Follow BFIA on Twitter
Blog for Iowa Archives
Blog for Iowa Categories
Search BFIA by Date
February 2017
M T W T F S S
« Jan    
 12345
6789101112
13141516171819
20212223242526
2728  

Media Matters for America is a Web-based, not-for-profit, 501(c)(3) progressive research and information center dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media.

Fight Media Bias

Iowa

Iowa Rapid Response Action

First responders to biased, imbalanced or factually inaccurate media coverage

Iowans for Better Local TV


National

FAIR: Fairness & Accuracy in Reporting
FAIR is a national media watch group that offers well-documented criticism of media bias and censorship

Free Press

News Corpse

Prometheus Radio Project

Radio for People

Save the Internet

Save the News

Iowa Policy Project

IPP Sponsors Two Events Exposing ALEC

A Legislator for Every Corp.

With all the damage ALEC is wreaking in Iowa these days it may be a very good time to make sure that everybody understands just what ALEC (American Legislative Exchange Council).

As so often happens in Iowa during a time of great stress and change our friends at the Iowa Policy Project (IPP) are ahead of the curve. On March 6th and 7th IPP will be sponsoring an event discussing ALEC and their brother organizations on the evening of March 6th and March 7th.

The March 6th event is in Des Moines:
Time:      6:30 to 8PM
Place:     Public Library 1000 Grand Ave., Des Moines.
https://www.facebook.com/events/173083723192845/

The March 7th event is in Iowa City:
Time:      7 to 8:30PM
Place:     Shambaugh Auditorium on the Pentacrest at the U of Iowa
https://www.facebook.com/events/124744924714627/

Find out what is behind the union busting, the cutting of education, the “shoot your neighbor” laws and the voter suppression laws.

It will be well worth your time.

SCREWED

Republicans That Voted Against Iowa Workers

I write this just after learning that the Iowa legislature has set the state back about a century as they strip public unions of almost all rights they have in the workplace.

Republicans have their usual BS reasons why it was such a great bill – efficiency, blah, blah, saves money, blah, blah. All of these reasons have been refuted by economists. Iowans called en masse to oppose this bill. But all that means little to nothing to Republicans. They don’t have the 2 million or so Iowa voters to answer to. Nope, they answer to Charles and David Koch and the other members of ALEC.

In what had to be one of the oddest scenes in a whole strange week. Republican legislators went behind closed doors to get a pep talk from Wisconsin’s big union buster and puppet of the Koch Brothers, Scott Walker. This is time that could have been used listening to constituents. I jest of course. They don’t care about constituents. They care about Koch Brother’s money.

Rick Smith at the Iowa Daily Democrat has a great story that lists some of the major donors to Iowa Republicans through a Koch operation. For Republicans these are the people they work for.

Nor do they worry about being re-elected. The next order of business will be to restrict voting. I suspect they will really clamp down on student voting and make it much harder to vote absentee.

Busting the unions will most likely have a very deleterious effect on Iowa’s economy as pointed out in this study by Peter Fisher of the Iowa Policy Project.

Will businesses worry about the loss of business due to the cuts Iowa’s public sector workers will suffer? Well, then it is time for more tax cuts! Sadly these tax cuts may not do a lot of good for small businesses in small town Iowa but then someone has to take one for the team and I guess you were chosen.

And for an extra kick in the teeth, expect congressional Republicans to repeal and not replace the ACA. They have a promise of huge tax cuts for the wealthy and that is one promise they will most likely keep. Without the ACA the cost of health insurance will go up across the board to cover the cost of care for those who are no longer able to get insurance after the ACA is repealed.

So the state workers will get increasingly lousier insurance to “save money.” (remember those tax cuts? That was money.) Therefore the burden of higher copays and deductibles will fall back on union workers who will have no power to bargain.

Since this affects about 15% of Iowa workers, expect it to make a noticeable dent in our economy., especially in the small towns Iowa Republicans claim to love so much.

I frequently heard this fall how union members in Iowa were turning out for Republicans because they were going to shake things up. Well they did, didn’t they? Republicans never really told you what they were going to do.

However, if you are a working person and a union member you should have learned by now to always ask yourself when a Republican says he or she is going to help you out – Just exactly when has a Republican ever helped a working person out? I can’t remember a time, but then I have only been around about seven decades.

Iowa Republicans will probably get a special mention at the summer ALEC meeting in Denver next July 19th – 21st.

Perhaps the worst part of all this is that reversing insanity like this is not as simple as just voting for Democrats. Besides a massive turn in the legislature we also need a new progressive governor. Those have been a rarity in Iowa. Remember, voting will soon be different also. In power grabs like this, one of the most important things to do is to stack the deck in favor of your side.

So sad to see this happen to what was once a wonderful state full of wonderful and thoughtful people.

Busting Iowa’s Public Unions


(2 minutes)

Looks like Republicans will finally achieve one of Terry Branstad’s dreams: public unions are on the verge of being effectively destroyed in Iowa.

The Iowa Policy Project did an analysis of the effects of the republican attacks on collective bargaining. While some legislators no doubt deeply believe that they are serving a major smack-down to unions that are out of control and way overpaid, they seldom think of the ripple effects.

As IPP notes the ripple effects will be especially felt in rural areas where state and local governments are some of the best employment opportunities in this areas.

Public employees are a significant share of the Iowa workforce and live and work in every Iowa county, from the most urban to the most rural. Of the nearly 1.6 million nonfarm payroll jobs in Iowa, about 1 in 7 jobs — 238,500 — are in state and local government. These workers are important to the state’s economy, as taxpayers supporting local schools and state and local services, and as consumers supporting local businesses and other private sector jobs.

Potential impact of changes in a law directly affecting the working conditions of such a large number of Iowans, who are engaged in every aspect of essential public service from the local to the state level, will be significant and widespread. From snowplow drivers to nurses, teachers to custodians, police, dispatchers, fire fighters, county clerks, librarians, social workers, corrections officers, paraeducators, and many other public employees in communities across Iowa could see changes in their pay, benefits and working conditions. Such changes would, in turn, have consequences for local economies, public services, and Iowa’s labor market as a whole.

New limitations on collective bargaining predictably opens the door to erosion of wages, benefits, and working conditions in public employment, and corresponding spillover effects of downward pressure on wages and working conditions in the private sector. Such labor market effects have become evident in Wisconsin five years after dramatic collective bargaining changes were enacted, and lawmakers in Iowa should be wary of the statewide economic impact likely to accompany any such changes here. Since 2011, Wisconsin has fallen to 40th of 50 states in job growth, and 42nd in wage growth.[3]

Any decline in the number or quality of public sector jobs will have a disproportionate effect on Iowa’s rural communities because, as the USDA notes, the public sector is a “major source of earned income in rural areas” that tend to attract far fewer of the financial, professional, or information service activities concentrated in urban areas.[10] Eroding the quality of public sector jobs in Iowa will further exacerbate recent effects of unprecedented declining public-sector employment levels following the last recession, which USDA data suggests are already causing negative effects in rural counties, along with negative multiplier effects on private-sector employment.[11]

The article goes into much greater detail documenting the potential effects. The point is simply this: Unions have not caused any problems in the Iowa economy. They do not exist in a vacuum and the huge changes to the current system that will result in negative impact on the workers will have a great effect on the Iowa economy as a whole.

Drastic changes like this dovetail nicely with Republican long term goals of destroying unions. The major reason behind the destruction of the unions is the unions role as the main base for the Democratic Party and their legally recognized role as bargaining units. As bargaining units unions were once able to help the common worker achieve middle class and dignity.

Since unions were given legal backing during the New Deal, Republicans have had unions in their legislative sights.

Republicans have used a vast amount of lies to push for the end of unions. Now they are within grasp of that goal. This has been one of the main reasons that businesses and corporations have backed Republicans. Without legal recognition of unions, corporations believe that their profits will soar as they can get labor on the cheap. This is of course the logic behind moving their manufacturing offshore – cheap labor.

What they forget is that in order to sell their widgets and other crap, they must have customers. As wages stagnate and even depress, as other fixed costs such as health insurance and housing squeeze the family budget even more, the customer base is drying up. As with many things the small business person is hit first.

Nothing happens in a vacuum.

Kitchen Table Issues And The Iowa Legislature

Iowa Capitol

Iowa Capitol

A quite disappointing session by most any standards. The legislature did little to give Iowa’s middle class and poor hope that there would be any help coming their way. Republicans in the legislature were able to keep some of the tax cuts that Governor Branstad bestowed on businesses while the legislature was out last fall.

So when Iowans sit at their kitchen tables to talk of finances, their hopes for them and their children, their health situations and the world situation – the kind of things families talk about – they must look at their leaders in Des Moines and just shake their heads wondering what the hell are they doing.

The cost of higher education will probably go up in Iowa thanks to the legislature while classrooms for the K-12 will possibly get a bit more overcrowded as Iowa continues its streak of underfunding education. Hopes of rising wages among the poorest in Iowa were once again dashed as there would be no talk of raising a minimum wage that is set at the lowest possible wage in the country.

On the good side, at least the legislature did not fall for the Governor’s little scheme to slowly starve public schools by cutting into the sales tax stream earmarked for schools. However, the other side of that coin is that the water pollution problems that Branstad’s little scheme was supposed to address remains untouched.

Once again Iowa’s Fiscal Partnership has a great summary of the recent legislative session here.

Not mentioned in there is Republicans in the legislature’s totally gutless approach to legalizing medical marijuana. Seems like it should be a simple project for the legislature to clean up the mess they made a couple years ago when they rushed a medical marijuana bill through at the end of the session. With the glare of media focused on the truly sad stories epileptic children, the legislature passed a bill that allowed the use of medical marijuana but not its purchase or possession.

When the problem was discovered rather than fix their mistake, Republicans decided this was a great place to make a really strange anti-drug stand. So for two consecutive sessions they have worked to once more make Iowa the butt of jokes. While they dither children with epilepsy will be seeing their access to cannbidiol oil expiring at the end of June.

The Iowa legislature is in desperate need of a major makeover this fall. We need adults who will address the needs of real Iowans, not a legislature beholden to ALEC.

Iowa Jobs Far Short of Governor’s Goal

IPP-webbanner-draft5

IWD presentation promotes bogus job growth number
Statement by Mike Owen, IPP Executive Director
MONDAY, NOVEMBER 30, 2015

Editor’s note: When a story on the radio presented the Governor’s number as news last week, I figured I’d better seek out the Iowa Policy Project for the truth.

Basic RGB

IOWA CITY, Iowa (Nov. 30, 2015) — The Iowa Policy Project today issued a statement from Executive Director Mike Owen regarding job growth claims offered by Iowa Workforce Development in a public budget hearing in Des Moines:

Today, during its budget hearing before Governor Branstad, Iowa Workforce Development promoted a bogus picture of job growth in our state. IWD Director Beth Townsend owes it to the people of Iowa to retract this inaccurate picture.

Without repeating the error promoted in the IWD presentation, we would make two critical observations:

First, the actual number of jobs added in Iowa since January 2011 is 101,700
(emphasis mine), according to the latest actual data. This is a full accounting of jobs added and jobs lost in all major job sectors tracked through the official Current Employment Statistics, available on the IWD website by copying and pasting this link into your browser: iwin.iwd.state.ia.us/pubs/ces/nonseasonal.xlsx.

Second, it should be no surprise that Iowa’s economy has fallen far short of the Governor’s ambitious goal of 200,000 new jobs in five years. Iowa jobs have risen at a pace of fewer than 2,000 jobs per month for five years. Monthly job growth would have needed to average 3,300 for the goal to be met.

The stubbornly slow pace of job growth has kept Iowa from full recovery from a recession that ended six years ago, before the Governor took office. While in overall numbers we have gained more jobs than the number lost during the recession, Iowa remains short of the number needed to keep up with population growth. Compared with the start of the recession, we are still nearly 35,000 jobs behind on that measure — a far more accurate sense of the condition of the Iowa economy at the end of 2015. (emphasis mine)

By contrast, the “gross gains” measure added to the IWD monthly nonfarm jobs spreadsheet early in the Branstad administration is a political contrivance. It has nothing to do with the actual state of employment in Iowa, and is plainly bogus math. It is solely about politics, and it has no place in official Iowa Workforce Development spreadsheets or presentations.

For more information about Iowa jobs, we encourage you to visit our website, and review our monthly Iowa Jobwatch — for a look at the relevant numbers. Find the latest Iowa JobWatch report at http://www.iowapolicyproject.org/IowaJobWatch.html.

IPP: Branstad’s Administrative Tax Cut For Businesses

branstad

If you are looking for solid, fact based opinions on what effect Iowa’s fiscal policies will have in the real world before they are enacted one of the best sources around is the Iowa Policy Project.

Once more under the guidance of Terry Branstad, Iowa is embarking on some new territory in the fiscal arena. Normally fiscal matters are a part of the budgeting powers that are held by the legislature. There is good reason for that. If the budgeting powers were held by one person, then that person would be hard to control whatever party that person is a member of. Bufgeting includes taxing powers. One could easily see that one person exercising budget and tax powers could easily reward friends and punish enemies without any checks.

This is pretty much what Terry Branstad did a couple weeks ago when he unilaterally interpreted a clause in the Iowa tax code to give something like a $40 million gift to the business community. This took place about 3 months after Branstad line item vetoed a $50 million one time expenditure that the legislature approved for Iowa schools. It looks like Branstad is running the budget on his own with schools being punished and businesses getting rewarded.

So we turn to Iowa Policy Project for some insight. From Research Director Peter Fisher we see in brief that a tax cut is not good for Iowa:

The administration’s proposal to create new sales tax exemptions for Iowa businesses is unnecessary, expensive and counterproductive. The state can ill afford another tax break that will harm essential state services while producing little or no economic benefit.

State and local taxes have little effect on business location decisions
State and local taxes are less than two percent of total costs for the average corporation. As a result, even large cuts in state taxes are unlikely to have an effect on the investment and location decisions of businesses, which are driven by more significant factors such as labor, transportation, and energy costs, and access to markets and suppliers.

Enacting a subsidy through administrative rules guarantees complete absence of evaluation and accountability
While the sales tax break has been promoted as an economic development incentive, creating it by administrative rule eliminates even the minimal level of accountability established by the Legislature for the periodic review of tax credits. There will be no review, no evaluation of its effectiveness, not even an annual accounting of its cost.

Tax breaks erode support for public investments in our future
The proliferation of tax incentives and business tax cuts over the past two decades has resulted in several hundred million dollars each year cut from the state budget. This has undermined the state’s ability to support quality education, from pre-school through public colleges and universities, which in the long run will have serious consequences for state economic growth and prosperity.

From IPP Executive Director Mike Owen:

New rule! Governor wants to make laws himself

We all know the drill: The Legislature passes bills and the Governor signs or vetoes them, whereupon they become either laws, or nothing.

Not anymore, apparently.

The move by the Branstad administration to implement a new sales tax break worth an estimated $40 million a year — possibly more — is taking place outside the legislative session. If it succeeds, we have entered a new world of executive authority in Iowa.

Business lobbyists wanted the change, it could not pass the Legislature, and the administration thinks it has found a short cut: Change the longstanding interpretation of the existing law. Presto, tens of millions of dollars will be available for manufacturers. And those same tens of millions of dollars will not be available for schools.

Iowa Policy Project

Iowa Policy Project

If the Iowa legislature has any spine at all this should be the first issue they address in the next session. However with former ALEC president Linda Upmeyer as the new Speaker of the Iowa House the chances are probably zero. Unless they stand up to the governor’s action they essentially approve of this change in the scope of power. The underlying issue is not the money, but the change in who has what power. Budgetary power was a power few legislatures have handed over willingly. It looks like Iowa’s is about to.

Wide Benefits Projected In County Minimum Wages In Iowa

Iowa Policy Project

Iowa Policy Project



FOR RELEASE TUESDAY, AUG. 11, 2015
CONTACT: MIKE OWEN, (319) 338-0773, mikeowen@iowapolicyproject.org

For full report: http://www.iowapolicyproject.org/2015docs/150811-minwage.pdf

IPP News
Wide benefits projected in county minimum wages in Iowa
In Linn, Johnson, $15 wage would boost combined 43,000 workers

IOWA CITY, Iowa (Aug. 11, 2015) — As Congress and the state Legislature have forced Iowans to wait almost eight years for action, a new report projects benefits to 19,300 workers in Johnson County and 24,300 in Linn County if a $15 minimum wage were adopted locally.

“We need to pay attention to why this matters to families and communities — and when we do, it’s easy to see why communities in other states are passing local minimum wage laws. They know it’s needed, and they’re tired of waiting,” said Peter Fisher, research director of the nonpartisan Iowa Policy Project and author of the new report.

Fisher, using information provided by the Economic Policy Institute, noted the majority of workers benefiting would be full-time workers over age 20, and many would have families. Much of their increased pay would be spent in local retail and service establishments, boosting the local economy.

“The workers and families benefiting from a minimum wage increase are not those typically portrayed by opponents who want to dismiss the importance of this issue to low-income working families,” Fisher said.

The report found that with a gradual, five-year increase in the minimum wage to $15 per hour in Johnson and Linn counties:

— Of those who would benefit from the higher wage in Johnson County, 59 percent are women, 58 percent work full time, and nearly a third are over age 40, while only 14 percent are under 20. In Linn County, 54 percent are women, 60 percent are full-time workers, and 41 percent are over age 40.
— Almost all workers in the two counties who are now living below the poverty line would see a wage increase.
— A higher minimum wage would put money in the pockets of low-wage workers and boost spending in the local economy, which in turn would lead to additional local retail and service jobs.

The report is available on the Iowa Policy Project website, www.iowapolicyproject.org.

Iowa’s minimum wage of $7.25 took effect in January 2008, and the federal wage followed at that level in July 2009. Twenty-nine states have a minimum wage higher than $7.25, including all of Iowa’s neighbors except Wisconsin.

The Iowa Senate passed an $8.75 wage this year, but the issue did not come to a vote in the House. Governor Branstad has not supported a minimum wage increase.

“While worker productivity has nearly doubled since 1968, the real value of the minimum wage has fallen 25 percent,” Fisher said.

Recently, Johnson County officials signaled their intent to push for a $10.10 minimum wage to be phased in by 2017, and a public forum is scheduled on the issue for Wednesday at 6 p.m. at the Johnson County Health and Human Services Building in Iowa City.

“There’s a wide range in what counties and cities around the country are proposing,” Fisher said. “Most of the cities and counties that have adopted a local minimum wage have set the wage above $10 per hour, many at $15, and most have indexed the wage to inflation.

“We know from our ‘Cost of Living in Iowa’ research that $15 is closer to the idea of a living wage, so we thought it would be worth knowing what kind of impacts that would have in a couple of major Iowa counties. And it would still fall short for most families in Johnson and Linn counties. Iowans need work supports such as food, energy and child care assistance to fill the gaps in household budgets.”

While no locality in Iowa has yet taken the step of passing a county or city minimum, 24 cities and counties across the country now have a higher minimum wage than the federal.

“The list will keep growing,” Fisher said. “Campaigns to raise the minimum wage are planned or underway in at least 10 cities right now.”

Studies of moderate increases in the minimum wage have found no discernible effect on jobs, the report noted. Even with an increase to $15, the resulting boost in local spending, reduced employee turnover and hiring costs, and the ability of employers to make other adjustments will likely minimize effects on employment.

The Iowa Policy Project is a nonpartisan, nonprofit public policy research organization based in Iowa City. Reports are available at www.iowapolicyproject.org.

Comments:

This is an excellent well researched article that is well worth the time to read in full. Really brings the issue home since most of us personally know people who will be directly impacted by a county wide minimum wage raise.

There are several myths surrounding a rise in minimum wage that have become talking points which do not survive close scrutiny. There are a plethora of articles on the internet debunking these myths. I will direct folks to this debunking on Salon. A simple googling of ‘minimum wage myths debunked ‘ will get thousands of articles.

As noted in the press release above, Branstad opposes a minimum wage increase. Minimum wage increases have also been a target of ALEC. The tactic for ALEC has been to take away local control from cities and counties in certain ares and give control of those areas strictly to the state. Minimum wage is one and fracking is another. With the Republicans in the Iowa House and Senate firmly controlled by ALEC we should fully expect such a measure to be introduced in the Iowa House shortly after the swearing in and replacement of Kraig Paulsen as leader. This is a major issue for ALEC across the country.

Raising the minimum wage was a big winner at the polls last November even in red states like Arkansas. Iowa’s Republicans will once more they are out of step with their constituents by standing four square against minimum wage raises.

Finally, the basic question that seems to capture all the misinformation in one statement – How much more will my Big Mac cost? Well, read it here and be amazed. Looks like not much more.

walmart protest for wages

Lawmakers Call for Special Session on School Funding

kirsten marquard

From Rep. Kirsten Running-Marquard

On July 2nd, Governor Branstad vetoed $56 million in urgently needed school funding. The money was approved by lawmakers in a compromise during the 2015 legislative session.

kirsten's petition

In an effort to restore school funding, I and other lawmakers are calling for a special session of the Iowa Legislature to overturn the veto. For a special session to occur, two-thirds of Iowa lawmakers (67 in the House/34 in the Senate) must formally request one. Above is my official petition.

Iowa school leaders say the result of the $56 million veto will be larger class sizes, fewer teachers, and higher property taxes. A petition from Iowans to lawmakers calling for a special session was also launched last week and has already gathered over 5,000 signatures. Anyone interested in signing the petition can go here.

The state just ended the fiscal year on the June 30th with a 6% increase in revenues and collected a record $8 billion for the first time in Iowa history. Over the last five years, school funding has slipped to about 1.85% annually, including one year when the Republican party and Governor Branstad left schools with zero. That’s compared to average increases of about 6% in the 1980’s to 4% in the 90’s.

Separately here is an analysis from Iowa Policy Project:

Some folks may buy into Gov. Branstad’s line about spending “one time money” as a solid reason for a line item veto. But as often happens, Republican “logic” falls apart under scrutiny. Mike Owen of Iowa Policy Project provides just such scrutiny:

Set aside for a moment that it can be quite sensible to use one-time funds for ongoing expenses. It depends on the circumstances. Set aside the fact that Iowa revenues and projections are strong and that state money seems to be available on an ongoing basis for corporate subsidies if not for restoring repeated shortfalls in education funding.

In the case at hand, the Governor vetoed one-time funds — for public schools, community colleges and the three regents universities — that ironically would have been spent in line with his own stated concern. The $55.7 million in one-time funds for local schools and area education agencies would have supplemented regular funding, set at 1.25 percent growth per pupil, all part of a package negotiated by the split-control Legislature.

Here’s the oft-stated concern about one-time funds, in a nutshell: You don’t spend one-time money on things that commit you to the same or greater spending in the future, because you don’t know whether the funds will be there later on.

For K-12 schools, the legislation specifies that funds “are intended to supplement, not supplant, existing school district funding for instructional expenditures.” It goes on to define “instructional expenditures” in such a way that assures the funds are for one-time uses that carry no additional commitment beyond the FY2016 budget year.

So, you can add to one-time expenses that you would have had to leave out, for purposes such as textbooks, library books, other instructional materials, transportation costs or educational initiatives to increase academic achievement. You can’t plan on having the same funds available in the following budget year.

For community colleges and the regents, each section of the bill included this stipulation: “Moneys appropriated in this section shall be used for purposes of nonrecurring expenses and not for operational purposes or ongoing expenses. For purposes of this section, ‘operational purposes’ means salary, support, administrative expenses, or other personnel-related costs.”

With or without the one-time funds that would have helped school districts, the legislative compromise ensures the continued erosion of the basic building block for school budgets, the per-pupil cost.

For the last six budget years, per-pupil budget growth has been above 2 percent only once. Once it was zero, and schools for the coming year are at 1.25 percent. This does not come close to meeting the costs of education at the same level year after year.

150602-AG-history
Supplemental State Aid (formerly termed “allowable growth) defines the percentage growth in the cost per pupil used to determine local school district budgets, which are based on enrollment. For FY2016, the Legislature and Governor have set the growth figure at 1.25 percent. Though state law requires this figure to be set about 16 months before the start of the fiscal year, the issue was not resolved until last week, when the Governor signed the legislation, and the fiscal year had already begun. The Senate passed 4 percent growth for FY2017 and the House 2 percent, but no compromise emerged and that remains unsettled. The education funding vetoed last week by the Governor affects separate one-time spending that would not have affected future budgets.

Whatsamatta With Kansas? Lots!

Iowa Fiscal Partnership

Catching up on some old reading I finally got around to reading Peter Fisher’s synopsis of the disastrous Kansas budget over at Iowa Fiscal Partnership.

Justice Louis Brandeis once called states “the laboratories of democracy.” As the major laboratory for crazy right wing anti-tax, anti-government policies Kansas has pretty much proven that their policies don’t work.

Here is the synopsis:

Keeping Ahead of the Kansans

By Iowa Fiscal Partnership
4/9/15
IFP POLICY SNAPSHOT /

Iowa’s Neighbors Show the Folly of Drastic Cuts to State Income Tax

• Big income-tax cuts in Kansas have dramatically reduced funding for schools, health care and other services.

By Peter S. Fisher

As state legislators consider drastic cuts in Iowa’s income tax, they would do well to consider the experience of our neighbor Kansas, which enacted a huge income tax cut in 2012, and cut taxes again in 2013. These cuts have dramatically reduced state funding for schools, health care, and other services.

These Kansas tax cuts were touted as a powerful economic development tool. Businesses and jobs would flock to Kansas, and growth would be so strong that, according to some, state tax revenues would actually increase.

Instead, the state of Kansas has been forced to cut school funding each year since enactment. At a time when the majority of states have increased education funding to make up for cuts during the recession, general state aid in Kansas has continued to fall, and per pupil funding is 15 percent below pre-recession levels, with school closings and increased class sizes the result. Two districts recently announced they will have to end the school year early for lack of funds. The state recently abandoned the school funding formula; aid is no longer tied to enrollment. Most of the state’s reserves have been used up just to keep services afloat, leaving the state with no cushion to soften the effects of the next recession. The state’s bond rating has been lowered.

As for the tax cut being “a shot of adrenaline” for the state’s economy, as the governor predicted, the anticipated job growth did not materialize. Instead, private sector jobs in Kansas have grown by 3.5 percent since the tax cuts took effect, well below the 5.0 percent growth nationally over the same period.

It is instructive to consider as well the experience in Wisconsin, where a large personal income tax cut took effect at the start of 2013, with similar results: subsequent job growth of 3.4 percent, farther below the norm than in Kansas.

None of this should come as a surprise. Most major academic research studies have concluded that individual income tax cuts do not boost state economic growth; in fact, states that cut income taxes the most in the 1990s or in the early 2000s had slower growth in jobs and income than other states. Businesses need an educated workforce, and drastic cuts to education are likely to make it difficult to attract new workers, who care about their children’s schools at least as much as they care about taxes. Nor will income tax cuts help small businesses create jobs. Only a tiny fraction of those paying income taxes own a business, and of those most are not in a position to create more jobs, or can expand employment only if demand for their services increases, regardless of taxes. (footnotes at link)

Just Thursday the Kansas legislature overwhelmingly rejected a new tax plan in the face of huge cutbacks for education and drastic lowering of bond ratings. Early Friday morning there was a reversal, but taxes enacted were just tinkering at the edges. More on that here:

Kansas is hardly alone in this. Presidential hopeful Gov. Scott Walker has turned a similar trick in Wisconsin as noted above.

In Louisiana, the legislature and the presidential hopeful Bobby Jindal are locked in negotiations over how to pay for any services and yet adhere to anti-tax guidelines laid out by Grover Norquist. Yep, legislators turned to Grover Norquist for guidance. Norquist is the unelected self proclaimed anti-tax guru.

We are watching these states and others with Republican governors and legislatures circle the drain of state insolvency while they turn their states into little pits of hell on earth for their citizens. Iowa is but one senator from joining the combination of Republican dominated legislature plus a Republican governor that seems to be the formula for disaster. Thus, while the presidential election gets the press, the local races are extremely important.

While stories abound of states cutting budgets and strangling themselves, Minnesota and California have both shown that fairer taxation and public spending for common good programs can have a great effect on improving the economy. From an analysis of Minnesota’s economy:

Minnesota is one of the top-ten best economies in the country; it is also a high-tax and high-spending economy.

“For so long, the accepted formula is that in order to have a healthy state economy, you have to have low taxes, low spending, and right-to-work laws,” Haglund says. “Minnesota actually has turned all of that on its head.”

Iowa’s Problem Of Priorities

Iowa Fiscal Partnership
Once again the folks at Iowa Fiscal Partnership provide solid analysis on why Iowa is having trouble funding even its most basic services at a time when politicians of all stripes claim the economic outlook in this state is good. The answer lies in the priorities that Iowa’s legislators set. Like so many states these days, priorities are skewed to the immediate gratification of business owners at the expense of their customers, the citizens of Iowa.

Peter Fisher, Research Director at Iowa Policy Project, offers a concise analysis in this backgrounder at the Iowa Policy Project. Fisher’s conclusion is also very concise:

We have a problem of priorities. We keep underfunding services for average Iowa families — education, health, work supports, natural resources — in order to finance massive tax reductions to businesses that don’t need it. And we spend in excess of $350 million each year on business tax credits that continue on autopilot, with no sunset, despite the state’s own analyses that fail to find evidence of appreciable benefit to the state from some of the largest of these subsidies.[7]

It is time to admit that the tax cuts enacted in 2013 were excessive, and are causing long term damage to the state. At the very least, the $50 million increase in the business property tax credit portion of those tax cuts scheduled for next year should be delayed or eliminated.

But that is not enough. There should be a moratorium on any further tax cuts or tax credits. All business tax credits should be subject to effective caps and sunsets to force a serious evaluation.

Without such measures, we will continue down the road of tax-cutting our way to mediocrity and shortchanging our children’s future.

Handing out favors to businesses will not meet what should be Iowa’s real priorities. It is not working in other states either. The booming state economies – California and Minnesota – have budgets that put people first and have raised taxes.