Today’s virtual House graphic: Who gains with local raises

Local power to raise the minimum wage allows higher-cost-of-living communities to adopt wages that better match their housing and living costs.

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About 29,000 Iowa workers have already seen pay raises because the supervisors in Johnson and Linn counties enacted a local minimum wage, held at a mere $7.25 statewide for over nine years. That number will more than double to 65,000 come April, when the first step of the Polk County minimum wage takes effect.[1] By January 2019, when wage rates in all three counties will top $10.10, about 85,000 Iowa workers will be enjoying a substantial increase in their pay.[2]

All of those wage gains will be rolled back if a bill under consideration in Des Moines is passed and signed into law. House File 295 would prohibit counties from enacting any law that sets standards for wages, benefits, scheduling, or other employment practices that are higher than state law. It would also nullify the wage ordinances already enacted in four counties where the elected representatives took action to help low-wage workers in the face of nearly a decade of state inaction.

Who are the workers who have gained, or who will gain, these pay raises? They are disproportionately women (56 percent) and disproportionately non-white (20 percent), compared to the overall population shares. Only 1 in 6 is a teenager; 31 percent are age 40 or older, while 53 percent are age 20 to 39. Almost three-fifths work full time, while only 13 percent work 20 hours per week or less. Of the workers seeing a bigger paycheck, 31 percent are parents.

Iowa is a low-wage state in an increasingly low-wage economy. In 2016, the median wage (half of Iowa workers earn less than that, half earn more) was $16.04 an hour, just 13 cents higher than it was in 1979 when adjusted for inflation. Since that time, worker productivity has risen 167 percent, but the gains from that greater productivity have not gone to workers. Minimum wage increases are one of the most important ways of ensuring that the gains from economic growth are widely shared instead of being captured by the richest 1 percent of households.

Local power to raise the minimum wage allows higher-cost-of-living communities to adopt wages that better match their housing and living costs. Local, democratically elected boards have passed laws overwhelmingly supported by Iowans that are raising the wages of about 85,000 Iowa workers, helping not just those workers and their families, but local economies dependent on their spending.

[1] The Johnson County minimum wage rose to $10.10 in January, 2017, and increases by the rate of inflation after that. The first step of the Linn County wage to $8.25 also took effect in January, and the last step, to $10.25, is scheduled for January 2019. The Polk County minimum becomes $8.75 April 1, and rises to $9.75 January 2018 and then $10.75 January 2019.

[2] A county minimum wage was also enacted in Wapello County, but the city of Ottumwa, home to most of the jobs in the county, nullified it within the city by enacting their own ordinance leaving the wage at the state level. We do not include any estimates for Wapello County in our figures. In Johnson and Linn counties, a few small towns have also enacted ordinances establishing minimum wages below the county level, but few jobs are affected. The number benefiting from the higher minimum wage includes all those projected to be earning less than that wage as of the year the minimum goes into effect (about 65,000 workers), as well as those whose wages are a little above the new minimum but who can be expected to get a raise in order to retain parity within a business or in order to remain competitive in the labor market (another 20,000).

2010-PFw5464Posted by Peter Fisher, research director of the Iowa Policy Project
pfisher@iowapolicyproject.org

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate how many Iowans are gaining from locally approved minimum wages.

When democracy is not enough

For public workers, long-accepted notions of electoral fairness in America do not apply.

170118_capitol_170603-4x4The governance issues raised by the anti-bargaining bill that just passed the Legislature are many, some in the process, and some in the new legislation itself.

An excellent synopsis of the impact of the onerous recertification requirements for bargaining representation is in a letter to the editor published in the Mason City Globe Gazette.
In that letter, Jason Enke of Clear Lake outlines what elections would look like for the representatives supporting the bill if the same requirements applied to their re-election campaigns:
This is what it would look like for them:
  • Each year, any legislator seeking to continue representing their constituents must submit a petition signed by at least 30 percent of their constituents in order to be placed on a ballot.
  • If they complete a successful petition, an election will be scheduled with the legislator themselves paying all costs of the election upfront.
  • Any eligible voter who does not vote in the election will have his or her vote counted as a vote against the legislator.
  • If there are multiple choices on the ballot, a legislator must receive the vote of a majority of all eligible voters.
  • If none of the choices on the ballot receive a majority vote, there will not be a runoff election. Those constituents will not be represented.
  • Furthermore, if a legislator loses an election and constituents are unrepresented, another election for that district will not be considered until a period of at least two years has passed from the last election.

Currently, by contrast, it is incredibly easy to get on a ballot for the Iowa Legislature — only 50 signatures for a state House seat, and 100 signatures for a state Senate seat. All costs of a legislative election are paid by public funds. If people do not vote, they are not considered in the outcome. To elect takes only a plurality, not a majority, of those voting, not those eligible or even registered. Those who are interested enough to vote make the decision. Deadlines are set in the Iowa Code for filling vacancies in legislative seats to assure people are represented when decisions are made for them.

None of what was mandated for public workers in Iowa is good enough for the majority of state legislators who passed the anti-bargaining legislation that Governor Branstad signed into law last week. For workers who want team representation of their position when they negotiate compensation to provide services to fellow Iowans, long-accepted notions of electoral fairness in America do not apply.

 

owen-2013-57Posted by Mike Owen, executive director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

Today’s virtual House graphic: Big checks, no taxes

Iowa’s lucrative research subsidy provided as much in 2016 to companies that do not pay Iowa state income tax as legislators recently approved as an increase in state school aid.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate the cost and nature of Iowa’s tax subsidies to companies to do research.

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Iowa’s lucrative research subsidy provided as much in 2016 to companies that do not pay Iowa state income tax as legislators recently approved as an increase in state school aid.

Unlike the typical use of a tax credit, the Research Activities Credit (RAC) is refundable and provides a check to the recipient for the amount of the credit not needed to erase taxes. In other words, if the company does not owe income taxes and has a research credit, it gets a check for the amount of the credit remaining.

A new report from the Department of Revenue (DOR) shows that in 2016, 207 corporate refunds were issued totaling $40.4 million (see graph above). Corporate claimants used another $8.7 million from the credit to erase tax liability, leaving the total cost of the corporate credit at $49.1 million.

For context, Iowa lawmakers this session provided $40 million as an increase in state aid for local school districts, defending the 1.11 percent increase as all the state could afford.

In most cases, beneficiaries of this tax credit and the tax credit “refunds”* are very large companies, DOR reports show. The graph above shows the overall cost of corporate claims on the RAC (beige), with the blue share of the bars showing the share of corporate claims paid out in checks to companies that paid no corporate state income tax to Iowa.

For more information and a list of companies that benefited from over $500,000 in RAC claims in each of the last seven years, see this Iowa Fiscal Partnership news release.

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* To refresh, these tax credit “refunds” are not refunds of taxes paid above what was owed, but of tax credits that exceed the amount of taxes owed. In 2016, the share of these research tax credits paid as “refunds” accounted for $4 out of every $5 of the cost of the credits.

For more information about Iowa tax credits and breaks for business, see this page on the Iowa Fiscal Partnership website: http://www.iowafiscal.org/category/research/taxes/tax-credits/

See also this related “Virtual House graphic” on Iowa’s growth in tax credit spending.

 

Today’s virtual House graphic: School funding in Iowa — a 20-year slide

The Iowa House of Representatives voted Monday to deny the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, we will offer examples. Here is today’s graphic, to illustrate state trends in Supplemental State Aid, formerly known as “allowable growth,” which governs per-pupil spending growth in local school budgets.

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Supplemental State Aid is the basic building block of a school budget, which is tied to enrollment, and is a combination of state funding and local property tax.

It is important to understand that an increase in state aid or per pupil growth, in other words, does not guarantee growth in an individual school district budget. That depends also on enrollment in the district. In some cases, an increase in SSA may still mean an actual decrease in funding available to a district, both in state aid and property tax. The percentages in the graphic above do not necessarily reflect what is happening in a given school district.

Join us Feb. 10 in Iowa City

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When: Friday, Feb. 10, 2017, 7 p.m.
Where: Old Brick, Iowa City, corner of Clinton and Market streets
What: Brief, 10-minute-or-less factual presentations from IPP staff and friends on key issues.
Who: You, and folks who have been watching developments on these critical policy issues:

Minimum wage • Collective bargaining • Education • Clean water policy • Taxes

One month into the 2017 Iowa legislative session, where do we stand on big issues facing our state? What are the real facts? What are responsible solutions? Let’s talk about them.
There is no admission charge for this event, but we do take donations. Sponsorships are available. Join us for presentations by IPP staff and good discussion with fellow Iowans!
 
Tickets not necessary, but please let us know you’re coming so we can plan.
RSVP to mikeowen@iowapolicyproject.org

The Governor’s health plan for public employees: A solution in search of a problem

We’ve seen this before; why would we try it again?

DSCN5662-detail240200Governor Branstad’s plan to remove health benefits from negotiations on state, county, city and school employee contracts presents more questions than answers.

The first question: What again is the problem? The Governor has not identified one with any specificity.

The second: What would be the effects? Local decisions on health care coverage reflect local realities; the Governor has not shown why a statewide plan would (1) cover employees adequately; or (2) save a dime.

And perhaps the most important: We’ve seen this movie once in the last year with the Governor’s Medicaid privatization, and many would have preferred to walk out. So why would we go again?

Perhaps we need to take a deep breath and study the issue first.
The Governor is giving us a solution in search of a problem. There is no problem. He has not identified one — just vague and unsubstantiated concerns that won’t be repeated here because they are vague and unsubstantiated. You have to do better than that, Governor.

Next, we have no specifics from the Governor about his suggested statewide pool — who would run it, what options employees might have, not even what it would cost, or any idea about where the costs would be greater than they are now.

We do have experience with that, in this Governor’s unilateral decision to privatize Medicaid, which has been both costly and disruptive thus far. This experience leaves a serious question whether the state should be rushing into another big change with health coverage that would affect as many as 1 in 7 workers in the state, with no more study than has been apparent.

In fact, according to the Des Moines Register, a big issue with the Governor is making employees pay a greater share of their health costs. What is missing from that concern is the fact that employees have given up pay increases through the years in negotiating the health-benefit arrangement. Will the Governor be permitted to ignore this?
For good context, our 2011 report “Apples to Apples” demonstrates that benefit packages move public employees closer, on average, to the overall compensation of private-sector employees with similar skill sets — though still below private-sector compensation.

If the Governor’s goal is to reduce state expenditures by reducing public employee health benefits or increasing the employee share of costs, it should be recognized that this would widen the compensation disadvantage already experienced by public sector workers.

Many public employers — school districts, etc. — like the ability to offer something that might not cost as much as a straight pay increase, and that is a benefits package that includes health insurance. Where employers and employees agree on such a package, why would the state object?

A responsible approach by legislators would keep all of these considerations in the forefront in discussing any such changes to employee benefits.

owen-2013-57Posted by Mike Owen, Executive Director of the nonpartisan 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.

The hope for nonpartisan dialogue to practical strategies on issues

Editor’s Note: This post ran on Charles Bruner’s blog as “Light at the end of the party conventions.” Bruner is a former co-director of the Iowa Fiscal Partnership, the fiscal policy analysis collaboration of the Iowa Policy Project and the Child and Family Policy Center, two Iowa-based nonprofit, nonpartisan organizations.

By Charlie Bruner

America needs every one of us to lend our energy, our talents, our ambition to making our nation better and stronger —where you can get a good job and send your kids to a good school, no matter what zip code you live in, where all our children can dream, and those dreams are within reach.

When I am President, I will work to ensure that all of our kids are treated equally and protected equally. Every action I take, I will ask myself: Does this make life better for young Americans in Baltimore, in Chicago, in Detroit, in Ferguson who have in every way the same right to live out their dreams as any other child in America?

There is an old saw that says: “I went to a hockey fight and, lo and behold, a game broke out.” I watched much of both political party conventions – and, lo and behold, amidst all the partisan rhetoric and campaigning, at least one common “issue/concern” was raised.

The above are direct quotes from Hillary Clinton and Donald Trump as they accepted their party’s nomination for President. The first paragraph is from Clinton’s speech, the second from Trump’s. Taking them at face value, the challenge is now for a public dialogue to “break out” that begins to build consensus around responses.

The common sentiments these statements express require actions that cannot be achieved by whoever is elected President, through the power of that office alone. Ultimately, as an electorate and as stewards of our future, we need to insist on a dialogue that goes beyond expressing these sentiments to developing practical and proximate strategies — public and private, professional and voluntary — that will enable us to realize them.

In such a dialogue, Democrats may stress the need for public responses that provide additional income and service supports and a proactive government that ensures a living wage to reduce material poverty. Republicans may stress the need for greater personal responsibility and community initiative based upon indigenous leadership that fosters more points of light within poor communities to enhance personal efficacy. In the end, the solution (for reasons of achievable politics and most effective policy) is not a matter of either/or, but of both/and.

These statements should be seen and used as an opportunity for us to insist on further, deliberative dialogue — dialogue that goes beyond sound bite proclamations mapping out a partisan political position. It is incumbent, for our children and our nation, that this dialogue does “break out” in ways that lead to that action, not only at the Presidential campaign level but in our states, communities, and neighborhoods.

At least that’s my story, and I’m sticking to it.

08-Bruner-5464 Charlie Bruner is Director Emeritus of the Child and Family Policy Center, which he founded as he completed 12 years as an elected Iowa state legislator. Prior to that, he received his Ph.D. in political science from Stanford University and has had different stints at both teaching and research. Thus, he brings three dubious backgrounds — academic, politician, and advocate — to his current work as a co-principal investigator for the Learning Collaborative on Health Equity and Young Children (see: childequity.org for his website).

Join us Sept. 15 to celebrate IPP’s 15th anniversary

The Iowa Policy Project is 15 years old and we’re having a party. Join us for our anniversary reception and help us move forward to the next 15!

Bill Stowe on clean water • Peter Fisher on work supports •
and more!

THURSDAY, SEPT. 15 • 6 P.M. • RECEPTION
PRAIRIE MEADOWS CONVENTION CENTER • ALTOONA

Hors d’oeuvres, cash bar — 6 p.m. • Program — 6:45 p.m. to 7:30 p.m.
Tickets $50 per person • Sponsorships available • RSVP TODAY!

Featuring: Bill Stowe, Des Moines Water Works
Hear from the CEO and General Manager of Des Moines Water Works, one of Iowa’s most prominent advocates of clean water stewardship.

Sneak Preview: The Cost of Living in Iowa Part 3 — Work Supports
IPP Research Director Peter Fisher will offer a peek at upcoming analysis of how Iowa can enhance eligibility for child care assistance so that working families are not penalized if they work more or achieve a slight boost in pay.

Special recognition by co-founder David Osterberg of early IPP supporters
Mark L. Smith, G. David Hurd and Fred and Charlotte Hubbell

And a silent auction you won’t want to miss!

RSVP today — download this response form to order tickets or become a sponsor.

INDIVIDUAL TICKETS: $50 per person

INDIVIDUAL SPONSORSHIPS:
LOOPHOLE CLOSER — $1,000 and above
POLICY WONK — $500 to $999
RESEARCH ASSOCIATE — $300 to $499
JOB COUNTER — $200 to $299

ORGANIZATION SPONSORSHIPS:
PIE ENLARGER — $5,000 and above
PLAYING FIELD LEVELER — $2,500 to $4,999

Give us a call at (319) 338-0773 for more information. Thank you!

ALEC Lauds Tax Cutting States

Once again ALEC is pushing its discredited notion that tax cuts are a potent tool to promote state economic growth, defying the preponderance of serious research.

Once again the American Legislative Exchange Council, or ALEC, is pushing its discredited notion that tax cuts are a potent tool to promote state economic growth. While the preponderance of serious research indicates that cuts to a state’s income tax or its business taxes have little positive effect on a state’s economy, and may well prove harmful to the long term prospects for growth and for increased prosperity, ALEC continues to push its anti-tax anti-government agenda. The latest effort is its State Tax Cut Roundup for the 2015 legislative session.

ALEC lays out in this report its principles of good tax policy, based for the most part on standard economic principles of taxation (transparency, simplicity, neutrality, fairness, reliability, and revenue adequacy), plus the need for balance between state and local governments, and its favorite: pro-growth policies, or economic competitiveness. As in other ALEC reports on tax policy, however, the discussion here is exclusively on ALEC’s notion of pro-growth tax policy — tax cuts of pretty much any variety. It is, after all, the Tax Cut Roundup, but there are no corresponding ALEC reports called the “State Tax Fairness Roundup” or the “State Tax Revenue Adequacy Roundup.”

The recent experience of Kansas should be caution enough against tax cutting as economic policy. For advocates of income tax cutting, Kansas was to be the poster child. Governor Sam Brownback signed legislation in 2012 slashing income taxes and cutting the state budget by over 13 percent. The tax cuts had been pushed by Stephen Moore and by Arthur Laffer, author of ALEC’s Rich States, Poor States, who argued they would provide an “immediate and lasting boost” to the economy. But instead of boosting the economy, Kansas GDP actually declined by 1.1 percent in 2013, the first year of the tax cuts, while nationally GDP grew at 1.3 percent. In 2014, Kansas growth once again lagged the nation, 1.4 percent versus 2.2 percent. Estimates for 2015 show the trend continuing, with state GDP growth expected to be just half of the national rate. Read more.

That the underlying ALEC agenda is to shift taxes from upper to lower income groups becomes clear when one contrasts its statement of tax fairness in the State Tax Cut Roundup with the tax policies ALEC actually favors. The principle stated by ALEC is: “The government should not use the tax system to pick winners and losers in society, or unfairly shift the tax burden onto one class of citizens. The tax system should not be used to punish success or to ‘soak the rich,’ engage in discriminatory or multiple taxation, nor should it be used to bestow special favors on any particular group of taxpayers.”

So how do ALEC’s policy prescriptions stack up against the concept of fairness? A state tax system that did not alter the distribution of income, as ALEC supposedly favors, would be a proportional system: It would take the same percentage of income from every income group. However, most state tax systems are regressive: They take a larger percentage of income from lower income groups, because they are dominated by sales, excise and property taxes, and an income tax generally of only modest progressivity.

Yet ALEC invariably applauds income tax cuts, which would make a state’s system more regressive, moving the state further from the goal of neutrality with respect to income distribution. Apparently shifting taxes from upper to lower income groups is the fair thing to do according to ALEC.

 

2010-PFw5464Posted by Peter Fisher, Research Director of the Iowa Policy Project
pfisher@iowapolicyproject.org
Peter Fisher is professor emeritus of Urban and Regional Planning at the University of Iowa. A nationally recognized expert on economic development issues and tax policy, he authored two “Grading Places” books that examined business climate rankings by various organizations, including ALEC. From this research, Fisher and the Iowa Policy Project have developed a new website, Grading the States, at gradingstates.org, to permit timely tracking of such studies and offer context to those wishing to review them. The post above is a version of a recent post by Fisher on the Grading the States website.
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