Unreasonable fear about ‘one-time’ money

Using stimulus funds bridged a gap in revenues and kept Iowa out of a race to the bottom.

Mike Owen
Mike Owen

You hear about it whenever some Iowa politicians get near a microphone to talk about the budget.

Heard above much wailing and gnashing of teeth is a common complaint that Iowa used “one-time money” to deal with recession-driven budget challenges.

Well, thank goodness for (1) that one-time money and (2) the willingness of state leaders at the time, including then-Governor Chet Culver, to spend it.

The Des Moines Register gets it, and isn’t afraid to say so in today’s editorial:

Yes, Iowa did it by shifting money set aside in savings accounts for other purposes, and it used one-time federal stimulus money. That was the right thing to do. The alternative would have been to lay off police officers, teachers and state workers, making the recession even worse in Iowa.

The state is in better shape financially now. It has the money to pay for essential services it has committed to provide to Iowans. The Legislature and the governor should pay to carry out those commitments.

The Iowa Fiscal Partnership (IFP) has pointed out that the American Recovery and Reinvestment Act, (ARRA), the economic stimulus program passed in 2009, was designed to provide targeted, timely and temporary assistance to Americans in the recession. As IPP’s Andrew Cannon noted in a recent IFP report, “Catching Up: Context for 2012 Budget Decisions in Iowa”:

Andrew Cannon
Andrew Cannon

While there is certainly merit in reducing the use of one-time money for the continuing expenses of the state, one-time-fund critics sometimes let strict adherence to that concept get the best of them. For instance, Recovery Act dollars were used precisely as intended: targeted, timely and temporary relief so that states could continue funding critical services, such as K-12 education and health services to individuals and families. State revenues declined precipitously during the worst of the recession; the Recovery Act bridged that drop-off in revenues until a time when revenues improved as the economy regained strength. The same can be said for use of $38.7 million from one of the rainy-day funds since high unemployment and reduced revenues during the year must constitute the rainy revenue day that the fund was designed to cover.

Had the Legislature and Governor Culver chosen not to use the ARRA funds, it is reasonable to assume that the holes created in recession would be left unfilled in better times. This is because one of the priority pieces of legislation passed in 2011 was the creation of a “Taxpayers Trust Fund” to pay for new tax breaks, the fund to be built from revenues coming in at a faster pace than expected. The priority was not to sustain or restore services, let alone enhance them, but to restrain use of new revenues.

Using the ARRA money when it came, for its intended purpose to bridge a revenue gap caused by recession, kept critical services in place when they were most needed, and kept us off the pace of a race to the bottom. Thank you to The Des Moines Register for reminding its readers of that smart public policy.

Posted by Mike Owen, Assistant Director

Quality of life — the path to good jobs and schools

A whopping 63 percent of Iowans voted in 2010 for a constitutional amendment that would dedicate funding to improve Iowa’s waters and land. Now, that is a mandate.

Will Hoyer
Will Hoyer


Governor Branstad wants Iowans to focus “like a laser beam” on jobs and education. If we are to do so, he must get us to examine how we’re managing our precious land and water. He cannot expect to achieve his job goals without those important parts of the picture.

What happens when people don’t want the jobs that are available because the air is so dirty that people get sick? What happens when well-educated, highly qualified job candidates pass up Iowa for another state that demonstrates a commitment to clean water and air? A variety of aspects make Iowa a desirable place to bring a business or a family. Most focus on quality of life.

If our children are educated in world-class schools they will have job opportunities everywhere. Companies across the country and across the world will be clamoring to hire hard-working, well-educated Iowa kids and those kids will have choices. Will they want to live in a state that demonstrates a commitment to clean air and clean water? Will they want a place that invests in parks and recreational opportunities? Absolutely.

As The Des Moines Register has pointed out, Iowa consistently ranks near the bottom in per-capita spending on recreation and conservation.

Politicians often talk of a “mandate” when they win an election with 52 or 53 percent of the vote. Why, then, can they not look back on the November 2010 election and recognize that a whopping 63 percent of Iowans voted for an amendment that would dedicate funding to improve Iowa’s waters and land? Now, that is a mandate.

Nobody will argue against creating jobs or improving education. It is a mistake to assume we can do either without other things that attract new people to Iowa and keep them here.

We educate smart people. If a smart Iowa-educated college grad can choose between a job in an Iowa town where the smell of a large hog confinement or industrial grain processor pollutes the air, or where nobody feels safe getting in the river water that runs through downtown, and a comparable job outside Iowa where clean air and water are the norm, we know what the choice will be.

We must invest in children’s education here in this state but we also must invest in protecting the environment so those children grow up healthy. We must invest in creating good jobs where people can work eight hours a day but we must also invest in protecting the environment where those workers live 24 hours a day.

Posted by Will Hoyer, Research Associate

Wellmark’s ‘uncertainty’ should not affect Iowa’s exchange

In a strong, consumer-oriented exchange, small businesses, individuals and families will want to participate. Why would Wellmark not want a share of that playing field?

Andrew Cannon photo
Andrew Cannon

Any business worth its salt can find a way to make a buck in a market with sufficient consumer demand.

Wellmark’s reported uncertainty in its ability to “break even” in the health reform-created insurance marketplace would seem puzzling for a company with 70 percent of the Iowa market.

According to an Aug. 31 Des Moines Register report (“Wellmark undecided on insurance exchange,” by Tony Leys), Iowa’s largest insurer is unsure it will participate in the health insurance marketplace created by the health reform law, citing concerns about its ability to “break even.”

This marketplace could be the place where as many as 156,000 Iowans* seek to purchase health insurance. Those with household income below 400 percent of the federal poverty line (about $89,000 for a family of four) will receive tax credits from the federal government to help cover the premium cost. And small businesses, which will also be eligible to purchase insurance in the exchange, will receive tax credits if they cover at least half of their employees’ premiums.

The stars are aligned to create consumer demand in the new insurance marketplace. Wellmark’s concern about breaking even probably should not be lawmakers’ first concern. The point of the exchange is to enhance the marketplace, not keep it restricted.

Rather, as we have repeatedly stressed, policy makers need to be focused on how to assure that lawmakers create an Iowa exchange that is fair and consumer-oriented.

Two groups heretofore are woefully underserved by the current health insurance market — individuals and families who don’t receive health insurance benefits at work, and Iowa’s small businesses. The exchange’s structure and governance should assure that Iowa individuals, families and small businesses can find affordable health insurance options.

In a strong, consumer-oriented exchange, small businesses, individuals and families will want to participate. Why would Wellmark not want a share of that playing field?

*Note: Data comes from the 2009 American Communities Survey (ACS), analyzed online using the University of Minnesota’s Integrated Public Use Microdata Series (IPUMS-USA). The ACS is conducted on an ongoing basis by the Census Bureau. Those 156,000 Iowans have household income in excess of 133 percent of the federal poverty level – the cut off point for Medicaid eligibility under health reform.

Posted by Andrew Cannon, Research Associate
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