual performance.[1]

Promoters of the plan are betting that this small nod to sports integrity might gain a few votes. However, the compromise in the Legislature shines a light on the integrity issue and to larger weaknesses, which are many.

If legal sports betting were not a threat to sports integrity, no such compromise to the betting bill, HF748, would be needed. The compromise concedes a threat remains to competition outside Iowa that gamblers might influence. Plus, legislative deals made now could be quickly reversed next year once that new betting door is open. I mean, what are the odds?

These are among many points — including fiscal and economic issues — being missed in the rushed drive in 2019 to expand gambling in Iowa with legalized sports betting.

Governing Magazine looked at the revenue states might expect. The magazine cited a Moody’s Investors Service report that noted “sports betting in Nevada accounted for just 2 percent of statewide gambling revenue.”[2] In the first six months of legalized sports betting in New Jersey a mere $3 million in tax revenue was raised from in-casino betting, in a state much larger than Iowa and with a higher tax rate on betting (8.5 percent).[3]

This is not economic development. Sports betting in Iowa is for Iowa residents only; we would not attract any out-of-state spending. And much of the money wagered on sports would come from spending on other forms of entertainment at local businesses, where more of the profits stay in the state.

Casinos want sports betting to entice new customers, who might become regulars at the slot machines and gaming tables.

So for a meager increase in revenue, the state would open up greater opportunities to contaminate sports integrity and create new problems of gambling addiction, along with the attendant family problems and breakups, embezzlement, and job loss.

Already, most families have no savings, or very little. Around half of U.S. families have no or negative net wealth.[4] More than 60 percent don’t have even $1,000 put aside for emergencies let alone for retirement.[5] Having more gambling opportunities keeps people from getting ahead.

Many of these problems are only a matter of time. Any bets on how soon we will see them?

2010-PFw5464Peter Fisher is research director of the nonpartisan Iowa Policy Project in Iowa City. pfisher@iowapolicyproject.org

 

[1] The Gazette, Cedar Rapids, March 19, 2019, “Compromise advances sports betting bill in Iowa House,” https://www.thegazette.com/subject/news/government/compromise-advances-sports-betting-bill-in-iowa-house-limits-in-play-prop-wagers-on-iowa-collegiate-sports-20190319, and March 22, 2019, “Betting on college pivotal to gambling debate,” https://www.thegazette.com/subject/news/business/iowa-sports-betting-college-sports-20190322.

[2] Liz Farmer. How the Sports Betting Ruling Will Impact State Budgets The Supreme Court outlawed a federal ban on sports betting on Monday, and some states are poised to capitalize. Governing May 14, 2018. https://www.governing.com/topics/finance/gov-how-legalizing-sports-betting-will-impact-state-budgets.html

[3] The Tax Policy Center, “TPC’s Sports Gambling Tip Sheet.”  https://www.taxpolicycenter.org/taxvox/tpcs-sports-gambling-tip-sheet.

[4] The Quarterly Journal of Economics, Emmanuel Saez and Gabriel Zucman, Vol. 1, May 2016, Issue 2, Wealth Inequality in the United States Since 1913: Evidence from Capitalized Income Tax Data, Pg. 554. http://gabriel-zucman.eu/files/SaezZucman2016QJE.pdf.

[5] Bankrate’s Financial Security Index, 2018, https://www.bankrate.com/banking/savings/financial-security-0118/.

Iowa women: Still working for less

Wage trends for all workers mask important demographic differences, as we show in our Wage section of the State of Working Iowa website. New data since that update show a gap remains between wages for men and women. Over almost four decades that gap has narrowed — partly due to lower wages for men — but in 2018 it widened, from 15 cents to 21 cents on the dollar.

For men, real wages began falling for low-wage men in the mid-1970s, and this spread across all but the highest percentiles through 1979-1989 and through the first half of the 1990s (1989-1995).

Some relief in the late 1990s is short-lived: Wage growth grinds to a halt in 2000–2007 and then retreats — for all but highest earners — from 2007–2018. Iowa women workers, by contrast, do relatively well: All but the lowest wage decile see impressive wage gains across the full 1979-2016 era. Low-wage women lost a lot of ground in the 1980s, but did better than their male peers during the 1990s boom.

The gender wage gap has narrowed substantially, but there also is a ways to go toward equal pay: In 1979, women made 62 cents for every dollar earned by men; today they earn 79 cents. The long-term narrowing of that gap reflects, in about equal measure, the gains made by women over that era, and the losses suffered by men.

By Colin Gordon, Senior Research Consultant for the Iowa Policy Project, and lead author of IPP’s State of Working Iowa series.