Improve water quality funding equitably

Expand existing state programs to improve waters and overall balance in Iowa tax system.

Iowa has an opportunity to advance equity while improving water quality. The constitutional amendment voters overwhelmingly passed in 2010 gave us the option to fund water quality programs with the sales tax, but it’s only a starting place, and we need to explore more equitable funding solutions.

The sales-tax option needs to be paired with options that enhance equity in the way we fund all public services. A comprehensive approach adds other sources — even as we recognize that Iowa policy makers have refused the voters’ clearly stated desire for action.

A new IPP report offers policy options to improve water quality in an equitable way. Iowa voters, in a 2010 statewide referendum, showed their willingness to raise the sales tax in order to fund water quality efforts. The trust fund they authorized remains empty today, nine years later.

As we noted in an April 2019 report, Iowa water quality funding is inadequate.[1] Some will claim new water-quality funding passed in 2018, but it was at best window dressing. New programs had no new revenue source and added little to the mainly federal nutrient reduction funding that exists now.

The sales-tax option remains on the table and is promoted by serious advocates for action. The challenge is to find a way to offset the impact of a sales-tax increase on lower- and moderate-income households. Already, those lower-income families pay the most of any income group, as a percentage of their income, on sales tax. This drives the overall regressive nature of Iowa’s state and local tax system.[2] Analysis from the Institute on Taxation and Economic Policy (ITEP) shows why a tax on purchases hits lower income families harder (see graph). Lower-income families spend most of what they earn, and they spend a large share of it on goods and services that are subject to the state sales tax. This is less the case the higher you go on the income scale.

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How to fix it? We see two immediate options using existing programs: Boost the Earned Income Tax Credit (EITC) to help working families, and expand Disabled and Senior Citizen Property Tax Credit and Rent Reimbursement Program.

How to pay for it? Use at least part of the revenue from a 1-cent sales tax increase. The constitutional amendment directs three-eights of the first cent to the clean water and recreation trust fund. The key is what happens with the other five-eighths.

According to ITEP data, increasing the state EITC to 20.5 percent of the federal credit (from the current 15 percent) would fully offset that average $124 yearly sales-tax increase for a working family eligible for the EITC. The Rent Reimbursement program can contribute for other low-income families. Those two steps — EITC and Rent Reimbursement — would cost an estimated $30 million,[3] only a small share of the “extra” sales-tax revenue from a 1-cent increase

Taxing the polluter is another policy option for addressing a broader equity concern. Fertilizer used in the agricultural sector is the source of the contamination, yet it is exempt from the general Iowa sales tax. Removing the fertilizer exemption would bring a substantial source of water quality funding: about $110 million annually.[4]

In an already tax system favoring the highest earners, raising the sales tax is not a preferred option. But it can be improved and turned into an opportunity to both improve services and the overall balance in Iowa’s tax system. Those interested in both equity and clean water could embrace that opportunity.

[1] David Osterberg and Natalie Veldhouse, “Lip Service: Iowa’s Inadequate Commitment to Clean Water.” April 2019. Iowa Policy Project. http://iowapolicyproject.org/2019docs/190424-WQfunding.pdf

[2] Institute on Taxation and Economic Policy, “Iowa: Who Pays? 6th Edition.” October 2018. https://itep.org/whopays/iowa/

[3] EITC: $124 for each of the 209,000 taxpayers who receive this credit equals $25,916,000. Renters’ credit: $124 for each of the 32,000 who receive the credit equals $3,968,000. Total about $30 million for the two programs.

[4] $1,845,469,000 X 6 % = $ 110,728,140. The total in the 2017 Census of Agriculture was much smaller than the 2012 figure $2,587,059,000.

 

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Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

Water funding exposes shallow commitment

Recent initiative fails to meet needs to improve Iowa water quality

Voters have indicated their support for increasing funding to improve water quality in Iowa, earmarking part of the next sales tax increase for clean water. So far, the protected trust fund for outdoor recreation and water quality remains empty.

Our latest water quality report addresses these issues:

  • What has been the state’s spending commitment to water quality over the past 15 years?
  • How much of state and federal dollars goes to reduce nutrient pollution in Iowa?
  • How much spending is needed to make meaningful water quality progress?
  • How can the state raise adequate revenue to make an impact?

We identified 16 primarily state-level programs that fund water quality improvements. Funding in the most recent year hasn’t even reached 2008 to 2009 levels.

The Nutrient Reduction Strategy (NRS), implemented in 2013, was created to reduce nutrient pollution that creates a hypoxic dead zone in the Gulf of Mexico. The strategy was advertised as a new commitment by the state to reduce Iowa’s pollution of our own rivers and the Gulf of Mexico. Even with the NRS, we find that state water quality spending has dropped off and struggled to return to pre-2008 recession levels.

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The Water Resources Coordinating Council is tasked with overseeing NRS progress, and measures the financial resources dedicated to reducing nutrient pollution from the state of Iowa to the Mississippi River system. The most recent NRS report shows $512 million was spent in state and federal dollars on Iowa nutrient reduction in 2017.[1] However, the state is largely riding the wave here; the real money comes from federal funding.

While it was assumed that adopting the NRS would increase Iowa’s commitment to water quality, it did not — though at the same time pollution has increased. Recent research indicates Iowa’s share of nutrient loading into the Mississippi and Missouri river watersheds actually increased between 2000 and 2016.[2]

In 2018, Governor Kim Reynolds signed a bill that appropriates $282 million to water quality efforts over the next 12 years.[3] This gesture compares poorly even to existing — and lacking — government water quality spending. Iowa is nowhere near to what is needed.

How much money does it really take to make a meaningful impact on Iowa water quality? The NRS document, written mainly by Iowa State University, estimated the cost of reducing nonpoint contamination under three scenarios. All were in the billions of dollars.

The Iowa Soybean Association estimates for nutrient reduction costs in just one river basin, the Lime Creek Watershed,[4] implies a statewide need of $1.4 billion a year for about 15 years. These estimates demonstrate the inadequacy of the 2018 spending bill.

Current investments are not resulting in discernible improvements in Iowa’s water quality. Two options available for generating the amount of revenue needed include removing the exemption of fertilizer used in agriculture and taxing it like other commodities.

A second option is fully funding the environmental trust that voters approved in a statewide referendum in 2010. Estimated revenue from either of these sources would bring more than $100 million per year. We need to tap new sources to make our state commitment to water quality equal to the task. Until then, we are only paying lip service to the problem.

[1] Iowa Water Resources Coordinating Council, “Iowa Nutrient Reduction Strategy 2017-2018 Annual Progress Report. Page 9.

http://www.nutrientstrategy.iastate.edu/sites/default/files/documents/NRS2018AnnualReportDocs/INRS_2018_AnnualReport_PartOne_Final_R20190304_WithSummary.pdf

[2] Christopher Jones, Jacob Nielsen, Keith Schilling, & Larry Weber, “Iowa stream nitrate in the Gulf of Mexico.” April 2018. PLOS. https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0195930&type=printable

[3] Brianne Pfannenstiel, “Reynolds signs water quality bill, her first as governor.” January 2018. https://www.desmoinesregister.com/story/news/politics/2018/01/31/reynolds-signs-water-quality-bill-her-first-governor/1082084001/

[4] Iowa Soybean Association Environmental Programs & Services, “Lime Creek Watershed Improvement Plan: A roadmap for improved water quality, sustained agricultural productivity & reduced flood risk. N.D. https://www.iasoybeans.com/search/?q=lime+creek

 

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Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

A Roadmap for Opportunity: It’s Time to Put Iowa on the Right Path

At this critical juncture, Iowa can take the high road to shared prosperity, or go down a dead end.

181009-roadmap-logoIowa can unlock the potential of each individual and allow all workers to share in the fruits of their labor by making public investments in the foundations of a strong economy. Well-resourced schools, access to higher education, decent wages and protections, economic supports, clean water and renewable energy, and a cleaned-up tax system, all can pave the way to opportunities and broadly shared prosperity that Iowans want.

Unfortunately, policy choices have put us on a road that prioritizes corporate profits over worker wages and corporate tax cuts over the public investments that allow for a strong, sustainable economy. We are at a crossroads and our policy choices today and in the near future can either pave the path to economic opportunity in every corner of our state, or create roadblocks to prosperity for everyday Iowans.

Our people-first roadmap offers the way forward. It lays out the evidence-based, responsible solutions to our state’s most pressing issues, pinpointing several stops along the way that would mark progress for our state, such as:

pinCreating the workforce of our future and ensuring our children reach their potential. Iowa can and should ensure K-12 schools receive the funding they need for every child to succeed, no matter where they live. We also must restore our commitment to higher education with more state support, lower tuition, and aid to reduce student debt.

pinBoosting economic security and supports for working Iowans. Giving Iowans’ lowest wage workers a long overdue raise, ensuring workers get paid what they’re legally owed, shoring up our system of compensation for workers who get hurt on the job, and restoring worker rights to collective bargaining can ensure that all Iowa workers are getting a fair deal. Iowans also need a boost in child care assistance, which can make or break the ability of a family to work.

pinRestoring a public commitment to the health and well-being of every Iowan, particularly seniors and people living with disabilities. Reversing the privatization of Medicaid and pursuing cost savings through innovation and efficiency rather than reduced services and worker wages are critical steps to ensuring access to health care for all Iowans — now and in the future.

pinEnsuring clean water and renewable energy for a healthy, sustainable Iowa. We can and must balance the state’s need for clean and abundant water with our agricultural economy by reducing water pollution. Likewise, Iowa should restore its legacy of leadership in renewable and efficient energy in order to create a cleaner, greener state for future generations.

pinCleaning up and restoring balance to the tax code. Right now, Iowa asks the lowest income Iowans to pay a higher share of their income in state and local taxes than those with the highest incomes. We can fix this by cleaning up corporate tax loopholes that squander precious public dollars that could otherwise be invested in shared opportunity for Iowans.

Iowa is at a critical juncture. We can take the high road that leads to progress and shared prosperity, or go down a dead end. The policies in this roadmap provide a clear route to a stronger Iowa. For more detail on each stop on the roadmap, please click here.

REAP: Long on Promise, Short on Support

REAP is kept well short of the $20 million annual support that had been envisioned — a nearly 25-year trend that keeps REAP well short of its potential.

When Iowa’s Resource Enhancement and Protection program (REAP) was established in 1989, the Legislature set its spending authority at $30 million, but funded it at only half that — $15 million. The next year, funding (FY1991) was set at $20 million, an amount we thought was sustainable.

It never again reached that level — though lawmakers attempted to set it at $25 million for the 25th anniversary of the program in the just-completed fiscal year. Governor Branstad vetoed $9 million that year, leaving REAP at $16 million for FY2015, where it stands for FY2016 as well.

Ironically, the 2014 veto came as the state was promoting its voluntary Nutrient Reduction Strategy. Twenty percent of REAP goes to these programs. The veto reduced funds available to help farmers implement new nutrient runoff reduction and filtration measures that could contribute to the goals of the nutrient strategy. Actions like these contributed to a long-term REAP shortfall of more than $220 million.

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See our new Iowa Policy Project report, REAP: A Case Study of Stewardship. With a more clear understanding of how REAP can make a difference in our quality of life, all Iowans may evaluate how it should be funded. In practice, REAP is kept well short of the $20 million annual support that had been envisioned — a nearly 25-year trend that keeps REAP well short of its potential.

IPP-osterberg-75Posted by David Osterberg, IPP co-founder and environmental researcher

‘Choose 2’ to reduce water pollution

“Choose 2” is a simple but effective concept, but keeps a voluntary component to a solution to a difficult issue. Isn’t it worth a discussion?

Where Governor Branstad chooses to promote confrontation, Iowa legislators could be looking for an opportunity to stop chronic pollution of Iowa’s lakes, rivers and streams.

The Governor spoke of “war on rural Iowa” after the Des Moines Water Works announced its Board of Trustees voted to issue a notice of intent to sue the supervisors in Sac, Buena Vista and Calhoun counties “in their role as governing authority for 10 drainage districts that are discharging pollutants into the Raccoon River,” threatening Des Moines’ drinking water.

There doesn’t have to be “war.”

The answer is first an acknowledgment that the water problems are real and can be addressed without causing great pain — financially or in health — to anyone inside or outside city limits, upstream or downstream.

Supporters of the new Nutrient Reduction Strategy (NRS), which was hailed as a promising effort to improve Iowa water quality by reducing nutrient pollution from the state by about half, plead for more time. A century is enough, say detractors. Agricultural interests have had about that much time to use totally voluntary approaches and nutrient pollution is now a serious problem.

At least part of the answer could well be “Choose 2,” which stems from the July report from the Iowa Policy Project, “A Threat Unmet: Why Iowa’s Nutrient Strategy Falls Short Against Water Pollution.” The IPP report offered six ideas to make a voluntary system better.

The list is not exhaustive, but the proposals are serious and science-based. The “Choose 2” concept is part of the list, and it is simple: Mandate that every producer, farm owner or renter, adopt two runoff-reducing steps — but let the farmer choose which steps.

For the many farmers already taking meaningful steps to reduce nutrient runoff, there is no impact. They have already started to reduce their pollution and can show they have.

Those who are not currently taking any steps, and thereby causing the lion’s share of the problem, would have to do something. But they would get to choose from among meaningful approaches that have been promoted by the Iowa Soybean Association, such as cover crops, grassed waterways, contour farming, terraces, bioreactors and conservation uses for oxbows. Producers could take two actions that best fit their operation, land and economic situation.

The proposal is simple but effective, and keeps a voluntary component to a solution. Isn’t it worth a discussion? Isn’t it better than knowing we’re allowing the poisoning of our water? Isn’t it better than just calling water pollution someone else’s problem and letting it go?

Posted by David Osterberg

IPP-osterberg-75David Osterberg, co-founder of the nonpartisan Iowa Policy Project, is a former state legislator who chaired the House Agriculture Committee and is a professor in the Department of Occupational and Environmental Health at the University of Iowa. Contact: dosterberg@iowapolicyproject.org.

See our report: “A Threat Unmet: Why Iowa’s Nutrient Strategy Falls Short Against Water Pollution,” at www.iowapolicyproject.org.

See similar versions of this piece as guest opinions in:

The Sioux City Journal, Feb. 5, 2015: “Choose 2” would provide more protection for water in Iowa

The Cedar Rapids Gazette, Jan. 31, 2015: Iowa should “Choose 2” to reduce water pollution

Tired of waiting, Des Moines Water Works speaks for all Iowans

Why should no one be surprised by Des Moines Water Works going to court? It is because the Governor and his administration have failed to act.

Last week, Des Moines Water Works’ Board of Trustees voted to issue a notice of intent to sue the Board of Supervisors in Sac, Buena Vista and Calhoun counties “in their role as governing authority for 10 drainage districts that are discharging pollutants into the Raccoon River,” which threaten Des Moines’ drinking water.

Why should no one be surprised by Des Moines Water Works going to court? It is because the Governor and his administration have failed to act.

The new Nutrient Reduction Strategy (NRS) was hailed as a promising effort to improve Iowa water quality by reducing nutrient pollution from the state by about half. Research behind the strategy showed that 90 percent of the nitrate pollution coming from Iowa came from nonpoint sources, mainly agriculture.

Despite this, state policy was to require cities and towns and industries to reduce their contribution to the nutrient pollution — but to let agriculture producers do whatever they wanted. For them reducing the pollution was voluntary.

An Iowa Policy Project report last July demonstrated the shortcomings of a voluntary approach and suggested a few ways to at least give the new strategy a chance. Had these suggestions been adopted maybe the Des Moines water utility would not have been forced to go to court. The following are what the report found as shortcomings of the NRS:

Insufficient funding — The year the NRS was adopted the Legislature responded with more than $20 million of new funding to support farmers who wanted to introduce new methods to reduce their pollution. In a bipartisan effort, legislators agreed to improve spending again in 2014. However, Governor Terry Branstad vetoed $11 million in similar funding and another $9 million in REAP natural resources and recreation funding — 20 percent of which would have gone to efforts to reduce soil loss that contributes to pollution of our rivers.

Insufficient monitoring — The state has supported more than a dozen efforts by local producers and ag businesses to work to improve soil and water protection practices in their own small section of a stream. This is a wonderful opportunity to do water testing to see if the new emphasis is doing any good. Yet, monitoring is not required for this expenditure of taxpayer dollars.

Pick two — The Iowa Soybean Association, the one commodity group that seems to take an interest in improving water quality, had supported six examples of methods to improve water quality, such as grassed waterways in fields and planting cover crops to follow corn and soybean crops. Our report suggested that each farmer voluntarily adopt any two of these measures. Not all measures would necessarily be best for each producer but two surely would work. We would let farmers decide which research-backed approaches to use.

Set benchmarks and a timeline — There is no timeline for the NRS to accomplish its goal of reducing nutrient pollution by nearly half. The Water Resources Coordinating Council, a voluntary citizen group that is to ride herd on the NRS, has never been allowed to vote on a timeline. Iowa’s Secretary of Agriculture is not interested in setting dates.

Will it take 100 years to accomplish the task? We don’t know. And Des Moines Water Works, standing up for all of Iowa, is reminding us all that we cannot wait.

IPP-osterberg-75Posted by David Osterberg

David Osterberg, co-founder of the nonpartisan Iowa Policy Project, is a professor of occupational and environmental health at the University of Iowa.

Stop politicizing water quality

If you are promoting a voluntary system to reduce nutrient runoff, shouldn’t you make sure farmers have resources to put sensible measures into practice?

Water quality in Iowa is so bad that any new initiative to improve our waters is probably a good thing. That said, Iowa farm groups’ new initiative to take action on agricultural pollution of our waters comes with a troubling rollout.

Making the announcement with Governor Branstad not only politicizes water quality, something that should be above politics, but masks the governor’s own decision this year to delay action.

The Governor’s veto of $11 million for water quality — funding passed by a divided legislature — makes an important statement about water quality. In addition, the governor also vetoed $9 million in funding for the REAP program, which is used by counties and cities to acquire and protect natural areas and to preserve Iowa’s environment.

Twenty percent of REAP goes to farmers to improve soil and water practices. If you are promoting a voluntary system to reduce nutrient runoff, shouldn’t you make sure farmers have resources to put sensible measures into practice?

The new group established to improve water quality needs to be taken seriously by the environmental community and by all Iowans. But this rollout does not engender trust.

The Iowa Policy Project recently released a report on water quality in Iowa. [See A Threat Unmet: Why Iowa’s Nutrient Reduction Strategy Falls Short Against Water Pollution] We showed that the addition of six new policies to the state’s new Nutrient Reduction Strategy would make it possible for the strategy to succeed.

One of those policies is the kind of effort the new farm group plans to push — bringing attention to the problem. A second policy is more funding, and farm group muscle could improve the chances in the Legislature. However, even if the Legislature acts, as in the 2014 session, legislation still has to get by a governor’s veto.

Maybe the best starting place to build broad support would be to invite an environmental group to the table, rather than a politician in the middle of a heated campaign. We know plenty who could help.

IPP-osterberg-75 Posted by David Osterberg, co-founder of the Iowa Policy Project