The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy.
By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.
Will “shared sacrifice” include the kind of balance we need in sustainable budget decisions that reflect Iowa values?
Our incoming governor is talking about “shared sacrifice.” It’s an interesting choice of words, because it implies “balance” in the tough choices, disappointing people across the board, or more positively, expecting much from all.
But will that happen? As we saw with 10 percent state budget cuts back in 2009, “across the board” is not always as advertised. Spending on clearly stated priorities, such as education, law enforcement and environmental quality, is cut, while spending in the shadows is not.
Too easily left out of the equation is the spending Iowa does through the tax code. This kind of spending is in the form of tax credits, and also money lost through tax loopholes, the loose seams in the tax code through which big corporations shield profits from rightful taxation in our state. It is spending on autopilot, often behind a veil of secrecy, with little or no oversight — let alone review and approval — by our elected lawmakers.
So, will “shared sacrifice” in 2011 include that kind of spending — the kind of spending that actually reduces resources before elected officials get a chance to make decisions on whether, or how, to spend the funds?
This is one of the most critical decisions to be made as a new General Assembly convenes and the new governor is inaugurated.
Short, fact-driven comments from the public may be accepted on Iowa Policy Points in response to posts by Iowa Policy Project staff members. These comments are screened, and may be edited for space — but if they are long and require extensive editing, they likely will not be posted. If you would like to comment on a post, the best advice is to keep the comment short, 100 or 150 words at the outside, and stick to the facts, rather than comments about personalities including political leaders. Our work is issue- and fact-based, and this blog is produced in the same spirit, to help provide factual perspective on the issues of the day.
We must consider what tax breaks are already in place for commercial property.
Scare tactics about commercial property taxes in Iowa are nothing new. Legislators and governors of both parties have fanned that idea for years, appealing to businesses that pay tax on 100 percent of their property value, while residential homeowners pay on about half.
Of course we all want to retain and attract good jobs. But it is usually a mistake to simply look at one part of our tax code and make sweeping generalizations about the impact on business activity. Property taxes are just part of the overall system of state and local taxes, both for individuals and businesses.
Businesses that occupy commercial real estate are also taxed under the corporate or personal income tax. Iowa’s personal income tax level is about average, and the corporate income tax in Iowa is well below average. Research has shown that Iowa’s overall level of business taxation (including property taxes) is about average among the 50 states.
There are inequities in commercial property tax that we could fix — but we should do so strategically. And if we’re going to look at the rates, or consider rollbacks or other cuts, we must consider what breaks already are in place.
A good starting place: the out-of-control growth of tax abatements and subsidies through tax increment financing (TIF). While commercial property owners in general are expected to pay tax on the full assessed value of their property, TIF arrangements drastically reduce or eliminate commercial property taxes, but only for selected property owners. This creates a disparity, and equity issues within a community. One store pays little or no property tax; a competitor down the street pays the full rate.
Any substantial reductions in taxes on commercial property should also address the inequities and waste inherent in Iowa’s system of tax increment financing. There should be no commercial property tax relief without substantial TIF reform.
We’re asking for your help as we seek to better understand where and why schools are choosing to invest in renewables and whether they are seeing benefits.
Almost five years ago IPP put out a report on Iowa schools that were using (or were considering using) wind power to generate electricity. We’re thinking about doing a followup report that might look at not only wind, but solar energy as well.
Do you know of schools around you that have solar panels on their property? Are any thinking about installing solar panels? Are solar panels or wind turbines being used in science classes or other parts of the curriculum in schools in your town? Has the installation of renewable energy generation impacted the way people think of renewables? We’re asking for your help as we seek to better understand where and why schools are choosing to invest in renewables and whether they are seeing benefits.
One example of a school that recently installed a small solar array on it is the Oak Ridge Middle School in Marion, Iowa. A generous donation from the Linn County REC allowed the school to install 20 solar panels totaling 2.6 KW of capacity. The solar array has been integrated into class work and is a valuable learning aide. Real-time data about the system’s output is available online.
Iowa schools are expected to graduate students with a knowledge base that will serve them in the future. Clearly wind and solar power are a part of that future and students who grow up around renewable energy will likely be more comfortable with and accepting of the role renewable energy can and should play across Iowa.
“The future of discount medical plans, in the wake of health reform, is unclear. What is clear is the legion of problems than accompany this sprawling and unevenly regulated industry.”
Five years ago, our “Nonstandard Jobs, Substandard Benefits” report illustrated that Americans in temporary, contract and part-time jobs without health insurance turned to medical discount cards as a substitute, many mistakenly believing they had health coverage.
Today, the Iowa Policy Project released a new report from Senior Research Consultant Colin Gordon, “Not Your Father’s Health Insurance,” which examines the problems emerging with the growth of discount plans in an increasingly expensive and confusing health-care market. “In some cases, states are stepping in to protect consumers,” Gordon says. From the executive summary:
The future of these plans, in the wake of health reform, is unclear — and will depend largely on the pace and terms of its implementation. What is clear, as of this report, is the legion of problems that accompany this sprawling and unevenly regulated industry. These include:
Aggressive and deceptive marketing practices which suggest or imply conventional insurance coverage, or exaggerate the savings or discounts offered;
Sweeping claims of access to “participating providers,” often in the absence of any clear agreement or commitment by listed providers to honor the plan’s discounts or commitments; and
Elusive benefits — given plan costs and provider participation — for most plan members.
Click here to read the one-page executive summary online.
Click here for the 15-page full report in PDF form (19 pages total including cover, executive summary, etc.).
This IPP report is the first among four being produced as part of a $335,043 contract with the U.S. Department of Labor Employment and Training Administration for research on employment and training costs of uninsurance and the impact on contingent workers. “Not Your Father’s Health Insurance” was funded totally from this federal contract.
Underemployed workers are not merely individuals who are not earning as much as they would have liked to; rather, they are individuals who are unable to find employment in jobs that match their skills and availability, and as a result are forced to survive on reduced earnings.
One effective way to gauge the effect of the recession on the state’s economy is tracking the state’s unemployment rate. But how accurate is the unemployment rate? The official rate for 2009 was 6.3 percent — does this mean that 93.7 percent of the labor force in Iowa was gainfully employed?
The official rate only accounts for those actively searching for work. The Bureau of Labor Statistics offers annual averages for several broader measures. If we include, for example, those who want to work but stopped looking for work, the 2009 figure rises to 7.1 percent.
And what about underemployed workers, such as part-time employees who would have like to work full time, but whose hours were cut back or who are unable to find full-time jobs? If we add those who are involuntarily part-time, the 2009 unemployment rate rises to 11.7 percent.
To complicate things further, even the figure of 11.7 percent can be viewed as conservative. The Bureau of Labor Statistics has no measure of the number of Iowans that are working in jobs that are below their education, skill or experience levels — another form of underemployment.
These examples — involuntary part-time workers and workers who are employed below their skills — are of non-unemployment labor market behaviors that should not be overlooked when estimating the impact of the recession on the state’s economy.
Underemployed workers are not merely individuals who are not earning as much as they would have liked to; rather, they are individuals who are unable to find employment in jobs that match their skills and availability, and as a result are forced to survive on reduced earnings. In the case of over-educated workers, they are also not seeing the earning premiums that are needed to offset the financial investment in higher education.
Underemployed workers have a distinct effect on the labor market. Over-educated workers are taking jobs from those with less education, as there are still not enough jobs for everybody. As employers gravitate toward the more-educated workers, over-education at the top is accompanied by unemployment at the bottom.
First, some perspective: the individual mandate has already faced three federal court challenges, including yesterday’s ruling. Judge Hudson’s ruling against the individual mandate is the only ruling to strike down any portion of the Affordable Care Act. Both earlierrulings found that individual mandate in particular and the entire health reform law fell within Congress’ constitutional powers under the Interstate Commerce clause.
The individual responsibility provision (Section 1501 of the Affordable Care Act) requires all individuals to purchase health insurance or face a tax penalty, with exceptions for those with religious convictions against health treatment and individuals facing extreme financial hardship. In order to prevent insurance companies from denying coverage to sick individuals or excluding preexisting conditions from coverage, a requirement that all individuals have insurance had to be included. Without such a provision, there would be a serious temptation for individuals to “game the system” — avoid purchasing insurance until they got sick.
But the other reason that this ruling is not as bad as it’s been made to sound, and in fact has some positives for health reform supporters, is that it struck down just that one provision of the law. Though Judge Hudson ruled that the individual responsibility provision was a constitutional overreach by Congress, he stated that the rest of the law falls within Congress’ constitutional purview. Virginia’s Attorney General, Kenneth Cuccinelli, requested that Judge Hudson halt the implementation of the law. Judge Hudson denied that request.
Lawmakers can (and should) continue to work toward the law’s full implementation, even in light of Judge Hudson’s ruling. The constitutionality of health insurance exchanges and the expansion of Medicaid are not in question.
This is just one ruling of three thus far, and undoubtedly more to come. When the legal wrangling is settled, we’ll know whether or not the individual responsibility requirement — and the tighter insurance regulations that rely on it — remains a workable part of the law. If the provision is found to be unconstitutional, there are workable solutions that would keep the insurance regulations in place and replicate the effects of an individual responsibility requirement. Until then, however, policymakers should continue their implementation efforts.