What smaller government looks like

Maybe you won’t notice cuts like those Lande announced Wednesday. Then again, maybe you want to take the kids to the lake this summer.

Mike Owen
Mike Owen

It was a previous Department of Natural Resources director who delivered the warning.

“I have gotten I don’t know how many complaints from legislators and small business owners about, ‘You used to do this and now you don’t any more,’” then-Director Rich Leopold told The Des Moines Register last year. “[Y]ou want smaller government, this is what it looks like.”

Now, for a fresh look.

On Wednesday, the Register’s Perry Beeman reported that current DNR Director Roger Lande informed his staff that the agency would eliminate more than 100 jobs. The excuse? Lack of funds.

This, at the same time Lande’s boss, Governor Terry Branstad, and state lawmakers are haggling over how much in tax breaks can be built not just into the FY2012 budget beginning July 1, but for the year after that, and structurally in the budget for years beyond.

As the Iowa Fiscal Partnership has pointed out, Iowans value many services that would not be available but for the public structures created by our tax dollars — education, law enforcement, safety-net services, and, yes, environmental quality. When Iowa already has substantially cut services and shown almost no restraint in its giveaways to corporations, some of which are subsidized not to pay any tax, should the DNR cuts be a surprise?

Maybe you won’t notice cuts like those Lande announced Wednesday.

Then again, maybe you want to take the kids to the lake this summer.

According to the Register article, the agency’s stream monitoring coordinator said remaining employees “will struggle to monitor lake and river pollution after the cuts.” So, take the kids — but maybe you’ll be jumping in the lake at your own risk.

Not a bad idea, perhaps, for some folks other than your family.

Posted by Mike Owen, Assistant Director

Tweet

Corporate giveaways: Running like a Deere

Deere has done nothing wrong. But these facts raise seemingly unavoidable questions of public policy, of priorities in spending. Somehow, lawmakers have avoided them.

Mike Owen
Mike Owen

News item: IFP: Research credit showers benefits on non-taxpaying companies:

Rockwell Collins, John Deere and Dupont … were among 133 corporations that paid no state income tax but received checks from the state totaling approximately $43 million. (Newton Independent, Feb. 11, 2011)

News item Feb. 16: Deere reports doubled earnings:

Deere & Co., Iowa’s largest manufacturing employer,  doubled its first quarter profits to $513.7 million, or $1.20 per share from $243.2 million, or $0.57 per share, for the same period last year. (Des Moines Register, Dan Piller blog, Feb. 16, 2011)

The first story cited a report from the Iowa Department of Revenue that shows Deere & Co. clearly reaped a windfall from the Research Activities Credit (RAC). Deere received at least $10.6 million, and quite possibly more, from the State of Iowa in 2010 above what it owed in income tax to Iowa. Deere was among 133 companies that paid no income tax to Iowa but still received checks from the state because their research credits were so large. Over 95 percent of corporate RAC claims were used not to offset taxes, but were paid out as checks to companies with no taxes owed — over $43 million in checks.

Deere has done nothing wrong. It has only taken advantage of special breaks offered by Iowa law. But this raises seemingly unavoidable questions of public policy, of priorities in spending. Somehow, lawmakers have avoided those questions.

Deere’s windfall in 2010 came without any review by the Iowa General Assembly or the Governor. This spending was done through the tax code. At the same time, Iowa school districts dealt with budget cuts, as did other agencies throughout state government. In some cases, property taxes rose because there were — we were told — insufficient state revenues.

The RAC report shows more revenues are available if lawmakers choose to seek them by cutting spending through the tax code. In the case of “tax credit refunds” like the $10 million-plus received by Deere and the $43 million spread across 133 companies, they could be eliminated, the money saved, and not one dime raised in taxes. Even if they were only scaled back, it would save money and cause no tax increase.

And that’s only one “tax credit” program that drains money from the treasury. There are others, and there also are loopholes that lawmakers have refused to plug.

But lawmakers’ choice, to this point, has been to leave that spending alone.

Posted by Mike Owen, Assistant Director

Political debate on steroids strikes out

“Many, it is clear, do not want good information whenever it comes to them, especially if they don’t want to like the source.”

Mike Owen
Mike Owen

The yellowed copy of The Des Moines Register from April 5, 1974, is one of my treasures.

First Time at Bat—Aaron Ties Ruth’s Record” the paper exclaims, beneath a banner headline in all caps: “PUBLIC BARGAINING BILL IS VOTED.”

Truth to tell, I kept the paper because of the Hank Aaron story. Little did I realize that, 37 years later, I’d see a connection between that story and the one trumpeted above it — how times have changed. Then, you didn’t have to worry about whether home-run kings were on steroids, let alone political discussions. Now, both are suspect.

The Iowa Policy Project has worked hard to correct the latter, and today put out an important report that knocks down myths about public employee pay and benefits. These myths feed political narratives that are built on foundations of polling data, marketing and talking points, with facts entering the discussion only where convenient. They defy a more honest approach, of gathering facts and then making a determination of what they show.

The 1974 Register story about the bargaining debate is interesting. It shows a bipartisan decision under a Legislature and Governor of one-party control — Republican — agreeing on a public-employee bargaining system that has stood the test of time. Neither side on a bargaining table really liked it then or now, but it reflected some sense of balance. Now, it is being challenged, and thrown into the mix of the discussion is the public employee pay mythology.

Where is the balance we could find four decades ago? Too many in politics today want their thumb on the scale, and too many are used to seeing it — so much that good research starts out tainted, just like a clean 420-foot home run may be. IPP’s report by Andrew Cannon today is an example; show people the data, and some will dismiss it without reading it because the headline doesn’t fit the world view they’ve bought into.

One commenter on the Register’s website today — didn’t have that 37 years ago — asked why a nonpartisan group would put out a study to coincide with a rally on labor rights at the Iowa Capitol — this of course would make it clearly suspect.

Of course, it also is most timely when people are talking about these issues, and when some are busy spreading bad information. Or, maybe we should have waited until after new laws were passed based on bad information. Many, it is clear, do not want good information whenever it comes to them, especially if they don’t want to like the source.

Posted by Mike Owen, Assistant Director

What? Services attract businesses?

What is clear is that you cannot have tax cuts and have the services, too.

Mike Owen
Mike Owen

Why is it that the mantra in real estate is “location, location, location,” and the political mantra in economic growth is “taxes, taxes, taxes”?

The political mantra, which crumbles regularly when put to serious analysis, also takes hits when the benefits of Iowa’s “location, location, location” are seriously put in jeopardy. Case in point: the drive to gut Iowa’s universal voluntary preschool program.

On Monday in the Iowa Senate Education Committee, Elliott Smith of the Iowa Business Council told lawmakers that the preschool program helps attract companies and employees, and will pay off in increased productivity by students.

Now, no one is under any illusions here. The business lobby will also keep pushing for tax cuts. Its influence is the fundamental reason corporate tax giveaways are out of control. The Legislature has not cracked down on them, and has rejected serious attempts to do so, cheered on by the business lobby. This fiscal negligence is costing Iowa tens of millions of dollars every year, shaking the foundations of  critical public structures such as education that support economic growth and opportunity for all Iowans.

What is clear, however, is that you cannot have tax cuts and have the services, too. And if research, and common sense — as illustrated by Mr. Smith’s support of Iowa’s preschool program — make a clear case for services, then tax cuts should simply be off the table. We cannot afford new tax cuts, let alone the gigantic giveaways already in place, and they don’t really improve the Iowa economy even if we could.

Posted by Mike Owen, Assistant Director

‘Shared sacrifice’ — for real?

Will “shared sacrifice” include the kind of balance we need in sustainable budget decisions that reflect Iowa values?

Mike Owen
Mike Owen

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.

Posted by Mike Owen, Assistant Director