Weekend open thread: Money matters

What’s on your mind this weekend, Bleeding Heartland readers? This is an open thread.

After the jump I’ve posted a bunch of links about finances and spending, large and small.

Let’s start with some big-ticket items. The U.S. Treasury took the trillion-dollar platinum coin off the table this weekend. It figures that President Barack Obama would unilaterally disarm ahead of the impending debt ceiling showdown with Congress.

On the lighter side, Paul Shawcross, who heads the Science and Space Branch at the White House Office of Management and Budget, posted this official response to a petition urging the Obama administration to construct a “death star.” Excerpt:

The Administration shares your desire for job creation and a strong national defense, but a Death Star isn’t on the horizon. Here are a few reasons:

• The construction of the Death Star has been estimated to cost more than $850,000,000,000,000,000. We’re working hard to reduce the deficit, not expand it.

• The Administration does not support blowing up planets.

• Why would we spend countless taxpayer dollars on a Death Star with a fundamental flaw that can be exploited by a one-man starship?

Star Wars geeks and fans of the space program will enjoy reading the whole response.

Don McDowell, who wrote the Cyclone Conservatives blog during the 2007/2008 election cycle, paid $60 for labor and $45 for a rental truck to retrieve the giant metal ROMNEY Believe in Iowa sign that was offered for free last week on Craigslist. A unique piece of political memorabilia like that could be worth a significant amount of money someday. I don’t know what you’d do with it in the meantime. Here’s a photo of the eyesore; McDowell is second from right.

According to a new report from the Legislative Services Agency, “The average salary for a state worker who is not a supervisor is $51,700.” That does not include salaries at the state universities. The full report is here (pdf). Excerpt:

Between January 25, 2011, and August 7, 2012, the number of individuals receiving paychecks from State agencies declined by 929 employees. In terms of FTE [full-time equivalent] positions, there was a decrease of 641.0 FTE positions. Payroll costs showed a corresponding decrease of $58.4 million over the 18-month period. Not all of these costs are savings to the State budget. If jobs are outsourced, the costs reappear as outside contract costs. For example, the DAS eliminated vacant janitorial positions and some staff that oversaw construction projects through outsourcing with a projected net savings after paying for outside suppliers.7

During this time, State agencies also experienced employee turnover and the costs associated with replacing employees who left. Some turnover and the associated costs are inevitable. Some of the costs are direct cash outlays to pay for advertising the opening, for travel for persons interviewing for a position, hiring placement services to locate new employees, and other such items. Many of the costs are opportunity costs for agency personnel. Agency administrators and perhaps senior staff must spend their time reviewing resumes, interviewing candidates, and related activities instead of performing other regular job responsibilities. Staff may absorb the extra workload for the vacant position and this can translate into service delays, more stress, and decreased morale. These opportunity costs translate into reduced organizational efficiencies. The State agencies with lower turnover rates avoid the costs of replacing staff at the normal rates and are able to focus their work efforts on their other primary functions, that is, they operate more efficiently.

This analysis identified three of the larger State agencies with turnover in excess of the national average rate for the 18-month period examined. The DAS [Department of Administrative Services] excess turnover was estimated to cost $886,000 or 4.0% of its annualized payroll. The time, effort, and added expenses from excess turnover totaled between an estimated $2.6 million and $2.9 million statewide. Since many of these costs are opportunity costs, they will not be listed in an expense report but are absorbed as lost efficiencies.

The other two large agencies with “excess” turnover were the Iowa Department of Public Health and the Iowa Department of Revenue.

This report underscores an important fact lawmakers overlook when debating budget allocations: not all costs to the state appear as direct cash outlays. The Iowa Policy Project has repeatedly pointed out how some very expensive state tax breaks and tax credits help wealthy individuals or profitable corporations.

A related issue that comes up in state policy-making: the cost of taking action is easier to assess than the public benefit of taking that action, or the cost of doing nothing. The Sierra Club Iowa Chapter pointed out in its comments on Iowa’s draft strategy for removing excess nutrients from waterways,

Regarding the science assessment in the Strategy, we generally agree with the comments of the Iowa DNR in its November 1 document. We would note in addition that when the science assessment attempts to conduct a cost/benefit analysis, it only looks at direct costs to the entity undertaking nutrient reduction measures. There is no attempt to factor in the benefits of nutrient reduction nor the costs of not taking adequate measures to reduce nutrient pollution. These factors should be considered.

In that November 1 document, Iowa DNR experts sharply criticized the proposal:

“We are not willing to endorse this document as written,” a group of DNR runoff-pollution experts wrote in a lengthy comment letter after reviewing the plan. “Major fundamental flaws permeate the ‘strategy’ while concrete ideas for implementation are not provided.”

The objections include what the staffers saw as a one-sided, agriculture-friendly strategy for solving long-standing pollution problems disrupting the Gulf’s lucrative fishing industry as well as fouling waterways throughout the Iowa and other Midwest states.

“This document reflects a narrow view not appropriate for a state-issued document,” the DNR letter reads. “This is evidenced by entire paragraphs being copied from an Iowa Farm Bureau comment letter (without proper citation) submitted in response to the Raccoon River Master Plan, and all costs and benefits being based on production of a single commodity crop.”

Getting back to tax credits: Iowa lawmakers created a new solar tax credit during horse-trading toward the end of the 2012 legislative session. A report from the Department of Revenue shows that during 2012, 50 individuals claimed a total of $108,936 solar tax credits, and 14 corporations claimed a total of $66,676 in solar tax credits.

Total awards were $175,612 for the year to-date, $1.32 million below the award cap for calendar year 2012. The 01/01/2012-12/21/2012 average award for an individual was $2,179 and the average corporate award was $4,763. The current numbers are as of December 21, 2012.

Last week Bleeding Heartland user greggheide explained how the solar tax credit law could be improved to stimulate more distributed renewable energy generation.

The legislature’s 2013 session begins on Monday. I hope lawmakers will again vote to raise Iowa’s earned income tax credit. Doing so would benefit more than 200,000 households which could use the help. We’re coming out of a “lost decade” economically for low- and middle-income Iowans. Child poverty is a big and growing problem here. Many children living in poverty have working parents who would benefit from an increase in the earned income tax credit. Incidentally, the largest pockets of poverty in Iowa are in “regional centers,” towns with a population between 10,000 and 50,000, according to the Des Moines-based Child & Family Policy Center.

In 2011, the Iowa House and Senate twice approved tax bills including an increase in the earned income tax credit. Governor Terry Branstad line-item vetoed the measure twice, hoping to use the issue as leverage to obtain cuts in income taxes and commercial property taxes.

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