A view of IPP research, from a researcher

Molly Fleming
Molly Fleming

As I begin my final year at the University of Iowa’s graduate program for Urban and Regional Planning, I have been fortunate to join the Iowa Policy Project as a part-time research assistant. This opportunity allows me to integrate my interest and experience in public policy with fact-based research and analysis. Given public confusion and misperception regarding such critical issues as health care, taxes and the environment, objective research is vital to ensure government accountability and citizen engagement. I am very pleased to be able to assist in this important work.

As a volunteer at the Iowa Policy Project last spring, I helped former research associate Beth Pearson to determine the benefits of home weatherization for low-income Iowans. Additionally, I helped to compare how alternative versions of climate change legislation could promote or harm public welfare. The research skills I gained from this experience have been invaluable, and I hope to build upon them throughout the coming year.

Under the guidance of Peter Fisher and other members of the wonderful IPP staff, I will look at the effects of the American Recovery and Reinvestment Act on Iowa’s economy. I also plan to take a hard look at Iowa’s budget allocations throughout the year and the rising cost of living within our state. It is my hope that this research will help to spark good ideas and influence important public policy. As the challenges and prospects facing Iowans evolve during this time of economic uncertainty, the Iowa Policy Project’s work is more important than ever. I am both honored and excited to be a part of the IPP at such an exciting time, and I look forward to my year here.

Posted by Molly Fleming, Research Assistant

Everything on the table? Really?

Back in January, Governor Culver asked lawmakers to “agree that everything’s on the table with respect to balancing the budget and finding cost savings in state government.”

Today, on Ryan Schlader’s WMT-AM radio talk show, State Rep. Nick Wagner, responding to a question about state employee retirement benefits, opined that “I don’t think we should just write anything off the table.”

Both quotes sound good. Do they mean it?

The evidence may come during the next legislative session. Budget policy fell short of the concept in 2009. Otherwise, abuses of Iowa’s tax code would not have been allowed to continue when lawmakers were choosing among services to be cut as revenues declined.

This is not a partisan thing — or it should not be.

Can’t all Iowans agree that any spending by state and local government should (1) carry a demonstrable public benefit, and (2) be subject to regular scrutiny to allow legislators and the public to determine that it does have that benefit?

The Legislature took a small but important first step in 2009 by passing legislation toward the transparency that would allow scrutiny of one of Iowa’s most wasteful programs: the Research Activities Credit (RAC). The RAC is a virtually open-ended business entitlement that results in multimillion-dollar secret checks being sent to big companies that don’t pay any income tax in Iowa.

Ultimately, the law passed this year may begin that process toward better scrutiny.

That’s why the Big Business lobby in Iowa will continue to fight transparency and protect its sweetheart tax breaks while lawmakers make other budget choices that will cut teachers in classrooms, drive up tuitions in community colleges and state universities, and continue to shortchange public safety, environmental quality and recreational assets.

If everything is on the table, it has to include wasteful spending on special-interest tax breaks for companies that don’t pay income taxes.

By Mike Owen, Assistant Director

Explaining the ‘trade’ in ‘cap and trade’

David Osterberg
David Osterberg

“Cap and trade” is a term growing in use but still needing explanation. We all get the “cap” part. The way to clean our water and our air is to “cap” the amount of pollution entering it. The “trade” part is a little more confusing.

The ‘cap’
Let’s assume that we see health or aesthetic damage from all the pollution in the air and that we have identified 121 tons of it being generated by a finite number of factories and other sources. Assume that good science says that we need to cut those identified emissions by half — 50 percent — to have an effect. Because it will be easier to get to that goal by giving the polluters some time to put in the pollution control or close down heavily polluting plants, we decide to reduce emissions by 10 percent a year over the next five years. The identified firms are told they need to cut the entire 121 tons to 110 tons by the end of the first year. That is the “cap” part of cap and trade.

The ‘trade’
The trade part of pollution reduction lets firms choose how to get to the total reduction. A firm with 10 plants equal to 11 total tons can decide to cut a quarter-ton from each of its four newest plants to reduce the 1 ton it is required to meet, and let the other plants produce as they formerly did. This works because we are interested in the total number, and it allows the company to meet the mandate to cut emissions by choosing the cheapest way within the company. A 10 percent reduction from all 10 plants would also get us the 1 ton, but this might be more expensive.

Firms also can trade with each other to help the economy achieve the desired reduction in emissions. The company that chooses to concentrate pollution in a few plants might want to go further than the 0.25 tons in each new plant. Its managers know that next year there will be another 10 percent reduction and 10 percent the year after that, so they might want to cut emissions just once and begin the process of eventually reducing even more. Going further than required this year will earn the firm credits, which can be saved for the next round of reductions, or purchased by a firm with mainly old plants that are hard to refurbish. This creates a market in which a broker agency sets up something like a stock exchange to trade the extra credits of one firm to the firms that want to purchase them. It is assumed that this marketplace will produce a cheaper solution to getting the same 10 percent total reduction in pollution that a simple mandate for each company, or even each plant, to reduce emissions by 10 percent.

The credit marketplace
The price of the credits is not known at the beginning. A firm might plan for a reduction on its several plants when learning that the price of credits is cheaper than first thought. The firm would then buy credits and do the plant cleanup next year. Alternatively, a firm might find the market for credits is so high that it can cut more emissions immediately and pay for part of the job by selling extra credits. That is how markets work and it shows how the trading part of cap and trade can address pollution from the big-ticket generators.

Posted by David Osterberg, Executive Director

IPP Open House packs ’em in

Christine Ralston
Christine Ralston

Wow, what an event. Friday afternoon, the Iowa Policy Project hosted an open house and FRIENDraiser at our new office in Old Brick.

We packed the office with friends and supporters. Guests had the opportunity to meet and talk with IPP staff, old IPP staff greeted longtime friends and new staffers were able to meet many of IPP’s friends and supporters.

The event was an opportunity for IPP to show off our new, spacious office. The organization has increased from five to nine staff members in just two years, so our old space was getting a bit cozy.

Our new space has several private offices, a research room and a separate conference room which was dedicated in honor of IPP co-founder Mark Smith.

Mark helped found IPP in 2001 in collaboration with IPP’s Executive Director, David Osterberg. Mark is perhaps best known as former president of the Iowa Federation of Labor, AFL-CIO. For 34 years, Mark worked tirelessly in education, organizing and advocacy for Iowa’s working families.

A short presentation included remarks by David about IPP history and Mark’s contribution to the organization as well as Mark’s remarks about the founding, work and expansion of the Iowa Policy Project.

David Osterberg speaks at IPP's Open House
David Osterberg speaks at IPP's Open House

The event was open to the public. Attendees included past and present members of the IPP board, friends and supporters of IPP’s work and several of our nearby elected officials: Congressman Dave Loebsack, State Senator Joe Bolkcom of Iowa City, State Representative Nate Willems of Mount Vernon, and Johnson County Supervisor Rod Sullivan.

Many, many thanks to those of you who took the time to come and speak with us, see our new offices and make donations in support of our work. We truly appreciate it.

Posted by Christine Ralston, Research Associate

Iowa reaches towering point on wind

Teresa Galluzzo
Teresa Galluzzo

Today the American Wind Energy Association (AWEA) released its annual rankings. These rankings showed Iowa moved up to second in the nation for installed wind capacity, after installing close to 1,600 MW in 2008. Iowa had a total installed 2,791 capacity of megawatts by year-end 2008, equal to 11 percent of the nation’s total wind capacity.

The Iowa Policy Project issued its own report this morning, to fill in some of the details about Iowa’s outstanding growth. The most impressive is that according to new estimates by the Iowa Utilities Board, wind fuels about 15 percent of the electricity generated in Iowa. This is a big increase from the 5 percent wind-powered generation estimated in 2006.

With this big jump, Iowa is now a world leader in the percent of electricity generated from wind power. To find comparable examples of wind production, we must look across the ocean to European countries. According to AWEA, Denmark leads the world, producing more than 20 percent of its electricity from wind energy.

Growth in wind production in Iowa, 1998-2008
Growth in wind production in Iowa, 1998-2008

Iowa’s outstanding growth in wind production calls into question the common argument that the costs of reducing our greenhouse gas emissions and addressing climate change are too high to justify action.

Looking at Iowa’s electricity prices since 1998 — the year before Iowa’s wind boom began — our electricity prices have remained below the national average and in fact have not increased as quickly as the national average price in the last three years (2005 to 2007). Assuming a somewhat similar portion of the wind-generated electricity produced in Iowa was actually consumed in Iowa, wind’s great expansion did not cause prices to spike.

Even as Iowa is leading the way in producing electricity from wind power, significant room remains to reduce our greenhouse gas emissions by increasing our use of renewable energy sources. On the upper boundaries, AWEA estimates that Iowa has the potential to generate 62,900 megawatts from wind power.

The new estimates of Iowa’s outstanding wind production, and its potential for new wind production, show that Iowans need not fear taking strong steps to address climate change. In fact, while still being thoughtful, Iowa should rapidly enact policies that continue to help our renewable energy production grow.

Posted by Teresa Galluzzo, Research Associate

Such a small change

David Osterberg
David Osterberg

Construction of big hog-producing facilities known as CAFOs is regulated by the Iowa Department of Natural Resources, but not very well. A few Iowa legislators have recognized that and are calling for a small change in the process to approve a CAFO and provide for disposing of the manure.

A study by the Iowa Policy Project last November demonstrated the legislatively imposed shortcomings of the present approval process. The proposed legislation, HSB168, would make a small improvement by shining more light on the process and allowing neighbors the ability to comment to their local county supervisors about shortcomings in plans for the proposed CAFO and its tons of manure.

The proposed bill would not allow the supervisors to stop a project but it would give more information to the Iowa DNR and its citizen bosses on the Environmental Protection Commission. That information might be used to modify plans for locating the facility and providing for manure disposal.

This small step would give neighbors another way to influence a change in their neighborhood.

Posted by David Osterberg, Executive Director