Capitol Update Week Four

January Revenue Report Paints Complicated Picture on FY 14

Monday’s report from the Legislative Services Agency on General Fund revenue for the month of January may cause some concern amongst those looking for ways to dramatically increase state spending.  With state revenue being 1.2 percent below FY 13’s level through seven months, many policymakers are urging caution when considering state spending options and future funding commitments.

While many are concerned about the lackluster growth in personal income tax revenue, sales and use tax have increased steadily.  Corporate income tax, projected by the Revenue Estimating Conference to fall, has seen nearly double digit growth so far this year.  And tax refund payments slowed dramatically in January, which is a significant shift from the previous six months.

It is important to note that having a clear view on how state revenue came in during FY 2014 may not be possible until after the fiscal year has closed on June 30.  The changes in how tobacco tax revenue and gaming receipts are accounted for will result in the General Fund being reduced in FY 2014.  Other factors that impact overall revenue will be the increase in the Earned Income Tax Credit and the first year of the Taxpayers Trust Fund tax credit.  These are a significant factor in why General Fund revenue is expected to be less in FY 2014.

Last year’s federal tax changes also impact how state revenue figures appears each month.  With the expectation of the Bush-era tax cuts expiring, many Iowans paid certain taxes early to avoid higher rates.  Once Congress came to an agreement on tax policy, other taxpayers (primarily farmers) were given a one-time extension on when they were required to file.  All these situations created an unusual revenue flow for FY 13.  This also makes it difficult to make comparisons with FY 2014.

The net effect of all these factors is that it is difficult to forecast just how the fiscal year will end up.  Such a blurry picture reinforces the need to keep FY 2015 spending below the projected ongoing revenue number, and it certainly serves as a warning against making major funding commitments in FY 2016 and beyond.

Secretary Northey Encourages Century and Heritage Farm Owners to Apply

On Thursday, January 30, 2014, the Iowa Department of Agriculture and Land Stewardship (IDALS) issued a press release in which Iowa Secretary of Agriculture Bill Northey encouraged eligible farm owners to apply for the 2014 Century and Heritage Farm Program.  The program is sponsored by IDALS and the Iowa Farm Bureau and recognizes families that have owned their farm for 100 years in the case of Century Farms and 150 years for Heritage Farms.

Applications are available on the Department’s website at www.IowaAgriculture.gov  by clicking on the Century Farm or Heritage Farm link under “Hot Topics.”

The ceremony to recognize the 2014 Century and Heritage Farms is scheduled to be held at the Iowa State Fair on Tuesday, August 12th.  The Century Farm program began in 1976 as part of the Nation’s Bicentennial Celebration and 17,851 farms from across the state have received this recognition.  The Heritage Farm program was started in 2006, on the 30th anniversary of the Century Farm program, and 650 farms have been recognized.  Last year 365 Century Farms and 67 Heritage Farms were recognized.

Congressional Report:  Health Law Will Reduce Jobs, Grow Deficit

 The Affordable Care Act will reduce the total number of hours Americans work by the equivalent of 2.5 million full-time jobs by 2014, according to a nonpartisan Congressional Budget Office (CBO) report.  The CBO analysis, part of the office’s annual economic and budget outlook, delivers a detailed analysis of how the new law affects work incentives.

An earlier report forecasted a reduction equivalent of 800,000 jobs by 2021, but the revised figures indicate workers will either leave the workforce or reduce their hours because the ACA allows workers to obtain subsidized health insurance coverage outside of the workplace.  The report also pointed out that employees may decide to work fewer hours to shrink their income and qualify for either federal premium support subsidies or expanded Medicaid coverage.

The CBO cautioned that because its figures turn dramatically on individual employer and worker choices, the new law’s overall impact on unemployment and the labor force is hard to know precisely.  For example, the CBO wrote, employees will eventually bear the brunt of the employer mandate through reduced wages—which will more greatly affect labor supply than demand.    The ACA provisions most responsible for constricting labor supply included subsidies for health insurance exchanges, Medicaid expansion, penalties on employers that decline to offer insurance and new taxes.

The report went on to project the U.S. will spend $2 trillion over the next ten years on the ACA’s expanded Medicaid, premium support and employer tax credits.  Over the same period, the law will generate $517 billion in “penalties” on uninsured people, employers and excise-taxes on high-premium insurance plans.  But despite the new revenue and increased spending, the report concedes the ACA will fail to dramatically reduce the number uninsured, cutting it from today’s 45 million to 31 million by 2024.

Week Four Recap

I chaired a subcommittee this week for house file 2058. The bill requires each state agency to post fees on the State website and notify stakeholders when there will be any increases. Currently, some agencies post fees on their individual website. HF 2058 would create a centralized database so all fees will be in one place online. This will serve Iowans better by allowing them to see fees they might be subject to without wasting time visiting dozens of sites and phoning agencies.

I also sat on a subcommittee for HSB 577. The bill would allow naturopathic physicians to become licensed and practice in Iowa. These types of physicians use herbs and natural remedies and incorporate them into modern medicine. Iowa, Tennessee and South Carolina are the only states that don’t allow naturopathic physicians to practice. Seventeen other states license and regulate this industry. Iowa would join those states. All other states have open practice laws and aren’t subject to regulation.

Wednesday night I toured the Hall of Laureates. The building is the old Des Moines public library. It is currently home to the annual World Food Prize. The World Food Prize came about from an idea by Norman Borlaug and John Raun, who wanted to reward people in innovative thinking in agriculture. They wanted Iowa to be the center of agriculture’s innovative thought process.

The building has a room of beautiful art telling stories of Iowa history. Our tour guide told an interesting story that stuck with me. Part of that collection, there was a painting of a Cambodian woman standing in front of a refugee camp. You might remember back in the 1970s when Iowa welcomed refugees that had nowhere to go. Iowa Governor Ray saw a news story depicting a boat that couldn’t enter the port and sank. Many Cambodian refugees lost their lives in that incident. It moved him write a letter to President Carter welcoming more refugees and found a handful of other states to do the same. It was after Iowa’s lead that other countries around the world began welcoming Cambodian refugees. I would encourage you to put it on your list to see in Des Moines if you’re interested in the history of Iowa.

I want to congratulate the citizens of Lake Delhi on receiving their permit from the Army Corps of Engineers. I went along with Steve Leonard and Senator Zumbach to pick up the permit in Rock Island last Friday. I want to give a big thanks to Steve, the Lake Delhi trustees and all that have worked tremendously hard to get to this point. Because of you, we will soon have our lake back!

This Friday I will be at the Manchester Farm Bureau Forum at 115 E Delaware Street. It starts at 10 am and is open to the public. I encourage you to attend.

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.iowa.gov or by phone at (515) 281-7330.

Sincerely,

Rep. Lee Hein

 

 

 

 

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