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Warped priorities from the Branstad administration

BY DI EDITORIAL BOARD | FEBRUARY 04, 2011 7:10 AM

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State legislatures across the country are now experiencing one of the more unattractive aspects of governing: cutting budgets.

Even Iowa, whose budget has been well-managed in recent years, is now forced to cut funding across many areas of its government.

In times of fiscal crisis, cuts are necessary, but Gov. Terry Branstad’s proposed allocation of appropriations displays dangerously skewed priorities. His advocacy for a slash in business taxes while defunding education is particularly heinous and misguided; instead of defending Iowa’s economy, these measures imperil our state’s public well-being.

Branstad repeatedly criticized former Gov. Chet Culver’s handling of Iowa’s finances, claiming Culver was spending irresponsibly. As Culver left office with a predicted $950 million surplus, these criticisms were mostly political rhetoric; it is a mistake, however, to think this figure proves budget cuts are unnecessary.

Culver had additional revenue as a result of the $1.9 billion of one-time stimulus funding that Iowa received during his term. While this extra source of revenue is not available to Branstad, Iowa’s surplus will be helpful in alleviating a forecasted budget shortfall — but not sufficient on its own, requiring additional spending cuts to balance the state books. But these cuts must be made prudently, with care taken to preserve the most important institutions of society.

One of the factors contributing to the necessity of budget reductions is an increase in state revenue over the last few years. Branstad’s plan includes a move that will lower revenue even further: tax cuts. Property taxes will receive a slight cut, but businesses will pay a full 50 percent less in taxes: 6 percent instead of 12 percent. New construction will be taxed at 60 percent of its value. The state will lose millions of dollars in revenue with very little benefit, and the action necessitates larger spending cuts than would be needed without the tax decrease.

The reason for this push is, ostensibly, job creation — a pernicious mantra used to justify recession tax breaks throughout America. Iowa is still recovering from the national economic downturn, and Branstad has expressed a desire to help small businesses grow in Iowa.

What the governor doesn’t mention is that under his predecessor, Iowa’s business environment is already relatively favorable. Forbes magazine picked Des Moines as the No. 1 place in the country for business and careers, and it is in the top 10 in the same magazine’s ranking of best locations to start a small business; six other Iowa metropolitan areas were listed in the top 20. The publication MarketWatch agreed, ranking Des Moines as the No. 1 location for small businesses.

Iowa’s well-educated workforce factored heavily into both publications’ reasoning for Iowa’s high rankings, but Branstad seems to completely disregard the importance of an educated workforce in overall economic growth.

His cuts will have a huge effect on education across the state, from preschool to graduate school. His proposal eliminates free preschool for Iowa’s 4-year olds and removes some funding for free and reduced-price lunches across the state. It also freezes the state’s implementation of the core curriculum — a common set of educational standards for elementary pupils.

But what may prove most harmful to the quality of Iowa’s elementary and secondary education is the amount of allowable increases proposed for the next two years: zero. Budget freezes will cause a serious decline in the quality of public education.

“It’s easy to look at it this way,” said Iowa City Superintendent Stephen Murley. “Regardless of what the Legislature decides, our costs will increase by 4 per cent every year. If we aren’t allowed to increase the budget, we are going to do less.”

That means layoffs in smaller districts, although Iowa City’s district is large enough to avoid terminating staff. For Johnson County, it means larger class sizes, fewer programs, and more work for teachers.

The University of Iowa will likely see similar consequences, along with higher tuition. The state Board of Regents proposed a nearly 5 percent tuition increase this week to compensate for de-appropriations. The Iowa House Republicans’ budget proposal includes reducing appropriations to the state’s public universities by an unspecified amount, which is wholly deserving of condemnation. The UI has already experienced program and teaching-assistant cuts; more reductions can only harm the quality of the university.

Investing in education is the single greatest method of helping Iowa grow, but Branstad’s shortsighted budget fails to account for the future benefits of a comprehensive, well-funded education system. Instead, he is proposing tax breaks for companies at the expense of Iowa’s schools — a deplorable choice that threatens the well-being of our state.


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