by | Jan 8, 2013
One of the top three priorities for the upcoming legislative session will be finally putting something on the books to bring Iowa’s commercial property tax rate in line with the rest of the nation. After much angling by both sides last year, ultimately no adjustments were made to the tax code.
Below you will find a very brief recap and analysis of the three plans that were on the table last year.  They are important to know since past will certainly be prologue in this debate. Both sides are essentially pushing the same proposed solutions as they did a year ago—and one way or another the law will reflect whichever side wins on the issue.
Governor Branstad’s Plan (House Study Bill 519)
This plan would reduce the taxable value of Commercial and Industrial property by 5% a year for 8 consecutive years. The taxable value for these properties is currently at 100%, so in 8 years the plan would allow the State to collect on 60% of the valuation instead of the current 100%.
- The cap for increasing valuations on Residential and Ag properties would be lowered from the current 4% a year to 2% a year.
- The first 3 years of the 5% reduction in valuation would be guaranteed, with the additional 5 years of the 5% reduction being subject to the value of commercial property rising in its assessed value.
- To offset the lower revenue being brought in by local governments the State would pay cities money every year. $50 million in year one, $100 million in year two, $150 million in year three. After the third year the amount would be raised an additional $30 million per year until it got to a $240 million backfill. This backfill would then remain on the State’s books every year going forward.
- The proposed money to local governments would be administered in different amounts based on how much a local government was affected by the revenue loss.
Analysis—This, much like the Governor’s education reform, would essentially be an increase in power and control at the State government level. The positive is that, in theory, the local governments would be forced to cut spending as the backfilled money that they receive is projected to be less than the revenue loss experienced by the local governments. In the prior incarnation of this plan the “administered based on need†language was not included, so it is quite possible that the backfill sent to the local governments would in fact not require them to actually cut their budgets—it really would just depend on how different the property valuations were from city to city.
The House Republican Plan (House Study Bill 500)
In many ways this plan has a lot of the same principals as the Governor’s plan. One major differences is that it implements in 14 years instead of 8 (interestingly the House’s prior proposal called for the 8 years that the Governor has now adopted).
- The biggest difference is that instead of paying local governments to offset the revenue loss, this plan would eliminate the 12.5% “2nd effort levy†(and I believe the $5.40 per $1,000 taxable valuation known as the “uniform levyâ€) and instead, by the year 2019, would have the State fund 100% of the per-pupil cost of K-12 education. Note: Right now the uniform levy is taken from property owners statewide and the State pays to take that amount up to 87.5% of each years determined per-pupil cost—the remaining 12.5% is paid by local property taxes taken from inside each district.
Analysis—There are smaller components to this that I did not investigate fully, but in many ways this approach is the same as the Governor’s in that it limits the local governments taxing authority. While the Governor’s plan would take general fund money and give it to the locals, the House plan just takes the responsibility of paying for things that the locals would otherwise have to spend on with local property tax funds (mainly education). Also, like the Governor’s plan, it would not fully offset the drop in local government revenues and theoretically would force local entities to cut the size of their budgets.
Though “local control” is usually a Republican battle cry, in this case it is largely a Democrat argument against the Republican plans. I happen to find the criticism valid—but for different reasons. The Democrats oppose the taking of local control because it would limit the amount that taxes can be raised, I see it more as limiting the decision making of local communities to pursue what their residents think is best (within the broader State law). One of the unresolved issues I have here is how the State paying all of the education funds would play out in terms of funding each school district. I believe the current formula allows a discrepancy range of a $175 per-student from district to district but, given the fact that the State would fund 100% of the burden, the questions exist—would this remain and how so?.
The Senate Plan (SF 522)
This bill passed the Senate last year 46-4. The only 4 to vote against it were Republicans Chelgren, Dix, Whitver, and Sorenson.
- It would tax the first $30,000 of commercial property at the same rate of residential property. This would result in an estimated $555 to $714 reduction for typical Commercial taxpayers (this small amount is one of the reasons that the four Republicans listed above voted against it).
- The plan would top out at a reduction of $6,856 (paltry when you consider that large retailers routinely pay over $500,000 a year in property taxes).
- The biggest distinction from the other plans is that the savings contained in the bill would not be concrete, but instead would be tied to the total revenue amount brought in by the State. Tax relief would only fully materialize as long as the States revenue increased.
- The plan basically offers a $50 million reduction in Commercial property taxes per year, as long as the States revenue increased 4% in that year.
Analysis—In many ways this last bullet point means that it is not really a significant cut in taxes or spending at all, and frankly it’s shocking that only four Republicans voted against it. It has some other provisions that make it, more or less, a way to stop the impending increase in property taxes faced by everyone. The positive here is that it does not affect the local government’s revenue stream or sovereignty (nor does it backfill anything with other State funds). The flip-side is that it does not allow for any reduction in government spending. It basically says that as long as the economy is good and values of property increase we will agree to give you a tax credit to soften the burden of your taxes rising along with the value of your Commercial property.
Stating the obvious here—this proposal is totally insufficient to deal with the size of the problem. What makes this plan ridiculous is that one of the major advantages in a tax reform plan is that businesses will know that lower rates are solidly in place for future spending and hiring. By having a bulk of the tax savings tied to the amount the State brings in in a given year, you are in essence not able to tell a business owner what his rate will be going forward—and clearly uncertainty is a killer for business owners
Overview & Summary
All these plans seems somewhat flawed and I don’t endorse any of them on their merit. Since Democrat votes are needed to pass something, if I had to I would support the House plan. My strong belief is that all three are unnecessarily over-complicated. More than anything they are just moving money around and telling local governments that they can’t raise taxes beyond a certain point—how much you want to bet that this doesn’t stop the same legislature from mandating that the same municipalities do more things every year?
Ultimately my skepticism comes from the fact that these proposals are all about people paying less taxes without putting forth a dollar of specific spending cuts…funny how that works.
by | Dec 17, 2012
It’s been a brutal stretch for Republicans since November 6th and I hate to pile on, but one issue facing the Iowa Legislature this session reflects what a perilous situation we could be in as a political party. That issue is automated traffic enforcement—which, at least so far, applies to only red light and speed cameras.
In spite of the disaster that was the 2012 election here in Iowa, perhaps the most depressing and telling sign of how far we have to go is that a clear majority of Legislators, and apparently Iowans, are not yet willing to say definitively that automated traffic enforcement is unacceptable. By default then we are saying we do not object to having cameras take pictures and videos of us in order to deliver substantial fines to our mailbox some 10 days later.
What I have heard from most legislators on this lately is that they believe from talking to their constituents this is close to a 50-50 issue. I don’t know if that’s accurate or not, but if it is then a majority of Conservatives and Libertarians are going to be in for an even worse ride than we previously thought.
I know there are several smart and well-reasoned Republicans making arguments for these cameras who see nothing wrong with them. I have to believe that a majority of these folks haven’t had the pleasure of receiving a $110.00 ticket in the mail from a non-memorable “infraction†that took place a week and a half before. And that these same people haven’t gone to the website link listed on the ticket to have the spooky experience of watching a video of them driving on a public road days before—yes this is how it works.
All the arguments against the cameras are well documented—no right to face your accuser, you may not have been driving, you could get numerous tickets before being aware you got any, questionable impacts on safety, the fact it is yet another increased revenue stream for government, etc.—but the biggest one to me is the overarching issue of what tactics we allow law enforcement and government to deploy against us. As we know too well, once we allow government to record us autonomously and levy fines against us for traffic violations, it is unlikely to stop there.
To all the proponents on this issue on both sides of the isle I ask the following—would you support having speedometers tied to computers in your vehicles which would use GPS coordinates to determine the speed limit and then issue you a ticket sent to your e-mail each time you went 8-10 mph over said limit? The analogy isn’t perfect…but it’s pretty close. Hard to imagine anyone saying yes—let alone a majority.
The Politics
The politics are interesting here too. In short, the Republican voting coalition needs, to a large degree, to include Libertarians or else they will win nothing moving forward. No matter how fiscally conservative they are, be assured that if the Republican Party here in Iowa and nationally will not stand up against video surveillance and mail delivered fines then Libertarians will never vote republican in a large majority. In fact, you would be hard-pressed to think of an issue that could more quickly lead to a third party—and hence the death of the Republican Party. Frankly, the truth is I wouldn’t blame them. If, as the party of small government and freedom, we won’t even stand up on this blatant of a “Big Brother†issue, then the jig is up.
The reason why the Libertarian coalition is so crucial is perhaps even more interesting. First and foremost you have the stubborn friction between the traditional voting blocs Republicans rely on to win elections and the current electorate. The largest single coalition in the Party is the religious-wing (in a society that is, for whatever reasons, growing more liberal on social issues), and the fastest growing new members of the electorate by a landslide are Hispanic voters (which we consistently lose by 30+ points). This is of course added to the fact that Republicans routinely lose the women vote by close to double digits (and they have voted in a greater number than men in every Presidential election since the 1980’s).
In pointing these things out I am in no way saying that these differences and pitfalls can’t be mitigated by the Republican Party, and am certainly not taking a position here on which coalitions should or shouldn’t prevail. The point I make is that because of these problematic dynamics for the Republican Party—a clear majority of the pragmatic Libertarian vote is absolutely essential going forward. In terms of the “going forwardâ€, Libertarians are by and large younger Americans that will be voting for generations (a segment of the youth vote Republicans could actually win), as well as the fact that Libertarian leanings, by nature, will grow larger the larger our government itself grows.
Tying It All Together
To be clear, this is not to say that Republicans would ever run on legalized prostitution or drugs, but it is to say that not standing up against something as symbolic of government overreach as traffic cameras would be a major mistake.
Both politically and on principle, fighting hard for a bill next session in the Iowa Legislature banning all automated traffic enforcement is a no-brainer. Not doing so would be abandoning the mantra of our Party—which is to stand for more freedom, less government intrusion, and less confiscatory power from the political class.
If as a Party we either fail to lead this charge in the first place, or do so and find a majority of Iowans don’t agree with us, there will be ramifications in future elections. As dim as the landscape looks now for Republicans it’s hard to imagine how much uglier it could get…but I know it would be much worse than $110 ticket in your mailbox.
![The Harsh Republican Reality of the Fiscal Cliff]()
by | Dec 10, 2012
I break from a majority of Republicans on the current fiscal cliff negotiations and believe the rate increases that Democrats are seeking should eventually be agreed to. More specifically I would support John Boehner signing on to taking the top bracket from 35% to 37-38% (short of the 39.6% Obama wants).
Of course the argument against doing so is the superior one—essentially that the Senate and the President want more money to spend while having not passed a budget in 3 years and having not yet put any real spending cuts or entitlement reforms on the table. But the two Parties have been at a stalemate over this issue for years and in my view the trump card is that last month they held the Senate, picked up seats in the House, and won the Presidency. To me the bottom line is that if a political party never agreed to anything they didn’t think was 100% ideologically or philosophically accurate we would never reach any compromise. This in fact is the definition of compromise, and in light of the election results anyone who thinks Republicans weren’t pushed into a position of forced compromise is fooling themselves.
The reasons for swallowing this bitter pill are multiple. First off, though often times the winner of an election pushes for the passing of legislation saying they ran on it when they really didn’t—that is not the case here. There is no question that President Obama ran on raising taxes on rich people and Mitt Romney ran on lowering rates and capping deductions. Secondly, over 60% of the American people in poll after poll say they want the wealthier among us to pay more taxes. Unfortunately, the alternative of refusing to budge on this issue in favor of tax increases on 98% of Americans is simply not good policy. All sides agree it would be devastating, not to mention it plays into all the awful stereotypes of Republicans and is politically fatal.
Not helpful here is that this whole discussion echoes the earlier scene at a Republican Primary debate where all 10 candidates on stage said they would not take a deal of $10 in spending cuts for $1 of revenue increases—the majority of non-hardliners in this country just flat out won’t deem a political party serious about solving a problem with this kind of position.
Just to be clear, the above is not at all to say I agree with raising any rates, but the facts are the facts. The Democrats have a far stronger hand here—and it’s certainly strong enough to yield this specific tax increase they desperately want.
Looking on the bright side, after suffering the defeat we just had nationally if the only direct price Republicans have to pay is to raise taxes by 2-3% on one bracket in order to get the Bush tax cuts made permanent (until we have a majority to do real reform), then I think one could argue that is not an obscenely high cost. The big part of making this an acceptable outcome is of course what will be given by the other side to reward this concession?
As of now clearly Democrats have not offered anything and are not acting in good faith. Since they don’t have to give on entitlement reform in this situation, essentially Democrats are going to have to agree to hundreds of billions in non-discretionary, non-defense spending cuts. My position is if Boehner gets this in exchange for the small bump in rates, that is an acceptable outcome. If he isn’t able to achieve that—then caving on this position is a major defeat.
The Media Fails Us Again
So far in this “negotiation” Republicans and John Boehner in particular have been getting killed for letting the whole debate revolve around a portion of revenue increase that would fund the government for about 8 days. This is such a great and obvious point, and frankly the shallowness of our national debates in general makes it hard to have much hope for the future of the Republic.
I fully agree with the criticism for Republican leadership losing the messaging war on one hand, but on the other I wonder what more they can do about it. Time and time again they speak of Washington not having a revenue problem but a spending problem, and they certainly are publicly making the case this would fund the government for only 8 days. The reality is that of all the power and influence the liberal media has over this country, perhaps the most lethal and subtle is their ability to decide what the focus of the debate is. For obvious reasons the President wants it to center on a rich vs. poor construct, and low and behold that is exactly what we have.
My Advice To Boehner
If I were advising Republicans I would suggest putting this debate in context by making an obvious point that I have not heard made yet. The absolute proof that we have a spending problem and not a revenue problem is that just to balance the budget in one fiscal year we would have to raise tax revenues by 40%. Yes that’s right, 40% more dollars into the treasury just to get to the point that we are not running a deficit every year—that is without paying down a penny of the $16 trillion in National Debt.
This of course is because in past years we have borrowed 40 cents of every dollar we spent (so far this year it is up to 46 cents of every dollar). The notion that tax rates would have to be raised on the entire country to a level generating 40% more money each fiscal year is so insane that just maybe it could break through the media machine and into view of the population.
The End Game
What’s so frustrating for Republicans, including myself, is how much sense these arguments make and that we can’t even get the Party that controls the majority of our government to even discuss the bigger more frightening picture.
That being said, the reason we have elections is so that each Party can make their case and the people can make their choice. Even though it’s not sound policy, given the fact that this choice has just been made, conceding a few percentage point increase for one tax bracket is not the end of the world.
In spite of all the venom being directed toward the Republican leadership in the House we need to be rooting for them to succeed—which in this case means getting the least destructive outcome in a tough situation.
The post The Harsh Republican Reality of the Fiscal Cliff appeared first on The Conservative Reader.
by | Dec 4, 2012
When the inevitable battle with public-sector employees in Iowa begins to rage here in the next few months and every elected Democrat in the state marches in lock-step with union negotiators, the following will help you understand this phenomenon.
Not only does their ideology lend itself to supporting the concept of an organization/government “protecting” people from the free market–it turns out that this cast of Democrat legislators largely are the unions.
Iowa House Democratic Caucus by Occupation
Below is a look at the occupations of the 46 Democratic members of the Iowa House that will be in office the next two years.
Teachers/Principals former and current = 12
Attorneys = 7
Occupation Unclear = 4
Social Work = 2
1 Each of the Following— Realtor, Farmer, Pharmacist, Grants Coordinator, Funeral Home Business, Golf Course Owner, Banker, Accounting Clerk, Head of Non-Profit Organization, (12 more random single occupations not listed here).
Number who have direct/indirect past or current union backgrounds (mostly public-sector) = 21
Trends
By far the biggest takeaway here is that of the 42 who had a clear current or former occupation that could be found on their legislative page or campaign website, a whopping 21 of them had direct connections to unions–the vast majority of which were public-sector. That is a full 50% of the caucus and does not even include Bruce Hunter, a ranking member of the Labor Committee whose wife is the State Political Director of the AFL-CIO, or Anesa Kajtazovic who goes out of her way to mention in her bio that at a young age her father’s experiences in the workforce led her to be “reminded how important union representation can be.”
The second biggest trend is that 12 of the 42 members with clear employment histories are current or former teachers. This explains why year after year we have a fight in the legislature to increase spending on education by 4% for “allowable growth”–not to mention why firing a teacher is almost unheard of, why there is currently no substantive teacher evaluation, and why there needs to be a Republican push just to ensure that students aren’t passed out of the 3rd grade without being able to read at the proper level, a policy that would seem to be the epitome of common sense. What is not so easily explained is with such a large number of educators doubling as legislators and a majority of the state budget dedicated to it every year, how are the results embarrassingly insufficient in such a large number of districts.
Revealed above is the gross disproportion of representation that unions have in the General Assembly in comparison to the percentage of Iowa’s workforce that they account for. As of 2011 Iowa had nearly 1.4 million people in the workforce. Of this number only 155,000 were in unions (11.2%) and an additional 32,000 were effectively represented by union negotiations while not being listed members, thus bringing the total number of employees directly or indirectly represented by unions to 187,000, or 13.5% of the workforce. Of note here is that the 1.4 million Iowa workers number actually excludes those self-employed so the percentages represented by unions are actually slightly smaller than those listed above. Even taking the larger percentages, while only 13.5% of Iowans are either in or governed by unions, in the Iowa House’s Democratic caucus a full 50% have direct or past connections with unions.
Coming Up
Before the session gavels in I will also do a breakdown of the Republican Caucus by occupation in both Houses (unless one of the Liberal bloggers reading this wants to save me the leg work). It would be very interesting for comparison purposes and may further explain the massive partisan divide we see year after year–my guess is the top 3 for Republicans in some order are small business owners, lawyers, and farmers.
Later this week we will take a look at 3 specific cases that symbolize this dynamic of union/citizen representation in the House, and next week we will have a breakdown of the occupations of the Democrat Caucus in the Iowa Senate. This will be followed by a look at the proposals offered by both the unions and the governor and what is likely to unfold on this front next session.
by Steven Waechter | Nov 28, 2012
The tax credit for wind energy is back on the agenda, and Iowa’s own Chuck Grassley and Terry Branstad are taking leadership roles in fighting for the extension, going so far as to appear together at a press conference about it.
Wind energy is my favorite target at the moment, because it combines socialist economics, corruption, aesthetic vandalism, junk science, and cynical political machinations – all melting together into a hideous soup of wasted money and ruined skylines.
Tough Love
After the last election, targeting two of Iowa’s best known Republicans for criticism is perhaps a risky business, but for those who think I – with my dislike of leftists – shouldn’t be doing it, I offer the following historical analogy:
In the days of the Roman legions, the centurions were legendary for their swift discipline. One centurion developed a habit of breaking his staff over the backs of soldiers who had acted disobediently. “Give me another,†he would say to his aide when it happened, and it happened so often that “give me another“ became his nickname . In this way, withering cruelty became not a malicious attempt to destroy, but deep concern for long-term wellbeing.
Well, give me another.
Political Venture Capital
Wind energy is an odious political scam. First of all, the industry cannot survive without government subsidy, namely, the tax credits. The wind industry makes profits not from the power grid, but from their tax returns.
It is also ridiculously expensive and underproductive. When Alliant Energy built the Whispering Willows wind farm in Franklin County, they petitioned utilities regulators for a rate hike to help cover the cost. The market had reached a price for electricity, generated by coal, but at that price the wind farm was not economically viable – it wouldn’t produce enough electricity to cover its cost.
They built it anyway. Even though the money in the wind industry is earned on the tax return and not the power grid, they didn’t want to eat an operating loss, so rates have to increase. Consumers in central Iowa found themselves paying more money for the electricity they used – still mostly generated from coal – to pay for a wind farm erected so the utility could earn a tax credit.
The utility sells the power and claims the credits; the landowners earn fees for having these modern art sculptures on their land; the turbines produce just enough electricity to power a massive, metaphorical conveyor belt carrying money from the pockets of poor customers to the rich and the politically-connected… Because that is progress these days.
Grassley stated at the recent news conference that “We have a 20 year investment in this… it would be terrible to throw a way a 20 year investment if it will mature in a short time.â€
We have been waiting for the wind energy industry to mature since the days when pioneer farmers could order a windmill from the Sears and Roebuck catalog. Most of them were dismantled after rural America was electrified. Now, the fantasy is that the same technology that was felled by electricity will be the future of electricity.
Central Dreaming
Nothing becomes outdated faster than a fantasy about the future. This is never more true than when the fantasy has its birth in the minds of politicians; a future brought to you by the same people who bring you inflation, wars, and prisons.
The general public is also rapidly becoming too poor to cover higher utility bills, but wind energy fits into the political rhetoric of our time and so they charge forward. Wind energy doesn’t make power cheaper, reduce our trade deficit, strengthen the dollar, or generate tax revenue – but it can get you elected.  It employs only a handful of people, especially when compared to the coal industry – which politicians have threatened to kill. The turbines themselves are insanely ugly, and provide a far too convenient backdrop for political photo opportunities.
I understand that this is politics. I also object to the fact that this is politics. The experience of subsidized public housing should have been enough to dispel the urge to make fantasy into reality, but it wasn’t. We will all pay the price. Literally.
One of the top three priorities for the upcoming legislative session will be finally putting something on the books to bring Iowa’s commercial property tax rate in line with the rest of the nation. After much angling by both sides last year, ultimately no adjustments were made to the tax code.
