Expect more downward revisions in Iowa revenue estimates

Jon Muller examines factors contributing to Iowa’s budget crunch. What do you want first: the bad news or the “quite disturbing” news? -promoted by desmoinesdem

The Iowa Revenue Estimating Conference (REC) reduced its FY 2017 estimate for General Fund Revenues by $106 million. That’s on top of the $96 million downward revision in December 2016. Since the original estimate used for FY 2017 appropriations (December 2015), cumulative downward revisions total $243 million on a $7.3 billion budget.

This has led to all the gnashing of teeth that comes every time revenues begin to slow. The REC has never been particularly prescient when it comes to predicting the turn in receipts, either on the way down or the way up. I have some insight into this phenomenon because I used to be a revenue estimator for the Iowa General Assembly, and wasn’t any better than they are now. Indeed, economic models in general are not very good at predicting turns in the business cycle until after they happen. They are very good at generating consensus forecasts that tend to magically predict the next year will look a lot like the current year, at least during stable periods.

What’s new this time around is, according to policy makers expressing concern about the downgrade, is the reduction in revenues during what is considered a reasonably healthy economy. In my view, the stress on the General Fund is actually due to two primary factors. The economy is perhaps not quite as robust as consensus opinion suggests. Secondly, it appears the cost of House File 2433 passed during the 2016 legislative session, a bill providing a sales tax exemption for items consumed in manufacturing processes, was dramatically understated.

I suspect those looking to blame the sluggishness on a downturn in the farm sector will be disappointed as farm income growth begins to turn positive. Those who believed hundreds of millions of dollars of tax cuts and credits would spur state revenue growth should be equally disappointed. It’s just not happening.

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Three questions about how Iowa got into this budget mess

Iowa’s Revenue Estimating Conference delivered bad news yesterday. Revenues are lagging so far behind projections that even after enacting huge spending cuts in February, the state is on track to have a shortfall of $131 million at the end of the current fiscal year. Next year’s revenues are being revised downward by $191 million as well.

Governor Terry Branstad, Senate Majority Leader Bill Dix, and House Speaker Linda Upmeyer quickly announced plans to use the state’s cash reserves to cover the gap. Dix’s written statement explained, “We must not cripple our schools, public safety and many other essential services with further cuts this year. Our savings account exists for moments such as this.”

Two months ago, many Democratic lawmakers advocated dipping into “rainy day” funds as an alternative to the last round of painful reductions to higher education, human services, and public safety. At that time, Republican leaders portrayed such calls as irresponsible. A spokesperson said Branstad “doesn’t believe in using the one-time money for ongoing expenses.” Now, the governor assures the public, “Iowa is prepared,” thanks to hundreds of millions of dollars in the state’s cash reserves, and Dix boasts about the supposedly strong GOP leadership that filled those reserve funds.

Republican hypocrisy on state budget practices is irritating and all too predictable. But that’s not my focus today.

While transferring funds from cash reserves will solve the immediate problem, it won’t answer some important questions about how we got into this mess.

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What you need to know to fight the next four terrible Iowa Republican bills

Republicans have already inflicted immeasurable harm on Iowans during the 2017 legislative session, taking rights away from more than 180,000 workers, slashing funding for higher education and human services, and approving the third-smallest K-12 school funding increase in four decades. The worst part is, they’re nowhere near finished.

Iowa Senate Minority Leader Rob Hogg has flagged twelve of the most destructive bills still alive in the GOP-controlled House and Senate. Any Iowan can attend public hearings scheduled for March 6 or 7 on four of those “dirty dozen” bills. Those who are unable to come to the Capitol in person can submit written comments on the legislation or contact Republican state representatives or senators directly by phone or e-mail.

Here’s what you need to know about the four bills most urgently requiring attention.

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Weekend open thread: Post-legislative funnel edition

It was a busy week in Iowa politics, as state lawmakers raced the clock before the first “funnel” deadline on Friday. With few exceptions, non-appropriations bills not yet approved by at least one Iowa House or Senate committee are no longer eligible for consideration during the 2017 legislative session. For roundups of which bills are alive and dead, see James Q. Lynch’s story for the Cedar Rapids Gazette and the Des Moines Register article by William Petroski and Brianne Pfannenstiel. Bleeding Heartland covered the demise of the “personhood” bill here.

Some bills that didn’t clear the funnel may be attached to appropriations bills later. Republican State Senator Brad Zaun hopes to revive a medical cannabis proposal that way, Tony Leys reported for the Des Moines Register.

I enclose below Iowa Senate Minority Leader Rob Hogg’s post-funnel list of the “dirty dozen” bills that Democrats are most focused on blocking during the remainder of the legislative session.

This is an open thread: all topics welcome. I’d especially appreciate tips on newsworthy comments from today’s legislative forums around the state. A Democrat in Muscatine asked State Representative Gary Carlson this morning whether he had any evidence of election fraud and whether he would acknowledge that the Republican voter ID proposal is a voter suppression bill. Carlson told her, “I just want the right people to vote.” Probably more honest than he meant to be. John Deeth explained the latest disenfranchising provisions House Republicans want to attach to Secretary of State Paul Pate’s bill, now named House File 516.

Final note: although it was sunny and unseasonably warm today in Des Moines, only about 100 people showed up for the “Spirit of America” rally by the Capitol building. A much larger crowd came to the Capitol on a very cold Thursday in February to march against President Donald Trump’s “Muslim ban” and immigration executive orders. An estimated 26,000 turned out for the Iowa Women’s March at the same venue on a Saturday morning in January.

UPDATE: Added after the jump side by side photos of the Women’s March and today’s event. SECOND UPDATE: A reader sent me his photo (taken by a drone) of the crowd at the Capitol for the “Day Without Immigrants” rally on Thursday, February 16. Added below.

Zaun was the first speaker to the pro-Trump audience today, and he noted (accurately) that he was the first Iowa Republican elected official to endorse Trump for president. He didn’t mention that he had previously declared himself “110 percent behind” Wisconsin Governor Scott Walker, whose campaign flamed out months before the Iowa caucuses. On caucus night, Trump finished third in the Senate district Zaun represents, behind Senators Marco Rubio and Ted Cruz.

UPDATE: Past and future presidential candidate Martin O’Malley was back in central Iowa on March 4, attending a fundraiser for State Senator Nate Boulton, among other events. O’Malley’s 2016 presidential campaign had a strong organization on the east side of Des Moines, which is part of Boulton’s district. The former governor of Maryland has visited Iowa regularly since the election, including stops in Davenport to support the special election campaigns of Jim Lykam for the Iowa Senate and Monica Kurth for the Iowa House.

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Buy Your Seeds Now!

Advice from Laura Hubka, chair of the Howard County Democrats and member of the Iowa Democratic Party’s State Central Committee. -promoted by desmoinesdem

I suggest planting a very large garden this year if you like your produce.

All people with so-called “questionable immigration status” (brown people) are being rounded up. I get it. There are laws in this land. It makes me sick to my stomach and sad.

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Key Iowa Senate Republican: "Loser pays" bill going nowhere

A Republican bill that would have made Iowa courts far less accessible to ordinary people will die in an Iowa Senate subcommittee, GOP State Senator Charles Schneider told Bleeding Heartland on February 25. Bill Brauch, former director of the Consumer Protection Division in the Iowa Attorney General’s Office, explained here how the so-called “loser pays” bill “would in effect kill Iowa’s private consumer fraud law, and just about eliminate any other type of legal action by an individual against a defendant with money.”

Senate Judiciary Committee Chair Brad Zaun introduced Senate Study Bill 1008 during the first week of the legislative session, then assigned it to a subcommittee chaired by Schneider. Following a February 25 public forum in Clive, I asked Schneider about that bill’s status. He replied, “I don’t think it’s going anywhere. I haven’t held a subcommittee meeting for it, and I’m not planning to.”

I mentioned that Senate Majority Leader Bill Dix had named “loser pays” as one of his top four priorities in an interview with Radio Iowa. Schneider responded, “I’m not planning to hold a subcommittee meeting on it. I don’t think any other tort reform bills include a ‘loser pays’ section in them.”

Under Iowa legislative rules, most non-appropriations bills will be dead for the year if they have not cleared at least one Iowa House or Senate committee by the first “funnel,” coming up on Friday, March 3. The leaders of subcommittees and committees have discretion on what bills to bring up for a vote.

I’m pleasantly surprised to learn Senate Study Bill 1008 will go down without a fight. Only a month and a half ago, Dix cited a “measure that ensures losers in those court cases pay for the cost associated with the case” as one of “four bills that I believe define us and give Iowans a clear indication of where we plan to go with policies for our state.” The Iowa Association of Business and Industry, a lobby group with substantial influence among statehouse Republicans, registered in favor of this bill almost immediately. Perhaps Schneider, who practices law as a day job, was able to convince non-attorneys Dix and Zaun that “loser pays” is unnecessary and unfair. Or perhaps Zaun miscalculated by putting Schneider in charge of this subcommittee.

Whatever caused this bill’s demise, any bit of good news from this dreadful legislative session is worth celebrating.

UPDATE: Reader Marian Kuper noticed that Senate Study Bill 1144 contains a “loser pays” clause for nuisance lawsuits against large livestock farms. Senate Agriculture Committee Chair Dan Zumbach proposed that bill, which contains several provisions designed to shield confined animal feeding operations (CAFOs) from lawsuits. It has passed a subcommittee and appears likely to survive the funnel, with support from several Big Ag lobby groups.

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