Iowa Legislature: Special Challenges for Today's Special Session
Iowa Policy Project
Job Quality, Accountability Missing from Discussions at Statehouse
DES
MOINES, Iowa – Iowa legislators need to keep job quality and fiscal
responsibility in mind [today] when they return for a special session
to restore the Grow Iowa Values Fund, two independent policy groups
said [last week].
“This
special session comes at a touchy time,” said Victor Elias, senior
associate at the Child & Family Policy Center in Des Moines. “As we
know, an election is coming, so legislators need to be careful to make
good decisions for the long term, not just whatʼs going to sound good
in a radio or TV ad in three weeks.”
David
Osterberg, director of the Iowa Policy Project in Mount Vernon, said
the proposals to be discussed need careful consideration.
“Iʼm
really concerned whether a one-day special session will address our
biggest challenges – job quality and health care,” Osterberg said. “We
just saw last week the new Census figures that show wages are down and
over 300,000 Iowans donʼt have health insurance. How can we pass a
jobs-creation program that doesnʼt make sure Iowans are paid more and
get benefits?” Elias and Osterberg
both said the Values Fund and one of the pieces of the deal – an
accelerated tax break for some business purchases – have flaws that
undermine their stated intent.
“The
Values Fund in its brief life has not performed as advertised,”
Osterberg said. “It is promoted as a way to create good-paying jobs
that raise wages in the state. It does produce some – but not as many
as it could, and weʼre talking about the use of public dollars here.
The Values Fund should not simply be reinstated in this session; it
should be strengthened, to require that the jobs being subsidized are
raising the floor of pay and benefits.”
Osterberg
noted a report in July for the IPP by University of Iowa professor
Colin Gordon, who found three general problems with the fund:
■ The
wage and job thresholds are too low in the rules governing the fund –
so low that the program is as likely to bid down local wages as it is
to raise them.
■
Loopholes in the rules make it too easy for the board to make awards to
firms that will pay dismal wages, or create too few jobs.
■ There
is little accountability to assure recipients will abide by
requirements for future wages, job creation or job retention. Osterberg
said the new Values Fund legislation should assure that rules
implementing it will be stronger, to correct deficiencies cited by
Gordonʼs paper.
“We have to take out the wiggle room,” Osterberg said. “We
shouldnʼt be allowing our tax dollars to encourage jobs that actually
lower the average wage in a county, which is what happened with the
first Values Fund award, to Wells Fargo.”
Elias
said one of the tradeoffs in the deal between the governor and
legislative leaders for the special session – the so-called “bonus
depreciation” tax writeoff for businesses – will not stimulate the Iowa
economy, and should be tailored so that it doesnʼt hurt cash flow for
the state. “At least the way this has been presented, the writeoff will
apply to half of the cost of purchases made from September 2001 through
the end of this year,” Elias said. “That
means businesses will get a tax break for decisions they already made,
so it really is not an incentive, but a windfall. In tight budget times
in Iowa with serious cuts in services, itʼs hard to defend a windfall
giveaway of up to $70 million.”
Elias recommended four steps to encourage fairness, accountability and revenue savings with this proposal:
■ Do not make it retroactive.
■ Limit the amount any one filer can claim ($500,000).
■ If no
limit is imposed, make any claim above a certain amount ($500,000 for a
filing period) an open record, with Department of Revenue reporting on
those making claims and the sizes of their claims.
■ Simplify filing for small businesses, so they are not disadvantaged vs. larger competitors with more accounting resources.
These
changes would help address important challenges in Iowa's job climate.
The state has not recovered from the 2001 recession, with the latest
government figures reporting the state down 28,000 jobs from March
2001. That net figure reflects both jobs lost and gained, with separate
research indicating a net loss of job quality as well.
Iowa's
job increases generally have come in industries that are less likely to
offer health-care benefits; job declines generally have come in
industries (manufacturing) that are more likely to offer those
benefits. Further, Iowaʼs median income is falling. According to the
Census, Iowaʼs median income fell 6.5 percent, or about $2,900, from
1999-2000 to 2002-03.
In fact,
the Census reported last week that the number of uninsured in Iowa grew
from 246,500 in 2001-02 to 303,000 in 2002-03, or from 8.5 percent of
Iowans to 10.4 percent. These growing ranks of uninsured are due to a
decline in employer-provided health-care benefits. According to the
Census, 67.3 percent of Iowans had employer-provided health benefits in
2001-02, with that average falling to 65.4 percent for 2002-03. That
1.9-point drop matches the increase in the proportion of Iowans
uninsured.
Reports on these topics are available at the Iowa Policy Project website, www.iowapolicyproject.org.
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