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Why The Surplus Should Go Back To Iowans – Now

Why The Surplus Should Go Back To Iowans – Now

Iowa Politics Money Chess TaxesThe Des Moines Register’s editorial this morning provided a concise (for Democrats) explanation about why Iowans should not get their $800 million over-payment returned to them.   It’s to be expected that now that there is extra revenue coming in, we see the Left drooling over the opportunity to spend our money.

It’s a wonder we managed to survive the past few years with so little money to spend.

But seriously, we did just fine.  And that should be the point now.  We’ve managed to do a great job of assessing where the government is spending money it doesn’t need to be spending, and cut some of it back (there’s more to cut, but we’ll leave that for another time). But even though we have one of the lowest unemployment rates in the country and a surplus in the Treasury, doesn’t mean it’s okay for the state government to keep the extra money from Iowans from last year.

We don’t operate our state from savings, we operate it from revenue.  Well, except for when we borrow, but let’s not quibble over that today.

The Register puts a number of items up for spending that are long-term expenses… they aren’t a leaky roof, as they try to relate it, but they are the lawn, the car upkeep, the utility bills.  They may even be things we should do and pay for, but if we are going to expand our expenses (which should be questioned regardless), the money for those things should come from current revenue, not savings.  Otherwise, we are making the same mistake we’ve made time and again in the past by paying for ongoing expenses with one-time resources.  It’s a foolish mistake.  It’s like taking your year-end bonus and paying the light bill and getting an oil change.  If your budget doesn’t allow you to pay for those things from your existing income, you are not in good financial shape to begin with.

If the I-JOBS program of Culver’s last 2 years in office had waited until this money was available, I could accept the idea of spending it on that kind of a project.  But alas, we were far too impatient and had to instead saddle our next generation with keeping the gambling enterprises alive in order to pay for this program.

And the Register can’t help but show how they have bought into the ridiculous notion that government jobs bring value.  The only kind of jobs that bring value to the economy are those that contribute to the Gross Domestic Product (GDP)… that is, jobs that actually generate income by creating products or services that people want to buy.  Government jobs don’t do that, and instead are a drain on GDP.

We don’t really have a pressing one-time financial need in Iowa, aside perhaps for some infrastructure such as bridges and roads, that the state government needs to attend to, although I’m sure some think otherwise.  There may be plenty of recurring expense needs that need attention (either to add or drop), but using this surplus to cover the lack of revenue for these items is foolish.

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I take a bit of exception to the idea that HF1 provide the people’s money back to them as a tax credit for 2013 taxes.  I realize that the printing and mailing of checks is an expense, but the money needs to get to Iowans now, not a year from now.  We’ve done it before, we can do it again.  Mail out the checks.

Obviously, lawmakers want to keep the interest on that money, eh?

Jump-Starting Job Creation in Iowa

Jump-Starting Job Creation in Iowa

Paul McKinley is the Iowa Senate Republican Leader

Iowans received more sobering news on the economy late last week. Unemployment ticked up to 6.9 percent with 116,800 Iowans out of work – an increase of 2,600 from the month before.

This news comes as Governor Culver is traveling the state touting his $1.7 billion dollar I-JOBS program that he promised would create 30,000 jobs and spur an economic revitalization of Iowa’s economy. But since unveiling his I-JOBS idea during the Condition of the State address in January 2009, Iowa has actually lost over 30,000 jobs while nearly $1.7 billion has been added to the state’s credit card.

Based on employment numbers from Iowa Workforce Development, the graph below illustrates the month by month unemployment numbers since Governor Culver announced his temporary work program.

Clearly, Culver’s expensive program has failed. Government cannot create jobs – it’s the private sector and small business that is the engine of job growth.

That’s why we need a new direction for Iowa – one that actually puts the focus on private sector job creation and puts Iowans back into good paying jobs in every county and community in this state.

Senate Republicans have a better plan.

Instead of empowering government bureaucrats to pick winners as is the direction taken by Governor Culver and legislative Democrats, Senate Republicans believe we must give entrepreneurs, employers and small business owners the tools they need to not only succeed today – but into the future as well.

Our detailed three point plan involves providing an immediate jolt of adrenaline to Iowa’s economy by offering aggressive tax incentives for hiring more Iowans while also cultivating good ideas and encouraging entrepreneurs to come forward to develop or expand their venture right here in Iowa.

In addition, our plan includes putting together an extensive volunteer commission of business leaders and entrepreneurs from around that state that will be tasked with identifying the onerous barriers and regulations that are holding back growth, development, expansion and job creation in Iowa. The Legislature and governor will need to act on these citizen suggestions.

When Governor Culver took office and legislative Democrats took over both chambers of the Legislature in January of 2007, Iowa’s unemployment was at 3.6 percent. Today it is on the verge of 7 percent.

Last year, Iowa lost 222 factories and two-thirds of Iowa’s counties lost population because of a lack of jobs. Today we remain 49th in the nation in friendliness to job creators according to US News & World Report and 41st according to the very reputable Small Business Survival Index.

We have now seen four years of sky high property taxes, irresponsible spending and generational debt. Year after year, Democrats have discussed and in some instances passed damaging anti-jobs legislation like gutting Iowa’s Right to Work status, decimating our worker’s compensation system, fundamentally altering our collective bargaining methods and implementing a property tax increasing prevailing wage.

We can and must do better. The status quo in Iowa cannot continue.

Senate Republicans know we can experience a 99 county resurgence. Iowa is filled with promise because we have wonderful people in welcoming communities who have a burning passion to build a better Iowa for their families, friends and neighbors.

We must begin to change direction, reignite the entrepreneurial spirit of the private sector and welcome the new economy of tomorrow. Let us again put our faith in the people to move Iowa forward instead of allowing government to hold us back.

As always, I welcome hearing from you and can be reached by phone at 515-281-3560 or by e-mail at [email protected]

Paul McKinley
Senate Republican Leader

April 25: A Day That Will Live For 20 Years

April 25: A Day That Will Live For 20 Years

iowa-state-capitol-dollarsUpdate: House File 376 (the bonding bill debated Friday evening into Saturday morning) passed the House at about 1:50 AM. – Ed.

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The Iowa House is currently debating the bonding measure  and making my head spin!  $750 million has turned into $650 million, and then other additional principle expenses, plus the interest costs put the cost for Iowans at over $1.4 billion (yes, with a “b”) (some put it at $1.2 billion).  $70 million per year for the next 20 years.Listening to the floor debate, it sounds like the bill sponsors can’t really answer any questions very effectively, and are just throwing money at, what?  As we discussed earlier, we just don’t need this money, these spending plans that aren’t really plans at all, just a lot of ideas to pick from right now.

Just reported that Republicans all signed and filed a letter of dissent for violating the Iowa State Constitution.  From what I’ve heard listening to this, the Democrats have come up with some approach that perhaps keeps them technically in line with the letter of the Constitution, but not the spirit.

Another bill Iowans are not going to like: Earlier today, Senate File 483 was passed by the House.  The bill extends the timeframe allowed by the state to pay refunds back on income tax refunds by a month.  That is stealing from Iowans… actually a type of tax increase.   If you have big refunds coming, it’s probably time to change your W4 to reduce the amount of the refund.

And the Standings Bill has resurrected a number of ideas that had previously be scuttled.

As I post this, it is 12:45 AM and debate continues.  Democrats are probably relieved that they could put this off until Friday evening and Saturday morning.  They’ve succeeded in delaying long enough that many Iowans just aren’t bothering to pay attention so they might be able to get away with what they want.  Thank goodness House Republicans are continuing to put up a fight.

Iowans will remember today regardless. April 25 should become a new war cry against an arrogant government intent upon imposing its will upon the people of Iowa… indeed, this is a trend that did not start in Iowa, but clearly will be felt intensely here.  “Our Liberties We Prize and Our Rights We Will Maintain”.  That’s our state motto.  We should not roll over and allow the government to get away with putting us so deeply in debt against our will, both constitutionally and through voicing openly our opinion.

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And the Iowa Senate is gaveling back in.

Iowa Democrats Bonding To Draw Session To A Close?

Iowa Democrats Bonding To Draw Session To A Close?

chet-culverAt a cost, it seems. Democratic leaders got together yesterday after several days of stalemating between the Governor and Legislative Leaders (all Dems). As you may know, Culver wants to borrow $750 million for infrastructure projects, and both House and Senate leaders have been resistant to this approach (probably recognizing that most Iowans do not want to see the State borrowing this kind of money).  So, while the good news is that legislators will probably get their work done in the next few days, the public may lose if this bond measure is passed (dubbed “I-JOBS“).

Only $150 million of the money would go to roads and bridges, and the rest to repairs from the disasters of 2008, renewable energy and other miscellaneous items.

I’m guessing this will include the $3 million needed from the State to get the $30 million in stimulus money from the Fed for the high-speed rail between Des Moines and Davenport which was talked up yesterday as part of Obama’s visit to Newton.

I don’t know a lot about the infrastructure needs in northwest Iowa, but evidently improvements are needed.  Mentioned in this story, Culver wants to see highway 20 (an east-west state highway running between Sioux City and Dubuque, running through Fort Dodge, Cedar Falls, and Waterloo) upgraded to four-lanes across the entire state.

Problem 1: Culver wants to use gambling revenues to cover the payments.   The gaming industry is not the most reliable, and the tax credits we recently implemented certainly demonstrate that and reduce the revenue from this source.  As Iowans (and others from out of state) become less and less interested in sustaining this industry, we will likely struggle with having revenues from these sources.  Which means we could end up spending general fund money on this.

Problem 2: This money is not even being allocated for actual projects.  A committee will be deciding how to spend the money (I wonder how much they’ll need for new carpets).  So we don’t know where the money will be spent until after we’ve borrowed it.  This will help perpetuate an already painful cycle of overspending and then cries for more money later.

Problem 3: Much of the road work to be done by this bonding will need to be replaced before we pay off the bonds.

Problem 4: Culver’s urgency in getting this passed “quickly” leads me to believe that he knows his position is tenuous, and that perhaps we need to look more closely at who will benefit from this.  I know it won’t be me.

Problem 5: Borrowing should be confined to emergencies, and should be emergencies AFTER we’ve exhausted the emergency (rainy day) funds already in place.

Peter Orazem, an Economic professor at Iowa State University, recently stated that the bond plan is unnecessary.  There is already over $1 billion of money going into flood relief and infrastructure improvements (from the rainy day funds and Federal moneys) that will provide enough jobs for those out of work in the construction industry.  Indeed, Iowa’s unemployment rate for construction workers (2.6%) is significantly below the national rate (over 10%).  Clearly, we risk creating projects that while funded, cannot be completed timely due to the lack of skilled workers.  And, as Professor Orazem explains, that will increase the costs for all projects (workers will be able to demand more money).

What troubles me is that there are other moneys specifically set aside for these types of projects.  The Rebuild Iowa Infrastructure Fund (RIIF) appropriations for 2008 and 2009 (estimated) were more than double for 2006 and 2007.  Evidently, revenues driving into RIIF are likely down due to tax credits provided to the gambling industry beginning this year, and interest on rainy-day funds is down due to rate drops and the use of some of that money.

If we don’t have the money and really need to have all this work done, perhaps it’s time to prioritize better.  We continue to have money come in from the Fuel Tax which is supposed to be used for roads and bridges, and we have money coming from the Fed to cover some $350 million in infrastructure costs.

I’m opposed to the bonding.  I can’t see this being the right solution.   Culver presses the fact that it will bring jobs to Iowa, but once the money is spent, then what?  Then the jobs go away.  It seems to me that infrastructure management should be designed as a structured and sustainable function of  the government that grows at a rate tied to inflation and population growth.  We shouldn’t even have to come up with new solutions for infrastructure each year, and we definitely shouldn’t have to have special bonds to support maintenance and real growth related improvements.  Revenues specific to this operation should be tied directly to growth and use.  What makes increasing the Fuel Tax an appropriate option, in my opinion, is that this source of funding does not account for inflation automatically as it is structured today.

Let’s get the work done this year that is really needed; we’ve got the money for that.  Let’s get the areas impacted by last year’s disasters back on their feet and worry about making things even better next year.

Oh yeah, right, next year’s an election year.  Gotta choose doing what’s right versus getting elected.  Chet, I wouldn’t worry about that if I were you.  2010 will be one year when the prior 24 months won’t be so easily forgotten.

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I wonder if anyone has looked at the revenue impact of the smoking ban.  I’m just saying.

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