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HomeMy WebLinkAbout1998-10-20 Info Packet t_~ % CITY COUNCIL INFORMATION PACKET O~tob~r g, I gg8 MiSCEL~N~EOUSiTEMSi i IP1 Meeting Schedule and Tentative Work Session Agendas IP2 Memorandum from City Manager: Pending Development Issues IP3 Letter from City Manager to Business Owners: Landfill Disposal Fee IP4 Release: Landfill Disposal Fee Reduction IP5 Letter to Mayor from Kenneth Boyd (Iowa Department of Economic Development): Community Economic Betterment Account (CEBA) Program IP6 Memorandum from City Attorney: Vacation IP7 Memorandum from City Clerk: September 29 Work Session IP8 Memorandum from City Clerk: Items for Joint Meeting of October 28 IP9 Iowa City Police Department Use of Force Report - September 1998 IP10 Letter from Trudy Day (City High School) to Police Chief: Vandalism IPll Memorandum from Dianna Furman: Utility Discount Program Statistics by Month - June 1997, Fiscal Year 1998 and Fiscal Year 1999 IP12 Agenda: October 8 JC Board of Supervisors City Council Meeting Schedule and Tentative Work Session Agendas 10-09-98 IP1 October 9, 1998 lOctober 7:00p 14 SPECIAL COUNCIL WORK SESSION [if quorum] City Hall Day Wednesday I Coralville City Hail f October 6:30p 19 COUNCIL WORK SESSION Monday council Chambers lOctober 7:00p 20 FORMAL COUNCIL MEETING Tuesday I Council Chambers lOctober 27 Tuesday I 6:00p SPECIAL COUNCIL WORK SESSION Capital Improvement Program Council Chambers IOctober 28 Wednesday I 4:00p SPECIAL COUNCIL WORK SESSION Joint Meeting with Cities of Coralville and North Liberty, JC Board of Supervisors, IC School Board Separate agenda TBD INovember 2 Monday 6:30p COUNCIL WORK SESSION Council Chambers I November 3 7:00p FORMAL COUNCIL MEETING Tuesday I Council Chambers Meeting dates/times subject to change FUTURE WORK SESSION ITEMS Circus and Rodeo Permit Regulations North End Parking College Street Traffic Calming Water Project Update Deer Management Hickory Hill West Housing Bond Program Chutes and Vaults Sidewalk Cafes City of Iowa City MEMORANDUM I10-09-98 IP2 Date: October6,1998 To: City Council From: City Manager Re: Pending Development Issues An application submitted by Mike Dombroski for a final plat of Prairie Meadows, Part 2, a 16.52 acre, 7-lot, residential subdivision located in the Suburban Residential, County RS zone for property located on the east and south side of Prairie du Chien Road, nodh of its intersection with Linder Road, in Johnson County. An application submitted by Parkview Evangelical Free Church for a special exception to permit a religious institution expansion, that is, the construction of a new addition and parking area, for property located in the Low Density Single-Family Residential (RS-5) zone at 15 Foster Road. An application submitted by Jim O'Brien for a special exception to permit the establishment of an eider congregate residence on Lot 8 of Longfellow Manor Subdivision for property located in the Medium Density Single-Family Residential (RS-8) zone on Longfellow Place. An application submitted by Christian Retirement Services to rezone a 0.2 acre parcel from Medium Density Single-Family Residential (RS-8) to Planned High Density Multi-Family Residential (RM- 44) for properly located at 703 Benton Court. An application submitted by Maxwell Development Company to rezone a 21.26-acre parcel, Lot 8 and Outlot A, WB Development, and Lot 1, Resubdivision of Outlot A WB Development, from Intensive Commercial (C1-1) to Sensitive Areas Overlay (OSA-CI-1) for property located on the east side of Naples Avenue, south of its intersection with Alyssa Court. tp2-2sa.doc October 2, 1998 CITY OF I0 WA CITY Re: Landfill Disposal Fee Reduction Dear Business Owner: The Iowa City City Council, as owner and operator of the Iowa City Landfill, has adopted a plan to reduce the landfill disposal fee by $10 per ton beginning January 1, 1999. The rate will be reduced from $48,50 per ton for Iowa City users to $38.50 per ton, and for all other landfill users the rate will decrease from $53.50 per ton to $43.50 per ton. We have projected this rate for calendar year 1999 and 2000. The purpose of this letter is to inform you, as a landfill user, that a rate change will take place so you can adjust your future budgets and/or refuse contracts accordingly. The rate change is a result of the Iowa City Landfilrs recently approved long range plan. This plan extended the landfilrs site life from 12 to 33 years. With the longer anticipated site life, the Iowa City Landfill can spread their operating and closure/post-closure costs out over a longer period of time, enabling reduction of the disposal fee. The disposal fees will again be evaluated in two years. I would also like to use this opportunity to inform you that the City Council has adopted a plan to ban corrugated cardboard from the landfill effective January 1, 2000. Corrugated cardboard has the wavy medium in the middle and does not include cereal box type cardboard. More information on the corrugated cardboard ban will be provided throughout the following year. For more information, please contact Brad Neumann at 356-5235. Sincerely, Step J. Atk City Manager jw/Itr/sa-d~spl .doe 410 EAST WASHINGTON STREET · IOWA CITY, IOWA :~2240-1826 · (319) 356-5000 · FAX (319) 356-3009 CITY OF I0 WA CITY October 2, 1998 PRESS RELEASE: Re: Landfill Disposal Fee Reduction Contact Person: Brad Neumann, Solid Waste Management Planner Johnson County Coundl of Governments The Iowa City City Council, as owner and operator of the Iowa City Landfill, has adopted a plan to reduce the landfill disposal fee by $10 per ton beginning January 1, 1999. The rate will be reduced from $48.50 per ton to $38.50 per ton for Iowa City users, and for all other landfill users the rate will decrease from $53.50 per ton to $43.50 per ton. The rate change is a result of the Iowa City Landfill's recently approved long range plan. This plan extended the landfill's site life from 12 to 33 years. With the longer anticipated site life, the Iowa City Landfill can spread their operating and closure/post-closure costs out over a longer pedod of time, enabling reduction of the disposal fee. The disposal fees will be evaluated in two years. The City Council has also adopted a plan to ban corrugated cardboard from the landfill effective January 1, 2000. Corrugated cardboard has the wavy medium in the middle and does not include cereal box type cardboard. More information on the corrugated cardboard ban will be provided ,; throughout the following year. 410 EAST WASHINGTON STREET · IOWA CITY. IOWA ~2240-1826 · (319) 356-5000 · FAX (319) 3:~6-5009 Thursday, October 01 1998 Ms. Naomi Novick, Mayor City of Iowa City City Hall- 410 Washington Street Iowa City, Iowa 52240-1826 10-09-98 IP5 IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT RE: Community Economic Betterment Account (CEBA) Program Contract Number: 94-PRO-01/City of Iowa City/National Computer Systems, Inc. Dear Mayor Novick: Congratulations on the completion of the five year fulfillment of the above-captioned project employment goals. The Department's review of the employment data indicates that the Business has maintained or exceeded the employment level the Business had reported at the conclusion of the project on August 30, 1995. In summary: 1. The Project Completion Date was August 30, 1995. 2. At the Project Completion Date the Business employed 899 FTE jobs. 3. The Agreement Expiration Date was September 30, 1998. 4. At the Agreement Expiration Date the Business employed 855 FTE jobs. The Job Attainment Goal for this project was 800 FTE jobs. Since employment levels have been successfully maintained and verified, the Department has closed project file on the forgivable portion of the project and hereby forgives the forgivable loan in the amount of $635,000. The forgiven loan amount may be considered taxable income. Any questions you have concerning the tax implications of the loan should be directed to Donald Cooper at the Iowa Department of Revenue and Finance, Division of Compliance at 515/242-4250. We would like to express our thanks to your community development staff and the Business for assisting in the administration of this successful project. We look forward to working with you on your community's future economic development projects. Please do not hesitate to call me or your Project Manager at 515/242-4848 if you should have any questions. Sincerely, Program Manager CC: Robert Knittie, IDED-Accounting file TERRY E. BRANSTAD, GOVERNOR DAVID J. LYONS, DIRECTOR 200 East Grand Avenue · Des Moines, Iowa 50309-1827 · 515/242-4700 · Fax: 515/242-4809 info@ided.state.ia.us · TTY: 1/800-735-2942 · www.state.ia.us/ided City of Iowa City MEMORANDUM Date: October 9, 1998 To: City Council From: Eleanor Dilkes, City Attorney Re: Vacation I will be on vacation the week of October 12th. Sarah will be in charge while I'm gone and she and Annie will know how to reach me. cc: Department Directors Im\mem\edl 0-8.doc City of Iowa City MEMORANDUM I10-09-98 IP7 Date: October6,1998 To: Mayor and City Council From: Marian K. Karr, City Clerk Re: Council Work Session - Joint Meeting, September 29, 1998 - 6:30 PM City Council: Champion, Kubby, Lehman, Norton, O'Donnell, Thornberry, Vanderhoef UI Student Senate Facilitators: Zak, Wolseth, Villaneuva, Rudd, Chiesa, Pettinger, Shuman, Murphy Tape: 98-108, Side 1. IntrOduCtions 98-108 S1 City of Iowa City Mayor Lehman welcomed University student participants and emphasized that University of Iowa Students are members of the Iowa City community. University of Iowa Student Senate President White welcomed the City of Iowa City City Council members. White explained the University student group facilitators will facilitate group/table discussions about issues related to both the University and City of Iowa City. University of Iowa students and City Council Members held group focus discussions about safe travel, lighting and police/public safety roles and attitudes. The discussion groups reported the following: GROUP CHARTS: Table 1 - Lana Zak Walking beats - campus security Insufficient volunteers Safewalk Expand Safewalk hours. Weekends and later hours Saferide - Bus for drunks Cambus after midnight Police statistics. ICPD/Campus Security Saferide off campus Saferide/Safewalk Table 2 - John Wolseth Safewalk expansion Free phones on campus Expand "Blue light" off campus Joint bus venture - UI/City i.e. downtown shuttle expand weekend hours Joint Meeting September 29, 1998 Page 2 Table 3 - Jess Villanueva Later night bus service Consistent bike registration rules between City and University Availability of campus phone outside of academic buildings, well lit areas Table 4 - Abby Rudd Bike path on east side of river Ped lighting from Church to Park Road on Dubuque Table 5 - Tom Chiesa Lighting in the Broadway areas Lighting going south on Dubuque Street towards Mayflower Lighting in City Park across from Mayflower Lights in ped mall Issue of street lights not existing Light back of sidewalks for ped. [No Table 6] Table 7 - Sarah Pettinger Police intervention-parties. Police can help if getting out of control PERCEPTION Public safety doesn't carry weapons. Tragedy needed to change? Police Citizens Review Board. Confidential complaint or ICPD citizen complaint Public safety-formal complaint forms, too. IC does have gang problem. Police and citizens responded. Bicycles can be on Univ. sidewalk but not on City and causes problems. Skateboarders Table 8-Scott Shuman Views of Public safety_ Not real cops Do not know range of capabilities May not see Views of PD The "enemy" Most interactions are extremes (get helped or being ticketed) Ways to change Personalize it Programs in residence halls Put programs in center of rights Table 9-Shuan Murphy Attitude/Relationship between students and PD'8 PD's report good intentions majority of time However, general student attitude is bad reflecting lack of personal contact Promoting better attitude presents problems, i.e. notification of police inside to bars Many of the problems are closely related to alcohol Influence enforcement has on drinking related problems. Meeting adjourned at 8:30 p.m. clerk\mins\0929ws.doc City of Iowa City MEMORANDUM DATE: TO: FROM: RE: October 9, 1998 Mayor and City Council Marian K. Karr, City Clerk Items for Joint Meeting of October 28, 1998 Please forward to me any agenda items for the upcoming meeting by October your direction the following items will be included: Discussion of Sales Tax Development along fringe areas (i.e. Herbert Hoover Highway/Taft Speedway) At ~OFFICER 47 L~ ~ ~ Li ~f s~, U100998 OCT 0 1998 IOWA CITY POt, XCE DEPARTMEN'IcITY MAHAGER'S OFFICE USE OF FORCE REPORT SEPTEMBER, 1998 DATE CASE # INCIDENT 09-01 98808302 Medical Assist FORCE USED Officer found a subject who was delusional and taken an overdose of medicadon. When requested to go to the hospital he refused. A goose neck come along was applied and he was escorted to the car and taken to the hospital. 95 09-03 98808370 Disorderly Conduct Officer saw two people pushing one another. The officer pushed one person away and applied a wrist flex on the other. The two were separated and sent their separate ways. 92 09-03 98808401 Injured animal An injured raccoon was shot with the officer's sidearm. 32 09-04 98808413 Public Intoxication Canying a concealed weapon Subject interfered with an investigation and officers grabbed his arms. He was placed against a wall and handcuffed. 27,53 85 09-05 09-05 98808469 98808491 Possession Under Legal Age, Public Intoxication Fight in progress Officers were talking with the subject about a PAULA charge and he attempted to nm. Officers grabbed his arms and directed him to the ground. Subject fled on foot and was caught in an apartment hallway. The officer had to grab his arm and escort him back to the scene. 50 85 11,37 09.4)5 09-06 09-07 98808540 98808562 98808611 Public Intoxication Burglary Domestic Assault Officer arrested the subject and handcuffed him. The man resisted the officer and was taken to the ground until a car arrived to transport him to jail. Officer drew his sidearm while checking a home that had been burglarized. A man was placed under arrest for domestic assault. He resisted attempts to place handcuffs on him. One officer applied a wrist flex. The man continued to resist and he was sprayed with OC. OFFICER 39 48 39 3,32 24, 40 32, 41 36 DATE o9-11 9-11 9-12 9-12 9-12 9-13 9-13 CASE # 98808724 98808727 98808802 98808855 98808860 98808866 98808880 INCIDENT Criminal Mischief Possession of Alcohol Under Legal Age Fight Interference With Official Acts OWI Public Intoxication OWI FORCE USED After being placed under arrest a man refused to get into the squad car. The officer got the man to double over and directed into the car. The man took off running from the officer when told to stop. The officer caught him and took him to the ground. Three times the subject attempted to get away while being handcuffed. The third time he was sprayed with OC. The officer saw a female assaulting a man. The officer grabbed her ann and pulled her away from the man. After being placed under arrest she resisted efforts to get her to the squad car. The officer had to hold on to her elbows until they got to the car. Subject was placed under arrest, but refused to be handcuffed. Officers placed him against the wall and attempted to pull his arms back. When he resisted the officer used a pressure point control technique. He was then handcuffed and placed in the back of the squad car. The man attempted to elude officers with his car. When he finally stopped he got out of the car and walked towards officers. He was ordered to stop and when he didn't he was taken to the ground. Officers responded to a man causing problems at a bar. The man was placed under arrest and resisted attempts to be handcuffed. Officers pulled his hands behind his back and handcuffed him. Driver of a car stopped for drunk driving refused to get out of his car. He attempted to restart the car and drive away. The officer grabbed his ann and pulled him out of the car. OFFICER DATE 16 9-13 11, 26 9-13 9,13, 40, 42,95 9-13 27, 32 9-15 39 9-16 48 09-19 39 9-19 CASE # 98808886 98808888 98808902 98808966 98809014 98809121 98809159 INCIDENT OWI Public Intoxication Burglary in progress Fight OWI Disturbance in a bar FORCE USED Subject was placed under arrest for drunk driving. He refused to be handcuffed and ran away. The officer caught him and ordered him to the grotmd. He was handcuffed. After being told he was under arrest the man started to walk away. Officers grabbed his arms and placed him against a wall. He continued to resist officers. One officer sprayed him with OC and he was taken to the ground. Subject was caught running out of a house that he had burglarized. He was taken to the ground where he actively resisted. He was sprayed with OC. He still resisted and tried to reach for his waistband. An officer grabbed him and applied pressure under his chin. He was then handcuffed him. The woman was placed under arrest for disorde~y conduct. She refused to be handcuffed and attempted to kick officers. She was handcuffed and while walking to the squad car buckled her legs and refused to walk. A wrist flex was applied and she was escorted the rest of the way. Subject was arrest and refused to get in to the squad car. The officer applied pressure to the back of his head and also his mid-section. When the man doubled over his placed in the car. The officer recognized the man as having an outstanding warrant. The man ran from the officer and was caught. He swung his arms around, resisting the officer's attempts to handcuff him. When the officer reached for his OC the man quit resisting. The man ran from officer during an investigation. The officer caught him and directed him toward the ground. OFFICER 36 36 48 26 24, 42 39, 42 35, 47 34, 94 DATE 9-20 0%20 9-2o 9-22 9-25 9-26 9-26 9-24 CASE # 9880916 1 98809166 98809174 98809233 98809407 98809412 98809415 98809310 IINCIDENT Interference with Official Act OWI Theft Public Intoxication Disorde~y Conduct Criminal Trespass Fight Public Intoxication Medical ,Assist FORCE USED The subject ran at officer sweating and waving his arms in a threatening manner. The officer grabbed one arm and put it behind his back and handcuffed him. While at the jail the subject arrested attempted to harm himself. The officer took him to the floor and held hi~n there until jail staff could assist. Employees flagged officers down about two subjects who had stolen some beer. The subjects ran from officers. When they were caught they were taken and ordered to the ground where they were handcuffed. Officer assisted the man walk down a flight of steps by holding onto his ann. At the jail the subject refused to get out of the car and had to be assisted out. The subject refused to put his hands behind his back. Officers grabbed an ann and pulled them back. He was then handcuffed. The subject refused to put his hands behind his back. Officers grabbed an ann and pulled them back. He continued to resist and a pressure point control technique was applied. He was then handcuffed. Officers grabbed the man's ann when he tried to walk away. He resisted and was placed against a squad car. He was handcuffed. A physician called for assistance in getting a patient to the hospital. The patient refused and was escorted to the squad car. She didn't wish to get inside, so officers picked her up and placed her in the car, OFFICER 48 DATE 9-30 CASE # 98809544 INCIDENT Disorderly Conduct FORCE USED The man was involved in an altercation and ran off when officers arrived. When caught he refused to put his arms behind his back. The officer grabbed the man's ann and pulled it behind his back. He was handcuffed CC: Chief ~ Manager Captains Lieutenants Library City Clerk Hurd City High School 1900 Morningside Drive Iowa City, IA 52245 (319) 339-6811 Fax (319) 339-5705 "The School That Leads" Trudy Day, Ed.D Principal Shirley J. Fouts Assistant Principal Jim S. Casas Assistant Principal Larry Brown Athletic Director October 2, 1998 R.J. Winkelhake Chief of Police 410 E. Washington St. Iowa City, IA 52240 CITY MANAGER'S Dear Chief Winkelhake, I wanted to take a moment and thank you and your officers for their outstanding work this past Wednesday evening at City High School. As you know, we had rather extensive vandalism at our building and grounds. Due to the efficient and effective work of your force, much more serious damage did not occur to our property, damage which we understand was planned for the evening. Your officers acted promptly, judiciously, and thoughtfully to stop the vandalism and apprehend the young people who committed the action. I appreciate the professionalism with which they handled this situation. Thank you, additionally, for your constant and dependable help to us at City High School whenever we need you. I always trust that your officers respond to our call quickly and most supportive of any need we express. We have enjoyed continuing to build a close working relationship with you in support of the growth and development of our students. Please let me know all ways City High School can be helpful to you and to the Iowa City Police Department. Again, thank you and your officers for their exemplary assistance at City High School last Wednesday. Sincerely, Principal Copy:-Steve Adkins, City Manager Dr. Barb Grohe, Superintendent "The School That Leads" Date: To: From: Subj: Treasury Division Memorandum 1 -Ocb98 Utility Discount Program Statistics by Month - June, 1997, Fiscal Year 1998 and Fiscal Year 1999 Water Sewer Refuse Total Accounts Month Recyling Water Sewer on Discount 1997 Discounts Discounts Proc)ram Water Discount Tax Discount Sewer Discount Refuse Discount Jul-96 118 30 148 June 175 51 226 1.149.44 56.13 1,207.81 1,148.00 FY98 July 177 51 228 1,146.88 56.03 Aug 166 52 218 1,159.68 56.63 Sept 171 57 228 1,111.04 54.28 Oct 177 60 237 1,185.28 57,90 Nov 173 59 232 1,216.00 59.40 Dec 171 59 230 1,205.76 58.88 Jan 173 60 233 1,192.96 58.25 Feb 182 65 247 1,218.56 59.52 Mar 179 73 252 1,141.65 57.15 Apr 180 77 257 621.27 31.26 May 178 76 254 923,94 46.27 Jun 174 75 249 899.16 45.15 FY Totals 2101 764 2865 13,022.18 640.72 1 205.12 1 218.57 1 167.46 1 245,47 1 277.75 1 266.99 1 253,54 1 280.44 1 144.88 623.04 926.56 901.70 13,511.52 1,141.44 1,154.56 1,085.69 1,148.04 1,151.29 1,151.29 1,134.88 1,161.12 1,659.68 721.60 1,210.33 1,174.24 13,894.16 FY99 Jul 109 59 168' 431.88 21.61 Aug 115 59 174 612.42 30.70 Sept 120 62 182 631.89 31.67 FY Totals 344 180 342 1,676.19 83,98 *Renewal for verification of eligibility status were sent April. 1998 and due back in Treasury June 30, 1998. Customers who did not respond were remove from the discount program in July. 433,10 614.16 633.68 1,680.94 478.88 728.16 780.64 1,987.68 utildis.xlsl 0/1/988:17 AM Recycling Discount 367.50 365.40 369.60 347,55 367.50 368.55 368.55 363.30 371.70 531.30 231.00 387.45 375.90 4,447.80 153.30 233,10 249.90 636.30 Total Discounts 3,928.88 3,914.87 3,959.04 3,766.02 4,004.19 4,072.99 4,051.47 4,002.93 4,091.34 4,534.66 2,228.17 3,494.55 3,396.15 45,516.38 1,518.77 2,218.54 2,327.78 6,065.09 1B/BT/BB B5:13:24 319-354-4213 -> 3193565BB9 IO~A CITV CLEIE 10-09-98 ~ J.ohn~on Count* Joe Bolkcom, Chairperson Charles D. Duffy Jonathan Jordahl Stephen P. Lacina Sally Slutsman BOARD OF SUPERVISORS October 8, 1998 FORMAL MEETING Agenda 1. Call to order 5:30 p.m. 2. Action re: claims 3. Action re: formal minutes of October l't a) Action re: b) Action re: c) Other Action re: payroll authorizations Business from the County Auditor permits reports 6. Business from the County Afiorney a) Other 7. Business from the Board of Supervisors a) Action re: appointment to the Senior Center Commission for a term ending December 31, 1999. b) Other 8. Business from the Planning and Zoning Administrator a) Final consideration of application Z9809 of Donald Ballard to correct the legal description of Ordinance 04-16-98-Z5. b) Other 913 SOUTH DUBUQUE ST. P.O. BOX 1350 IOWA CITY, IOWA 52244-1350 TEL: (319) 356-6000 FAX: (319) 356-6086 18/82/98 09:13:49 319-354-4213 -> 3193565889 I0~ CITY CLENR Page 88Z Agenda 10-8-98 Page 2 6:00 p.m. - Public Hearing on Conditional Use Permit, Zoning, Platting, and Amendment applications: a) Discussion/action re: the following Conditional Use Permit: Application CU9805 of Mike and Mary Mango, signed by Mike Mango, requesting a Conditional Use Permit to operate an outdoor storage facility on Lots 2 and 3 of Coral Village Estates located in the SE ¼ of the NE ¼ of Section 24; Township 81 North; Range 7 West of the 5tn P.M. in Johnson Cotrely, Iowa ffhis property is located at 3353 Sandy Beach Road NE which is on the south side of Sandy Beach Road NE, approxin~tely ~ of a mile east of the Sandy Beach Road and Lake Manor Road NE intersection in Jefferson Twp.). b) First and Second consideration of the following Zoning application: Application Z9836 of Nellie Donovan, owner, Iowa City, Iowa, signed by Jerry Eyman and Richard Kordick, requesting rezoning of 15.0 acres from A1 Rural to CP-2 Planned Commercial of certain property described as being in the SW ¼ of Section 5; Township 79 North; Range 5 West of the 5th P.M. in Johnson County, Iowa (This property is located on the north side of Herbert Hoover Highway SE, approximately ~ mile east of its intersection with 1-80, west of the existing Gateway Development in Scott Twp0. c) Discussion/action re: Application SP17, signed by Jerry Eyman, requesting approval of a site plan for Lot 2 of Gateway First Addition. This property is located on the north side of Herbert Hoover Highway NE, approximately ¼ of a mile west of the 1-80 and Herbert Hoover Highway intersection in Scott Twp. 10/BT/gB Bg:14:Z7 319-354-4Z13 -> 3193565BB9 IOOA CITY CI~RK Page 803 Agenda 10-8-98 Page 3 d) First and Second consideration of the following Zoning applications: Application Z9837 of Ray S. Hruby, Oxford, Iowa, requesting rezoning of 3.0 acres from A1 Rural to RS-3 Suburban Residential of certain property described as being in the NW ¼ of Section 18; Township 80 North; Range 7 West of the 5th P.M. in Johnson County, Iowa (This property is located on the south side of 260th Street NW, approximately ¼ of a mile west of it's intersection with Greencastle Avenue NW in Madison Twp.). Application Z9838 of Mary Evelyn Murphy, Noah Liberty, Iowa, signed by Carmen Davis, Tiffin, Iowa, requesting rezoning of 9.64 acres from A1 Rural to RS Suburban Residential and RS-3 Suburban Residential (approximately 4 lots) of certain property described as Lot 1 of Pirkl's Second Subdivision located in the NE ¼ of the NW ¼ of Section 20; Township 80 North; Range 6 West of the 5th P.M. in Johnson County, Iowa (This property is located on the west side of Noah Liberty Road NE, approximately ¼ of a mile south of it's intersection with Dubuque Street NE in Penn e) Discussion/action re: the following Platting applications: Application S9840 of Linda Edge°Dunlap, signed by Tom Anthony of Landmark Surveying and Engineering, requesting preliminary and final plat approval of Austin Heights - Part 2 (A Resubdivision of Austin Heights), a subdivision described as being located in the SE ¼ of Section 20 and the SW ¼ of Section 21; all in Township 78 North; Range 6 West of the 5th P.M. in Johnson County, Iowa (This is a 2-1ot, 29.512 acre, one residential and one outlot subdivision, located on the north side of 540th Street SW in the NW quadrant of the 540th Street and Observatory Avenue SW intersection in Liberty Twp.). 1B/BT/98 09:15:09 319-354-4213 -> 31935GSBB9 IDg~ CITY CLERR Page 084 Agenda 10-8-98 Page 4 , Application S9843 of Marilyn Yutzy, signed by Charlotte Yoder, requesting preliminary and final plat approval of Yutzy 2na Subdivision, a subdivision described as being located in the SW ¼ of the NW ¼ of Section 4; and the SE ¼ of the NE ¼ of Section 5; all in Township 78 North; Range 7 West of the 5th P.M. in Johnson County, Iowa (This is a l-lot, 1.43 acre, farmstead split, located on the south side of 470th Street SW, approximately ½ of mile west of the 470th and Gingerich Road SW intersection in Sharon Twp.). , Application S9844 of Scott Tomash requesting preliminary and final plat approval of S & J Tomash First Subdivision, a subdivision located in the SW ¼ of Section 9; Township 81 North; Range 7 West of the 5th P.M. in Johnson County, Iowa (This is a 3-Iot, 16.38 acre, 2 residential and 1 industrial lot, on the east side of Highway 965 NW, approximately ¼ north of 140th Street NW in Jefferson Twp.). f) First and Second consideration of the following Amendments: 1. Amendment. Chapter 8:1.22 V 7b, Subdivision Regulations, by adding new language as follows; Dead ends or cul-deosacs shall be prohibited on all subdivision roads created after January 1, 1999 that are longer than 1000 feet; or service more than 10 lots. In these circumstances a secondary access road that connects to a public/private road shall be required. The traveled portion (road surface) of the cul-de-sac shall be a minimum of at least 70 feet in diameter. At the discretion of the Johnson County Board of Supervisors, an exemption may be granted if the developer/subdivider can demonstrate that there will be adequate access for emergency vehicles. 2. Amendment. Chapter 8:1.22 V 7f, Subdivision Regulations~'Dust Alleviation, by adding a new paragraph, Chapter 8:1.22 v 7f(6), IB/B?/98 B9:15:47 319-354-4Z13 -> 3193565889 I0~ CITV CLg~K Page 885 Agenda 10-8-98 Page 5 Any subdivision approved after January 1, 1999 that has 4 or more lots shall be required to provide approvcd dust alleviation to all interior road surfaces. The subdivision's homeowners association is responsible for providing dust alleviation annually. Amendments. Chapter 8:1.22:X2, Subdivision Regulations by deleting paragraph d and adding a new 8: 1.22:X 2d as follows: [At no time shall approval be granted to developments which include lots containing less than 50 percent of the lot area required, unless such a development is in an RS-3, RS-5, RS-10 or RS-20 District. Developments in an RS-3, RS-5, RS-10, or RS-20 District may include lots containing less than 50 percent of the required lots area, but not less than one (1) acre. All systems with fifteen (15) or more connections, or that regularly serve more than twenty-five (25) persons are to be considered "public water systems", as defined by Chapter 455B. 171(17), Iowa Code (1995). When a development has less than fi~een (15) service connections or regularly serves less than twenty-five (25) individuals, permitting and monitoring will be in accordance with requirements prescribed by the Johnson County Board of Health.] Amendment. Chapter 8: 1.9, District Use Regulations, by adding a new paragraph D as follows: [8: 1.9D RS-20 Suburban Residential District. Permitted Uses: The use of premises in the RS-20 Suburban Residential District shall be the same as those set forth for the RS Suburban Residential District (see 8:1.9). Accessory Uses: Premises in the RS-20 District shall be restricted to those accessory uses pennitted in Article 8: 1.20]. Amendment. Chapter 8: 1.25, Area Regulations to include: RS-20 100 20 acres 20 acres * * 6. Amendment. Chapter 8: 1.24.I, Yard Regulations by adding RS-20 40 10 50 1B/B?/98 B9:16:Z9 319-354-qZ13 -> 3193565889 IOWfi CITY CLgEK Page BB6 Agenda 10-8-98 'Page 6 7. Amendment. Chapter 8:1.22 V 7G, Subdivision Regulations, Bus Turnarounds, by adding new paragraphs as follows; Bus Turnarounds, Any subdivision created alter January 1, 1999 that has four (4) or more buildable lots shall be required to provide a bus rumaround at the subdivision's intersection with the county road. The bus turnaround shall be constructed adjacent to the county road, within the subdivision' s property. The developer/subdivider may, at the discretion of the Johnson County Board of Supervisors, be granted an exemption from this requirement if sufficient obstacles to meeting this requirement are demonstrated. 10. Adjourn to informal meeting a) Reports and inquiries from the County Attomey b) Inquiries and reports from the public c) Reports and inquiries from the members of the Board of Supervisors d) Other 11. Adjournment % CITY COUNCIL INFORMATION PACKET October 16, 1998 OCTOBER 19 WORK SESSION ITEMS IP1 IP2 Memorandum from JCCOG Traffic Engineering Planner: College Street Traffic Calming Resurvey Memorandum from Animal Control Supervisor: Circus and Rodeo Rules and Regulations IP3 IP4 IP5 IP6 IP7 IP8 IP9 IP10 IPll IP12 IP13 IP14 IP15 IP16 IP17 MISCELLANEOUS ITEMS Memorandum from City Manager: Meeting with Mercy Hospital Officials Letter from City Manager to Dubuque Street Business Owners: Parking Letter from Brian White to City Manager: UISCICity Council Follow-Up Memorandum from Administrative Assistant: Cedar Rapids Deer Task Force Memorandum from Finance Director: City of Iowa City Investment Report for the Quarter Ending September 30, 1998 Memorandum from City Clerk: October 5 Work Session Letter from City Engineer to Nathan Eugene Savin and Susan Enzle: Dubuque Street Sidewalk Letter from JCCOG Traffic Engineering Planner to Highland Avenue Residents: Traffic Calming Letter from JCCOG Traffic Engineering Planner to Joan Jehle: Kimball Road Letter from Linda Groff to Police Chief: Appreciation Letter from West High Parent, Student, Teacher Organization to Parking and Transit Director: West Side Bus Routes Information: Public Notification for Development Items Release: SEATS Director Minutes: August 20 PATV Board of Directors Agendas: October 13, 14, & 15 - JC Board of Supervisors Info Packet October 16, 1998 page 2 Memo from City Manager regarding his absence from joint meeting on October 28. Memo from City Manager to PCRB regarding PCRB ordinance - time requirements. Agenda for the 10/20/98 Informal meeting of the Board of Supervisors. Memo from City Manager regarding Capital Improvement Plan. Choices for Iowa - Building a Better Tax System. Date: To: From: Re: City of Iowa City MEMORANDUM October 9, 1998 City Council Doug Ripley, JCCOG Traffic Engineering Planner College Street Traffic Calming Resurvey 10-I 6-98 IP1 On September 8, 1998 I brought to you for your consideration a traffic calming proposal for College and Washington Streets between Summit Street and Muscatine Avenue. The proposal is attached. At that time, a survey of 117 residents had been completed. The survey response rate was low with only 24% returned; 15 in favor of the proposal and 12 against. At that time you directed a resurvey of the neighborhood in order to get a higher response rate. A copy of the resurvey is attached, including information regarding the approximate amount of parking spaces lost. The follow-up survey was sent to 144 residents. The difference in surveyed residences is because we surveyed individual rooming house units the second time, in accordance with your approved traffic calming process. Of the 144 surveys, 36% or 52 were returned. Of the returned surveys, 26 were in favor of the proposal and 26 were against the proposal. This issue will be presented for discussion and a decision at your October 19, 1998 work session. Please bring any questions you may have to this meeting. CC; Steve Atkins Karin Franklin Jeff Davidson Marcia Klingaman Rick Fosse College Street and Washington Street Residents Im\mem%drl 0-8-2.doc September 17, 1998 College and Washington Street Residents CITY OF I0 WA CITY Re: Potential Traffic Calming on College and Washington Streets - Resurvey Dear Resident: As you will recall, on July 22''d a survey was sent to you regarding traffic calming on College and Washington streets. Upon the survey completion, only 27 of the 115 surveys (24%) were returned. When this issue was taken to the City Council for a final decision, it was determined that the return rate was too low and the neighbors should be resurveyed to get a higher response and better indication of neighborhood sentiment. A required response rate is not identified in the Traffic Calming Policy, but is considered as part of the decision process by the City Council. This correspondence is a resurvey of the neighborhood to get a better indication of neighborhood response. If you returned the initial July 22 survey, you must also send in this survey to be counted. If you did not complete the initial survey, please consider completing this one. An addressed, postage-paid postcard has been included for your response. Please return this postcard to me by Friday, October 2, 1998. Last fall residents in your neighborhood contacted the City with concerns about traffic speeds and volumes on College and Washington Streets, specifically between Summit Street and Muscatine Avenue. This spring, traffic counts were completed confirming higher than typically expected volumes and speeds. Working with the neighborhood, a couple of concepts were developed to minimize the speed and volume of traffic. Neighborhood residents determined that traffic circles at intersections and mid-blocks would be the most appropriate and effective strategy for College and Washington Streets. After reviewing design criteria, it was determined that traffic circles could be installed at intersections and mid-block locations (see diagram). The intent of these proposed modifications is to slow traffic down and discourage cut-through traffic. Although these benefits are anticipated, some negative impacts may also be noticed. Specifically, snow removal quality around the circles may be lessened. Also, parking modifications will need to be made to accommodate the proposed changes and signs will be posted to caution drivers about the traffic changes. Approximately 5 parking spaces will be lost on Washington Street and College Street around the midblock circles. Approximately 13 parking spaces will remain on Washington and 35 on College. The next step in the City's traffic calming evaluation process is to survey residents directly impacted by the proposed changes. The final decision will be made by the City Council, but without neighborhood support of the project, the proposal will not be forwarded to the City Council. 410 EAST WASHINGTON STREET · IOWA CITY, IOWA ~2240-1826 · (319) 3.~6-5000 ~, FAX t319) 3,~6-5009 If approved by the City Council, the traffic calming devices would be installed in a temporary fashion. Due to weather related construction delays, it is likely that any installation would not take place until next spring. Follow-up traffic studies and a neighborhood survey would be completed in approximately one year to determine if the devices should be removed or installed permanently. At that time more aesthetic design can also be considered. Please take a few minutes to review the attached proposal and complete the survey below. Please return the resurvey to me by October 2, 1998 so this issue can be resolved. If you have any questions, please call me at 356-5254. Thank you. Sincerely, JCCOG Traffic Engineering Planner Attachment cc: Steve Atkins, City Manager Karin Franklin, PCD Director Chuck Schmadeke, Public Works Director Jeff Davidson, Transportation Planner Rick Fosse, City Engineer Marcia Klingaman, Neighborhood Services Coordinator Andy Rocca, Fire Chief Pat Harney, Police Captain, Field Operations Joe Fowler, Transit Manager Bud Stockman, Streets Superintendent jccogtp~ltrs',dr-coll.doc . alley E SUMMIT ST. "~I September 22, 1998 To: City Council From: Misha C. Goodman-Herbst, Supervisor Animal Control Subject: Circus and Rodeo Rules and Regulations Enclosed you will find the proposed rules and regulations I am recommending be used for circus and rodeo permits. Should you have any questions please feel free to contact me at 356-5297 Definitions: Circus: Rodeo: An event or performance where animals such as lions, tigers, elephants, horses, and/or other animals, perform under the direction of an animal handler or trainer for the public regardless of whether an admission fee is charged. A contest, exhibition, or competition where contestants or entrants participate in events of team ~f~ning, barrel racing, saddle bronc riding, or bull riding. No other events involving animals may take place without the prior written approval of the Director of Animal Control. Rodeo Rules and Regulations Purpose of Regulations: The purpose of these rules and regulations is to provide humane, safe, and sanitary surroundings and treatment for performing and nonperforming animals related to rodeos and to provide a safe environment for the public who attends performances and general areas in which rodeo animals are maintained. Scope of Regulations: The provisions in these rules and regulations apply to all rodeos regardless of whether or not a fee is charged to the public for attendance. No person or group may operate a rodeo within the City limits without first applying for and obtaining a permit to do so. All rodeos and rodeo events will be subject to inspections prior to approval of permits and prior to all events. All rodeos must be sanctioned mcmbcrs cf by the Professional Rodeo Cowboy Association ("PCRC") and abide by all PCRC Bylaws and Rules. Rodeos may include events of Team Penning, Barrel Racing, Saddle Bronc Riding and Bull Riding. No other events may take place without prior approval from the director of Animal Control. A veterinarian must be present for every performance and must certify all animals as fit to perform. Animals found to be unfit to perform will be housed in a quiet location away from P-performance arenas. Animals must be isolated and as comfortable as possible to reduce stress. The veterinarian to reinstate certification to perform may recheck animals every hour. Animals must receive any medical attention necessary for their well being. Animals racy bc found by an Animal Control Officer to be unfit to perform due to injury, illness, extreme aggressiveness or behavior that may be considered unreasonably dangerous to the animal or the public shall not be allowed to perform. All animals must be maintained in adequate containment areas that ensure the health and safety of the animal and the public at all times. All animals must be under proper control whenever outside of containment fencing. No animal may be allowed to run loose outside of containment fencing or fenced arena. All animals must be properly identified with tattoos, brands, microchip identification, or cattle mark to identify ownership. All animals housed together must be compatible. Non compatible animals shall be housed with a separation wall constructed in such a way as to prevent animals from gaining access to one another. All animals must be appropriately vaccinated. All animals must have reasonable access to proper food, fresh water and adequate shelter. 10. Fecal and food waste shall be removed daily from inside and around enclosures and stored or disposed of in a manner which prevents noxious odors or pests. 11. 12. 13. 14. 15. Dirt enclosures and arenas shall be raked clean daily. Equipment and personnel must be on hand to remove any injured or down animal from the performance arena and to recapture any animal in the event of escape. A veterinarian must have appropriate tranquilizing and immobilization drugs and equipment available in the event of animal escape or injury. Any PRCA official, Animal Control Officer, judge, or stock contractor or veterinarian may stop any event due to unsafe arena conditions, animal injury or behavior which maybe considered dangerous to the animal or the general public. All rodeo events are subject to the rules of the Professional Rodeo Cowboys Association, Iowa State Agricultural Code requirements, United States Agricultural Code requirements and Iowa City Municipal Code requirements. Circus Rules and Re.qulations Purpose of Requlations: The purpose of these rules and regulations is to provide humane, safe, and sanitary surroundings and treatment for performing and nonperforming domestic and wild animals related to circuses and to provide a safe environment for the public who attends performances and general areas in which circus animals are maintained. Scope of Regulations: The provisions in these rules and regulations apply to all circuses regardless of whether or not a fee is charged to the public for attendance. Time Requirement: All circus permits shall be applied for at least 30 days prior to the first scheduled performance. The division of animal control shall be notified immediately when a circus enters the City of Iowa City. Exemptions: Circuses travelling through the City of Iowa City enroute to other locations and not performinq within Iowa City shall not be subject to permit requirements unless the circus remains within the City of Iowa City for more than 24 hours. Definitions: Performing Animals: Performing animals shall be animals that have been rehearsed, controlled or monitored by a trainer and can accomplish a consistent routine under prescribed behavior cbnducted under the discipline of a trainer. Nonperforming Animals: Nonperforming animals shall be animals which are exhibited enclosures and are not removed for rehearsal or performance. to the public in cages or Cages: Cages shall mean any enclosure in which the public has normal access to any area within three (3) feet of any portion of the case enclosed by bars. Large Carnivore: Large Carnivore includes but is not limited to lions, tigers, jaguars, leopards, pumas, wolves, cnd hybrids of such animals, and other carnivores. Primate: Primate includes, but is not limited to, gorillas, orangutans, spider monkeys, capuchins, end macaques and all other primates, old world and new world monkeys. Size of Animal Cages and Enclosures, Containment Requirements (a) Large Carnivores: Large Carnivore animals shall be housed individually in cages no smaller than 98 inches deep, 65 inches wide and 78 inches inchcc high per animal. Each additional animal housed together will require an increase in space of twenty five percent. The cage must be constructed of steel or casehardened aluminum with at least one solid side or portable divider panel so that no animal may harm another animal. All cages must have a steel floor with a wood surface suitable for drainage of urine covered with a natural substrate. All cages shall have secure locking devices and shall be well ventilated. Cages exposed directly to the public must be constructed of steel or alloy bars no more than 11/2 Z__~inches apart. (b) (C) (d) Bears and Hyenas: Bears and hyenas must be housed in cages no smaller than 91 inches deep, 48 inches wide and 76 inches high. Each additional animal housed together will require an additional 25 percent increase in space. Cages must be constructed of steel or casehardened aluminum with one solid side or a portable divider panel so that no animal may harm another animal. All cages must have a steel floor suitable for drainage of urine and be covered with a natural substrate. All cages shall have secure locking devices and be well ventilated. Cages exposed directly to the public must be constructed of steel or alloy bars no more than 11/2 Z_~inches apart. Primates: Primates must be housed in cages no smaller than 91 inches deep, 65 inches wide and 78 inches high. Cages must include a sitting perch above floor level and exercise objects, which promote physical and psychological well being. These may include but are not limited to sturdy ropes, bars, branches and chains. All cages shall be constructed of steel or casehardened aluminum with one solid side or a portable divider panel so that no animal may harm another animal. All cages must have a steel floor suitable for drainage of urine and covered with a natural substrate. Cages exposed directly to the public must be constructed of steel or alloy bars no more than_l 1/2 ~ inches apart. All cages must be sufficiently constructed to be escape-proof and the door must have a padlock at the top and bottom. Elephants: Elephants shall be maintained in an enclosure not less than 700 square feet in area per animal, with a fence of 2-inch diameter steel bars or 4-inch diameter schedule 40 galvanized steel pipe at least 6 feet in height. No roof is required except for shelter. The fence must be constructed of material strong enough to prevent the animals' escape. The director of animal control must approve the use of electrified fencing. The floor of the enclosure shall be covered with a natural substrate. A heated enclosure shall be provided in any area where the ambient air temperature drops below 40 degrees Fahrenheit. II. All enclosures must be maintained in such a way that all lights and other such objects and obstacles shall be kept outside the reach of the elephant. III. Elephants shall be provided exercise, free of chains, within an adequate enclosure on dirt for a minimum of 4 hours per each 24-hour period. IV. Chaining Requirements: 1. Chains shall be secured to a concrete floor, concrete "deadman", or other immovable anchor. 2. A covered chaining area shall be provided. An elephant may be chained by only one rear leg and the opposite front leg and in such a manner as to restrict movement but still allow the animal to easily lay down and rise again. Chains shall be rotated to the other 2 legs daily. Elephants chained for any extended period shall have their leg chains padded and shall be checked regularly to insure they are secure and to detect any injury to the leg. Snaps and clips may be used only within a primary enclosure. A clevis or stronger type chain attachment shall be used outside the primary enclosure. Either a pool shall be provided or the elephant shall be washed with water daily, as weather or temperature permits. Constant chaining shall not exceed 14 days without written justification from a veterinarian. (e) Hoofstock Animals: Hoofstock animals such as zebras, horses or buffalo shall be maintained within an enclosure constructed of galvanized steel livestock panels appropriate for preventing the animals' escape. Animals must have enough room to exercise and move around within enclosure. Separate enclosures shall be maintained for animals that are not compatible with one another. All animals shall be provided with a shelter that has a roof and three sides. Enclosure floors shall be dirt or an appropriate substrate. General Provisions: 1. All animals shall have currently maintained vaccinations specific to each species. A written log for the animal(s) maintained must be on site. The log shall be written in the English language and shall contain the following information: animal's health care, vaccination, and treatment records, type of treatment and dates of treatment, identifying marks or characteristics, and veterinarian signature. Veterinarian must be must be on call twenty-four hours a day. All circuses are subject to the United States Fish and Wildlife service regulations, Iowa State Agricultural Codes and Iowa City Municipal Codes. An animal trainer or handler shall be on duty at all times at the arena in the areas in which the animals are located in order to monitor the animals and to prevent unauthorized persons from entering these areas. At least two animal trainers or handlers shall be present whenever animals are performing for the public to ensure the safety of the animal and the public. While in performance, the public shall be protected from the large carnivores, omnivores and elephants by a steel mesh cage that must extend 13 feet high. Hard floors within cages or enclosures shall be cleaned a minimum of once weekly. Walls of cages and enclosures shall be spot cleaned daily. The surfaces of cages including perches, shelves and any fixtures shall be cleaned weekly and shall be constructed in a manner that permits thorough cleaning. Cages and enclosures with dirt floors shall be raked a minimum of once every three days and all waste material shall be removed. Any surface of cages or enclosures that may come into contact with animal(s) shall be free of excessive rust that prevents the required cleaning or that affects the structural strength. All animals shall be provided with fresh water at intervals as to ensure their health and welfare. All pools, tanks and water containers shall be clean and enclosures shall provide drainage for surface water and runoff. Food shall be of a type and quantify that meets the nutritional requirements for the particular species and shall be provided in an unspoiled and uncontaminated condition. Containers shall be clean. Fecal and food waste shall be removed daily from inside, under and around cages and stored or disposed of in a manner which prevents noxious odors or pests. Cages and enclosures shall be ventilated to prevent noxious odors. 10. All animals shall be cage rolled, leashed, haltered, tethered or chained while being transported from cages to arena. 11. All cages and enclosures shall have adequate locks and shall remain locked at all times and will only be opened to allow temporary entry or exit by a handler. 12. Safeguards are to be used when necessary to prevent escape of animals such as double-door mechanisms, interconnecting cages, lock down areas or other comparable devices. 13. All cages or enclosures constructed shall be well braced and securely anchored at ground level to prevent escape by digging or erosion. 14. Animals shall be publicly displayed only for periods of time and under conditions consistent with the animal's health and comfort. The animal must be handled so there is no perceived risk to the public in the judgement of the Animal Control Officer, with sufficient distance allowed between animal acts and the viewing public to assure safety to both the public and the animals. Animals on display shall be contained within an escape-proof area or enclosure at all times when not under the immediate control of a handler. Circus animals shall be allowed a rest period of at least 4 hours per day within an enclosure. 15. Permit holders are subject to all permit rules and regulations. 16. A veterinarian must have appropriate tranquilizing and immobilization drugs and equipment available in the event of animal escape or injury. It shall be the responsibility and liability of the circus owner, animal owners, handlers and trainers to recapture and if necessary euthanize any animal that escapes. Definitions Rodeo: A~ontest, exhibition, or competition in which the public may be charged an i,dmission fee to watch the skill of contestants or entrants in events of Teah~n Penning, Barrel Racing, Saddle Bronc Riding or Bull Riding. Circus: Any an admission fee horses, dogs, and handler and where arena for public enterta or performance which may charge members of the public animal acts such as lions, tigers, elephants, animals under the direction of an animal trai~ner or ~ats, tumblers and clowns also often perfor/r~ in an / / // Rodeo Rules and Regulations Dose of Regulations: lose of these rules and regulations is to provide humane, safe, and surroundings and treatment for performing and nonperforming animals relate, Io rodeos and to provide a safe environment for the public who attends and general areas in which rodeo animals are ,maintained. Sc( The whether or i in these rules and regulations apply to alZ a fee is charged to the public for regardless of No person or applying for and operate a rodeo within the 'ning a permit to do so. without first All rodeos and rodeo permits and prior to all will be subject to ins prior to approval of All rodeos must be Association and abide by ,~d members of the 'CRC Bylaws Rules. Rodeo Cowboy Rodeos may include events Riding and Bull Riding. No the director of Animal Control. Barrel Racing, Saddle Bronc place without prior approval from A veterinarian must be present for e all animals as fit to perform. performance and must certify 6. Animals found to be unfit to De housed in a quiet location away from Performance arenas. Animals be iso and as comfortable as possible to reduce stress. The veterin', reinstate rtification to perform may recheck animals every hour. receive medical attention necessary for their well being. 7. Animals may be found an Animal Control Offi r to be unfit to perform due to injury, illness, extrem aggressiveness or behavior t t may be considered unreasonably danger us to the animal or the public. 8. All animals must e maintained in adequate containment reas that ensure the health loose outside/f contaiment fencing or fenced arena. All ani als must be properly identified ~'th tattoos, brands, microchip identification or catt mark to identify prev}n~/ nimals fr ' ' /. · / 10. 11. 12. 13. 14. 15. animals must be appropriately vaccinated. All animals must have reasonable ac. gs to proper food, fresh water and adequate shelter. and food waste shall be removed daily from inside and around enclosures and Ir disposed of in a manner which prevents noxious odors or pests. Dirt and arenas shall be raked clean daily. from the A veterinarian equipment persmmel must be on hand to remove any injured or down animal arena and to recapture any animal in the event of escape. ,/ have appropriate tranquilizing iramobilization drugs and ~le in the event of animal escape injury. Any PRCA may stop any event maybe considered Control Officer. to unsafe arena condit ~,rous to the animal or stock contractor or veterinarian animal injury or behavior which general public. All rodeo events are sub Association, Iowa State A Code requirements and to the rules cultural Professional Rodeo Cowboys requirements, United States Agricultural Code requirements. Circus Rules and Regulations related 1; of Regulation: ~ose of these rules and regulations is to provide humane, safe, and sanitary and treatment for performing and nonperforming domestic and wild animals circuses and to provide a safe environment for the public who attends -~s and general areas in which circus animals are maintained. Sco The provisions or not a fee is Time Requirement: All circus permits performance. The enters the City of Iowa Exemptions: Circuses travellin subject to permit requirements more than 24 hours. [ations: / these rules and regulations apply to all circuses regar,d, Fess of whether ed to the public for attendance. / / applied for at least 30 days prior to t first scheduled of animal control shall be notifie~'t~mt ediately when a circus / / / Definitions: Performing Animals: Performing animals shall be animals a trainer and can accomplish a consistent under the discipline of a trainer. been rehearsed, controlled or monitored by under prescribed behavior conducted Nonperforming Animals: Nonperforming animals shall be enclosures and are not removed which or exhibited to the public in cages or ,rmance. Cages: Cages shall mean any three (3) feet of any portion in which the public case enclosed by bars. access to any area within Large Carnivore: Large Carnivore inclu s but is not limited to lions, tigers, wolves, and hybrids. Primate: Primate ~nclude but ~s not hm~ted to gorillas orangutans, spider anLl ma ' ' ' ' leopards, pumas, capuchins, have sec to the apart. Size of Animal Cages and Enclosures, Containment Requirements 8 inches deep, 65 inches wide and 78 inches inches high per mal. Each additional animal housed together will require an increase in space five percent. The cage must be constructed of steel or casehardened with at least one solid side or portable divider panel so that no animal another animal. All cages must have a steel floor with a surface drainage of urine covered with a natural substrate. A] es shall locking devices and shall be well ventilated. 3osed directly must be constructed of steel or alloy bars no 11/2 inches (b) Bears and inches deep, 48 together will rec constructed divider panel so that steel floor suitable for All cages shall have exp&ed directly to the than 11/2 inches apart. an additional 25 percent ' casehardened animal may harm e of urine and locking devic~ ic must be c s: Bears and hyenas must be housed :es no smaller than 91 and 76 inches high. additional animal housed in space. Cages must be one solid side or a portable animal. All cages must have a covered with a natural substrate. be well ventilated. Cages el or alloy bars no more (C) Primates: Primates must be inches wide and 78 inches high. level and exercise objects, whi These may include but are All cages shall be side or a portable divider tnel so cages must have a steel suitable natural substrate. Ca exposed steel or alloy bars thanl 1/2 constructed to be bottom. cages no smaller than 91 inches deep, 65 must include a sitting perch above floor physical and psychological well being. d to sturdy ropes, bars, branches and chains. or casehardened aluminum with one solid ~o animal may harm another animal. All drainage of urine and covered with a the public must be constructed of apart. All cages must be sufficiently have a padlock at the top and (d) Elephants: E phants shall be maintained in an'.~closure not less than 700 square feet in area er animal, with a fence of 2-inch dia eter steel bars or 4-inch enoug to prevent the animals' escape. The director g~ animal control must appr ve the use of electrified fencing. The floor of the ~nclosure shall be covered wi a natural substrate. I. A heated enclosure shall be provided in any area ~here the ambient air ture drops below 40 degrees Fa~enhe~t / II. All enclosures must be maintained in such a way that all lights and other such objects and obstacles shall be kept outside the reach of the elephant. III. Elephants shall be provided exercise, free of chains, within an adequate enclosure on dirt for a minimum of 4 hours per each 24-hour period. Chaining Requirements: 1 .Chains shall be secured to a concrete floor, concrete "dead ,ma~", or other immovable anchor. 2. A covered chaining area shall be provided. 3 .An elephant may be chained by only one rear leg ~rd the opposite front leg and in such a manner as to re: movement but '~itill allow the animal to easily lay down andaim Chains shall be rotated to the other 2 legs daily. ephants chained for any extended shall have their leg padded and shall be checked to insure they are and to detect any injury to eg. 5 and clips may be used o within a primary enclosure. A clevis type chain shall be used outside the primary :losure. 6.Either a ~1 shall be or the elephant shall be washed with water temperature permits. 7.Constant not exceed 14 days without written justification fro~ (e) Hoofstock Animals: Hoofsto maintained within an enclo: appropriate for to exercise and move maintained be provided with a are not a roof. such as zebras, horses or buffalo shall be of galvanized steel livestock panels escape. Animals must have enough room osure. Separate enclosures shall be with one another. All animals shall three sides. Enclosure floors shall i The log shall be written in the En language and shall contain the following ihformation: animal's health care, yadcination, and treatment records, type of treatm~t and dates of treatment, identifying marks or characteristics, and veterinarian sigiiature. Veterinarian must be must be on call twenty-four hours a day. 2. All circuses are subject to the United States Fish and Wildlife service regulations, Iowa State Agricultural Codes and Iowa City Municipal Codes. , An animal trainer or handler shall be on duty at all times at the arena in the areas in which the animals are located in order to monitor the animals and to prevent unauthorized persons from entering these areas. At least two animal trainers or handlers shall be present whenever animals are or enclosures shall be cleaned a ' ' Walls cages and enclosures shall be spot cleaned daily. The includin ~erches, shelves and any fixtures shall be cleaned corn in a manner that permits thorough cleaning. Cage~' dirt floors be raked a minimum of once every three shall be remo d. Any surface of cages or enclosures that ~ with animal(s) that affects the 7. All animals shall and welfare. All provide drainage for 8. Food shall be of a type particular species and condition. Containers 9. Fecal and food waste shall stored or disposed of in be free of excessive rust that strength. with fresh water at ' ~, tanks and water containers water and runoff. quantify that meets be provided in an be clean. removed daily which enclosures shall be ventilated 10. All animals shall be cage transported from cages to arena. 11. All cages and enclosures shall haw times and will only be opened to allc 12. Safeguards are to be used when ne, double-door mechanisms, comparable devices. 13. All cages or enclosures ground level to prevent 14. Animals shall be publicly consistent with the is no perceived risk to with sufficient distanc~ safety to both the within control of a handl{ per day within 15. Permit 16. A equipment res to weekly. of cages and shall be enclosures with all waste material come into contact required cleaning or as to ensure their health be clean and enclosures shall requirements for the and uncontaminated inside, under and around cages and noxious odors or pests. Cages and odors. tethered or chained while being tuate locks and shall remain locked at all temporary entry or exit by a handler. to prevent escape of animals such as cages, lock down areas or other shall by digging only ~ health and comfort. in the between animal and the animals. Animals .f area or enclosure at all times Circus animals shall be allowed a mclosure. subject to all permit rules and regulations. have appropriate tranquilizing and in the event of animal escape or injury. It and liability of the circus owner, animal owners, and if necessary euthanize any animal that escapes. braced and securely anchored at :ion. ods of time and under conditions animal must be handled so there f the Animal Control Officer, the viewing public to assure isplay shall be contained not under the immediate period of at least 4 hours drugs and 11 be the and trainers City of Iowa City MEMORANDUM Date: October 15, 1998 To: City Council From: City Manager Re: Meeting with Mercy Hospital Officials On Monday afternoon I met with representatives of Mercy Hospital concerning the status of the homes located near the corner of Gilbert and Bloomington. The homes are scheduled for demolition some time the week of October 19. I discussed with them the importance of these properties for their proposed expansion. They stepped me through the number of community contacts made and it was their position that they need to proceed with the demolition in order to fulfill their development goals. tp3-2sa.doc October 14, 1998 Dear Dubuque Street Business Owner/Manager: It has been brought to our attention that some businesses along Dubuque Street between Iowa Avenue and Washington Street, who utilize the center of Dubuque Street as a commercial loading zone, are far exceeding the 15-minute maximum time limit for such activity. For reasons such as public safety and flow of traffic, the time-limit must be observed. This note is to inform you that our Parking Division will begin enhanced enforcement of the regulation. I have included the section of the City Code pertaining to parking in commercial districts. Sincerely yours, City Manager Enclosure C: City Attorney Parking Division Police Department 410 EAST WASIIINGTON STREET * IOWA CITY, IOWA 52240-1826 · (319) 356-5000 · FAX (319) 356-5009 9-4-3 9-4-4 9-4-3: PARKING NOT TO OBSTRUCT TRAFFIC: All Noncommercial Districts: In any noncommercial district, no vehicle shall stand, stop or park upon any traveled lane of a roadway in such a manner or under such conditions as to leave available less than ten feet (10') of the width of the roadway for free movement of vehicular traffic. B. Commercial Districts: 1. Noncommercial Vehicles: In com- mercial districts, standing, stopping or parking in any traveled lane of a road- way by noncommercial vehicles is prohibited. 2. Commercial Vehicles: a. On two-way streets in commer- cial districts, commercial vehicles may stop, stand or park in a traveled lane while engaging in the loading or un- loading of property, provided ten feet (10') of width of roadway exists to the right of the center line for the free movement of vehicular traffic. b. On one-way streets in commer- cial districts, commercial vehicles may stop, stand or park in a traveled lane while engaging in the loading or un- loading of property, provided ten feet (10') of width of the roadway is open for the free movement of vehicular traffic. 3. Compliance Required; Time Limit: Vehicles stopped, standing or parked in the traveled lane of a roadway shall do so in accordance with the above provisions, but in no event shall any vehicle be parked longer than fifteen (15) minutes. (1978 Code §23-236) 9-4-4: GENERAL PARKING RE- STRICTIONS~: Public Or Private Property2: No person shall park a vehicle upon public or private property without the consent of the owner or person in possession of such property or the agents thereof. Any vehicle parked in violation of this subsection may be ticketed and/or towed pursuant to the following proce- dure: the Police Department is hereby authorized to act as an agent of any owner or other lawful possessor of real property and to tow or cause to be towed, pursuant to the Code of Iowa, as amended, any motor vehicle that has been parked or placed upon real property without the consent of the owner or person in lawful posses- sion of such property or the agents thereof. However, prior to the towing of any motor vehicle, the owner, lawful possessor or the agents thereof shall, in writing, authorize the police to act as agent therefor and shall further agree to notify the County Sheriff as required by the Code of Iowa, as amended, and shall also agree to release, defend, indemnify and hold harmless the City, its officers, employ- ees and agents from any damages, claim of damages or liability resulting from such towing. The owner or lawful possessor of such motor vehicle may reclaim such vehicle pursuant to the Code of Iowa, as amended. B. One-Way Streets And Roadways: 1. No person shall stand or park a vehicle on the left side of a one-way 1. See subsection 9-3-12D of this Title for parking in bicycle lanes. 2. See subsection 6-1-2Q of this Code. Iowa City 497 THE UNIVERSITY OF IOWA Memorandum OCT i ,: 1998 Date: 10/7/98 To: Steve Arkins, City Manager From: Brian A. White j//______________ FIE: UISG/City Council Follow Up The following is a list of comments, concerns, and ideas for change that were discussed in the various groups at the September 29m joint meeting. The list is grouped into the three focus areas of Lighting, Safe Travel, and Police/Public Safety roles and attitudes. Under these focus areas, the main points have been categorized and bulleted. If you need further clarification on any of these points, feel free to contact me at 335-3859 or via e-mail at bawhite@blue.weeg.uiowa.edu. I want to thank all of you who helped out and participated in making this joint meeting a success. Hopefully we can do this again sometime in the future. Lighting Areas of concern for poor lighting on City property: · Lights going South on Dubuque St. towards Mayflower · City Park drive and walkways Lighting in Pedeslrian Mall · Parking lot across from Mayflower (Northeast side of City Park) · Taft Speedway · Linn Street near Blackhawk apartments · Street lights flicker on and off periodically (i.e. Clinton St.) Areas of concern for poor lighting on University property: · Tunnel and walkway from IMU to EPB and under Iowa Ave. overpass · Basketball court behind Burge- light switch doesn't work prope~y Other suggestions to both the City and the University: ** *Balance lighting with landscape to promote safety ***Re-institute plan to create a bike path along east-side of Iowa River (from IMU to Mayflower) Student Government 48 Iowa Memorial Union Iowa City, Iowa 52242-1317 319/335-3860 10/7/98 Memorandum: UISG/City Council Follow Up Safe Travel Safewalk · Expand hours · Need more volunteers (tap into Greek system) · Phones with proper signage in all University buildings · Get community involved · Expand past University property · Cream walkers who would be "on call" · Safewalk ~ Saferide cooperation Blue Light Phones · Re-evaluate the locations · Re-paint them, make them more noticeable · Turn into phones with access to Safewalk Buses · University and Iowa City working together, co-op · Expand hours for University and Iowa City buses · Special route hitting the city during weekend hours · Concern for safety for Saferide individuals · Cream a Moonshine bus to model the Sunshine bus, but during night hours · Re-evaluate and expand the Sunshine bus Bikes · Consistency between University and City bike regulations and policies · Create a late night beat for bike cops · Clearer markings for bike lanes · Downtown signs needed for drivers and bikers to "Share the Road and Sidewalk" · Bike path on East Side of Iowa River · Possible bike training? How would you get people there? Other · Pedestrian Bridge across Dubuque St from the West side to the East side by Mayflower · Bike path from IMU to Mayflower following the river on the East side, with out going up the hill Police and Public Safety Attitudes Probierns and Concerns · Students do not view police as helping officials (See suggestion #1) · Public safety officers do not carry weapons · Students do not have personal contact with police officers (Iowa City and Public Safety) · Majority of students feel defensive towards all officers, even though the majority of direct interactions are good ones · Promoting police efforts (PAULA raids) may improve public relations, but it reduces police effectiveness Ideas for Change · Promote students ability to call police if THEIR party gets out of hand · Inform students of complaint processes: PCRB confidential complaint or ICPD citizen complaint · Personalize student-PS/ICPD interactions (e.g. residence hall programs) · Inform students of rights through "improving relationships" programs City of Iowa City MEMORANDUM TO: FROM: DATE: RE: City Council ,~ Cedar Rapids Deer Task Force Per your request, I spoke with Cedar Rapids Parks and Public Property Commissioner Dale Todd regarding the CR Task Force recommendation to use only non-lethal methods to manage the deer population for the winter of 1998/1999. To establish their committee, the Cedar Rapids City Council utilized a similar process as Iowa City in appointing members that would represent a variety of viewpoints on deer management. The Council requested a timeline of three to four months for members to compile a recommendation. The deadline passed without a decision as some members did not feel that there was sufficient time to compile necessary data to formulate a plan. It has been the case with many citizen deer committees that as time investments become higher and higher without a recommendation, members of the task force drop off. This occurred in Cedar Rapids. The remaining members eventually recommended managing deer by utilizing citizen education and tactics such as reflectors as well as improved tracking of accidents and population. You will remember Iowa City's conclusion was one that had never before been reached in the state of Iowa. We did not look at the process as one where we felt obligated to manage our deer as our neighbors would, rather we formulated a plan that we felt was right for our town; the Cedar Rapids Task Force did the same. There are no right or wrong answers to deer management. In the future, a different group of citizens could recommend a different plan for Iowa City. That is precisely the justification for maintaining a strong system of citizen input on this issue; the plan must reflect the views of the community. C.R. panel sees no need for deer hunt Task force cites lack of complaints, decrease in herd By Rick Smith Gazette staff writer What a difference 12 months has made. A year ago, after 15 months of listening and studying, City Hall decided that Cedar Rapids need- ed to thin a dangerously large deer herd. On a 5-0 vote, the City Council gave the go- ahea~t for a three-month The task bowhunt in the city lim- force its, saying in recommends the face of vocal anti- beering up hunting for& education on es that deer non-lethal hunting would reduce means for deer-vehicle control. accidents. "When you have people who are hitting deer on First Avenue during the day, that's a problem," Mayor Lee Clancoy said then. "And rm not willing to wait until some- one's killed to do something about this." Late last week, Clancoy was on vacation when the 1998 Cedar Rapids Urban Deer Task Foreo's "Final Report" surfaced, con- cluding that deer hunting in the city limits -- thought a life-or- death matter for citizens a year ago -- is not needed this year. Parks Commissioner Dale Todd, a new face on the City Council this year and one who helped organize the new Urban Deer Task Force in March, said Friday he didn't know where the grave fears of death by deer had gone in a year's time. "This year there has been no direction from the City Council to proceed with a bowhunt," Todd said. Such a hunt began Thursday in the bordering city of Marion. Sharpshooting to cull high herd · Iowa City to revise plan that allows sharpshooters to thin deer herd, 6A numbers in Iowa City is sched- uled for January. Bowhunting in Des Moines is set for Decem- ber and January. Cedar Rapids task force mem- ber Laurie Crawford Stone on Saturday said the big change in Cedar Rapids between this year and last is education. The cur- rent task force, she said, became well-educated about non-lethal means to control deer numbers and about steps residents can take to avoid accidents and keep deer from destroying plants and Gazette file photo by John F. Martin This deer was observed In August near the busy Intersection of Highway 151 and Wright Brothers Boulevard. The number of deer-vehicle collisions has risen ever,/year since 1978, and a Cedar Rapids task force recommends a program to Inform reddents how to avoid deer accidents and how to keep deer from eating plants and trees. Deer: 'The easy way is to ~ll,' says a Cedar Rapids task force member. · From page 1A trees. Task force meetings, she noted, were not without disagreements. "The easy way is to kill," Stone said. "We broke the mold. We didn't take the easy way out, saying 'Let's lust kill them.'" A second task force member, Joe Harris, said Saturday that this task force is seeking a new aerial deer count by the Iowa Department of Natural Resources so the city has figures to compare with the previous two winter counts. A third year of data will give the task force a clearer picture of the deer problem for next year, Harris said. The task force's final report, which may undergo a final revision after a meeting Tuesday evening, could spur some public debate in its current form. Todd, for instance, reluctai~fly acknowl- edged that the report's first rationale not to hunt deer inside the Cedar Rapids city limits this year is not entirely correct. That rationale is that no one has complained to the City Council about deer in 1998. Todd noted that three or four people have lodged complaints, but, he added, even that number doesn't mean much. No formal complaint process exists, he said. Todd said his travels in neighborhoods continue to turn up deer damage to plant life and homeowners who complain about it. "And they have no qualms with letting you know about it," he said. The task force also concludes that a deer hunt is not needed this year because the number of deer in the city has decreased from 1997 to 1998. Responsible for the "decrease" may be a "special hunt" last year outside the city limits or a deer population that is "beginning to self'regu- late," the report states. (Special hunts last October through Janu- ary in Cedar Rapids, Marion and Squaw Creek Park killed 60 deer, and 125 were taken in a special zone surrounding the metro area.) But has there been a decrease in deer in Cedar Rapids? According to the task force report, the DNR aerial deer count in 1997 was 1,750 -- when the City Council said the. risk from deer was great. And in 1998, the count was Dale Todd Laurie Usa Cedar Rapids Crawford Xandsaker parks Stone Iowa City commissioner Cedar Rapids task force task force 1,744. The report beefs up its definition of a decrease by noting that 20 deer counted in 1998 were in Morgan Creek Park, a site not included in the 1997 count, However, the report does not mention comments made in April by Willie Suchy, DNR wildlife biologist who manages the state's deer population. Suchy noted then that the 1998 count in Cedar Rapids likely was low because it came both, in a warm winter and later than the 1997 count. That meant that deer likely were' not running together in large numbers during the 1998 count and so were more difficult to count. Instead of hunting, the Cedar Rapids task force is recommending a host of other tactics to help with the deer problem: · Better mapping and counting of acci- dents and deer populations · Installation of deer-crossing signs, spe- cial reflectors and roadway fencing · A citizen education program to inform citizens how to avoid deer accidents and how to keep deer from eating plants and trees. Tim Thompson, a DNR wildlife biologist in Iowa City, and Lisa Handsaker, a mem- ber of the Iowa City/Coralville Urban Deer Task Force, both said last week that the special reflector. known as a Streiter reflec- tor. can help reduce the number of vehicle- deer crashes after daylight. The reflectors, which cost between $%000 and $10,000 for a. 5,/c/78 one-mile stretch of road, are challenging to maintain, Thompson noted. Handsaker said that success with re~ec- tors does not to reduce a problem deer herd With no hunting program in place and with fewer deer dying in vehicle crashes. the deer count wig only rise, she said. Deer-vehicle crashes in Iowa have in creased each year since 1978. In 1997, the number increased to 13,328 from 12,276 the year before. In 1992, there were 9,135, according to Don Cummings, director of wildlife management at the DNR. The DNR's Thompson said the state deer population, which numbers about 400,000, likely wig be reduced in the face of an aggressive hunting strategy that permits hunters to shoot females. Special hunting areas around metropoli- tan areas also should help reduce suburban herds, he said. But, he added, many urban deer stay in the city. "And when you don't have any type oi harvest, other than by vehicles in the urban areas, you take away one of the big mortall- ty factors,~ Thompson said. The Cedar Rapids task force report said the task force wants to examine the results of deer sharpshooting in Iowa City as it studies options for Cedar l~apids in the years ahead. Iowa City's Handsaker noted that bow hunting was not selected as an option in Iowa City because it would not make a dent in the Iowa City deer overpopulation. The Cedar Rapids task force report noted that the 1997 bowhunt in Cedar Rapids killed an "insiguificant" number of deer 20 -- and was controversial. Not part of the Cedar Rapids report is a recipe that task force member Stone has come across to keep deer from browsing on plants and trees. Put four scrambled eggs in a closed container, leave to rot in the sun four days, then mix with a quart of water and two to three tablespoons of spreader/sticker, which makes it stick to the leaves. Spray every three weeks. "It smells, so you got to wear rubber gloves," she said. City of Iowa City MEMORANDUM 10-16-98 IP7 Date: To: From: Re: October 12, 1998 City Council City Manager I t uarter Ending September 30, 1998 Attached you will find the City of Iowa City Investment Report for the quarter ending September 30, 1998. The reports lists the investments by fund, institution, and maturity date and includes new investments purchased and those redeemed. We continue to be able to invest City funds out approximately 10 to 11 months based on our daily cash flow needs. The purchased and redemption portion of the schedule reflects the rates the City had at maturity and then the rates at the reinvestment date. Please call me if you have any questions. Attachment indexbc\memos\l -1 DY.doc CITY OF IOWA CITY QUARTERLY INVESTMENT REPORT JULY 1, 1998 to SEPTEMBER 30, 1998 Finance Department: Prepared by: Sara Sproule OVERVIEW The City of Iowa City's investment objectives are safety, liquidity and yield. The primary objective of the City of Iowa City's investment activities is the preservation of capital and the protection of investment principal. The City's investment portfolio remains sufficiently liquid to enable the City to meet operating requirements that cash management procedures anticipate. In investing public funds, the City's cash management portfolio is designed with the objective of regularly exceeding the average return on the six month U.S. Treasury Bill. The Treasury Bill is considered a benchmark for riskless investment transactions and therefore comprises a minimum standard for the portfolio's rate of return. The investment program seeks to achieve returns above the threshold, consistent with risk limitations and prudent investment principles. The quarterly investment report lists investments by fund, by institution, by maturity date, and investments purchased and redeemed. The Federal Reserve lowered the federal funds rate one quarter percentage point from 5.50 percent to 5.25 percent at its meeting in September 1998. The federal funds rate is what banks charge each other on overnight loans. The federal funds rate had not been changed for eighteen months. The City of Iowa City has already noticed drops in the rates that we are able to receive on our portfolio investments. If you look at the investment activity for the quarter ended September 30, 1998, you will see that rates obtained on new investments in July 1998 are higher than rates received on new investments added to our portfolio in September 1998. Rates obtained in the second quarter of fiscal year 1999 are expected to be even lower than rates obtained in the first quarter of 1999 with the recent decline in the federal funds rate. CITY OF IOWA CITY INVESTMENTS ON HAND SUMMARY BY FUND GENERAL FUND INSTITUTION NAME 9/30/98 INVESTMENT AMOUNT 9/30/97 INVESTMENT AMOUNT ALL OPERATING FUNDS GENERAL OBLIGATION BOND FUND EMPLOYEE BENEFIT RESERVE FUND BOND RESERVE FUND TOTAL 63,214,764.00 525,000.00 3,400,000.00 12,297,863.00 57,665,458.13 600,000.00 4,000,000.00 12,582,000.00 79,437,627.00 $74,847,458.13 CITY OF IOWA CITY INVESTMENTS ON HAND LISTING BY INSTITUION INSTITUTION NAME 9/30/98 9/30/97 I NVESTM E NT I NVESTM E NT AMOUNT AMOUNT BRENTON BANK FIRST NATIONAL BANK FIRSTAR BANK HAWKEYE STATE BANK HILLS BANK & TRUST IOWA STATE BANK IOWA PUBLIC AGENCY INVESTMENT TRUST MAGNA BANK NORWEST BANK U OF I COMM CREDIT UNION US TREASURY NOTES VAN KAMPEN 3,800,000.00 0.00 7, 100,000.00 1,000,000.00 525,000.00 3,400,000.00 12,200,000.00 4,700,000.00 5,474,000.00 11,114,000.00 4,500,000.00 8,900,000.00 7,532,108.24 9,467, 108.10 11,005,400.00 13, 149,000.00 19,651,118.76 12,958,221.90 7,450,000.00 4,950,000.00 0.00 5,009, 128.13 200,000.00 200,000.00 TOTALS 79,437,627.00 $74,847,458.13 CITY OF IOWA CITY INVESTMENTS ON HAND DETAIL LISTING BY MATURITY DATE 9/30/98 INSTITUTION INVESTMENT NAME TYPE PURCHASE MATURITY INVESTMENT INTEREST DATE DATE AMOUNT RATE VAN KAMPEN GOVT MUTUAL FUND NORWEST SAVINGS NORWEST SAVINGS IOWA PUBLIC AGENY INVEST. TRUST IPAIT FLEX CD HAWKEYE STATE BANK SAVINGS NORWEST SAVINGS IOWA PUBLIC AGENY INVEST. TRUST IPAIT IOWA PUBLIC AGENY INVEST. TRUST IPAIT FLEX CD NORWEST CD NORWEST CD NORWEST CD NORWEST CD NORWEST CD NORWEST CD MAGNA BANK CD NORWEST CD HAWKEYE STATE BANK CD HAWKEYE STATE BANK CD NORWEST CD FIRSTAR CD NORWEST CD NORWEST CD HAWKEYE STATE BANK CD FIRST NATIONAL BANK CD MAGNA BANK CD HAWKEYE STATE BANK CD NORWEST CD HAWKEYE STATE BANK CD NORWEST CD IOWA STATE BANK CD FIRST NATIONAL BANK CD FIRST NATIONAL BANK CD FIRST NATIONAL BANK CD MAGNA BANK CD MAGNA BANK CD FIRST NATIONAL BANK CD U OF I COMMUNITY CREDIT UNION CD BRENTON BANK CD MAGNA BANK CD HAWKEYE STATE BANK CD MAGNA BANK CD MAGNA BANK CD IOWA STATE BANK CD IOWA STATE BANK CD BRENTON BANK CD BRENTON BANK CD BRENTON BANK CD HILLS BANK CD HILLS BANK CD MAGNA BANK CD HAWKEYE STATE BANK CD HAWKEYE STATE BANK CD HAWKEYE STATE BANK CD IOWA STATE BANK CD HILLS BANK CD FIRST NATIONAL BANK CD 22-Jul-85 N/A 200,000.00 VARIABLE 30-Jun-95 N/A 1,300,000.00 VARIABLE 17-Apr-97 N/A 323,818.38 6.21 19-Jun-97 N/A 1,809,615.69 6.01 18-Jul-97 N/A 1,600,000.00 5.50 25-Nov-97 N/A 3,108,837.38 6.01 9-Mar-98 N/A 1,000,000.00 VARIABLE 6-Apr-98 N/A 4,722,492.55 5.72 20-Nov-97 1 -Oct-98 1,000,000.00 5.92 3-Apr-97 5-Oct-98 2,100,000.00 6.31 20-Nov-97 9-Oct-98 900,000.00 5.92 4-Dec-97 15-Oct-98 1,000,000.00 5.93 4-Dec-97 23-Oct-98 900,000.00 5.93 4-Dec-97 2-Nov-98 1,000,000.00 5.93 15-Dec-97 6-Nov-98 900,000.00 6.06 12-Dec-97 16-Nov-98 1,000,000.00 6.04 19-Dec-97 20-Nov-98 900,000.00 5.95 22-Jan-98 20-Nov-98 400,000.00 5.95 29-Dec-97 1 -Dec-98 1,000,000.00 5.90 9-Sep-98 1 -Dec-98 525,000.00 5.30 6-Jan-98 4-Dec-98 900,000.00 5.91 9-Jan-98 15-Dec-98 1,000,000.00 5.92 22-Jan-98 18-Dec-98 900,000.00 5.95 14-Mar-97 31-Dec-98 1,000,000.00 6.13 3-Jul-97 31-Dec-98 525,000.00 6.14 27-Jan-98 31-Dec-98 1,000,000.00 5.75 26-Mar-98 31-Dec-98 900,000.00 5.69 13-Mar-98 15-Jan-99 1,900,000.00 5.75 26-Mar-98 29-Jan-99 900,000.00 5.71 30-Mar-98 1 -Feb-99 1,000,000.00 5.68 14-Apr-98 12-Feb-99 900,000.00 5.71 14-Apr-98 15-Feb-99 1,000,000.00 5.71 14-Apt-98 26-Feb-99 900,000.00 5.71 14-Apr-98 1 -Mar-99 1,000,000.00 5.73 14-Apr-98 12-Mar-99 900,000.00 5.73 24-Apr-98 15-Mar-99 1,000,000.00 5.71 13-Mar-98 15-Mar-99 7,450,000.00 VARIABLE 8-May-98 26-Mar-99 900,000.00 5.85 1-May-98 1 -Apr-99 1,000,000.00 5.76 12-May-98 9-Apr-99 900,000.00 5.7 12-May-98 15-Apr-99 1,000,000.00 5.77 12-May~98 23-Apr-99 900,000.00 5.77 12-May-98 30-Apr-99 1,000,000.00 5.72 12-May-98 7-May-99 900,000.00 5.72 5-Jun-98 14-May-99 1,000,000.00 5.85 5-Jun-98 21-May-99 900,000.00 5.85 19-Jun-98 1-Jun-99 1,000,000.00 5.80 2-Jul-98 4-Jun-99 900,000.00 5.80 2-Jul-98 15-Jun-99 1,000,000.00 5.80 17-Jul-98 18-Jun-99 900,000.00 5.63 6-Jul-98 25-Jun-99 1,200,000.00 5.70 25-Sep-97 1 -Jul-99 1,300,000.00 6.35 24-Oct-97 1 -Jul-99 1,000,000.00 6.25 30-Mar-98 1 -Jul-99 1,600,000.00 5.77 1-Jul-98 1 -Jul-99 774,000.00 5.80 9-Sep-98 1 -Jul-99 600,000.00 5.25 Page1 INSTITUTION INVESTMENT PURCHASE MATURITY INVESTMENT INTEREST NAME TYPE DATE DATE AMOUNT RATE HILLS BANK HAWKEYE STATE BANK HILLS BANK HILLS BANK NORWEST FIRST NATIONAL BANK FIRST NATIONAL BANK MAGNA BANK NORWEST MAGNA BANK MAGNA BANK TOTAL CD CD CD CD CD CD CD CD CD CD CD 25-Aug-98 2-Jul-99 900,000.00 5.55 6-Jul-98 6-Ju1-99 1,100,000.00 5.70 25-Aug-98 15-Ju1-99 1,000,000.00 5.55 25-Aug-98 16-Ju1-99 900,000.00 5.55 22-Sep-98 30-Ju1-99 900,000.00 5.29 25-Sep-98 13-Aug-99 900,000.00 5.28 7-Aug-98 31-Dec-99 800,000.00 5.80 3-Oct-97 30-Jun-01 119,000.D0 6.25 31 -Oct-97 31 -Oct-02 1,418,463.00 6.49 31-Oct-97 1 -Jul-03 250,000.00 6.50 13-Ju1-98 11-Jul-03 3,511,400.00 5.92 $79,437,627.00 Page 2 CITY OF IOWA CITY INVESTMENT ACTIVITY FOR THE QUARTER ENDED SEPTEMBER 30, 1998 INVESTMENTS ON HAND AT 6/30/98 INSTITUTION INVESTMENT TYPE PURCHASE DATE MATURITY DATE INTEREST 'RATE 90,990,638.25 PURCHASES 7/1/98 TO 9/30/98 HILLS BANK CD 7/1/98 HILLS BANK CD 7/2/98 HILLS BANK CD 7/2/98 HAWKEYE STATE BANK CD 7/6/98 HAWKEYE STATE BANK CD 7/6/98 MAGNA BANK CD 7/13/98 MAGNA BANK CD 7/17/98 FIRST NATIONAL BANK CD 8/7/98 HILLS BANK CD 8/25/98 HILLS BANK CD 8/25/98 HILLS BANK CD 8/25/98 FIRST NATIONAL BANK CD 9/9/98 FIRSTAR BANK CD 9/9/98 NORWEST BANK CD 9/22/98 FIRST NATIONAL BANK CD 9/25/98 TOTALPURCHASES REDEMPTIONS 7/1/98 TO 9/30/98 MAGNA BANK CD 9/5/97 MAGNA BANK CD 6/19/97 HILLS BANK CD 7/19/96 IOWA STATE BANK CD 10/11/96 HILLS BANK CD 12/31/96 MAGNA BANK CD 10/3/97 NORWEST BANK CD 10/9/97 HILLS BANK CD 1/3/97 HILLS BANK CD 7/12/96 NORWEST BANK CD 10/14/97 NORWEST BANK CD 10/9/97 NORWEST BANK CD 10/14/97 NORWEST BANK CD 10/14/97 NORWEST (PARTIAL REDEMPTION) SAVINGS 11/25/97 NORWEST (PARTIAL REDEMPTION) SAVINGS 4/17/97 IOWA PUBLIC AGENCY INVESTMENT TRUST (PARTIAL REDEMPTION) IPAIT 4/6/98 IOWA PUBLIC AGENCY INVESTMENT TRUST (PARTIAL REDEMPTION) IPAIT 6/19/97 NO RWEST BAN K C D 11/4/97 NORWEST BANK CD 11/4/97 NORWEST BANK CD 11/20/97 NORWEST BANK CD 11/20/97 NORWEST BANK CD 11/20/97 NORWEST (PARTIAL REDEMPTION) SAVINGS 11/25/97 NORWEST (PARTIAL REDEMPTION) SAVINGS 4/17/97 IOWA PUBLIC AGENCY INVESTMENT TRUST (PARTIAL REDEMPTION) IPAIT 4/6/98 IOWA PUBLIC AGENCY INVESTMENT TRUST (PARTIAL REDEMPTION) IPAIT 6/19/97 7/1/99 6/4/99 6/15/99 6/25/99 7/6/99 7/11/03 6/18/99 12/31/99 7/2/99 7/15/99 7/16/99 7/1/99 12/1/98 7/30/99 8/13/99 7/1/98 7/1/98 7/1/98 7/1/98 7/1/98 7/2/98 7/2/98 7/6/98 7/12/98 7/15/98 7/17/98 7/31/98 8/14/98 N/A(8/24/98) N/A(8/24/98) N/A(8/24/98) N/A(8/24/98) 8/28/98 9/1/98 9/11/98 9/15/98 9/25/98 N/A (9/29/98) N/A (9/29/98) N/A (9/29/98) N/A (9/30/98) 5.80 5.80 5.80 5.70 5.70 5.92 5.63 5.80 5.55 5.55 5.55 5.25 5.30 5.29 5.28 6.01 5.96 6.30 5.92 6.05 5.96 5.71 6.05 6.30 5.74 5.74 5.77 5.79 6.01 6.21 5.72 6.01 6.04 6.04 5.92 5.92 5.92 6.01 6.21 5.72 6.01 774,000.00 900,000.00 1,000,000.00 1,200,000.00 1,100,000.00 3,511.400.00 900,000.00 800,000.00 900,000.00 1,000,000.00 900,000.00 600,000.00 525,000.00 900,000.00 900,000.00 15,910,400.00 (600,000.00} (774,000.00) (1,300,000.00) (1,200,000.00) (1,000,000.00) (900,000.00) (900.000.00) (1,700,00000) (3,514,000.00) (1,000,000.00) (900,000.00) (2,000.000.00) (2,000,000.00) (960,716.30) (224,756.93) (707,526.70) (543,086.41) (900,000.00) (1,000,000.00) (900,00000) (1,000,000.00) (900,000.00) (171,368.80) (277,691.44) (1,070,628.11) (1,019,636.56) TOTAL REDEMPTIONS INVESTMENTS ON HAND AT 9/30/98 (27.463,411.25) 79,437,627.00 City of Iowa City MEMORANDUM Date: To: From: Re: City Council: Staff: Tapes: October 14, 1998 Mayor and City Council Marian K. Karr, City Clerk Council Work Session -October 5, 1998 - 6:50 PM Lehman, Champion, Kubby, Norton, O'Donnell, Thornberry, Vanderhoef. Atkins, Helling, Karr, Dilkes, Franklin, Davidson, Craig, Schoon, Ripley. Reels 98-109; all; Reel 98-110, all. REVIEW ZONING MATTERS Reel 98-109, Side 1 Planning and Community Development Director Franklin presented the following Planning and Zoning items for discussion: A. MOTION SETTING A PUBLIC HEARING FOR OCTOBER 20 ON AN ORDINANCE VACATING THE MADISON STREET RIGHT-OF-WAY SOUTH OF PRENTISS STREET, THE DES MOINES STREET RIGHT-OF-WAY WEST OF CAPITOL STREE~ AND THE 20-FOOT WIDE ALLEY SOUTH OF PRENTISS STREET AND WEST Oh CAPITOL STREET. (UNIVERSITY OF IOWANAC98-0005) ORDINANCE CHANGING THE ZONING DESIGNATION OF APPROXIMATELY 22 ACRES FROM MEDIUM DENSITY SINGLE-FAMILY RESIDENTIAL (RS-8) TO LOW DENSITY SINGLE-FAMILY RESIDENTIAL (RS-5) FOR PROPERTY LOCATED IN THF SUMMIT STREET HISTORIC DISTRICT. (REZ98-001 07. (FIRST CONSIDERATION) ORDINANCE CHANGING THE ZONING DESIGNATION OF APPROXIMATELY 9.27 ACRES FROM LOW DENSITY SINGLE-FAMILY RESIDENTIAL (RS-5) TO SENSITIVF AREAS OVERLAY/MEDIUM DENSITY RESIDENTIAL (OSA-8) TO ALLOW A 72-UNI~ RESIDENTIAL DEVELOPMENT ON PROPERTY LOCATED ON THE SOUTH SIDE Oh TAFT SPEEDWAY WEST OF DUBUQUE STREET. (RIVERVIEW PLACE PARTNERS/REZ98-0009) (FIRST CONSIDERATION) Franklin suggested that Council defer this item indefinitely. ORDINANCE CHANGING THE ZONING DESIGNATION OF AN APPROXIMATE 4,000 SQUARE FOOT PROPERTY LOCATED AT 114 WRIGHT STREET FROM COMMUNITY COMMERCIAL (CC-2) TO PLANNED HIGH DENSITY MULTIPLE- FAMILY RESIDENTIAL (PRM). (SECOND CONSIDERATION) ORDINANCE CONDITIONALLY CHANGING THE ZONING DESIGNATION ON A 10- ACRE TRACT LOCATED ON THE SOUTH SIDE OF MELROSE AVENUE AND WES~ OF WEST HIGH SCHOOL FROM LOW DENSITY SINGLE-FAMILY (RS-5) TO PLANNED DEVELOPMENT HOUSING (OPDH-8) TO PERMIT AN 80 DWELLING UNI~ RETIREMENT COMMUNITY. (MELROSE RETIREMENT COMMUNITY/REZ98-0002) (PASS AND ADOPT) Council Work Session October 5, 1998 Page 2 RESOLUTION APPROVING A FINAL PLAT OF WINDSOR RIDGE - PART 9, A 20.33 ACRE. 46 LOT RESIDENTIAL SUBDIVISION LOCATED IN THE LOW DENSITY SINGLE-FAMILY RESIDENTIAL (RS-5) ZONE FOR PROPERTY LOCATED NORTH OF ARLINGTON DRIVE AND BARRINGTON ROAD. (SUB98-0023) MOTION TO FORWARD A LETTER TO THE JOHNSON COUNTY BOARD OF SUPERVISORS RECOMMENDING THAT A REQUEST SUBMITTED BY GERALD MILDER TO REZONE 20.4 ACRES OF LAND FROM RURAL (A1) TO SUBURBAN RESIDENTIAL (RS-10) FOR PROPERTY LOCATED AT 4820 AMERICAN LEGION ROAD BE DENIED. (CZ9831) Franklin noted the applicant has requested deferral of this item to October 20, 1998. MOTION TO INCLUDE IN THE LETTER TO THE JOHNSON COUNTY BOARD OF SUPERVISORS CONCERNING THE MILDER REZONING. REQUEST THAT THF CITY AND COUNTY JOINTLY CONSIDER RESOLUTIONS TO THI$ TYPE OF REZONING SITUATION THAT ARE NOT CONTRARY TO THE FRINGE AREA AGREEMENT. Franklin noted the applicant has requested deferral of this item to October 20, 1998. REVIEW AGENDA ITEMS Reel 98-109, Side 1 (AGENDA ITEM #9 - CONSIDER AN ORDINANCE AMENDING TITLE 14, ENTITLED "UNIFIED DEVELOPMENT CODE," CHAPTER 3, ENTITLED "CITY UTILITIES," ARTICLE H ENTITLED "SOLID WASTE," SUBSECTION 2, ENTITLED "DEFINITIONS" OF THE CITY CODE TO AMEND SEVERAL DEFINITIONS.) In response to Kubby, Atkins stated he will provide additional information regarding the changes in definitions. (AGENDA ITEM #7 - WATER MAIN PHASE 4) Norton noted that a 24 inch water main was being constructed from Emerald Street to the Peninsula. (AGENDA ITEM #13 - 1996 MASTER PLAN FOR THE IOWA CITY MUNICIPAL AIRPORT) Thornberry inquired about the Airport Master Plan. In response to Norton, Lehman explained the Airport Master Plan had not previously been voted on by City Council. SALES TAX Reel 98-109, Side 1 City Manager Atkins, City Attorney Dilkes, and City Clerk Karr facilitated discussion of the proposed sales tax proposition ballot language. Council tentatively agreed to the following sales tax ballot categories: 0% property tax relief 40% construction of a center for community events 25% ~ water rate stabilization 10% operating expenses for the library, center for community events and related community events. 10% support of the operating and capital expenses for public transit 10% for hiring and equipping police officers and fire fighters 5% funding of Johnson County human services. Council Work Session October 5, 1998 Page 3 City Council directed City Attorney Dilkes to research ballot language relating to property tax relief and directed City Clerk Karr to proceed with setting public discussion at Council's October 20, 1998 meeting for November 3, 1998. Staff Action: Revised ballot language and item setting public discussion on October 20 agenda (Karr). SOUTH GILBERT STREET CORRIDOR Reel 98-109, Side 2 Planning and Community Development Assistant Director Davidson, City Attorney Dilkes, and John Sales (Stanley Consultants) responded to Council comments regarding proposed South Gilbert Street Corridor project alternatives. A Council majority stated that Alternative #3 is the preferred alternative and agreed to discuss the timing of South Gilbert Street Corridor Improvements in the CIP meeting of October 27. Staff Action: Complete corridor final report (Davidson). HIGHLAND AVENUE TRAFFIC CALMING Reel 98-110, Side 1 Traffic Engineer Ripley summarized Highland Avenue traffic calming options. Vanderhoef requested traffic count figures for Kirkwood Avenue, both before and after reconstruction of Kirkwood Avenue. Council majority directed staff to proceed with Highland Avenue traffic calming measures as outlined in Ripley's September 21, 1998 memo re: Highland Avenue Traffic Calming Proposal. Staff Action: Parking changes will be made immediately, traffic calming devices will be installed in the Spring of 1999. Follow-up data collection and survey one year after installation (Ripley). NONCONFORMING USE REGULATIONS Reel 98-110, Side 2 Planning and Community Development Director Franklin facilitated discussion regarding a proposed change in the nonconforming use regulations in historic districts. There was not a Council majority to support changing the nonconforming use regulations. Staff Action: None (Franklin). WINTER DECORATIVE LIGHTS Reel 98-110, Side 2 Council majority supported Iowa City's Downtown Association request for $6,000 to purchase winter decorative lights. Staff Action: Inform DTA of the Council's decision to participate in financing and installation (Atkins). Council Work Session October 5, 1998 Page 4 APPOINTMENTS Housing and Community Development Commission: Bob Elliott (unexpired term) Dan Coleman Lucia-Mai Page COUNCIL AGENDA/TIME Reel 98-110, Side 2 Reel 98-110, Side 2 O'Donnell raised concerns regarding newspaper vending machine litter located around City bus stop areas. Council directed staff to write a letter to the newspapers. Norton requested that Council schedule discussion of zoning and use issues in the Herbert Hoover Highway/I-80 area at the next joint meeting. Lehman reported that he received a telephone call noting Council's comments toward each other during formal Council meetings. Adjourned: 10:35 PM clerk\min\1005ws.doc October 13, 1998 Nathan Eugene Savin Susan Enzle 501 Kimball Road Iowa City, IA 52245 Dear Nathan & Susan: I have received a copy of your letter regarding the sidewalk that was recently installed along the east side of Dubuque Street between Kimball Road and Park Road. You have requested that the sidewalk be extended south along Dubuque Street to connect with the rest of the sidewalks forming a continuous route to downtown. Alternatively, you have requested that the walk be extended at least to the one sidewalk that exists south of the intersection. The steep hill beginning directly at the back of the east curb line prevents the sidewalk from being extended up the hill without the construction of significant retaining walls. The cost of this construction cannot be justified since there is an eight foot wide walk on the other side. With regard to extending the walk to the south side of Park Road, construction of the walk required the acquisition of private property, which was opposed by the neighboring property owners. The limits of the project were a result of a meeting at the site between City Council members, abutting property owners and area residents. If you have questions, please feel free to call me at 356-5143. Sincerely, City Engineer Cc: City Manager City Council ~-- 410 EAST WASHINGTON STREET * IOWA CITY, IOWA 52240-1826 * (319) 356-5000 * FAX (319) 356-5009 IP10 October 9, 1998 / ~ CITY OF I0 WA CITY Highland Avenue Residents Dear Highland Avenue Resident: At their October 5, 1998 work session, the City Council approved the traffic calming proposal that was presented for your opinion this fall. Unfortunately, due to weather constraints the installation of the traffic calming devices will not take place until next spring. The parking changes will be made this fall, however. As our traffic calming program process dictates, traffic speeds and volumes will be monitored after the installation. After approximately 12 months, another survey will be sent to you asking if you would like the traffic calming devices made permanent or removed. If you have any questions about this process, please do not hesitate to call me at 356-5254. Sincerely, Doug Ripley JCCOG Traffic Engineering Planner CC: City Council City Manager Rick Fosse Jeff Davidson Marcia Klingaman Im\mem\drl 0-8 .doc 410 EAST WASHINGTON STREET · IOWA CITY, IOWA 52240-1826 · (319) 356-5000 · FAX (319) 356-5009 October 15, 1998 CITY OF I0 WA CITY Joan Jehle 1167 E. Jefferson St. Iowa City, IA 52245 Dear Ms. Jehle: The City Manager forwarded to me your letter concerning traffic conditions on Kimball Road, specifically in the 500 block near the curve. It is unfortunate that your family has had to endure people driving into their yard. There are limited things the City can do to alert drivers to the curve, and probably none of them would have prevented the incident on October 3, given the contributing circumstances of driver impairment. To help alert drivers to the curve, and hopefully reduce the likelihood of additional incidents like the recent one, the City will install an advance warning sign in both directions on Kimball Road to alert people to the curve in the road. These signs may be installed by the time you receive this letter. As mentioned above, we do not think these signs would have prevented the incident of October 3, but they should alert rational drivers to the curve. If you have any questions or would like to discuss this further, do not hesitate to call me at 356- 5254. Sincerely, Dou,~")Ripley JCCOG Traffic Engineering Planner cc: City Council Steve Atkins Jeff Davidson R.J. Winkelhake Im\ltr\drl 0-13doc 410 EAST WASHINGTON STREET · IOWA CITY. IOWA 52240-1826 · (319) 3~16-~000 · FAX (319) P STHIGH 2910 Melrose Avenue, Iowa City, IA 52246 October 13, 1998 Dear Mr. Fowler, We of the West High Parent, Student, Teacher Organization(PSTO) write in support of west side city bus routes which would enable students to arrive at school as early as 7:00 AM and remain as late as 5:00 PM. Michaelanne Widness has. reminded you of the current situation in her letter of August 29th. Not only is the current schedule inadequate to serve high school students on the west side but we of the West High PSTO were dismayed to learn that city bus schedules on the east side of Iowa City easily accommodate high school, junior high and Catholic school students. The West High PSTO urges you to seriously consider coordinating service with Coralville to provide students and, perhaps others, on the west side the opportunity to use public transit All efforts made towards the equity of the bus routes will be appreciated. Cc: Iowa City Council Iowa City School Board Sincerely, Ann Gough-lverson PSTO President IP14 Dear Applicant: In response to neighborhood requests, the City Council has asked staff to provide greater public notification for development items. Beginning October 29, 1998 we will be expanding our public notification process that the City currently uses for rezoning, subdivision, OPDH, special exceptions, and variance applications. These changes will affect all applicants, so it is important to review and conform to these changes to prevent any delays in the process. A list of addresses must accompany every application for rezoning, subdivision, special exceptions and variances. This list must include all landowners of property within 300'--an increase from the current 200', of the proposed site, including public ways. This list should be submitted on disc if possible in address label format according to the following specifications: 30 addresses per 8 ¼" x 11" page 3 columns %" margins (or in Avery 5160 label format) The applicant will no longer be responsible for posting public notice signs on the property. A sign will be posted by Planning staff at the time an application is filed. This sign must remain until the application is approved or denied. Larger sites will require one sign for every 200' of frontage on each street adjacent to the site. These 24" x 36" signs will contain general information regarding the application and will provide a phone number for persons to contact Planning staff with questions regarding the application. Planning staff will compile a mailing list based on the response to the sign and send out meeting agendas when the application is scheduled for public discussion. Planning staff will be responsible for removing the signs. If the applicant notices the sign has been removed or damaged between the time of application and final approval or denial of the request, the City of Iowa City Planning staff should be notified. A copy of Iowa City's GOOD NEIGHBORHOOD POLICY (enclosed) will be provided to every applicant at the time of application. This policy has been developed to help create more opportunities for early and more effective citizen participation in both 410 E-9, SI' %~,~IIIN(;I'()~, '~IR[-;ET · IO~A'A {"11'~, IOWA ,~2240-1826 · (319) 356-5000 , FAX (319) 356-5009 major and minor projects, and encourages an applicant's participation beyond current legal requirements for notification. Beginning on January 1, 1999, the application fees will also be increased by $25.00 per review to cover the additional costs associated with these expanded notification practices. Annual increases equivalent to the cost of living index will also be implemented. A list of the revised fees is attached. A revised application form, which reflects these changes, has been enclosed for your use. If you need additional forms, you may photo copy this form or you can obtain additional copies from our office. If you have any additional comments or concems about these changes, please contact our department at 356-5230. Sincerely, Tammy Parks Administrative Secretary Planning & Community Development eric. PLANNING & COMMUNITY DEVELOPMENT * IOWA CITY APPLICATION FORM NOTE TO APPLICANT - THIS IS A COMPREHENSIVE APPLICATION FORM, COMPLETE ONLY THOSE ITEMS RELATED TO YOUR APPLICATION(S). PLEASE TYPE OR PRINT NAME OF APPLICANT: NAME OF DEVELOPMENT: STREET ADDRESS OR PROPERTY LOCATION: ADDRESS {INCLUDE ZIP CODE): NO. OF LOTS: SITE SIZE: ASSESSOR'S PARCEL NO.: PHONE: PRESENT ZONING PROPOSED ZONING PLEASE CHECK ONE PERSON TO CONTACT FOR FURTHER INFORMATION OR REFERENCE  PROPERTY OWNER: ADDRESS (INCLUDE ZIP CODE) PHONE: i ATTORNEY: ADDRESS {INCLUDE ZIP CODE) PHONE: [] ENGINEER: ADDRESS (INCLUDE ZIP CODE) PHONE: 1 OTHER: ADDRESS (INCLUDE ZIP CODE) PHONE: TYPE OF APPLICATION (check all boxes that apply) ANNEXATION 3,12 REZONING 3,10ollo12 SUBDIVISION 1°10°12 PRELIMINARY PLAT ISUBDIVISION FINAL PLAT 2'4'5'6°10'12 PLANNED DEVELOPMENT1 o3 ° 7°9, 1 o° 11 ° 12 PRELIMINARY PLAN PLANNED DEVELOPMT. 2°3,5°6°7,8,12' FINAL PLAN . [SENSITIVE AREAS 1,3 °7,8o9,10°12! DEVELOPMENT PLAN .... j ALLEY RIGHT-OF-WAY VACATION OF STREET OR 3-12I DOCUMENTS REQUIRED FROM APPLICANT 1o 12 copies of preliminary plat/plan (one 8'~" x 11" copy) 2. 12 copies of final plat/plan (one 8 1/2" x 11" copy) 3. Location Map and legal description 4. 4 copies of legal papers consisting of: a. Title opinion b. Statement of County Treasurer c. Consent to platting by Owner & Spouse d. Subdivider's Agreement e. Dedication Documents* f. Easement Agreements* g. Encumbrance Bond Certificate* h, Petition to pave abutting streets* 5. Construction drawings - 3 sets 'varies with development - consult with City Attorney's Office. 6. Stormsewer and stormwater detention calculations 7. Building design sketches/elevations 8. Landscaping plan 9. Additional information: a. Statement of Intent b. Evidence of Ownership c. Description of Development d. Intended time schedule for completion 10. Names and mailing addresses of property owners within 300 feet {may be obtained at City Assessor's Office) 11. Applicant's statement as to why zone change is warranted 12. Application fee - see attached list. ATTACH ADDITIONAL SHEETS IF NECESSARY FOR OFFICE USE ONLY CASE NUMBER: APPLICATION ACCEPTED BY: FEE PAID: AMOUNT DATE NAME DATE This is an application form only;~,,. Additional materials may be required during the review process ORIGINAL: KEPT BY CITY CLERK COPY TO: PLNG. COMM. DEV. COPY TO: APPLICANT FEES FOR REVIEW OF PLANNING AND ZONING AND BOARD OF ADJUSTMENT (BOA) APPLICATIONS Subdivision Minor Major Final Combination Planned Area DeveloOment |OPDH) Preliminary Final Administrative Review Combination - preliminary/final Combination - OPDH and Subdivision Preliminary Final Combination - preliminary/final Rezoning V01~llltarv ARnexation Street or Alley Vacation Variance SDecial Exce0tion Other BOA actions Combination BOA Actions Current Fee New Fee 1/1/99 $490 $515 $490 + $15/Iot $515 +15/Iot $490 ~515 $540 + $15/Iot ~565 +15/Iot ~490 + ~15/Iot $515+15/Iot $65 ~90 $540 + $15/lot $565 + 15/lot ~490 + ~15/Iot ~515 +15/1ot $490 $515 $540 + $15/Iot $565 +15/Iot ~330 $355 $330 '$355 $120 ~145 $275 $300 ~275 S300 $275 ~300 ~325 $350 Sharedlpcd/newres.doc It is important that all meeting notices get to people eady. When you schedule your meetings, look for other events or activities that might conflict. Is it a holiday or the day before a holiday when a lot of people are out of town? Is the University in session or not? Is there a big local or neighborhood func- tion that day? To make it convenient for neighborhood residents, consider holding the meeting at a location near the project site. Schools and churches and businesses often have meeting space available. The City Neighborhood Ser- vices Office can assist you in making meeting arrangements. How Should You Listen to Issues, Concerns, and ~ Problems ? ~ [3 Is the process I am using open and fair? How can public input help make this project successful? The procass of listening to the questions, concorns, and problems you hear from the public is critical to successful dtizen partidpation and a successful project. Your role in any contact with neighborhoods should go beyond trying to convince people your project is wonderful. It should attempt to identify questions and concerns the public has about your project so you can address them. Much of this listening can be done through group meetings. Try to convey to the people attending that while you may not be able to do everything everyone wants, you are listening and the process you are using is fair and open. If someone is going to go to the time, expense, and trouble to attend meet- ings, find baby sitters, rearrange their schedules, and endure the other inconveniences associated with public participation, they need to believe there will be a return to them in having a quality development that does not harm their way of life. If people see your decision-making process as fair, they will be much more willing to accept your proposal than if they think a project is being forced on them. Make sure whoever you have on your team dealing with the public understands the importance of listening and being non-confrontational. This will help setthe tone for the entire meeting. Do I have a plan to show I have considered all of the issues and dealt with them fai~y? What are you going to do about the concerns you hear?. You may need to revise your plans and bring them back to the public for further review. Don't feel you have to solve everyone's concorns at one meeting. If they are confident you are working with them to find solutions, people will be glad to put in time and effort to work toward those solutions. Are you willing to revise your plans based on feedback received? Try to deal with people as directly as possible. Faca-to-faca communication and talking to people on the telephone is much better than communicating through letters. Use letters as a follow-up and to formalize an agreement already reached. The Good Neighbor Policy is a step in encouraging early and effective citizen participation. Although imple- mentation of the policy will involve extra effort at the beginning of your project, it has been our experience that following these policies minimizes the potential for delay and controversy when the projects are reviewed by the Board of Adjustment, Planning and Zoning Commission and City Council. We hope that this check- list along with our assistance will prove to be useful. The City of Iowa City staff is always available to help you through the process. Please feel free to contact your project planner at 356-5230, should you have any questions or need additional assistance. In addition, please let us know if you have any comments or sug- gestions regarding our process. We look forward to working with you. Check out... Good Department of Planning & Community Development 410 E. Washington St. Iowa City, Iowa 52240 (319) 356-5230 Iowa City residents, property owners, and others have demonstrated an interest in local government develop- ment issues and would like to be more involved in the decisions they believe affect them. In an effort to make the development process run more smoothly and to meet the needs of interested citizens, a new policy has been developed to help create more oppor- tunities for eady, and hopefully more effective, citizen participation. This is called our "Good Neighbor Policy". This policy is meant to encourage dialogue early in the project planning process to pinpoint, discuss, and try to resolve neighborhood issues related to the impacts of a proposed project. For minor projects, such as a yard reduction, this may be as simple as knocking on your neighbors door and discussing your project with them. For a major rezoning or subdivision you may want to sponsor a neighborhood meeting to present your project and solicit neighbors comments. The Good Neighbor Policy does not guarantee specific outcomes, but should be used as a tool to help guide you through development review and encourage your participation beyond current legal requirements for notification. What follows may be described as helpful hints; others may view it as a checklist of suggested actions. Action on your part is not required, but is encouraged. Your active involvement in the Good Neighbor Policy early on in your project is likely to facilitate the process; to help it run more smoothly and to be less controversial in the public decision-making arena. The Office of Neighborhood Services can assist you to implement the Good Neighbor Policy for your project. They maintain an up-to-date list of neighborhood associations and who to contact. The office can also help develop mailing lists more specific to your project. For more information, the Neighborhood Services Coordinator can be reached at 356-5237. ppdadmin~page~:K~lneig.p65 Citizen Participation Checklist Who Might Be Impacted By Your Project? ~ [~ Have I identified the residents, property owners, busi- nesses, neighborhood associations and other organiza- tions which might be interested in my project proposal? Have I identified who will be directly affected? Have I identified those who will not be affected, but who think they will? Most residents of a neighborhood have different concerns depending on what part of the neighborhood they are in. A resident living immediately next to your proposed projecrs site may have very different concerns - and more strongly held concerns - than the rest of the neighborhood. A resident living on a busy collector street in the neighborhood may have much more concern about the traffic impacts of your project than someone living on a cul-de-sac. Treating the entire neighborhood as if they have uniform concerns may cause you to miss important issues. How Do Neighbors See Your Project? ~ [3 Have I thought about my project from the perspective of the people listed above? Have I identified some of the concerns or problems they may have? Put yourself in the place of these people. How will they see your project? As an enhancement to the neighborhood? Or will they be concerned that your project will create traffic that may affect them? Will they be concerned about the hours you plan to be open? The quality of housing you intend to build? Try to predict what you will hear during the public hearing process so you can be better prepared to respond. We have found that applicants that do a good job of thinking this through are better prepared to discuss thorny issues with citizens. How Will You Notify Interested Parties? ~ [~} Which public notification techniques might be most appropriate for this project? There are a number of participation and notification tech- niques which can be used. Neighborhood meetings and letters are the most common, but there may be other meth- ods of communication and interaction you want to use. Applicants have had success with open houses, tours of other projects, informational flyers, and news releases. What will connect you with the people who need to know about your project? How can you best inform them of what you want to do? Written information is generally a part of the participation process. Whether it is a meeting notice or general information about your project, it is cdtical that you give people back- ground about your project, including a description of the project, what process you are going through, and what decisions related to the project have already occurred. Do not assume people know your comer has been zoned for a shopping center for years. You need to tell them. To ensure that meeting notices are effective in getting people to your meetings, you need to consider not just what you want to tell people in your notice, but what form it should take. What techniques can make the communication more effective? How can you help ensure people will read your mail? Consider other ways of getting the word out, like door hangers, homeowner association newsletters, local newspa- pers, etc. The City's Neighborhood Services Office can help you with this. Johnson County iI IOWA.~ Joe Bolkcom, Chairperson Charles Duffy Jonathan Jordahl Stephen P. Lacina Sally Stutsman -> 319356S089 Hagor/City Council BOARD OF SUPERVISORS October 15, 1998 FOR IMMEDIATE RELEASE PRESS RELEASE from the Johnson County Board of Supervisors For more information, call Joe Bolkcom in the Board's Office - 356-6000 The public is invited to a reception to meet the new director of Johnson County S.E.A.T.S. The new director Lisa Dewey will be meeting S.E.A.T.S. riders and other members of the public. The reception will take place at the Iowa City Public Library, Room A, on Wednesday, October 21st, from 3:00 -5:00 p.m. The reception is sponsored by the Johnson County Board of Supervisors, P.E.P.S. (People for Equitable Para-transit), and the Johnson County Coalition for Persons with Disabilities. Refreshments will be served. Contact Person: Joe Bolkcom - 356-6000 -30- 913 SOUTH DUBUQUE ST. P.O. BOX 1350 IOWA CITY, IOWA 52244-1350 TEL: (319) 356-6000 FAX: (319) 354-4213 PATV BOARD OF DIRECTORS Thursday, August 20, 1998 Public Access Television BOARD MEMBERS PRESENT: PATV: Rene Paine BTC: Betty McKray PUBLICi Richard Twohy Greg Thompson, Tim Clancy, Robin Butler (notes). - Meeting called to order at 7: 10pm - July minutes approved with corrections (Clancy/Butler) - Board announcements: Thompson reiterated how good it is to have PATV. He noted that the ICON Annual Manual had listed PATV under "Best Bets." I. OLD BUSINESS ( 1 ) Facility Board toured the wonderful new facilities. Postcards are being sent out to the mailing list explaining the three phases of moving and getting the building in order. The CTG recommended to the BTC to give $6,000 of pass the through money to PATV to get the studio in order. (2) Fundraising Subcommittee Report We really need to gear up and get more organized with fundraising. (3) Programming Board reviewed the revised contract. One change was recommended. In stead of reading "A PSA will run continually on Channel 2, etc." It should read "A PSA will run regularly on Channel 2, etc." Board approved contract (Thompson/Butler; 3-0) (4) Board Recruitment Board members were asked to suggest new members. PATV will run a PSA and send a press release announcing the need for board members. Interested parties will be asked to write a letter stating why they want to be on the board. McKray suggested that PATV think about changing By-laws to have a Past-president position on the board. II. NEW BUSINESS - The Board decided to have two Strategic Planning Sessions. The first retreat will focus on financial and fundraising issues. The second will focus on a general visionlug and a five year plan. - Tentative date for first retreat: Saturday, October 10th. Paine will check into reserving the Senior Center Classroom. lIl. REPORTS - BTC: McKray reported the many happenings about McLeod. The BTC generally supports McLeod entering the market, and has recommended this to Iowa City. The Iowa City City Council passed one of three readings to have the McLeod addition added to the November ballot. The second and third readings will be the Tuesday ai~er the August PATV Board meeting. McLeod seems willing to give some money for community programming. Overall the cable television competition market has to be on a level playing field. Therefore, both TCI & McLeod have to offer similar services. It is important to PATV to note that TCI is required under the franchise agreement to give $150,000 for PATV, even ifTCI's subscribers decrease. McLeod, on the other hand, also has to give money for community programming; however, it is not specified at this time that it would go to PATV. - Management: Paine reminded the board that she has not had an evaluation in quite some time. The Annual Report is ready. It was produced in house this year. Meeting closed at 9:26pm. (Butler/Thompson) 1B/1Z/gB 09:08:31 319-384-4Z13 -> 3193865889 I08~ CITV CLERK IP17 Jolutson County -'- iOW:A- ~ - Joe Bolkcom, Chairperson Charles D. Duffy Jonathan Jordahl Stephen P. Lacina Sally Slutsman BOARD OF SUPERVISORS October 13, 1998 INFORMAL MEETING 1. Call to order 9:00 a.m. Agenda 2. Review of the formal minutes of October 8th 3. Business from the Board of Supervisors a) Discussion re: schedule of five-year construction program for Secondary Roads. (Joe) b) Discussion re: meeting with area legislators. c) Minutes received 1. Hawkeye Area Community Action Program for September 9, 1998 2. Johnson County Nutrition Board for September 21, 1998 d) Reports e) Other 4. Business from the County Attorney a) Discussion re: county's proposals for the Administrative Unit and the Sheriff' s Office collective bargaining agreement. b) Other 913 SOUTH DUBUQUE ST. P.O. BOX 1350 IOWA CITY, IOWA 52244-1350 TEL: (319) 356-6000 FAX: (319) 356-6086 1811Zl98 89:8B:56 319-354-4213 -> 3193565889 IDWA gITV CL~RK Pag~ 88Z Agenda 10-13-98 5. 1:30 p.m. - Department Head Meeting Page 2 a) Discussion of the following: 1) Exempt employee attendance records (Joe) 2) External County News (Joe) 3) Reports/updates from department heads 4) Date and time of next meeting 5) Other 6) Adjourn 6. Discussion from the public 7. Recess 10/13/98 89|89:52 319-354-4213 -> 3193565889 IOUfi CITV CLERK Page 881 hl]'~Ull COlilIIii;*Y IOWA BOARD OF SUPERVISORS Joe Bolkcom, Chairperson Charlie Duffy Stephen P. Lacina Jonathan Jordahl Sally Stutsman Johnson County Board of Supervisors INFORMAL MEETING Agenda 1. Call to order 10:00 a.m. October 14, 1998 2. Work Session to discuss Board of Supervisors office a) Discussion re: 2. 3. Other the following: Reorganization of the Board of Supervisors office Staff liaison 3. Adjourn 913 SOUTH DUBUQUE ST. P.O. BOX 1350 IOWA CITY, IOWA 52244-1350 TEL: (319) 356-6000 FAX: (319) 354-4213 10/14/98 09:17:10 319-354-4~13 -> 3193565089 I0~ CITV ~L~RK Pa~c 881 Johnson County' __ II IOWA.~ Joe Bolkcom, Chairperson Charles D. Duffy Jonathan Jordahl Stephen P. Lacina Sally Slutsman BOARD OF SUPERVISORS October 15, 1998 FORMAL MEETING Agenda 1. Call to order 9:00 a.m. 2. Action re: claims 3. Action re: formal minutes of October 8th 4. Action re: payroll authorizations 5. Business from the County Auditor a) Action re: permits b) Action re: reports 1. County Recorder's monthly report of fees collected 2. Clerk' s September monthly report 3. County Auditor's 1st quarterly report of fees collected c) Other 6. Business from the Planning and Zoning Administrator a) Motion setting public hearing for various zonings and plattings. b) Final consideration of Application Z9836 of Nellie Donovan. 913 SOUTH DUBUQUE ST. P.O. BOX 1350 IOWA CITY, IOWA 52244-1350 TEL: (319) 356-6000 FAX: (319) 356-6086 10114198 09:17:34 319-354-4213 -> 31935658H9 IOWA CITV CLERg Page Agenda 10-15-98 Page c) Second consideration of the following Zoning application: Application Z9837 of Ray S. Hruby, Oxford, Iowa, requesting rezoning of 3.0 acres from A1 Rural to RS-3 Suburban Residential of certain property described as being in the NW ¼ of Section 18; Township 80 North; Range 7 West of the 5th P.M. in Johnson County, Iowa (This property is located on the south side of 260th Street NW, approximately ¼ of a mile west of it's intersection with Greencastle Avenue NW in Madison Twp.). d) First and Second consideration of the following Zoning application: Application Z9838 of Mary Evelyn Murphy, North Liberty, Iowa, signed by Carmen Davis, Tiff.m, Iowa, requesting rezoning of 9.64 acres from A1 Rural to RS Suburban Residential and RS-3 Suburban Residential (approximately 4 lots) of certain property described as Lot 1 of Pirkl's Second Subdivision located in the NE ¼ of the NW ¼ of Section 20; Township 80 Noah; Range 6 West of the 5th P.M. in Johnson County, Iowa (This property is located on the west side of North Liberty Road NE, approximately ¼ of a mile south of it's intersection with Dubuque Street NE in Penn e) Discussion/action re: the following Platting application: 1. Application S9844 of Scott Tomash requesting preliminary and final plat approval of S & J Tomash First Subdivision, a subdivision located in the SW ¼ of Section 9; Township 81 North; Range 7 West of the 5th P.M. in Johnson County, Iowa (This is a 3-1ot, 16.38 acre, 2 residential and 1 industrial lot, on the east side of Highway 965 NW, approximately % north of 140th Street NW in Jefferson Twp.). f) Final consideration of the following Amendments: 10/lq/98 09:18:11 319-354-~Z13 -> 3193565889 I08~ CITV CI~Bg P~c 083 Agenda 10-15-98 Page 3 Amendment. Chapter 8:1.22 V 7b, Subdivision Regulations, by adding new language as follows; Dead ends or cul-de-sacs shall be prohibited on all subdivision roads created after January 1, 1999 that are longer than 1000 feet; or service more than 10 lots. In these circumstances a secondary access road that connects to a public/private road shall be required. The traveled portion (road surface) of the cul-de-sac shall be a minimum of at least 70 feet in diameter. At the discretion of the Johnson County Board of Supervisors, an exemption may be granted if the developer/subdivider can demonstrate that there will be adequate access for emergency vehicles. Amendments. Chapter 8:1.22:X2, Subdivision Regulations by deleting paragraph d and adding a new 8: 1.22:X 2d as follows: [At no time shall approval be granted to developments which include lots containing less than 50 percent of the lot area required, unless such a development is in an RS-3, RS-5, RS-10 or RS-20 District. Developments in an RS-3, RS-5, RS-10, or RS-20 District may include lots containing less than 50 percent of the required lots area, but not less than one (1) acre. All systems with fifteen (15) or more connections, or that regularly serve more than twenty-five (25) persons are to be considered a "public water supply systems", as defined by Chapter 455B.171(22), Iowa Code (1997). When a development has less than fifteen (15) service connections or regularly serves less than twenty-five (25) individuals, permitting and monitoring will be in accordance with requirements prescribed by the Johnson County Board of Health.] to Amendment. Chapter 8: 1.9, District Use Regulations, by adding a new paragraph D as follows: [8: 1.9D RS-20 Suburban Residential District. Permitted Uses: The use of premises in the RS-20 111114198 889:188:49 319-354-4Z13 -> 319356588889 IOO~ CITV CLgRff Page Agenda 10-15-98 Page 4 Suburban Residential District shall be the same as those set forth for the RS Suburban Residential District (see 8: 1.9). Accessory Uses: Premises in the RS-20 District shall be restricted to those accessory uses permitted in Article 8: 1.20]. Amendment. Chapter 8:1.25, Area Regulations to include: RSo20 100 20 acres 20 acres * * Amendment. Chapter 8: 1.24. I, Yard Regulations by adding RS-20 40 feet 10 feet 50 feet 7. Business from the County Attorney a) Discussion/action re: approving amendment to the 1997-2000 Social Services Negotiated Agreement. b) Other 8. Business from the Board of Supervisors a) Other 9. Adjoum to informal meeting a) Discussion re: scheduling times of department head evaluations. b) Reports and inquiries from the County Attorney c) Inquiries and reports from the public d) Reports and inquiries from the members of the Board of Supervisors e) Other 10. Adjournment City of Iowa City MEMORANDUM TO: FROM: DATE: RE: City Council City Manager October 19, 1998 Joint Meeting October 28 I will be unable to attend the joint meeting scheduled for 4 p.m. on October 28. I committed to a speaking engagement many months ago for the American Planning Association Midwest meeting in Cedar Rapids. C; Assistant City Manager City Attorney City Clerk City of Iowa City MEMORANDUM Date: To: From: Re: October 19, 1998 Police Citizens Review Board City Manager PCRB Ordinance - Time ReqUirements In my memo of August 12, 1998 I requested the PCRB consider an amendment to the ordinance that would provide for an extension of time with respect to the investigation of complaints by the Police Department. As I indicated in my memorandum, although timeliness is critical, the thoroughness should be of paramount concern in these investigations. I note in your annual report recently submitted to the City Council that you have not recommended any ordinance changes as suggested in my August 12 memo. There is no mention of my request and your interest, agreement, disagreement, etc. In order that I may discern the position of the PCRB, I would appreciate receiving a written response so that I may determine what other action might be necessary on the part of my office to encourage the amendments to the PCRB ordinance. As I indicated I would be happy to appear before the PCRB to discuss my concerns. cc: City Council 10/19/98 08:44:51 319-354-4213 -> 3193565089 IOSfi CITY ~LERK Page 001 Johnson County -L i~X-~ ~oe Bolkcom~ Chairperson Charles D. Duffy Jonathan Jord~ Stephen P. Lacina Sally Smtsman BOARD OF SUPERVISORS October 20, 1998 INFORMAL MEETING 1. Call to order 9:00 a.m. Agenda 2. Review of the formal minutes of October 15th 3. Business from Deborah Schoenfelder re: Senior Center update. discussion Business from Graham Dameron, Director of Department of Public Health re: approval of Johnson County Departmere of Public Health application for Iowa Department of Natural Resources FY 2000 Grant Application Water Well Program (GTC). discussion 5. Business from the Board of Supervisors a) Discussion re: Financial Agreements with Wellmark Blue Cross/Blue Shield of Iowa. b) Discussion re: proposal for videotaping the Board of Supervisors' weekly informal and formal meetings for the 1998-1999 year. c) Discussion re: evaluations. 913 SOUTH DUBUQUE ST. P.O. BOX 1350 IOWA CITY, IOWA 52244-1350 TEL: (319) 356-6000 FAX: (319) 356-6086 ~0/19/98 08:45:18 319-354-4Z13 -> 319~5~5089 IO~A CITV gI~RK Page Agenda 10-20-98 Page 2 d) Minutes received 1. Juvenile Crime Prevention Community Program for July 15, 1998 2. Johnson County mental Health/Developmental Disabilities Planning Council for September 15, 1998 3. Johnson County Decat Project Planning Committee for October 6, 1998 e) Reports f) Other 6. Work Session re: Johnson County Land Use Plan. discussion 7. Discussion from the public 8. Recess City of Iowa City MEMORANDUM Date: October20,1998 To: City Council From: City Manager Re: Capital Improvement Plan Attached is a list of proposed Capital Improvement Projects for the period of FY2000 through 2004. In that we are beginning our review of capital projects earlier, we do not have the full benefit of detailed budgetary estimates and related information. During our discussion we will identify for you our eligibility for various State and/or Federal aid, as well as cost sharing that we believe to be appropriate, notably when another jurisdiction is involved in the project. At your meeting of October 27 we would intend to discuss with you the projects as proposed in order to acquaint you with as much detail as possible. There are many projects which are rather straight forward, such as the listing of annual/biennial projects, which are of a recurring nature. All projects are subject to your review, reprioritization, and changes that you feel are appropriate. However there are those that, when initiated, are likely to be part of some comprehensive project, e.g. Mormon Trek, Highway 965, Foster Road, etc. These projects represent a major work commitment and whenever we feel it practical and responsible we will recommend the use of consultants to assist. The year/time schedule is our best judgment, but as you know, it can often be altered by matters beyond our control, such as the early summer rain effect on Captain Irish Parkway, or the storm clean up as a result of the June 29 storm. I would hope at our meeting of the 27th that we can familiarize you with the capital projects and you would be able to provide us guidance concerning priorities and any other policy implications. Im~nem~sal 0-15.doc Annual/Biennial Maintenance Annual Sewer Mains Annual Water Mains Public Art Entranceway Beautification Streets and Drainage Overwidth Sidewalks Overwidth Paving Sump Pump Discharge Tiles Creek-Drainage Maintenance P,/R Crossings Traffic Signalization Traffic Calming Parks Improvements Footbridges Intra-City Bike Trails Open Space Acquisition Accessibility Shelter Improvements Parkland Development Sidewalk Replacement Parking Lot Improvements $15,000 $25,000 $25,000 $15,000 $20,000 $120,000 $25,000 $10,000 $30,000 $50,000 $25,000 $10,000 $50,000 $5,000 $15,000 Park Restroom Replacement/Construction (5 @ $40,000 = $200,000) Park/Playground Equipment Replace throughout park system (5 @ $100,000 = $500,000) $300,000 $170,000 $100,000 $30,000 $245,000 $195,000 $40,000 $100,000 Biennial Curb Ramps A.D.A. · Biennial Brick Street Reconstruction Biennial Concrete Street Reconstruction Biennial Asphalt and Chipseal Biennial Parking Ramp Maintenance $250,000 $160,000 $200,000 $800,000 $300,000 mgr/mainten.doc Year 2000 Airport Terminal Renovation Airport Master Plan - Land Acquisition Airport Taxiway - Iowa Jet Service Burlington Bridge (South) Over Iowa River- Repairs and Railing Cemetery Expansion Tennis Court Renovation/Lighting Walden Woods Park Development Wetherby Park Development City Park Stage - Riverside Theater Willow Creek Trail - Mormon Trek to Willow Creek Drive Skateboard Park Transit Building Methane Remediation Highway 6 Sidewalk/Drainage Civic Center - Roof Repair Foster Road Street Improvements Dubuque/Foster Road intersection Dubuque/Foster Road - east to Prairie du Chien (grading, water line) Foster Road - west of Dubuque through Elks property construct to urban standards $1,050,000 \ 2002 7so, ooo,/ 2,380.00Q...... 2000 $4,180, 000 $700,000 $2,600,000 $300,000 $800,000 $650,000 $200,000 $75,000 $1bo,ooo $12o,ooo $400,000 $100,000 $400.000 $1,000,000 $180,000 $2,380,000 Waterworks Park Development - Phase I (detailed estimates not available) Downtown Streetscape/City Plaza Mormon Trek Abbey Lane to Highway 1 Melrose to P,/R overpass P,/R overpass R/R to Highway 6 Storm sewer- Abbey Lane (* shared costs not yet identified) $2,50~000- 2003 3,00~000- 2002 1,40~000- 2001 ~00~000- 2002 750.000- 2000 *$9,65~000 South Wastewater Plant - Construct Water Line Waterline for soccer fields, treatment plant, Country Lane Apgrtments South Sycamore Regional Storm Water Various phases $2,400, 000 Fire Apparatus Longellow- Pine Street Pedestrian Trail $250,000 $1,700,000 $750,000 $300,000 $1,000,000 $300,000 $250.000 Collector Wells - Upper Terminus Peninsula Park Development (detailed estimates not available) Peninsula Water Main, Electricity, Trail (site development) Peninsula Water- Foster, Dubuque to Plant Sycamore Storage Reservoir Concrete Repair Department of Public Works Facilities Site Development Office Building Vehicle Storage Vehicle Service Fuel Island, Wash, Salt Storage / Police Storage / $2,500,000 $2,500, 000~ 2004 and after 1,900,000 $500,000 $1,560,000 $2,500,000 $200,000 $~050,000 rngr/year2000,doc Year 2001 Abbey Lane Sanitary Sewer (new name - Rohret South) Benton Street - Orchard to Sunset Court Hill Trunk Sewer Highway 6 Sidewalk/Drainage Improvements Mormon Trek- Railroad Overpass South Sycamore Regional Storm Water Iowa Avenue Streetscape Various Phases Gilbert/Bowery Intersection - Left Lanes EPA Storm Water Permitting (application only) Mercer Park Ball Field Lighting Scott Boulevard Sidewalk (Scott Park) GIS Computer Improvements Various Phases Water Treatment Plant South Wastewater Plant Cemetery Building Renovation and Repair Hunter's Run Park Development Civic Center - HVAC Court Hill Trail City Park Building/Parking Improvements Leisure Pool Development Beer Creek Storm Sewer Gilbert Street- IAIS/Railroad Underpass Iowa Avenue Sanitary Sewer Downtown Streetscape - Phase III $3,200,000 $ l, 000, 000 $800,000 $2,500,000 $800,000 $1,000,000 $1,400,000 $700,000 $1,500,000 $420,000 $500,000 $200,000 $60,000 $100,000 $31,650,000 $25,700,000 $50,000 $300,000 $200,000 $225,000 $150,000 $250,000 $400,000 $250,000 $100,000 $1,000,000 mgr/year2001 .doc Year 2002 Second Avenue Bridge Highway 6 Sidewalk/Drainage Improvements Park Road Bridge Approach GIS Computer Improvements Highway 965 Extended South Sycamore Regional Storm Water Dodge Street Paving - Governor to Hy-Vee Water Works Park - Phase II Hickory Hill Trail Development Captain Irish Parkway - First Avenue east to Scott/Rochester First Avenue Extended Water Main - Captain Irish to Rochester Reservoir Foster Road Street Improvements Dubuque/Foster intersection Grading water line east to Prairie du Chien Dubuque Street Elevation - Northbound Lane Water Main - Dubuque to Dodge Iowa Avenue Streetscape Fire apparatus Mormon Trek - R/R to Hwy 6 Mormon Trek - Melrose to PJR Overpass Scott Park Trunk Sewer $300,000 $1,000,000 $300,000 $600,000 $5,000,000 $500,000 $1,300,000 $250,000 $150,000 $5,000,000 $1,500,000 $1,600,000 $1,800,000 $360,000 $1,480,000 $1,700,000 $350,000 $2,000,000 $3,000,000 $400,000 mgr/year2002.doc Year 2003 F Street Bridge Meadow Street Bridge Landfill Cell GIS Computer Improvements Mormon Trek - Abbey Lane to Highway 1 Sycamore - Burns to City Limits Park Road - Riverside Drive - Left Turn Lane Riverside Redevelopment Project (Old DPW) Scott Park Development and Basin Excavation North Branch Basin Excavation Laura Drive Reconstruction Lower Muscatine - DeForest to Spruce Burlington Bridge over Ralston Creek Iowa Avenue Bridge Repair Fire Station ~ $320,000 $350,000 $2,800,000 $300,000 $2,500,000 $1,200,000 $230,000 $2,000,000 $250,000 $100,000 $480,000 $700,000 $700,000 $800,000 $1,000,000 mgr/year2003.doc Year 2004 and Beyond South Gilbert Improvements Taft Speedway Reconstruction Scott Boulevard Across 1-80 to Highway 1 South Area Arterial - Hwy 1 to Gilbert East-West Parkway - Gilbert to Scott Northside Storm Sewer Keokuk Street- Reconstruction Highland to Plum Sycamore - City Limits to L Iowa River Trail - Pedestrian Bridge , Rocky Shore to Peninsula · West Bank - Benton to Sturgis Ferry Rochester Bridge Near Southside Parking Garage Fourth Avenue Bridge Johnson Street- Cross Connection Sycamore - Highway 6 to DeForest Prentiss Street Bridge Replacement Third Avenue Bridge Sixth Avenue Bridge 420th Street Abutting Industrial Park American Legion Road - Scott to Taft Fire Training Facility Hafor Circle Storm Sewer Willow Creek Trail- Bridge at Napoleon Park Willow Creek Trail - Riverside to Highway 921 to Highway 1 Recreation Center Expansion Iowa Avenue Culvert Repairs Mesquakie Park Fire Apparatus - (projected to 2015) Dubuque/Church Left Lane Finance Computers Hwy 6 East - Lakeside to 420th Shannon Drive Box Culvert Scott Blvd Trunk Sewer Extension Public Works Facilities - Phase II and III $2,500,000 to $6,000,000 $1,500,000 $5,000,000 $9,000,000 $3,400,000 $1,800,000 $400,000 $1,000,000 $1,200,000 $320,000 $15,000,000 $320,000 $500,000 $250,000 $375,000 $320,000 $320,000 $1,200,000 $2,100,000 $890,000 $600,000 $520,000 $670,000 $5,000,000 $300,000 $1,500,000 $2,800,000 $300,000 $1,000,000 $3,500,000 $500,000 $1,500,000 7,000,000 mgr/year2004 .doc Choices for Iowa Building a Better Tax System Tyson Slocum Robert G. Lynch Michael P. Ettlinger Matthew W. Gardner September 1998 ITC P Institute on Taxation and Economic Policy 1311 L Street, NW · Washington, D.C. 20005 ° (202) 626-3780 This study was funded through a grant from the Joyce Foundation, Chicago, Illinois. Copyright© 1998 by the Institute on Taxation and Economic Policy. Contents INTRODUCTION .................................................... 1 SUMMARY OF FINDINGS .............................................. 2 NOTES ON PRESENTATION ............................................ 5 CHAPTER ONE. ECONOMIC AND SOCIAL INDICATORS ........................... 6 CHAPTER TWO. STATE & LOCAL PUBLIC SPENDING TRENDS IN IOWA ............... 16 CHAPTER THREE. AN OVERVIEW OF THE CURRENT IOWA TAX SYSTEM .............. 20 CHAPTER FOUR. TRENDS IN IOWA TAXES ................................. 24 CHAPTER FIVE. THE IOWA PERSONAL INCOME TAX ........................... 26 CHAPTER SIX. IOWA CONSUMPTION TAXES ................................ 33 CHAPTER SEVEN. IOWA PROPERTY TAXES ................................. 37 CHAPTER EIGHT. OTHER IOWA TAXES: CORPORATE & INHERITANCE ............... 41 CHAPTER NINE. TAX BURDENS, BUSINESS TAX INCENTIVES AND ECONOMIC GROWTH . .. 43 CHAPTER TEN. TAX OPTIONS FOR IOWA .................................. 47 CHAPTER ELEVEN. CONCLUSION ....................................... 55 APPENDIX A: DETAILED DISTRIBUTIONAL TABLES ............................ 56 APPENDIX B: METHODOLOGY & COMPARISON WITH KPMG PEAT-MARWICK ANALYSIS . .. 58 CHOICES FOR IOWA BUILDING A BETTER TAX SYSTEM state and local tax system plays many Aroles. First and foremost it provides the means to pay for government services. It also helps define the relationships between a state and its various local govern- ments: county, city, school district. And it defines the relationship of people as individuals with the embodiment of people as a society--government. Quality government services are critical to the economic and social well-being of any society and any state. Schools and infrastructure are at least as important to economic growth as entrepreneurship and the cost of capital. A failure to recognize this, in favor of feel-good solutions such as tax incentives and business subsidies, can do very real damage to a state's economy. Iowa has, over time, been investing more in government services. lowa's recently improved economic situation could not have occurred without this commitment. But other states also have been enhancing the programs they provide their citizens and businesses. Thus, Iowa has already started to fall behind in some areas and with recent tax cutting and ever more restrictive limitations on revenue raising, risks falling further behind. The relationship between [owa's state government and its local governments is increasingly one of the state prescribing the amount and means of local government revenue collection and local government relying on the state for funding. The risk is that if the state government keeps cutting taxes and restricting its own ability to raise revenue, services at all levels of Iowa government will suffer. What government does is not only important in an economic dollars-and-cents way, but also in terms of quality of life. Good schools are not just about producing high quality cogs for the economic machinery. Good schools are about producing good citizens with a knowledge and appreciation of the world around them. Government is also about providing safe streets, good health services and a clean and healthy environment. These things are important not just because they are attractive to corporations deciding where to locate--which they are--but also because they enhance the lives of the citizens of Iowa. If instead of spending money on things that actually help Iowa's economic and social environment, lowa's government spends it on tax breaks for wealthy citizens and corporations, that can hurt lowarts in many ways. The way that government taxes its citizens also affects the quality of life of lowans. Currently, middle- and low-income lowarts pay a greater share of their income in state and local taxes than do the best-offcitizens of the state. As this report documents, there has been a shift in taxes from better-offlowans and corporations to middle- and low-income families--most recently in the form of tax cuts targeted at the best-off. Government services are important and their costs must be shared. But iowa has been moving away from taxing based on people's ability to pay. This report offers an examination of these and other issues pertaining to the tax system of iowa and the state's economic and social environment. Included in the study is an assessment of the merits and shortfalls of a number of tax reform options. We hope this report will prove to be useful to both the policymakers and the average citizens of Iowa. -1- SUMMARY OF FINDINGS Economic and Social Indicators Between 1978 and 1993, Iowa's real per capita personal income grew by less than one percent --slower than in all but three states--while the nation's real per capita income grew by nearly 18 percent. Between 1993 and 1996, however, lowa's real per capita personal income grew by 10.6 percent, double the national growth and faster than any other state in the nation. Despite more jobs, falling population and a low unemployment rate, average salaries have fallen in Iowa, both absolutely and compared to the national average. To a large degree, this reflects an increase in the employment/population ratio. Iowa now ranks fourth in the share of its population that is employed. As the share of adult lowarts working nears its maximum possible amount, the growth in the employment/population ratio is likely to cease. This will put upward presstire on wages. If Iowa does not have a workforce and non-labor assets of sufficient quality to support high-wage jobs, however, the recent economic growth may stagnate. Thus, it is more important than ever that Iowa invest in its labor and non-labor assets. The current state of those assets is mixed. Iowa has good roads and ranks about average in the condition of its bridges. Iowa ranks high in several measures of elementary and secondary education. The high school graduation rate is comparatively high, as are the most recent rankings in elementary school proficiency in math and reading. Iowa has for several years also ranked well in pupil-teacher ratios. But there are indicators that lowa's commitment to public education has been waning. Expenditures per-pupil have risen at about half the rate of the national average since 1980. Iowa teachers' salaries in 1997 had dropped to 85 percent of the national average--putting Iowa 35th in the country. If these trends are not reversed, it is unlikely that Iowa will continue to do well in primary and secondary educational achievement. This would be a blow to the economic future of Iowa. Iowa ranked 24th in the percent of population with a college degree or higher in 1996. But the percentage of the population with a graduate degree in Iowa is 6th lowest of any state, and Iowa ranks 33rd in the number of employed doctoral scientists and engineers per 1,000 workers. Currently, the prospects for improving these numbers are good since Iowa ranks high in the number of science and engineering graduate students. As with primary and secondary education, however, without a continuing commitment to higher education, these prospects could quickly change-- with serious consequences for Iowa's economy. Health and the environment are also important to an economy. They contribute directly to the quality and productivity of labor, and businesses are attracted to locations that offer quality health care and good environmental conditions. Iowa generally ranks well in health conditions. There are, nevertheless, areas for improvement. For example, Iowa ranks 5th best among the states in immunization for children aged 19 to 35 months. But 18 percent of such young children in Iowa do not have their immunizations. More generally, access to health care is a problem in Iowa. In 1995, Iowa ranked 44th in the number of physicians per 100,000 of population. And in 1997, 225,000 lowarts had no health insurance. Air quality in Iowa is good, but water and soil pollution are serious problems. Sixteen percent of surface water discharges were not in compliance with water quality standards, ranking Iowa 40~h in the na- tion. Iowa also ranks relatively high in the number of superfund dump sites and the amotmt of toxic chemi- cals released into the environment. Crime, which can discourage economic activity, is low in Iowa. In sum, economic and social conditions in Iowa are improving after years of decline. This turnaround could not have happened without government invest- ments, particularly those in education and infrastructure. With a potential shortage of skilled workers in the future, however, the need for improving Iowa's labor and non-labor assets has never been greater. State and Local Spending in Iowa iowa ranks 19~h in state and local government spending as a share of personal income. Within the region, Minnesota ranks above Iowa, while Nebraska, South Dakota and Wisconsin are similar in their public spending. · lowa's rankings in per-pupil spending on K-12 education have declined since 1980. This indicator has fallen froin 20~h in the country to 29th in 1997. While Iowa used to spend more than the national average on its students, today it spends only 92 percent of the U.S. average. · Iowa has been spending less on higher education recently, but still ranks fourth among the states. · Poverty spending has increased largely because of -2- ~rogramh has decjincd tdative to othel starch, lowa's Current Tax System Fhese tln'ee taxes .liflbr m n'kediy nl fi~cir imp lets oil Trends in Iowa 'Ihxes average lking That is, Ic l'eqthtt:3 hiddie- m pay a higher share oI the very welj-of[ha~e m pay, a The poorest til~h of~ll $14,000 ~er Vedl, [ y 102 pelcent ot then [ Iowa Taxes Shares of Family Income The sales tax rate has been raised from three percent to five percent in less than 20 years. Excise taxes on gasoline and tobacco products have been increased repeatedly over the same period. Recent tax law changes have greatly reduced the level and progressivity of !owa's personal income tax and cut the progressive inheritance tax as well. The 1992 sales tax increase is currently raising about the same amount of revenue as the personal income tax cuts of 1995, 1996, 1997 and 1998 are now costing. This shift from personal income taxes to sales taxes is quite regressive, with the bottom 60 percent of the income spectrum seeing tax hikes and the richest 20 percent getting tax cuts. The Personal Income Tax iowa has experienced relatively slow growth in its personal income tax revenue. In addition, Iowa's income tax is much less progressive than its rate structure would suggest. This is primarily due to its unlimited deduction for federal personal income taxes paid. Alabama and Louisiana are the only other states to allow this unlimited deduction. iowa's personal income tax is more complex than that of most states. This complexity is partially the result of many differences between how Iowa defines taxable income compared to the federal income tax rules. Iowa's treatment of married couples, its low standard deduction and several other items add to the complexity of the Iowa income tax. Recent changes in the Iowa personal income tax have made it less progressive and decreased the state's reliance on it. Iowans pay $230 million less in federal personal income taxes because of the federal itemized deduc- tions they take for their Iowa state income taxes. Shifting away from the state personal income tax to non-deductible taxes like the sales tax causes federal personal income tax payments by Iowans to go up. Consumption Taxes Consumption taxes have been growing in Iowa, rising from 3.0 percent of personal income to 3.7 percent from 1985 to 1995. The sales tax rate has increased from three percent to five percent from 1982 to the present. In addition, a local option sales tax has been introduced at a level of up to two percent. Excise taxes have also been on the rise. Consumption taxes are very regressive. This is because middle- and low-income families spend a much larger share of their income than do the well- off. As a result, low-income Iowans pay five times as large a share of the income in sales and excise taxes as do the wealthy. Middle-income families pay more than three and a half times as much (as a share of income) as do the wealthy. Property Taxes in 1997, property taxes totaled 34 percent of all Iowa state and local taxes--the single largest source of public revenue. But Iowa's reliance on property taxes has fallen over the years. As recently as 1985, property taxes collected 39 percent of all state and local taxes. One reason for this property tax decline has been limitations and cuts imposed by the state on local governments. These tax cuts and growth limitations have constrained the ability of local governments to raise revenue to provide important services as they see fit. At the same time that the state has restricted the power of local governments to raise property taxes, the state has granted greater authority for localities to impose sales taxes. Property taxes are regressive. This is because home values are a much higher share of income for middle- and lower-income families than for the wealthy. It is common for a middle-income family to own a home valued at two or three times their annual income. Since property taxes are based on property values, they represent a larger share of income from middle-income families than from the better-off. Corporate and Inheritance Taxes iowa's corporate income tax has declined sharply. !n 1978, it constituted 0.38 percent of gross state product. By 1996, it had declined to 0.27 percent of GSP, and Iowa's rank among the states on this measure had dropped from 28th tO 35th. The corporate income tax is a progressive tax that is partially paid by out-of-state shareholders in corporations. The inheritance tax is paid by inheritors of Iowa property. In 1997 this tax was cut dramatically, fully exempting lineal relatives. The inheritance tax is a progressive tax, and the recent tax changes will primarily benefit those inheriting larger estates. The very largest estates will still have to pay the federal "pick-up tax" to Iowa notwithstanding the recent law change, but many of them will pay less than they would have under lowa's prior inheritance tax. Tax Burdens, Business Tax Incentives and Economic Growth umerous studies have found that the level of Ntaxation in a state has little impact on economic growth. In fact, a review of the economic performance of states in the region shows that the highest tax states have performed better, by most measures, than the lowest tax states. The is not a surprising finding. Low-tax strategies for economic development often undermine the ability of government to provide quality services. This can have adverse economic impacts on the quality of labor supply, infrastructure and a host of other items important to growth. Business incentives tend to be inefficient, reward- ing companies for what they would have done anyway. They also distort economic decisions to the detriment of long-term growth. Many business incen- tives are instituted through "tax expenditures." These tax expenditures are generally enacted without careful review and their success at accomplishing their goals is rarely scrutinized. Iowa would be well served by adopting better disclosure of tax expenditure information and requiring greater accountability from businesses receiving tax incentives. Tax Reform Options his report presents 18 detailed options for tax changes in Iowa, coupled with distributional and T revent~e analyses of each option and an analysis of its strengths and weaknesses. Some of these proposals increase revenues to pay for public services. Others would require reductions in government programs, and still others would shift taxes among income groups without affecting total state revenues. Readers can evaluate these options based on their own notions of tax fairness. NOTES ON PRESENTATION he distributional tables in this report were produced using the Institute on Taxation and T Economic Policy Microsimulation Tax Model.' The tables look not only at Iowa taxpayers by income levels, but when relevant, at categories of iowa families, broken down by family type and age. All figures are for 1998. · 60 percent of lowa's total population lives in non- elderly married-couple families. These families have 60 percent of Iowa's total income. · Unmarried non-elderly taxpayers, a group that includes single people with and without children, ~The ITEP model is described in the last appendix. For a more detailed description of the model and its methodologies, see ITEP's June 1996 report Who Pays? A Distributional Analysis of the Tax Systems in All 50 States or contact the Institute. represent 24 percent of Iowa's population and 21 percent of income. lowa's elderly account for 16 percent of the population and 19 percent of income. 1998 Iowa Family mphics Married non...eldedy Unrrarded non-elderly Bderly Addendure' Marded, all Unmarried, all *Includes dependents. %of Adult %ofTotal %of Total Population Population* Income 53% 6(2)% 60% 25% 24% 21% 22% 16% 19% 67% 70% 72% 33% 30% 28% When we divide the Iowa taxpaying population into quintiles, we subdivide the top fifth of the taxpayers into three subgroups to aid our analysis. The top 20 percent is both a very important and a very heterogenous group. · Almost half of all personal income in Iowa goes to the best-off fifth of all taxpayers. · Taxpayers in the first 15 percentage points of the top fifth earn an average of $75,600. The average income of the top one percent is $476,000. The Distribution of Income in Iowa All Families & Individuals in 1998 Share of Average Total Income Group Income Range Income Income Lowest 20% Less than 814,000 $8,200 3.8% Second 20% $14,000 to $26,000 19,900 9.2% Middle 20% $26,000 to $40,000 32,100 14.9% Fourth 20% $40,000 to 861,000 48,700 22.6% 7°` Next 15% $61,000 to $101,000 75,600 26.3% .-. Next4% $101,000 to $212,000 133,000 12.4% O ~' Top 1% $212,000 or more 476,000 10.9% Finally, in our tables and analysis, we define "income" to include all cash earnings and transfers, including items not included in "adjusted gross income" (such as tax-exempt interest or most social security benefits) or other narrow, tax-law-based income definitions. -5- CHAPTER ONE ECONOMIC AND SOCIAL INDICATORS he economic and social well-being of a state is Ta function of many often interrelated and interdependent factors. Of course, precisely measuring the well-being of a state is difficult.2 Nevertheless, chosen and evaluated carefully, economic and social indicators can paint a picture of how well a state economy is performing, allow state-by-state comparisons, and show trends over time. Most important, such an analysis can provide useful insights into what can be done to promote greater social and economic well-being in the future. After reviewing hundreds of indicators, we selected a number of measures of economic and social well-being to help assess the state of Iowa. These indicators are grouped into six categories: General Economic, Infrastructure, Health, Education, Environment, and Crime. The primary criterion for selecting these indicators was their ability to reflect economic and social well-being. But, they were also chosen based on the availability of data over time and the ability to compare data across states. When possible we have compared Iowa to the national average and to neighboring states: Illinois, Minnesota, Missouri, Nebraska, South Dakota, and Wisconsin-- and we have looked at trends over time. Ideally, Iowa would like to be at or near the top in the nation in quality of life and strength of its economy. At minimum, economic and social conditions in Iowa should improve over time. Where Iowa is above average, its lead should be increasing. !n those areas where Iowa lags behind the national averages, the gaps between Iowa and the U.S. averages should be narrowing. Our analysis finds that Iowa went through a long period of economic stagnation and decline that lasted 2First, all the data useful for such an analysis may not be available. Second, time constraints may oblige researchers to be selective in their analysis. Third, for data that are available and that are selected for analysis,judgments may have to be made as to how to interpret them and how to weigh their relative importance. For example, if Iowa has a better educational system than Nebraska while Nebraska provides better medical services to its citizens, in which state are the citizens better off?. roughly from 1978 through 1993. Although there were periods of progress, for most of that 15 year period Iowa lost ground relative to other states. In 1978, most indicators of economic well-being suggested that Iowa ranked above most of the other fifty states. By 1993, many indicators placed Iowa nearer the middle--and, sometimes, at the lowel- end --of the fifty-state rankings. After 1993, there has been a turnaround in Iowa. Indeed, the last five years have been a period of partial economic revival and rebirth. Today, [owa's rankings on many measures of economic and social attainment are improving. Unfortunately, many of Iowa's citizens have yet to share in this recent prosperity. Whether the process of growth and amelioration stalls or continues and spreads will depend in part on the policies and strategies that the people of Iowa and their elected representatives choose to pursue. I. General Economic Indicators Over the last twenty years Iowa has experienced uneven economic growth. The years between 1978 and 1993 were years of economic stagnation and decline interrupted by brief spurts of growth. The five years since 1993 have been years of strong growth. Some of the ground--but not all of it --that was lost from 1978 to 1993 has been regained. Gross state product (GSP) is one of the best measures of the overall size ofa state's economy. It is the sum of the value of all the goods and services Gross State Product (GSP) and Growth Rates GSP Rankings Growth Rate Rankings 1978 1993 1996 1978-93 1993-96 Illinois 4 4 4 41 29 Iowa 25 30 29 48 13 Minnesota 19 20 18 25 11 Missouri 14 17 16 36 15 Nebraska 35 35 36 39 14 South Dakota 49 46 46 28 10 Wisconsin 16 18 20 33 31 SOURCE.' Bureau of Economic Analysis. -6- produced in a state. In 1978, Iowa had the 25th largest economy among the fifty states. Over the next fifteen years its economy grew more slowly than those of all but two states and by 1993 Iowa had only the 30th largest economy. From 1993 to 1996, however, Iowa ranked 13th in GSP growth. Another indicator of economic strength is state personal income. !t is one of the most commonly used measures of the 1978 uS Rank relative affluence of Illinois $22,219 7 state residents. State Iowa 19,998 19 personal income Minnesota 20,099 17 measures the total Missouri 18,660 31 Nebraska 19,326 23 income received by SouthDak0ta 17,127 37 the residents of each Wisconsin 19,552 22 state. To facilitate United States $19,723 comparisons between states and over time, state personal income is typically divided by state population and adjusted for inflation. The result is what is known as 'real per capita personal income'. In 1978, Iowa's real per capita personal income was above the national average ($19,998 versus $19,723). Between 1978 and 1993, however, Iowa's real per capita personal income grew less than one percent (slower than in all but three states) while the nation's real per capita income grew nearly 18 percent. As a result, by ]993 iowa's per capita personal income was well below the national average ($20,187 versus $23,202). Between ] 993 and 1996, however, lowa's real per capita personal income grew 10.6 percent--double the national growth and faster than any other state in the nation. Although lowa's per capita personal income remains below the national average, it rebounded from just 87 percent of the national average in 1993 to over 91 percent in 1996. Iowa now ranks 31s~ in per capita income nationally (as opposed tO 36~h in 1993 and 19th in 1978)3. 3Median household income is another common measure of economic well-being. It measures the income of the typical household--the household in the middle of the income distribution. Median household income data is only available for years beginning in 1984. lowa's median household income is 6 percent below the national average ($33,209 versus $35,492 in Agriculture represents a far larger share of Iowa's economy than it does of most other states. Hence, fluctuations in lowa's farming sector tend to have a big impact on the overall performance of [owa's economy. Indeed, !owa's relatively poor economic performance from 1978 to 1993 and its revival since 1993 can be partly attributed to changes in farm production and its Real Per Capita Personal Income in 1996 Dollars 1993 us Rank 1996 US Rank $25,140 9 $26,855 8 20,187 36 22,330 31 23,487 19 25,699 12 21,482 26 22,984 27 21,546 25 22,975 28 19,224 40 20,749 38 21,963 23 23,390 23 $23,202 $24,436 SOURCE: Bureau of Economic Analysis, US Dept of Commerce, April 1998 (revised). Inflation adjustment by the Institute on Taxation & Economic Policy. attendant effects. Consider, for example the impact of agriculture on Iowa's GSP. Between 1978 and 1993 farm output fell by well over fifty percent and contributed to declines in trucking and raftroad trans- portation. While farm production accounted for nearly 15 percent oflowa's GSP in 1978 (versus 2.4 percent for the U.S.), by 1993 it represented only three percent of lowa's economy. Between 1978 and 1993, Iowa's GSP growth rate would have improved from 3''d slowest to 7th slowest were agriculture excluded. After 1993 iowa's agricultural output rebounded sharply. Between 1993 and 1996, Iowa farm production grew nearly 160 percent, more than eight times faster than the rest of the state's economy. By 1996 farm output rebounded to seven percent of lowa's GSP versus 1.2 percent for the U.S. economy. Were agriculture to be excluded, Iowa's GSP growth rate between 1993 and 1996 would fall from 13th fastest to just 30m fastest. Sharp fluctuations in farm income also explain a significant portion of the stagnation in lowa's personal income from 1978 to 1993 and its rebound since 1993. in 1978 farm income accounted for over 10 percent oflowa's total personal income. Over the next fifteen years farm income shrank by over 80 percent until it represented less than one percent of !owa's personal income in 1993. Between 1993 and 1996 1996). In 1984, however, lowa's median income was 11 percent below the national average. Consistent with the data on GSP and personal income, most of the growth in Iowa's median income occurred after 1993. -7- farm income grew more than six fold and accounted for nearly five percent of Iowa's personal income in 1996. Given that agriculture still plays an important, even if diminished, role in Iowa's economy, the recent weaknesses in many agricultural prices do not bode well for future economic growth. Preliminary per capita personal income data for 1997 suggest that Iowa's economic growth has been slowing down. This may, in part, be due to weakness in the farm sector. It should be noted that lowa's per capita personal income has grown significantly faster than its total personal income. This reflects the fact that Iowa has lost population over the last twenty years. Between 1978 and 1987 Iowa's population declined by more than five percent--some 150,000 people. Since 1987 Iowa's population has been growing slowly. Still, for the entire period between 1978 and 1997, Iowa was one of just three states to experience a population decline (2.3 percent or 65,000 people).4 Employment growth is another important indicator of the relative health of an economy. The Iowa economy has added about 305,000 new jobs since 1978, growth that is substantially below the U .S. average (20 percent versus 39 percent)5. Not surprisingly, the slow job growth is partly attributable to the poor performance in the agricultural sector. Between 1978 and 1996, farm employment fell by nearly 30 percent or almost 50,O00jobs. While farm employment accounted for I 1 percent of all jobs in 1978, by 1996 only 6.5 percent of Iowa's jobs were in farming. Other sectors that experienced large job losses include industrial machinery and equipment manufacturing employment (down 32 percent or some 21,000 jobs) and railroad employment (down 61 percent or about 6,000 jobs). Most of the employment growth in Iowa over the last twenty years has occurred in the service sector. Service employment has grown 72 percent since 1978 (204,000 jobs). Specific areas of strong service em- ployment growth include business services employ- ment (up 177 percent or 59,000 jobs) and health services employment (up 53 percent or 42,000 jobs). Finally, retail trade employment has also grown significantly since 1978 (about 65,000 jobs). Unfortunately, many service and retail sector jobs tend not to pay high wages. Iowa has lost about 1,000 manufacturing jobs, a decline of 0.4 percent, since 1978 (this includes the aforementioned losses in industrial machinery and equipment manufacturing employment as well as gains and losses in other manufacturing sectors). Manufacturing jobs typically spur economic vitality because such jobs tend to be higher paying than most. When manufacturing workers spend their relatively high salaries, sales and earnings are increased throughout the economy. Although the number of manufacturing jobs has fallen only slightly in Iowa, inflation-adjusted hourly earnings in manufacturing have dropped by a fifth since 1978. With substantially lower wages, manu- facturing workers have a smaller positive impact on Iowa's economy. Iowa manufacturing hourly earnings are now only 3 percent above the national average, down from 14 percent above average in 1978. Notwithstanding slow job growth, the unemployment rate is low and falling in Iowa. This is partially due to the population decline described earlier. The unemployment rate in Iowa in 1997 was 3.3 percent, the lowest rate in more than twenty years and the fourth lowest rate of any state. The most recent unemployment data suggest that the unemployment rate in Iowa fell to an extraordinary low rate of 2.5 percent in June of 19986. Despite a decline in population, 300,000 new jobs, and a very low unemployment rate, average salaries Unemployment As a % of the Civilian Labor Force US US 1980 1997 Rank Rank Illinois 8.3% 29 4.7% 14 Iowa 5.8% 10 3.3% 4 Minnesota 5,9% 11 3.3% 4 Missouri 7.2% 21 4.2% 11 Nebraska 4.1% 2 2.6% 2 South Dakota 4.9% 6 3.1% 3 Wisconsin 7.2% 21 3.7% 7 United States 7.1% 4.9% Source: U.S. Bureau of Labor Statistics. 4US Bureau of the Census. 5Bureau of Economic Analysis. 6Bureau of Labor Statistics, Geographic Profile of Employment and Unemployment. -8- have fallen in Iowa. Between 1981 and 1996 inflation- adjusted average annual pay fell 3.5 percent in Iowa. Meanwhile, it rose seven percent in the nation as a whole. In 1981, annual pay in lowa was nine percent below the national average.7 By 1996, average annual pay in Iowa was fully 18 percent below the U.S. average and lower than the average pay in 40 other states (versus 32 states in 1981). !owa's falling relative annual pay confirms that many of the new jobs created in Iowa were not "good" jobs; that is, they were not high-paying, high-skilled jobs. With more jobs, a declining population from which to hire workers, and a low unemployment rate how is Average Annual Pay for All Workers in 1996 Dollars 1981 US Rank 1996 US Rank 81-96 ch. Illinois 529,253 6 $31,285 8 +6.9% Iowa 24,534 33 23,679 41 -3.5% Minnesota 26,198 23 28,869 13 +10.2% Missouri 25,848 26 26,608 24 +2.9% Nebraska 22,827 43 23,291 44 +2.0% South Dakota 20,884 50 20,724 50 4.8% Wisconsin 25,529 27 26,021 27 +1.9% United States $27,080 $28,945 +6,9% SOURCE.' U.S. Bureau of Labor Statistics Inflation adjustment by the Institute on Taxation & Economic Policy it possible that wages have declined and been kept low? The answer to this question involves an understanding of the employment/population ratio. The share of Iowa's adult population that is working has been growing rapidly--more than twice as fast as the national average. As jobs increased and the population declined, unemployment fell. But equally important, the number of adults entering the workforce seeking employment grew very rapidly. This increasing supply of available labor is probably a significant reason why inflation-adjusted average annual pay has been falling absolutely and relative to the national average. In 1978, the share of iowa's adult population that was working was six percent higher than the national average. This put Iowa 12th highest among the 50 states. By 1996, Iowa's employment/population ratio had reached 70.8 percent--fourth highest among the states and 12 percent above the national average. 71981 is the earliest year for which data is available. The trend toward fuller employment in Iowa is unlikely to continue at the pace of the last two decades. As the share of adults working nears its maximum possible amount. the growth in the employment/population ratio must slow down. This fact has important implications for the nature of future economic growth in Iowa. Over the past twenty years, lowa's below average and falling average annual pay may have helped encourage local employers to hire more workers and may have attracted employers from out of state. But given that iowa is well above the national average in its employment/population ratio and given that the growth in lowa's employment/population ratio is likely to slow down, there is likely to be an increase in wages (relative to the national average) in response to further increases in the demand for labor. Just as falling and below average pay may have encouraged the recent job and economic growth in iowa, wages above the national average may hamper job and economic growth unless the quality of labor and other assets in Iowa improve. A rising quality of labor and other assets can both encourc~ge employers to expand employment opportunities (despite Iowa's wages rising relative to the U.S. average) and enable employers to pay higher wages. If this occurs, of course, workers, their families and employers will be better off. An analysis of economic and job expansion in iowa over the past twenty years indicates that it has been spurred in large part by growth in the service and retail sectors. The jobs that have been created are, for the most part, low paying and of moderate skill level. This is a problem for !owa's families. The residents of Iowa would obviously be better off with high paying and high skilled jobs. Funda- mental to the ability of lowa's businesses to create such jobs is the availability of a healthy, well-educated and skilled labor force. Of course, if wages in Iowa begin to rise relative to wages nationwide, then, to some extent, Iowa businesses can anticipate an in- migration of labor that will help to satisfy the need for skilled labor. Businesses are, however, more likely to locate and expand in areas where needed resources exist than to go where there are shortages and rely on in-migration. Thus, a key challenge facing Iowa policy- makers is how to insure an adequate, growing supply of appropriately skilled labor. -9- With this mixed record on employment and wages, it's not surprising that lowa's poverty record is mixed. On the bright side, the poverty rate in iowa in 1996 was below the national average (9.6 percent versus 13.7 percent} and 10th lowest among the fifty states. On the negative side, the pov- 1980 US 1988 erty rate has improved Rank Illinois 12.3% 19 12.7% only marginally over the Iowa 10.8% 14 9.4% last few years and is Minnesota 8.7% 5 11.6% higher than the 9.4 per- Missouri 13.0% 24 12.7% cent rate in 1988. In Nebraska 13.0% 24 10.3% other words, despite an South Dakota 18.8% 36 14.2% impressively ]ow unem- Wisconsin 8.5% 3 7.8% ployment rate, some United States 13.0% 13.0% 270,000 Iowans are still Source: u.s. Bureau of the Census stuck in poverty. This' result is not surprising given that average pay has been declining. lowans are generally able to find jobs. But, unfortunately, too many of the available jobs do not pay wages above the poverty level. !!. Infrastructure: ~,--~he physical infrastructure of an economy is fundamental to its health and growth potential. _ The infrastructure's role in the economy is similar to the role of the skeletal structure, the nervous system and the cardiovascular system in the human body. Each needs to be in good condition in order for the body to ~mction well. Likewise the vari- ous components of the physical infrastructure (roads, bridges, telecommunication networks, etc.) need to be adequately developed and well maintained in order for an economy to grow rapidly and efficiently. Infrastructure plays a key role in attracting and retaining business. In particular, the adequacy and quality of roads, bridges, and sewer and water treatment systems are among the primary factors that businesses considerwhen making investment location decisions. Several indicators suggest that lowo's physical infrastructure is in good condition. Highway conditions are important to a state's economic health because highways serve as the major link between producers and purchasers of goods and services. Highways are particularly important in a state like Iowa that relies heavily on the transportation of its agricultural and processed goods. Iowa's highways are in better condition than are highways in almost all other states. Only 1.3 percent of lowa's highways were rated in "poor" condition in 1996, which ranked Iowa 6t'' best among the states.s Unfortunately, lowo's bridges do not fare so well. Nearly 34 percent of Percent of Persons Below Poverty Level US US US 1993 1996 Rank Rank Rank 23 13.6% 24 12.1% 22 9 10.3% 10 9.6% 10 18 11.6% 14 9.8% 11 23 16.1% 29 9.5% 9 13 10.3% 10 10.2% 13 29 14.2% 25 11.8% 20 4 12.6% 18 8.8% 7 15.1% 13.7% the state ranking best in the 21'~ in 1988Y Adequate Iowa's bridges were deemed deficient or structurally obsolete in 1996.9 This ranked Iowa 23''d- an improvement. however, over its ranking of 35th in 1988 when 48 percent of lowo's bridges were deemed deficient. Finally, a measure of the adequacy of lowo's sewage system shows nation in 1992, up from wastewater treatrnent facilities are important for economic vitality because new and expanding businesses need such facilities. Although these measures indicate the condition of some of the existing infrastructure, they do not indicate whether this infrastructure is sufficiently comprehensive. Unfortunately, no good statistics are available to provide that information. lll. Education ---~ ducation is arguably the single most important -~ factor determining long-term economic growth. ~ The productivity and growth of an economy are directly related to the level of education and training of its workforce. For a state to maintain its economic competitiveness it must develop a workforce that has the skills needed by employers. The workforce, furthermore, must be able to adapt to ever changing economic circumstances. In light of the employment and wage data discussed earlier, it is particularly sU.S. Department of Transportation, Federal Highway Administration, Hi~:hwav Statistics, 1996. Washington, De: GPO, 1997. "Thirteenth Report of the Secretary of Transportation to the U.S. Congress, The Status of the Nation's Highway Bridges, 1996. GPO, May 1997. I°The U.S. Environmental Protection Agency, Office of Water, 1992 Needs Sttrvey Report to Congress. -10- important for Iowa to improve the skills of its labor force if it hopes to attract employers, keep its unem- ployment rate low and experience rising real wages. lowa's overall record in education is good. But there are some troubling indications that the state's commitment to educational excellence is ebbing. Elementary and Secondary Education perhaps the broadest indicators of workforce skill levels are measures of educational attainment. [n today's economy, a minimum requirement for most jobs is a high school diploma. lowa's record in providing its citizens with this requirement is very good--but it could be better yet. In 1996, Iowa ranked 9th in the percentage of its adult population with a high school diploma or higher degree, up from 18th in 1980 (87.4 percent versus 71.5 percent)2~ In addition, iowa's high school dropout rate (6.6 percent) was the third lowest in the nation and its high school graduation rate of 87 percent in 1994 was the fourth highest in the nation22 These indicators bode well for Iowa's future. Of course, the fact that a growing percentage of Iowa's population is getting high-school diplomas does not tell us much about the quality of the education that Iowans receive relative to other Americans. Although measuring the quality of education is extremely difficult, some data suggest that [owa's students are achieving at well above average proficiency. Measurements of math proficiency for fourth and eighth graders in 1996 scored Iowa's students well above average. These measurements ranked Iowa 6th and Ist, respectively, out of the 41 states surveyed. The math test scores oflowa's students were equal to or better than their scores on similar tests taken in 1990 and 1992. Likewise, a measurement of reading proficiency of fourth graders in 1994 showed lowa's students performing well above average and ranking 4th out of the 39 states that participated in the reading proficiency study.13 Another indicator of education quality is pupil- ~ Bureau of the Census, Current Population Survey. 12U.S. Department of Education, National Center for Education Statistics. ~3U.S. Department of Education, National Center for Education Statistics, National Assessment of Educational Progress. teacher ratios. Numerous studies have shown that students benefit from smaller class sizes and more individual attention from school staff. lowa's pupil- teacher and pupil-staffratios in public elementary and secondary schools are better than the national average. And both of these ratios have improved slightly over the past ten years, although Iowa's relative rankings have remained fairly constant. In 1995, Iowa ranked 16d' and 17th in pupil-teacher and pupil-staff ratios, respectively. Other indicators of education quality suggest that Iowa's commitment to educating its workforce may be ebbing. For example, while in 1980, Iowa spent more than the national average per pupil on its students, today it spends only 92 percent of the U.S. average. With relatively less being invested in lowa's students and schools, the quality of education may suffer. Likewise, teachers' salaries in Iowa have fallen Pupil-Teacher Ratios in Public Schools 1989 uS Rank 1995 US Rank ILlinois 16.9 27 17.1 35 Iowa 15.7 17 15.5 16 Minnesota 17.2 31 17.8 40 Missoud 15.7 18 15.4 14 Nebraska 14,7 9 14.5 7 South Dakota 15.5 14 15.0 11 Wisconsin 15.9 20 15.8 20 United States 17.2 17.3 Source: US Dept of Education. further behind the national norm. In 1980, the average annual salary of teachers in Iowa was about 94 percent of the national average. By 1997, Iowa teachers' salaries had fallen to about 85 percent of the US average, dropping Iowa from 26th to 35th. With salaries further below the national norm it may be difficult for lowa's schools to attract the high quality teachers they need to be competitive in the future. it should be noted that the 1998 Iowa legislature increased the minimum teacher salary from $18,000 to $23,000. This will have a small impact on lowa's average teacher's pay. Whether there is a long-term impact will depend on whether funding for this initiative comes from an increase in overall school spending or cuts in other parts of the school budget, possibly including cuts in salaries for more experienced teachers. -11- Average Annual Salary of Public School Teachers in Constant 1995-96 Dollars 1979-80 us Rank 1995-96 US Rank Illinois $ 35,088 9 $ 41,008 12 Iowa 30,308 24 32,376 34 Minnesota 31,721 21 36,937 19 Missouri 27,276 39 33,341 29 Nebraska 26,945 41 31,496 39 South Dakota 24,616 49 26,346 51 Wisconsin 31,909 20 38,571 15 United States $ 31,837 $ 37,846 Inflation-adjustment based on the Consumer Price Index prepared by the Bureau of Labor Statistics, U.S. Dept of Labor. Price index does not account for different rates of change in the cost of living among states. Source: National Education Association Higher Education iowa has made considerable progress in higher education. Without a further substantial increase in the percentage of its population with college degrees or better, however, Iowa will experience difficulty in creating and attracting high-skilled, high-paying jobs in the future. !n 1996, Iowa ranked 24th in the percent of its adult population with a college degree or higher, up from 31st in 1980 (21.3 percent, up from 13.9 percent).TM On the other hand, the percentage of the population with graduate or professional degrees in Iowa remains the 6m lowest of any state. It is not surprising, therefore, that the pool of highly trained local talent in Iowa is not impressive relative to the rest of the nation. For example, the number of employed doctoral scientists and engineers per 1,000 workers in 1994 was lower in Iowa than in 32 other states. This was an improvement from a ranking of43rd in 1989. The prospects for developing a larger cadre of locally trained, skilled scientists and engineers in the near future should be good. In 1996, Iowa ranked 13~h in the number of science and engineering graduate students per one million population. Likewise, in 1996, Iowa ranked 6th ill research expenditures per capita at doctorate-granting institutions--up from 10th in 198915. 14Bureau of the Census, Current Population Survey. IsNational Science Foundation. Iowa faces a special challenge in attempting to develop a large, locally-trained pool of highly skilled workers. it has been suggested that Iowa suffers from a significant out-migration of people in their twenties and thirties. Unfortunately, these may include many of the best educated lowans. Improving lowa's education system offers an opportunity to create a critical mass of highly educated workers. The skills offered by such a group can attract business that will, in turn, keep young, educated Iowans from leaving the state. Without improvements in the quality of Iowa's future labor force, the current boom in the economy may be difficult to sustain. Existing businesses may experience difficulty in finding qualified job applicants. Studies of new business creation have found that many new companies are founded by locally educated and trained individuals.~6 Without appropriately educated individuals, new businesses may fail to develop. By failing to train and retain people locally, Iowa is limiting the supply of skilled individuals it will need to be competitive in the future. IV. Health: , , ealth conditions ofa state's population and the -- availability of medical care have major effects . _ on the quality of life. They influence decisions about where to live and where to start a business, and they affect the quality and productivity of labor. Hence, health is important to economic development, as well as a significant measure of a society's general well-being. Statistics on health and health care cover a wide variety of issues. We have selected indicators that reflect the health of states' populations and the availability of care. ' Health Conditions Many indicators suggest that health conditions in Iowa are better than the national average. Major health problems persist, however, and some are getting worse. · Death rates due to heart disease and cancer, the 16See, for example, "The Anatomy of the Location Decision: Content Analysis of Case Studies" by Howard Stafford in E Hamilton (editor), Spatial Perspectives in Industrial Organization and Decision Making (1974). -12- two leading causes of death nationwide, are higher in Iowa than in most other states. Iowa ranks 42nd worst in avoiding deaths due to heart disease~7 and 36t" in the cancer death rate.Is The fact, however, that lowa's population is older than the national average may explain these poor rankings. In 1996, 15.2 percent of lowa's population was over the age of 65, compared to 12.8 percent for the nation as a whole. · The infant mortality rate in Iowa is lower than in most states and has fallen at a more rapid rate than has the national average. Between 1980 and 1997, the infant mortality rate declined by over 50 percent in Iowa. The preliminary data for 1997 suggest that Iowa now ranks 5th best, up from 21st in 1980.m · The percentage of babies with low birth weight is not only an indicator of current health conditions, but also a predictor of future health (low-birth weight babies tend to have more health problems later on). The percent of babies with low birth weight is sub- stantially lower in Iowa than in the nation as a whole. The gap between Iowa and the national average, however, is narrowing. The share of babies with low birth weights in Iowa rose faster than the national average between 1980 and 1996 (28% versus 996). In 1980, Iowa ranked 3rd best in avoiding low-birth- weight babies; in 1996 it ranked 14~h. Childhood immunization plays a key rote in preventing future illness. !n 1995, only 82 percent of !owa's children aged 19 to 35 months were fully immunized. Although Iowa ranks 5th best among states on this indicator, thousands of Iowa's children are not being appropriately protected from potentially dangerous diseases. Health Care Availability n important determinant of health conditions is Athe availability of health care. lowa's record in this area is not impressive. in addition, health care may be becoming less available in Iowa. · One way to measure the availability of health care is to calculate the number of physicians per 100,000 population. In 1981, Iowa ranked 45th on this measure, about 32 percent below the national average number of doctors per capita. In 1995, Iowa ranked nNationa[ Center for Health Statistics. 18American Cancer Society. ~gNational Center for Health Statistics. 44th, about 30 percent below the US average. Iowa ranks lower on this indicator than any of its neighboring states. Doctors per 100,000 Civilian Population 1981 US Rank 1995 US Rank Illinois 186 14 244 11 Iowa 126 45 166 44 Minnesota 189 13 239 13 Missoud 165 21 218 21 Nebraska 148 34 199 29 South Dakota 116 48 166 44 Wisconsin 160 26 213 25 United States 185 236 Source,' American Medical Association. · Health insurance coverage is another good measure of the availability of health services. More of Iowa's residents are covered by health insurance than is typical of Americans as a whole, but the coverage rate is falling. Over the last five years, lowan's health insurance coverage has declined (from 91 percent to 88.4 percent) and its ranking among the states has fallen, from 7th to 14th best. There are now some 225,000 lowans with no health insurance.2° Percent of Persons Not Covered by Health Insurance 1990-92 Rank 1996 Rank' Illinois 11.8% 19 11.3% 11 Iowa 9.0% 7 11.6% 14 Minnesota 8.8% 6 10.2% 7 Missouri 13.1% 27 13.2% 20 Nebraska 8.7% 5 11.4% 12 South Dakota 12.2% 22 9.5% 4 Wisconsin 7.9% 4 8.4% 1 United States 14.2% 15.6% 1990 to 1992 is a three year average. Source: U.S. Census Bureau V. Environment: · --~ nvironmental conditions, like health conditions, -~ have an obvious impact on the quality of life of ,_~ citizens. They also influence economic conditions, although their effects on economic conditions are more subtle than their impact on quality of life. 2°US Census Bureau, March 1997 Current Population Survey. -13- Businesses, like people, prefer safe, clean, stable communities. Indeed, many businesses require healthy environments in order to thrive. For example, much of the tourist industry could not survive with polluted rivers, lakes, and streams. The old thinking that economic growth and environmental protection were incompatible is giving way to an understanding that they are often complementary--and that a healthy environment is important for long-term, sustainable economic growth. As the relationship between environmental decay and community health has become clearer, the American public has demanded that its drinking water be safe and the air it breathes be free of dangerous contaminants. It is now understood that the costs associated with maintaining a safe and clean environment ill a community frequently pale in comparison to the costs of reestablishing a safe and clean environment. Indeed, the enormous cost of cleaning up the superfund dump sites is one of the most sobering reminders that it is often vastly cheaper to prevent pollution than it is to repair the damage caused by toxins. Indicators of environmental quality reflect the general conditions of water, air and soil. These indicators suggest that the quality of Iowa's air is excellent while its water and soil conditions are below average. This is not surprising in a state that relies heavily on farm production. Fertilizers and pesticides used in farming tend to seep into the soil and contribute to water and ground pollution. On the other hand, they tend to have little effect on air quality. Since statistics on environmental quality have been collected regularly only recently, it is very difficult to determine whether the quality of Iowa's environment has been improving. It should be kept in mind that some statistics on pollution are not necessarily perfect indicators of the health risks from pollution in particular states. For example, the negative effects of toxic chemicals released in a state may not be felt in that state because the chemicals may be carried by wind or water to other states. Similarly, the amount of hazardous waste generated in a state does not convey the degree of toxicity of that waste, nor does it indicate how much of that waste escapes into the state's environment. Likewise, the number of dump sites in a state does not reflect the size and condition of each of those sites, although qualifying as sttperfimd dump sites does suggest that the sites may be among the worst dump sites in the nation. In 1997, Iowa was one of 17 states without any areas that violated national air quality standards for ozone or carbon monoxide.21 Water quality is a more serious concern. In 1997, 16 percent oflowa's surface water discharges were not ill compliance with water quality standards, ranking Iowa 4ffh ill the nation. This was worse than the non-compliance rate in 1990, when nine percent of lowa's water discharges were in noncompliance (ranking 22'~d in the nation)22. Adjusted for the size of its population, Iowa had more than its share of the total number of superfund dump sites within its borders in 1996, and ranked 34th on this indicator of pollution.23 Likewise, in 1993 Iowa released a larger amount of toxic chemicals per capita into its air, water and soil than did all but 17 other states.TM In sum, except for air quality, most measures of environmental quality suggest that Iowa is below the national average. V!. Crime: Crime affects economic and social well-being. High crime rates discourage economic activity, contribute to community disintegration and cause businesses and families to flee. The crime rate in Iowa is well below the national average. It is now lower than its 1980 level, and has fallen faster than in the nation as a whole. In 1980, Iowa had the 14m lowest crime rate in the country. By 1995, the state ranked 9~h lowest, with a crime rate that was 69 percent of the national average. lowa's crime rate fell by 23 percent over tile period .25 lowa's violent crime rate is especially low relative to the rest of the nationsless than half the national average. In particular, Iowa had the 4~h lowest rate of rape and the 2'd lowest murder rate in 1995. 21 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. 22U.S. Environmental Protection Agency, Compliance Evaluation Section. 23U.S. Environmental Protection Agency, Office of Emergency and Remedial Response. z4U.S. Enviromnental Protection Agency, 1993 Toxics Release Inventory. '*sFederal Bureau of Investigation, Crime in the United States. VII. Summary · -~ mprovements in a state's economic well-being are a function of "extensive" and "intensive" develop- .ment. Extensive development refers to growth that results from increases in the quantity of various factors of production. In simple terms, this means tbat output generally expands in response to increases in employment, factories, machinery, tools, equipment and infrastructure. Intensive development refers to growth that results from improvements in the quality of the factors of production. Hence, intensive development refers to output growth in response to improvements in the health, education and training of workers, infrastructure enhancements, and technological innovations. Some kinds of extensive development are by their very nature limited. For example, increases in employment are limited because as employment grows the pool of potential workers is gradually exhausted; that is, at any given moment there are only so many people available to work. Once frill employ- merit is achieved, output expansion due to job growth proceeds only if population grows. In contrast, there are no known limits to intensive development. The health, education and training of workers can always be improved. Technological advances and infrastructure enhancements have no apparent bounds. Like all states, Iowa has experienced both inten- sive and extensive development. One example of lowa's intensive development is the gain in the educa- tional attainment of its population, although there are danger signs in this area due to recent trends. The most obvious manifestation of extensive development in iowa is the dramatic increase in the ratio of its population that is working. This surge in the share of people employed has increased Iowa's output, but at the same time may have kept wages low. Low wages, in turn, may have encouraged employers to hire more workers and expand production. These and other sources of economic sustenance are critical to Iowa's economic health, and have undoubtedly contributed to the state's economic growth over the last five years. It should be noted, however, that this path toward economic growth may have run its course: it is highly unlikely that the ratio of Iowa's population working can continue to grow at the pace of the last 20 years. Like other forms of extensive development, this one is limited. Hence, Iowa may be forced to concentrate on ways to further improve the quality of its assets if it wishes to sustain its current economic expansion. With its unemployment rate very low, an employ- ment/population ratio well above national norms, and the demand for labor strong, it is unlikely that Iowa's wages will continue to fall. Labor shortages are likely to develop and this will put upward pressure on wages. If the quality of the labor force and other critical factors do not improve significantly and average wages in Iowa start to rise, employers may experience declining profits and they will have less of an incentive to expand employment opporttmities. Job growth could slow down and the economic expansion of the past five years may slow down. On the other hand, if the quality of the Iowa labor force and other assets improve, businesses are more likely to remain profitable and employers will be more willing and able to pay higher wages and further expand employment opportunities. lowa's workers and families will be better off and the economic expansion may continue unabated. In sum, economic conditions in Iowa have recently improved after years of decline. This turnaround could not have occurred without government investments, particularly in education and infrastructure. But with a potential shortage of skilled workers in the future, the need for improving Iowa's labor and non-labor assets has never been greater.:6 If lowa's economic recovery is to continue it must invest in its workforce and other assets. This means that further attention must be paid to improvements in health, education, safety, infrastrncture and the environment. :6This is particularly true in light of changes that are likely to take place in farming. As noted earlier, lowa's economic performance is strongly influenced by conditions in the agricultural sector. Fanning has historically played a key role in the growth and development oflowa. Unfortunately. agricultural output fluctuates widely from year to year. In addition, there is a very real possibility that the role of farming in the American and Iowa economy will continue its relative long-term decline. In light of this possibility, it would be prudent to both examine ways to avoid this decline but, at the same time, anticipate that there may well be the further loss of farming jobs in Iowa for reasons outside the control of Iowa policymakers. Hence, to secure a more stable and certain economic growth pattern, Iowa would be wise to, through the means described, make the state a more likely site for non-agricultural development. -15- CHAPTER TWO STATE & LOCAL PUBLIC SPENDING IN IOWA easured as a share of personal income, Mlowa's public spending is in the middle of the pack among all states, ranking 19th in 1995. Per capita, lowa's public spending ranks 23''d. In 1980, Iowa ranked 20th in both measures.27 Within the region Iowa spends less than Minnesota as a share of personal income and about the same as South Dakota and Wisconsin. Direct General Expenditures: 1980 and 1995 1980 1995 1980 Asa%of Asa%of US US Per Capita Personal Personal Rank Rank (1995 $) Income Income Illinois 14.4% 44 16.1% 46 $ 2,933 Iowa 17.7% 20 20.2% 19 3,117 Minnesota 18.6% 13 21.4% 11 3,505 Missouri 13.7% 46 15.2% 51 2,368 Nebraska 16.9% 25 19.0% 26 2,857 South Dakota 20.2% 5 20.1% 20 2,931 Wisconsin 18.1% 17 20.1% 21 3,327 ALL STATES 16.1% 18.7% $ 2,999 Source: Bureau of the Census, Bureau of Economic Analysis. As discussed in chapter one, sustained levels of public spending are essential to eco- 1995 Iowa State & Local Direct nomic and social GeneralExpenditures health. This is a Education 36.8% critical time for Poverty Programs 14.3% Iowa to improve Health 10.7% the quality of its Highways 11.5% labor and non-labor Police, Courts, Corrections, Fire6.8% assets so that the Parks & Natural Resources 3.3% recent level of Debt Service 3.3% economic growth Sewerage 2.4% Housing & Cornre. Development 1.1% can be maintained. Other 9.9% 27The source for this state comparison data is the U.S. Bureau of the Census publication, "Goverm33ent Finances." 1995 data are the most recent available. 1980 was chosen to use as a comparison year, after verifying that the choice would not result in the reporting ofaberrational or distorted trends. KEEPING THE DATA IN CONTEXT In comparing spending between states it is important to put statistics in context. For instance, the fact that California spends five times as much as Iowa on highways isn't very informative. California has eleven times as many people and thirteen times as much income--of course it spends a lot more. In this chapter, we usually use per-capita spending and spending as a share of personal income as our measures. Per-capita spending tell us how much a state spends on 1995 government services relative to its US Per US population. Hence, big states' govern- ments don't appear as high spending in Rank Capita Rank this statistic merely because they serve 24 $4,131 27 more people. 20 4,210 23 Spending as a share of personal 7 5,166 8 income gives us a measure of spending 48 3,336 50 relative to what a state can afford. Not 31 4,060 3O only do big states spend more because 26 3,833 38 they have more people, but wealthier 14 4,514 15 states spend more because their citizens $ 4,362 demand, and are willing to pay for, more and better services. Also, government services tend to cost more in wealthier states because costs are higher. A wealthy state might appear higher on the per-capita ranking than a poorer state even if it provides the exact same level of service because it has to pay more. Share of personal income statistics account for this to some extent (for a discussion of how personal income is defined for this statistic, see chapter three). Neither of these measures, however, is any more than a starting point for analysis of state and local government spending because they do not account for the differences in spending needs among states. A sparsely populated state may, for example, need to spend more on highways per-person, or as a percentage of personal income, because it requires relatively more miles of road than other states. Roads in some states take more of a beating from the weather than in other states. Some states have more through truck traffic than others. And some states face higher costs because of their geology. We have, where possible in this section, tried to put specific government spending programs in a useful statistical context. In many cases, however, useful data is not available so we are left with comparing expenditures not to needs, but to Iowa's population and income. -16- Education he single largest portion of state and local Tspending, over one-third, goes for education. Iowa's past commitment to education has been paying off, with Iowa student achievements in elementary and secondary education appearing to have improved over the last decade and a half. Recent trends indicate, however, that lowa's state and local governments have been providing fewer of the resources needed to maintain these high levels of student achievement. While Iowa's expenditures per pupil increased from 1980 to 1995, it did not keep pace with the national average. Ranked 20th in 1980, Iowa slipped to 29th nationally in 1995. While expenditures per pupil were two percent higher than the national average in 1980, Iowa had fallen eight percent below the national average by 1995. Of lowa's neighbors, only Missouri and South Dakota spent less per student.28 Average Undergraduate Tuition, Fees, Room & Board Paid By Students at Public Institutions of Higher Learning for the 1995-96 School Year 4-Year Schools 2-Year Schools Tuition, Fees, In-state In-state Room & Rank Tuition Rank Tuition Board Only Only Illinois $ 7,841 33 $ 3,355 37 $1,232 Iowa 5,945 19 2,564 27 1,785 Minnesota 6,734 24 3,229 35 2,050 Missoud 6,768 25 3,024 32 1,252 Nebraska 5,503 12 2,189 19 1,132 South Dakota 5,61 3 13 2,644 29 3,430 Wisconsin 5,839 18 2,61 4 28 1,835 United States $7,014 $2,848 $1,239 NOTE: Data are for the entire academic year. Tuition. fees, room & board were weighted by the number of full-time undergraduates in 1995, but are not adjusted to reflect student residency. Source: U.S. Departmentof Education, National Center for Educa~on Statisbcs. Spending per pupil in public K-'I2 schools in constant 1994-95 dollars 197940 %ofUS Rank 1994-95 %ofUS Rank Illinois $5,011 114% 11 $6,136 102% 18 Iowa 4,507 102% 20 5,483 92% 29 Minnesota 4,624 105% 19 6,000 100% 21 Missouri 3,751 85% 31 5,383 90% 31 Nebraska 4,165 95% 24 5,935 99% 22 South Dakota 3,696 84% 37 4,775 80% 42 Wisconsin 4,799 109% 15 6,930 116% 12 United States $4,401 $5,988 Source: U.S. Dept of Educafion, National Centerfor Education Statistics. Higher Education Investment in higher education is also crucial to train lowa's workforce. While iowa's rankings have been consistently above national averages, spending per student has fallen since 1980. In 1980, lowa's per student higher education spending was 41 percent above the national average--ranking 6th highest nationally. Although spending per student Fell by 18 281owa's per-pupil spending has increased since 1995. This, however, has been the trend in most states. Data are not currently available to show whether Iowa has made up, or lost further ground since 1995. Rank 20 36 42 21 18 50 37 percent by 1995, Iowa still spent 37 percent more than the national average, ranking 4'1'. Iowa's public institutions of higher learning have lower tuition than those in 24 other states. Average undergraduate iowa public school tuition in 1996 was $2,564, 10 percent cheaper than the national average. Affordable tuition is important. Academic qualifications alone will not guarantee attendance at an institution of higher education. Tuition must be paid and costs covered, whether through loans, grants, or out of pocket. The lower the tuition and other associated costs, the more accessible education is for all qualified applicants. Need-based aid is crucial for those who cannot afford tuition. Per student need-based assistance and grants awarded by the state of Iowa fell from 1990 to 1996. In 1990, Iowa spent an average of $321 on need-based aid ranking the state 7th best. By 1996, Iowa was providing an average of $291, or 8Lh best. Average faculty salaries can reflect a state's ability to attract qualified instructors to its universities and colleges. In this regard, Iowa ranked 13~h highest nationally in 1996, paying on average two percent higher than the national average for public institutions. For Iowa to maintain and expand its educated work force, investments in higher education are crucial. The trend towards lower overall spending in this area is worrisome. -17- Poverty Programs he second largest area of state and local spending Tin Iowa is on poverty programs (14 percent of the budget in 1995). The two biggest poverty programs are Medicaid and the Family Investment Program. Spending on poverty programs in Iowa as a share of personal income has increased as it has in most of the country--primarily because of rising health care costs. Iowa's spending in this area has fallen, however, in relation to the rest of the country. Whereas poverty program expenditures as a share of personal income equaled the national average in 1980, Iowa had fallen below the national average by 1995. This, in part, reflects lowa's relatively low poverty rate. Legislation enacted by Congress in 1996 significantly changed the way the federal government assists those in poverty. In the past, much of the federal government's contribution to state poverty programs was tied to a formula based on, among other things, the number of recipients. Under the changes, the entitlement status of some of these programs ended, and the federal contribution is allocated under a block grant formula with funding linked to a base year. In Iowa, the state's funding is tied to 1994 levels. Poverty Program Spending As a % of Personal Income 1980 Rank 1995 Rank Illinois 2.0% 16 2.6% 31 Iowa 2.0% 17 2.9% 27 Minnesota 2.5% 8 4.0% 6 Missouri 1.4% 42 2.5% 43 Nebraska 1.3% 44 2.7% 36 South Dakota 1.9% 18 2.8% 34 Wisconsin 2.6% 7 3.3% 18 ALL STATES 2,0% 3,1% Source: Bureau of the Census: Bureau of Economic Analysis. Although the new arrangement provides Iowa with fewer restrictions on how it can use the federal money, there could be a catch. If the number of persons in need were to increase (say, during a recession), the federal contribution would not necessarily go up proportionately as in the past. This could place an increased burden upon Iowa governments. Health & Hospitals hile spending on health and hospitals increased Was a share of personal income from 1980 to 1995, reflecting steeply rising health care costs, lowa fell in the rankings. In 1980, spending on health and hospitals, as a share of personal income, was 1.8 percent (8~h highest). By 1995, Iowa ranked 11th (2.2 percent of personal income). This drop is of concern in light of the needs in the health area described in Chapter 1. Highways in 1980, highway spending in Iowa, as a share of personal income, was 2.5 percent of personal income (ranking 9th highest). By 1995, Iowa ranked 6m (2.3 percent of personal income). This relatively high level of spending is undoubtedly responsible for Iowa's high scores in road quality. Public Safety Spending on police, fire, and other public safety programs has increased as a share of personal income. In 1980, Iowa ranked 49th (0.6 percent of personal income). By 1995 the state ranked 36m (0.8 percent of personal income). This spending increase as a share of personal income has coincided with a 23 percent drop in the violent crime rate during that same time period. Natural Resources Expenditures on natural resources, parks and recreation increased as a share of personal income --from 0.5 percent of personal income in 1980 (a rank of 31~ nationally) to 0.7 percent of personal income in 1995 (a rank of 22'~d). Interest on the Debt Spending on state and local debt interest payments increased dramatically from 1980 to 1995. [n 1980, Iowa ranked last in interest spending (0.3 percent of personal income). By 1995, Iowa ranked 41~t (0.7 percent of personal income). For fiscal year 1997, all state and local governments in Iowa reported total debt of $4.4 billion. -18- Expenditure Limitations & Special Funds 2 addition to lowa's Constitutional requirement for balanced budget, Iowa law limits spending in excess of 99 percent of general fund revenue. The remaining one percent and any budget surplus is dedicated to various funds, or is returned to the general fund as follows: 1. The Cash Reserve Fund. This is the first stop for "excess" revenue. Funds from this account can only be spent on nonrecurring emergency expenditures. If the Cash Reserve Fund gets below three percent of general fund revenues, it takes a three-fifths majority of the Legislature to spend those revenues. This fund is deemed full when it reaches five percent of general fund revenues. At $220 million, the fund is currently full. Any amount in excess of the five percent goal (recently, the entire amount coming in) goes to: 2. The Generally Accepted Accounting Principles (GAAP) Deficit Reduction Account. No money will be dedicated to this fund in 1998, because lowa's GAAP deficitwas eliminated in 1995.''9 Excess from this fund (currently the entire amount coming in) goes to: 3. The Economic Emergency Fund (or the "Rainy Day Fund"). This fund is used for emergencies only. The goal for this account is also five percent of general fund revenues. For 1998 this fund is also full with $220 million. Any surplus in excess of the five percent goal flows back to the general fund. In addition to these funds, there is a Rebuild Iowa Infrastructure Fund. Qualifying infrastructure expendi- tures include: land acquisition and construction, repair of existing buildings, and recreational trails. Routine maintenance and operational expenses are not in- cluded. All gambling receipts in excess of $60 million are automatically dedicated to this fund. In fiscal year 1998, 56 percent of all revenue for this account ($79.9 million} came from gambling receipts. This account also receives interest incurred from both the Cash Reserve Fund and the Economic Emergency Fund. Summary of Public Spending Issues While Iowa has a history of moderate levels of funding for government services, recent trends indicate that support for some important programs has been slipping relative to other states. iowa's history of commitment to primary and secondary education has been a factor in the state's strong showings in student achievement. Through 1995, however, expenditures per pupil had been on the decline, threatening to undermine Iowa's strong performance. Although Iowa's commitment to higher education is above the national average in most key categories, recent trends indicate that, here to, support has been declining. Per student expenditures and need-based aid has declined, which could limit Iowa's ability to adequately train the workforce it needs. With lowa's economy performing as we]] as it has in many years, now may be the time to make important public investments. hwestments in educa- tion, infrastructure and a host of other government services do not necessarily produce immediate pay- offs in economic performance. But if they aren't made now, the price may be steep in the years to come. 2oThe "GAAP deficit" is the General Fund deficit using GAAP rules. -19- CHAPTER THREE AN OVERVIEW OF THE CURRENT IOWA TAX SYSTEM his chapter examines overall taxes in Iowa Tcompared to other states, along with trends over the past two decades. [t also analyzes the distribution of Iowa taxes by income level. The Overall Level of Iowa Taxes Several widely accepted measures exist for comparing tax burden between states. Iowa ranks differently depending on which measure is used:3° · On a per capita basis, Iowa is below the national average in state and local taxes and ranks 20th highest in the nation; · As a share of total personal income, state and local taxes in Iowa are above the national average and rank 9m in the nation; · As a share of gross state product, lowa's taxes are above the national average and rank 3°we focus here on total taxes raised by states, counties, municipalities, and school districts. Because states vary widely and somewhat serendipitously in the proportion of their revenues raised at different government levels (i.e., state versus [ocal}, limiting our analysis to only state (or only local) revenues would greatly distort the relationships among the various states. State and local taxes include all tax revenues raised by state and local governments, mostly from property taxes, consumption taxes, personal income taxes, and corporate income taxes. Excluded from taxes are (1) offsetting receipts from user fees charged for government-provided services, gross interest income, and amounts paid into employee pension, workers' compensation and unemployment trust funds; (2) a small amount of miscellaneous non-tax revenues; and (3) funds from federal assistance. The most recent state and local tax figures cited here are for fiscal 1994-95, the latest year for which the U.S. Bureau of the Census has published data for combined state and local taxes for all states. 1996 and 1997 data is sometimes used as noted in this report for trends in personal and corporate income taxes. It should be noted that the Census Bureau's state only tax data through fiscal 1996-97 show little or no change in the trend of [owa's taxes compared to national trends. Which measure is the appropriate one? Each is instructive, but has certain limitations. Iowa's below average per capita taxes ranking tells us, by definition, that lowans pay less per-person than the national average. But this is to be expected, given that lowarts have less income per-person than the national average. Measuring taxes per capita cannot tell us much about the level of taxation relative to what a state can reasonably afford, the cost of providing government services in the state, or what level of services the public demands. For this reason, most analysts commonly use taxes as a share of personal income as a benchmark. Because it is widely accepted, generally valid, and the data is readily available, this is the measure of taxes that we use most often in this report.31 31Estimates of state-by-state personal income are published by the U.S. Commerce Department's Bureau of Economic Analysis (BEA). BEA's definition of personal income is quite broad, including not only most cash income, but also many types of non-cash income (e.g., food stamps, employee fringe benefits such as health insurance and accrued pension benefits) and certain types of imputed income (primarily the rental value of owner-occupied housing). Personal investment income includes large amounts of imputed investment income (included as part of personal interest), but excludes both realized and unrealized capital gains (which are supposedly reflected in the reported income from the corporate sector of GSP). These departures from the common notion of personal income are not thought to create any significant distortions in state-by-state comparisons. In computing taxes as a share of personal income, some analysts mistakenly dividefiscalyear revenues by the calenderyear figures provided by BEA. Since states vary significantly in their economic growth rates (due to, among other things, varying population growth rates), this error can sometimes noticeably change state rankings. In addition, because BEA periodically revises its past estimates of state personal income, figures for taxes as a share of personal income can also change somewhat when the revisions are taken into account. The figures presented in this report for taxes as a share of personal income avoid these common errors by dividing fiscal year tax receipts (as presented by the U.S. Bureau of the Census) by our calculation of fiscal year state-by-state personal income. Also, the personal income figures cited here reflect BEA's April, 1998 personal income revisions. -20- But measuring taxes as a share of personal income also can produce anomalies, since some taxes do not come out of the pockets of %of individuals, but instead are paid, at least initially, GSP Rank Illin0is 9.0% 32 by businesses. For example, Wyoming's total taxes Iowa 10.0% 14 in 1995 were equal to 11.6 percent of personal Minnesota 10.8% 5 income--15~h highest in the nation. Much of the Missouri 8.6% 35 taxes in Wyoming are not collected from indi- Nebraska 9.2% 30 viduals, however, but from the mineral industry, South Dakota 7.7% 46 which largely exports these taxes to customers and Wisconsin 11.2% 4 Total State & Local Taxes in 1995: Three Measures owners who do not reside in Wyoming. Thus, although Wyoming ranl<s 15thin taxes divided by ALL STATES 9.4% 11.1% personal income, the citizens of Wyoming really SOURCE: Bureau of Economic Analysis; Bureau of the Census face a considerably lower level of taxation. This brings us to the third measure used in this report: taxes as a share of gross state product (GSP).32 This measure addresses the "Wyoming problem" by measuring taxes relative to an economy's entire output instead of the portion of output which remains in-state. As a share of GSP, Wyoming taxes, at 7.4 percent, ranked 48th in 1995--much lower than when ranked as a share of personal income. Comparing taxes as a share of gross state product, almost by definition, probably offers the best measure of the potential impact ofa state's taxes on economic activity in a state. We use GSP in this report in comparing state corporate taxes with one another. State & Local Taxes as a % of Personal Income in 1995 % different % Rank from Iowa Alaska 18.8% 1 +6.7% New York 14.7% 2 +2.6% Dist. of Col. 13.6% 3 +1.5% Wisconsin 13.0% 4 +1.0% Minnesota 12.8% 5 +0.7% Iowa 12.1% 9 -- Kentucky 11.5% 19 -0.6% Median (Mississippi) 11.0% 26 -1.1% Virginia 9.8% 48 -2.3% Tennessee 8.7% 51 -3.4% US Average 11.1% -1.0% SOURCES.' Government Finances, Bureau of the Census; U.S. Dept of Commerce, Bureau of Economic Analysis. 33GSP is described in Chapter 1. % of Per Pers. Inc. Rank Capita Rank 10.6% 35 $ 2,627 14 12.1% 9 2,467 20 12.8% 5 2,998 7 10.1% 42 2,147 36 11.5% 17 2,399 23 10.1% 41 1,899 46 13.0% 4 2,837 9 $ 2,514 As the table to the left illustrates, small differences between states in their levels of taxation can significantly affect their relative rankings. Despite ranking 9th highest nationally, Iowa's taxes as a share of personal income are: · only one percent of income higher than the median state and 1.1 percentage points above the national average; · closer to the lowest ranked state than to the highest ranked; · closer to the 48th ranked state than the second ranked state; and · closer to the 19th ranked state than the 5th ranked state. Thus, although looking strictly at its ranking, Iowa might be classified as a high tax state, it actually doesn't have much higher taxes than most states. None of these aggregate measures of tax burden --per-capita, share of GSP or share of personal income--tells us whether specific groups of taxpayers experience iowa as a low-tax, high-tax, or average tax state. Taxes can affect taxpayers differently depending on amount of income, sources of income, home ownership, family size, if they live in an urban or rural area, and a host of other factors. For any given taxpayer, the tax burden she or he would owe in another state might be higher or lower than in Iowa, regardless of the other state's average tax burden. Another problem with aggregate measures of tax burden is that they include all taxes collected in the state, regardless of whether the residents of the state pay those taxes or not. In fact, a significant portion of taxes paid by business are not paid by residents, but are "exported" out-of-state and paid by non-residents. Much of the Iowa business tax burden ultimately is -21- Non-Deducible Taxes Deduciible Taxes The Distribution by Income Level of Iowa Taxes $500 (12%~ of deductible taxes is offset b, lower federal tax deductibletaxes suchasthe eaxes, In t995, lederally A regressive tax system is problematic because it places the largest tax burden on those with the least ability to pay taxes. A ten percent tax burden on middle- or low-income families cuts directly into their standard of living in a significant way. But a similar level of taxation on wealthy families does not significantly impede their quality of life. The *'ability- to-pay" principle is a central argument for a progres- sive tax structure. A progressive tax system takes a larger percentage of the income of the well-offthan it does from those with lower incomes. A regressive tax system--like Iowa's--does exactly the reverse. The regressivity or progressivity of a tax system is determined by the regressivity and progressivity of its component taxes and by the relative degree of reliance on each tax. Consumption taxes, such as the sales tax, are the chief reason why lowa's overall tax structure is regressive. Iowa property taxes are also regressive, although to a lesser degree than consumption taxes. lowa's personal income taxes are progressive, but do not fully offset the regressivity of [owa's other taxes. As mentioned earlier, lowa's income and property taxes can be deducted in computing federal income taxes. But only those taxpayers who itemize their deductions on federal tax returns can take advantage of this. For those who do itemize, their federal tax liability is substantially lowered. Hence, the net burden of the Iowa personal income and property taxes, after accounting for the reduction in federal taxes, is lower than it first appears. At the same time, because the benefits of itemized deductions go disproportionately to higher-income taxpayers in higher federal tax brackets, the net distribution of lowa's taxes are actually more regressive than before the federal deductions. For instance, taxpayers in the wealthiest one- percent of Iowans have their Iowa tax burden of 8.5 percent offset by a reduction in federal taxes equal to 1.7 percent of income. Thus, the net burden of the Iowa tax system on the wealthlest one percent is 6.8 percent of income. In contrast, for middle-income Iowans, the burden of Iowa taxes is cut by only 0.1 percent--from 10.2 percent to 10. 1 percent. Iowa Taxes in 1998 As Shares of Family Income for All Taxpayers Income Lowest Second Middle Fourth Top 20% Group 20% 20% 20% 20% Next 15% Next 4% Top 1% Average Income in Group $8,200 $19,900 $32,100 $48,700 $75,600 $133,000 $476,000 Income Less than $14,000- $26,000- $40,000- $61,000- $101,000- $212,000 Range $14,000 $26,000 $40,000 $61,000 $101,000 $212,000 or more Sales, excise &gross receipts taxes 6.3% 5.6% 4.7% 3.9% 3.0% General sales tax, individuals 3.1% 2.8% 2.3°0 1.9% 1.5% Excise &gross receipts taxes. individuals 1.7% 1.5% 1.3% 1.1% 0.9% Sales, excise & gross receipts taxes, business 1.5% 1.3% 1.0% 0.8% 0.6% Property taxes 4.4% 3.4% 2.7% 2.6% 2.6% Property taxes on families 4.0% 2.9% 2,2% 2.0% 2.0% Business property taxes 0.4% 0.5% 0.5% 0.6% 0.6% Income taxes 0.5% 1.8% 2.8% 3.3% 3.8% Personal income tax 0.5% 1.8% 2.8% 3.2% 3.7% Corporate income tax 0.0% 0.1% 0.1% 0.1% 0.1% 1.9% 1.3% 1.0% 0.7°0 0.5% 0.3°'0 0.4% 0.3% 2.5% 2.2% 1.6% 0.8% 0.9% 1.5% 4.1% 5.0% 3.9% 4.8% 0.1% 0.2% Total before Federal Itemized Offset 11.1 % 10.9% 10.2% 9.8% 9.4% Federal Itemized Deduction Offset -0.0% -0.0% -0.1% -0.2% -0.7% Net Taxes after Federal Offset 11.1 % 10.8% 10.1% 9.6% 8.7% 8.5% 8.5% -1.0% -1.7% 7,5% 6,8% -23- CHAPTER FOUR TRENDS IN IOWA TAXES otal state and local taxes in Iowa have T increased since 1985 as a share of personal income, largely fueled by increases in con- sumption taxes.34 !n 1985, total state and local taxes were 10.6 percent of personal income, ranking Iowa 20th among the states. By 1995, !owa's taxes had risen to 12.1 percent of personal income and its rank had risen to 9th. This data, however, does not take into account substantial tax cuts enacted since 1995. Total Taxes as a % of Personal Income 1985 Rank 1995 Rank Illinois 10.0% 31 10.6% 35 Iowa 10.6% 20 12.1% 9 Minnesota 12.3% 5 12.8% 5 Missouri 8.3% 50 10.1% 42 Nebraska 9.7% 38 11.5% 17 South Dakota 9.4% 43 10.1% 41 Wisconsin 12.2% 6 13.0% 4 ALL STATES 10,5% 11,1% SOURCE.' Bureau of the Census, Bureau of Economic Analysis There is no question that lowa's total taxes have risen over the last ten years. But not all Iowa taxes have gone up, and the increases have not been shared equally by all lowarts. The most noticeable trend has been the growth in consumption taxes. The general sales tax--which comprises 70 percent of all consumption taxes in Iowa--has been increased twice since 1982. Both increases were enacted during economic downturns to make up for projected revenue shortfalls. In response to the 1982 crisis, the sales tax rate was raised from three to four percent. In 1992, Iowa again faced budget shortfalls and again turned to the sales tax, raising the rate from four to five percent. The state's decision in 1985 to allow localities to implement a one percent local option sales tax has 34The year 1985 is selected for comparative purposes in this section due to data availability--before 1985, the Bureau of the Census did not report all consumption taxes together in its state and local revenue reports. also contributed to greater reliance on consumption taxes. In the 1998 legislative session, another percentage point of local option sales tax was authorized to pay for school infrastructure. Primarily due to the increases in the state sales tax rate, Iowa's average annual growth rate in per capita consumption taxes from 1985 to 1995 was double the national average and the 7h highest nationally. The state's increasing reliance on consumption taxes is worrisome because they are regressive-- consumption taxes hit middle- and lower-income Iowans harder than the better-off. In addition, by increasing reliance on these taxes, which are not deductible from federal income taxes, lowans pay more in federal income taxes than they would have if an equivalent amount of revenue had been raised from deductible taxes instead. Progressive taxes, on the other hand, have been a declining source of revenue. Although the income tax remains Iowa's only major progressive source of tax revenue, it has been cut in each year from 1995 to 1998. These changes have made the personal income tax less progressive. lowa's inheritance tax--also a progressive revenue source--was reduced significantly in 1997. Another progressive tax in decline is the corporate income tax. In 1985, it comprised 0.37 percent of gross state product (ranking 28th among the states). By 1996, it comprised 0.27 percent of gross state product (ranking 35d~). Thus, a tax borne substantially by well- off, out-of-state shareholders in multi-state corpora- tions has been falling. Lower business taxes mean that Iowa residents must pay a larger share of the tax burden. Property taxes have grown the least of all major sources of revenue. This is primarily due to growth limitations and cuts in business taxes mandated by the state. Property taxes are not nearly as regressive as consumption taxes and cutting and limiting them has had only a modest impact on the overall regressivity of the tax. There have also been substantial shifts in non-tax revenues. Federal government aid accounted for 21 percent of iowa state and local revenue in 1978 and now accounts for 18 percent. User fees and charges have also increased significantly: in 1978 they pro- vided 14 percent of revenue, in 1995 they accounted for 18 percent of revenue. About half of user fees are for higher education. Other charges include user fees for health care and parks and recreation. These fees often hit middle- and low-income families the most. Iowa taxes have increased compared to twenty years ago. But that trend is reversing in response to recent tax cuts and tax growth limitations. These new developments threaten the future of important government programs. In addition, the incidence of who pays Iowa taxes has shifted in recent years. Hikes in the regressive sales tax, coupled with cuts in the progressive personal income and inheritance taxes, and the decline of the corporate income tax, have shifted the tax burden away from the wealthlest lowans and on to middle- and lower-income residents. Furthermore, Iowa has been shifting from taxes deductible on the federal tax ! return to non-deductible +0.5% taxes. In short, the recent state tax shifting has been raising the federal taxes of lowarts. Provisions have been put into law, or are under con- sideration, that make these trends likely to continue and difficult to reverse. Property tax limitations restrain the use of that revenue source by Lowest 20% Second 20% local governments. Laws are in place that will require further cuts in business property taxes into the next century. And now, local governments have been authorized to raise more in sales taxes. Thus a shift from the less regressive property tax to the more regressive sales tax is likely. In addition, the proposed "Taxpayers Rights Amendment" to the Iowa Con- stitution, discussed in Chapter 10, would make reversal of the shifts described here much less likely. Although Iowa's shift toward consumption taxes has been ongoing, the 1990s have seen a rapid succession of legislative actions pushing the trend forward. In fact, the entire 1992 state sales tax increase is now being used to pay for the state income tax cuts that followed in 1995 through 1998. The following chart shows the impact of major Iowa state tax changes starting in 1992. The combination of the sales tax hike and income tax cuts has been approximately revenue neutral; the sale tax hike currently collects as much as the income tax cuts cost. But the impact on the citizens of Iowa has been anything but neutral. Lower- and middle-income families pay higher taxes; those at the top of the income scale pay less. !n addition, Iowa's shift from deductible income taxes to non-deductible sales taxes has caused Iowans to pay an additional $45 million in federal personal income taxes. Effects of Iowa State Tax Changes, 1992-1998 As Shares of Family Income (at 1998 Levels) +0.1% -0.0% I-0.1 Middle 20% Fourth 20% Next 15% Next 4% Top 1% -25- The gulf between Iowa's very progressive rate structure and its slightly progressive effective tax rates is caused by several factors. Alabama Iowa Louisiana Missouri Deduction for federal personal income taxes paid The Iowa deduction for federal Montana personal income tax payments is the most significant reason for the relative lack ofprogressivity of the Iowa personal North Dakota income tax. This deduction has been a feature of the tax since it was adopted. Of the other states which allow a deduction for federal income taxes Oklahoma (Alabama, Louisiana, Missouri, Montana, North Dakota, Oklahoma, Oregon, and Utah), only Alabama and Louisiana allow Oregon a deduction of the full amount. Utah The opportunity to deduct the full amount of federal income taxes paid greatly reduces Iowa's effective tax rates, particularly for high income taxpayers. This is because the federal income tax is progressive. Taxpayers with lower incomes pay less in federal taxes than do people with higher incomes. Hence, lower-income families deduct much less than Iowa's Deduction for Federal Income Taxes Paid as a % of 1998 Income i 12°/o 14% 16% 18% 20% ~L~/~ 24% Top 1% Next 4% ~.. Next 15% e 4th 20% 2nd 20°/. Low 20% ~ ~ * ] - -I - - 0% 2'/0 4% 6% 8% 10% Deducti~nasa%of19981ncome taxpayers at higher incomes. While the average deduction for the wealthlest one percent of Iowa residents is over $100,000, the average value of this deduction for middle-income families is about $2,000. Low-income families don't pay any federal personal income tax and therefore have nothing to deduct. It is important to note that only the federal income tax--the only federal progressive tax for individuals-- States That Allow Deduction for Federal Income Taxes Paid All federal personal income taxes paid are deductible. All federal personal income taxes paid are deductible. All federal personal income taxes paid are deductible. Maximum federal income tax paid deduction is $5,000 Taxpayers choose between taking the standard deduction and itemizing deductions. If they itemize, the full amount of federal taxes can be deducted UNLESS the taxpayer makes over $124,500. Then, the deductible amount is limited as income increases. Taxpayers can either take the deduction for federal income taxes paid and apply higher state tax rates, or multiply their federal tax by 14% to get their state liability. 5% choose the deduction option. Taxpayers have two options, only one of which allows a deduction for federal income taxes paid. 58% of taxpayers choose the federal tax paid deduction option (which entails higher nominal state tax rates), and the rest forgo the federal deduction in favor of lower nominal state rates. Maximum federal income tax paid deduction is $3,000. 50% of the federal income tax paid is deductible. is deductible from Iowa taxable income. The various regressive federal excise and payroll taxes are not deductible from the Iowa personal income tax. Deducting federal payroll taxes would be a more progressive option. Three states--Alabama, Massa- chusetts and Missouri--allow a deduction for federal payroll taxes.37 The argument is sometimes made that the federal deduction is important because it prevents "taxing a tax" and thus precludes "double taxation." This argument is something of a red herring. In reality, taxpayers worry more about how much they are taxed than how many times. After all, would you rather pay two one-percent taxes or one twenty-percent tax? Double taxation is actually a fairly common occurrence. The outcry regarding this particular instance of double-taxation stems not from concern over the violation of a principle of taxation, but from a desire to defend a cherished tax loophole. Several of the tax change options described in Chapter 10 show the impact of eliminating or reducing this deduction. Eliminating this very costly deduction would permit adoption of significantly lower state income tax rates, other tax reforms or increased investment in government services. 37Most of the federal payroll tax applies only to the first approximately S68,000 of earned income. Thus, the amount of the deduction does not increase as income exceeds this cap. -27- Small Personal Exemptions Personal exemptions in the federal system and in most state systems are of the greatest benefit to lower-income families. They exclude a fixed amount of income per taxpayer and, typically, per dependent. Because the exemption amount is a greater percent of the income of a low-income family than of a higher income family, they have a larger impact in reducing a lower income taxpayers liability. For example, a family with $15,000 of income and $10,000 of exemptions avoids taxes on two-thirds of its income because of the exemption. A family with $200,000 of income and $10,000 of exemptions escapes taxation on only one-twentieth of its income. Instead of exempting a portion of income from tax, Iowa uses an exemption credit to directly reduce the tax liability of taxpayers. Thus, a taxpayer's before- credit tax liability is reduced by $40 per family member (with an additional $40 for each elderly member of the family). This type of exemption credit, Taxable Income $ 20,000 Tax (from tax table) $ 932 k¥/[h'!=l~e-~,k, No Credit $100,000 $ 7,620 Income $ 20,000 $100,000 - Exemption 4,000 4,000 = Taxable Income 16,000 96,000 Tax (from tax table) $ 677 $ 7,261 % Tax Reduction -27% -5% Taxable Income $ 20,000 $100,000 Tax (from tax table) 932 7,620 - Credit 300 300 = Tax $ 632 $ 7,320 % Tax Reduction -32% -4% used to reduce before-credit tax liability, has a more progressive impact than exemptions used to reduce taxable income. Because the personal income tax is progressive, the credit ends up being a smaller percentage of higher income families' taxes than would an income exemption. Among lowa's neighbors, only Nebraska uses exemption credits in the same way as Iowa. Nebraska provides $88 per exemption. While a family of four in Iowa receives $160, the same family in Nebraska would receive 5352. Thus, although Iowa's exemption credits are a progressive feature of its tax system, they are small and thus do less to add progressivity to the iowa personal income tax than do similar features in other jurisdictions. The table below shows what the credit would have to be to offer the same tax reduction as the federal exemption for various numbers of exemptions. Only for a single exemption is the current credit greater than the benefit of the exemption.38 Federal Exemptions Equivalent in Credit for Iowa # of x $2700 Credit Current $40 Exemptions Exemption Equivalent Iowa Credit 1 $ 2,700 $ 23 $ 40 2 5,400 106 80 3 8,1 O0 227 120 4 10,800 358 160 5 13,500 524 200 6 16,200 689 240 Low Standard Deduction Similarly, !owa's standard deduction is small. in 1998, Iowa's standard deduction for unmarried and married people filing separately is $1,440 ($3,550 for married people who file together). This deduction is much smaller than the federal standard deduction and the standard deductions of many states. in 1998, the federal standard deduction is $4,250 for unmarried, single people (S7,100 for married couples filing together). Like the federal income tax, the Iowa income tax provides taxpayers with the option of itemizing their deductions instead of taking the standard deduction --taxpayers choose whichever will give them the largest deduction. Typically, upper-income taxpayers benefit the most from itemizing. lndeed, while only a quarter of all Iowans will itemize deductions on their 1998 tax returns, almost all of the wealthiest one percent of lowarts will itemize. Iowa's small standard deduction shortchanges Iowans who do not itemize their deductions. Since these taxpayers are disproportionately lower-income earners, this progressive feature of lowa's income tax does less for low- and middle-income families than in many personal income tax systems. 3~The value of exemptions increases as the amount increases because they are exempting income that would be taxed in higher brackets. -28- The 1998 Changes in the Iowa Personal Income Tax Reduced the Progressivity of the Income Tax Effective in 1998, the personal exemption credit is increased from $20 to $40, tax rates are cut across- the-board by 10 percent, capital gains taxes are reduced and the retirement exclusion is increased. These changes have had a regressive impact. Since the personal income tax is a progressive tax, an "across-the-board" cut benefits the well-off the most. By contrast, an "across-the-board" tax cut in lowa's regressive consumption taxes would benefit low- and middle-income families the most. (See chapter 10 for analyses of these and related tax change options.) [-1'~FT4~ 1993 Iowa County % above/below I&v~l: Incomes Iowa Median Warren County $39,356 +36.3% Dallas County 35,297 +22.3% Story County 34,024 +17.9% Iowa Median 28,867 -- Howard County 25,401 -12.0% Appanoose County 22,125 -23.4% Wayne County 20,627 -26.5% Source: U.S. Bureau of the Census. Effects of Iowa's 1998 Personal Income Tax Cuts as Shares of Income Lowest20% Second20% MIddle20% Foudh20% Next15% Next4% Top1% -0,"~% ~i i -0.3% -- -0,4% -0.5% -0.6% -0.7% Cutting capital gains taxes overwhelmingly benefits the best-off The pension exclusion benefits primarily middle-income senior citizens. The credit increase does make the personal income tax more progressive. Nevertheless, the over- all tax cuts for 1998 are greatest for those with higher incomes. In addition, Iowan's federal taxes were increased by $41 million because of lower deductions on the federal tax return for state income taxes paid. The impact of these cuts also varies geographically. There are wide differences among Iowa counties in median income. Counties such as Wayne, Appanoose and Howard are unlikely to fare as well under these tax cuts as higher-income counties such as Warren, Dallas and Story. Complexity of the Iowa Personal Income Tax - n general, state income tax systems become more complex for taxpayers the more they differ from - the federal personal income tax system. After all, everyone has to complete their federal tax return anyway and to the extent the state form consists of copying a few numbers from the federal form, it is relatively simple. The simplest state personal income taxes are those that are calculated as a percent of federal tax due (Vermont and Rhode Island) or which simply require applying a rate table to federal Adjusted Gross Income or taxable income (such as Minnesota). There are always some differences between the federal tax base and state tax bases, mainly because of differences in the restrictions on what the federal and state governments may legally tax. These differences, however, only affect a minority of taxpayers. lowa's personal income tax differs significantly from the federal income tax--more so than in most states. This means that Iowa taxpayers have to do more work in order to complete their Iowa tax forms. Separate Filing For Married Couples Under the federal tax system, there are substantial incentives for most married couples to file joint tax returns. Federal policymakers felt that treating a married couple as a single economic entity for tax purposes made sense. But in Iowa, there are strong incentives for couples to file under the status married filing separately. This requires a recalculation for each spouse of many income and deduction items from what is reported on the federal return jointly. -29- The cause of the incentive to file separately in Iowa is rooted in Iowa's single tax table. Since Iowa's nta~ginal tax rate and taxable inconte brackets are the same for all fliers regardless of status, many married couples gain from splitting their income so that more of their income is in lower tax brackets (see the table to the right). It is possible to design a tax system which would eliminate this "marriage penalty" without Iowa losing revenue or raising married couples taxes (see tax change options in Chapter 10). Itemized Deductions lowa's itemized deductions also add to the complexity of lowa's personal income tax. Because !owa's standard deduction is lower than the federal, more people have an incentive to itemize their deductions. Itemizing on the state return when not itemizing on the federal return makes tax filing more complicated. Other Complexities Several other features of the Iowa personal income tax, discussed elsewhere in this chapter, also add complexity to the system. In particular, the differences from the federal income tax rules on retirement income, social security income and capital gains income make the tax system more complex. Each of these items must be re-calculated when filling out the Iowa personal income tax. The alternative tax calculation discussed below also adds complexity. Other Elements of Note in the Iowa Personal Income Tax Earned Income Tax Credit Beginning with the 1990 tax year, lower-income Iowa working taxpayers have been allowed an earned income credit equal to 6.5 percent of the federal earned income tax credit (EITC). The federal EITC is designed to offset regressive tax burdens on low-wage workers. In this time of transition in social welfare programs, the need for ensuring that low-income workers do not find themselves living in poverty has never been greater. In 1996, the federal EITC helped lift 4.6 million people in working families out of The Advantage of Separate Filing in Iowa: An Example Joint Separate Returns Return Spouse 1 Spouse 2 Wages $ 50,000 $ 35,000 $ 15,000 Interest, dividends, etc. 10,000 4,000 6,000 Total adjusted gross income60,000 39,000 21,000 Standard deduction 3,550 1,440 1,440 Deduction for federal taxes6,300 4,600 1,500 Iowa taxable income 50, 150 32,760 18,060 Income tax before credits 3,154 1,791 806 Credits 160 80 80 Net tax $ 2,994 $ 1,71 1 $ 726 Total net tax, separate filing $ 2,437 Tax saving from filing separately $ -556 poverty--including 2.4 million children.39 Two factors limit the effectiveness of Iowa's EITC. First, it is a relatively low percentage of the federal credit. Second, Iowa's ElTC--unlike the federal credit --is not refundable. Because it is non-refundable, those taxpayers whose EITC exceeds Iowa personal income tax liability (before EITC calculation} do not 1998 Earned Income Tax Credit Comparisons % of Federal Credit Refundable? Iowa 6.5% no Kansas 10% YES Maryland (1) 50% no Massachusetts 10% YES Minnesota (2) 15%, 25% with kids YES New York 20% YES Oregon 5% no Rhode Island 27% no Vermont 25% YES 4% one kid, 14% 2 kids, Wisconsin YES 43% 3+ kids (1) Maryland also has a 10% refundable credit- taxpayers choose whichever provides the largest amount. (2) For those with ch~dren, the amountof credit varies with income. 25% is an estimate ef the average. :~gU.S. Bureau of the Census. March 1997 Current Population Survey. A Refundable Earned Income Tax Credit Will Assist Maryland's Working Poor Families, Elizabeth C. McNicbol (COBPP March 16. 1998). -30- receive the full credit. If the personal income tax were Iowa's only tax, this might make sense if the goal was to simply reduce tax liability and not provide further assistance. But for low-income families, the largest components of the tax burden are consumption and property taxes--not income taxes. A refundable credit would help offset all taxes paid by lower-income Iowans, not just taxes on income. In 1998, nine other states--Kansas, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Wisconsin have versions of the earned income tax credit. Only Oregon's EITC is uniformly smaller than lowa's. And six of the states offer refundable EITC's. Iowa's EITC is a good start to helping Iowa's working poor. Increasing the EITC and making it refundable would help offset regressive Iowa taxes and would increase its effectiveness in encouraging low-income workers to enter the workforce. (Options for expanding the EITC are discussed in Chapter 10.) Treatment of Retirement Income Starting in 1995, Iowa has allowed a retirement income exemption. This exemption allows a dis- abled person or a person 55 or older to exclude a certain amount of retirement income from Iowa taxable income. Effective for 1998, the maximum amount excludable was increased from $3,000 to $5,000 ($6,000 to $10,000 for married couples who file taxes together). One of the arguments for increasing the retire- ment exclusion in 1995 was that it would stem the outflow of elderly from Iowa. It is unlikely, however, that relatively small differences in taxes significantly affect people's choices about where to spend their golden years. There certainly is not I,'~ix'~. Income Illinois All exempt Iowa $5,000 ($10,000 married filing Minnesota None exempt Missouri None exempt Nebraska None exempt South Dakota No income tax Wisconsin None exempt a strong case to be made for further expansion of this exclusion. Even comparing Iowa to Illinois, which doesn't tax any pension or social security income, only 31 percent of Iowa elderly pay more under the Iowa personal income tax than theywould under the Illinois personal income tax. This is because of the already Marginal Tax Rates and Taxable Income Iowa has a marginal rate personal income tax system and the brackets in the tax table refer to taxable income. The table below shows how these distinctions matter for a married couple with $100,000 in income. First of all, only about three-fourths of that income is taxable income under the Iowa personal income tax because of deductions, exemptions and exclusions. Next, although the top rate of 8.98 percent starts at $51,120 of taxable income, of the $74,756 left to be taxed, only $23,636 is taxed at the top rate. The rest of taxable income is taxed at the lower rates. This is how marginaltax rates work. How Iowa's Marginal Tax Rates Work Iowa Tax Calculation for a Married Couple with $100,000 in Wage Income Step 1: Iowa Taxable Income = $74,756 Tax in bracket $4 8 55 256 417 368 772 1,350 2,122 $5,352 Tax Calculation at Each Marginal Rate 0.36% x first $1,136 of taxable ~ncome 0.72% x next $1,136 of taxable ~ncome 2.43% x next $2,272 of taxable ~ncome 4.5% x next $5,680 of taxable ~ncome 6.12% x next $6,816 of taxable ~ncome 6.48% x next $5,680 of taxable ~ncome 6.8% x next $11,360 of taxable ~ncome 7.92% x next $17,040 of taxable income 8.98% x final $23,636 of taxable income TOTAL IOWA TAX Addendum: Percent of total income taxed at 8.98% rate: 23.6% generous exclusions for social security and pension income under Iowa law combined with an exemption credit of greater value than Illinois's exemption and Iowa's allowance of itemized and standard deductions where Illinois allows none. For the mostly better-off elderly who do pay more under Iowa's tax system it is unlikely that the few hundred dollars difference has a substantial impact on where they choose to live? Social security benefits are not subject to Iowa's personal income tax if the taxpayer's adjusted income is below $32,000 for couples and S25,000 for other taxpayers. For those with incomes exceeding these thresholds, the basic rule is that 50 percent of the 4°ITEP Tax Model. -31- social security benefit contributing to adjusted income above the base amount is subject to tax. This rule reflects the pre-1993 federal law on taxation of social security benefits. Iowa has not con- Formed to federal changes that increased the amount of social security taxes subject to taxation for people with higher incomes. The federal changes were prompted by complaints about high income people receiving untaxed social security benefits and the need to balance the federal budget. Taxing benefits is equivalent to reducing benefits at higher incomes (for tax simplification examples conforming social security taxation to the federal rule, see chapter 10). Alternative Tax Calculation iowa allows an alternative tax computation for lower-income married and single parent taxpayers. Unmarried taxpayers without children are not eligible. This alternative tax computation addresses a problem resulting from lowa's income tax threshold. Iowa's threshold exempts those taxpayers with incomes under $13,500 from owing any tax. While a threshold is effective at removing low-income people from paying any income tax, it can create unfair situations as well. For example, an Iowa resident earning $13,499 pays no income tax. But if she earns just $2 more, she will exceed the threshold and have to pay income tax on all her taxable income ($13,501 less deductions and credits). This can mean a tax of as much as :5400. Obviously, making a low-income person's tax liability go up S400 with an income increase of $2 is not good tax policy.41 The alternative tax calculation ensures that no one pays over 8.98 percent on their income exceeding $13,500. This smooths out the cliff effect of the threshold. In our example, instead of owing $400, the taxpayer uses the alternative calculation and owes 9 cents. Most tax systems that have high thresholds for requiring citizens to pay taxes do so implicitly through higher standard deductions and exemptions. Were these to be raised in Iowa, the explicit thresholds and the alternative tax would be unnecessary. Local Income Taxes Upon approval by referendum, school districts may impose a surtax on the state income tax not to exceed 20 percent of state personal income tax liability in conjunction with a property tax hike. The funds are used for school improvements. As of 1997, school districts raised $27 million under this tax. Deductibility of State Personal Income Taxes on Federal Returns notable advantage of state personal income taxes (shared by property taxes) is that part of Atheir cost is, in effect, paid by the federal government. This is because many taxpayers are able to deduct their Iowa income taxes on their federal tax return, lowering their federal personal income tax liability. This has a far more significant impact than is sometimes appreciated. For individuals who itemize their deductions on their federal tax return, between 15 percent and 39.6 percent of state tax liability is offset by lower federal taxes. Iowans pay $230 million less in federal income taxes because they pay their personal income tax instead of a non-deductible tax. 4~This is referred to as a "cliff effect." Tax liability goes "off a cliff" with a very small step up in income. -32- CHAPTER SIx IOWA CONSUMPTION TAXES onsumption taxes accounted for nearly a third C--32 percent--of all Iowa state and local tax revenues in 1997. The vast majority of lowa's consumption tax revenue is derived from the general sales tax. The five percent state sales/use tax alone accounted for 22 percent of all state and local taxes in 1997. All other consumption taxes in Iowa-- including the motor vehicle use tax, excise taxes on gasoline, tobacco and alcohol, and two local option taxes (sales and hotel/motel) collectively represented about 10 percent oflowa's state and local tax revenue in 1997. As a share of total taxes, Iowa's sales and excise taxes have risen steadily over the past decade, from 28 percent of total tax revenue in 1985 to 31 percent of total tax revenue in 1995. Consumption taxes rose from 3.0 percent of personal income to 3.7 percent of personal income between 1985 and 1995. The general sales tax increased from 1.7 percent of personal income in 1982 to 2.6 percent in 1995.42 Over the past 20 years, Iowa has repeatedly increased general sales and excise taxes. In particular: · The state sales and use tax rate has been increased twice, from three percent to four percent in 1983 and from four percent to five percent in 1992. This represents a two-thirds increase in the sales tax rate over this 15 year period. · Since 1978, cigarette excise taxes have been raised five times. The current tax of $0.36 per pack of 20 is almost triple the pre-1981 tax of $0.13 per pack. · Gasoline excise taxes have been raised nine times since 1978, with a net result of increasing the tax per gallon on gasoline from seven cents to 20 cents. The state's continued willingness to raise sales and excise taxes helps explain the increasing total tax burden on Iowa's families. Unfortunately, much of the burden of this shift to consumption taxes falls on middle- and low-income groups. Because low-income families spend all of their income and middle-income families spend most of their income to maintain a reasonable standard of living, taxing their consumption imposes a heavy burden. The truly wealthy are able to maintain a very high standard of living while spending a relatively small share of their income. Thus, taxing their State & Local Consumption Taxes As a % of Gross State Product As a % of Personal Income 1985 Rank 1995 Rank 3.9% 24 3.7% 34 3.0% 44 3.7% 32 3.7% 30 4.0% 25 3.8% 26 4.1% 23 3.1% 42 4.0% 24 4.3% 15 4.7% 15 3.5% 35 3.6% 35 1985 Illinois 3.3% Iowa 2.6% Minnesota 3.1% Misscud 3.3% Nebraska 2.6% South Dakota 3.5% Wisconsin 3.1% ALL STATES 3.8% 4.0% 3.2% SOURCE: Bureau of Economic Analysis, Burea of the Census Per Capita (1995 Dollars) Rank 1995 Rank 1985 Rank 1995 Rank 21 3.1% 32 $ 822 14 $ 914 18 41 3.1% 36 541 44 763 35 29 3.3% 23 749 21 937 14 22 3.4% 21 720 23 869 26 42 3.2% 29 571 42 836 28 16 3.6% 18 685 27 890 20 30 3.1% 33 660 32 792 33 3.4% $ 760 $ 920 42The earliest data available from the U.S. Bureau of the Census for total consumption taxes are from 1985; general sales tax revenue, however, is available for years prior to that. We chose the year 1982 as the base comparative year for the general sales tax because it was the year prior to the 1983 tax increase. consumption does not take nearly as heavy a toll. While the regressivity of the general sales tax is lessened by exemptions for groceries and prescription drugs, sales and excise taxes remain the most regressive taxes in Iowa: -33- definition of its sales tax base has been toward broadening the base. When initially introduced, the sales tax applied only to gross receipts from the sale of tangible personal property, gas, electricity, water, communication services, and the sale of admissions to places of amusement and athletic events. The base was extended to include the short-term rental of rooms in 1965, certain services in 1967, and optional service and warranty contracts in 1981. The last major wave of base-broadening, in 1985 and 1992, included snack foods and prepared foods in the definition of taxable goods, and expanded the list of enumerated taxable services to include cable television, landscaping, and building maintenance. The 1992 base expansion added 11 new services to the tax base, including taxidermy, swimming pool maintenance, dating services, and limousine services. The practice of introducing major exemptions to the sales tax dates only to 1974, when food for home consumption, prescription drugs and medical devices were exempted. The only other major exemptions from the general sales tax are for gasoline and diesel fuel (because these items are subject to a special excise tax at a higher rate), newspapers, and sales of motor vehicles subject to registration (because these items are subject to a "motor vehicle use tax" which is functionally identical to the general sales tax). While the exemptions for food and prescription drugs lessen the regressivity of the general sales tax, the sales tax remains the most regressive of the major taxes imposed by the state of Iowa. By most measures, the tax base of lowa's retail sales tax is moderately broad. Only six other states tax a greater number of enumerated services than Iowa, which taxes 94 separate personal, business and professional services.44 This is due in part to [owa's greater willingness to tax business services such as advertising, printing, and janitorial and telephone answering services. Indeed, in 1996, Iowa taxed more business services than all but seven states. While it is generally agreed that broadening the sales tax base is a good thing from a horizontal equity perspective --that is, treating all consumption similarly--there are possible pitfalls. To the extent that a sales tax base is broadened to include additional purchases by businesses, there can be a pyramiding effect where businesses pass on the cost of the taxes to the purchasers of their products. In addition, inequities can be created between companies that keep services in-house--thus avoiding tax--and companies that purchase services from outside sources. Thus, this kind of sales-tax base broadening can have undesirable consequences. Local Option Sales Taxes Since 1985, Iowa has allowed cities and counties to enact a local sales tax, subject to approval by referendum. The rate of the local tax may not exceed one percent. All purchases subject to the state sales tax are also subject to the local sales tax. 472 cities and 53 out of 99 Iowa counties imposed the local option sales tax in 1997. in 1978, cities and counties were authorized to impose a hotel/tnotel tax at a rate of up to seven percent. Three counties and 52 cities currently levy this tax at rates ranging from three to seven percent. These two local option taxes collectively raised almost S106 million in revenue in 1997, or about 1.5 percent of all Iowa state and local taxes. The 1998 Legislature allowed counties and school districts to impose a one percent local option sales tax in addition to the already existing local option tax. To impose the tax, a majority of residents in the county or school district must approve the tax by referendum. Revenues generated by this tax must be dedicated to school infrastructure costs. This will undoubtedly make this option more attractive to voters when offered no other choice for funding needed school construction. 44Federation of Tax Administers, Tax AdnTinistrators News, December, 1996. -35- Excise Taxes As previously noted, Iowa's motor vehicle fuel excise tax was doubled during the 1980s. The rate has remained unchanged since 1989, but Iowa's gasoline excise tax remains the 20th highest among U.S. states. Includ- ing the one cent per GasolineTaxes in1998 gallon "environmental protection charge" on Per Gallon petroleum deposited in Illinois 19.0¢ storage tanks at retail Iowa 20.0e motor vehicle fuel outlets, Minnesota 20.0¢ Iowa fuel tax collections Missoud 17.0¢ Nebraska 23.5¢ totaled $430 million in South Dakota 18.0¢ 1997, or six percent of Wisconsin 25.4¢ total Iowa state and local taxes. Since nearly tripling between 1981 and 1991, lowa's cigarette excise tax rate has remained unchanged. Cigarettes are taxed at 36 cents per pack, and all other tobacco products are taxed at 22 percent of the wholesale sale price. Notwithstanding the lack of Cigarette Taxes in 1998 a rate hike since 1991, Per Pack Iowa's cigarette tax is the Illinois 44¢ 23~d highest in the nation. Iowa 36¢ Iowa tobacco taxes collec- Minnesota 48¢ tively brought in nearly Missoud 17¢ SlO0 million in 1997, or Nebraska 34¢ about 1.4 percent of all South Dakota 33¢ Wisconsin 44¢ Iowa state and local taxes. iowa's insurance premiums tax is levied at a two percent rate on the adjusted gross amount of insurance premiums. 1997 revenue from this tax amounted to $106 million, or 1.5% of total Iowa tax reve n u e. The motor vehicle use tax and motor vehicle lease tax are levied as five percent taxes on the sale and lease, respectively, of motor vehicles. These taxes collective- ly brought in $223 million or 3.1 percent of all state and local taxes in 1997. The Regressivity of Excise Taxes Selective excise taxes--gasoline, cigarettes, etc.-- are especially regressive, in part because they are generally a fixed amount per unit purchased. These excise taxes hit the poor 38 times as hard as the wealthy, while middle-income people pay about 14 times as much as the rich as a share of income. Consumption Tax Trends Over the last 15 years, Iowa has significantly raised taxes on consumption. This shift has made the Iowa tax system more regresslye. Recent legislation--allowing counties and school districts to impose local sales taxes of up to two percent--may force revenue-strapped local governments to increasingly turn to regresslye taxes to fund important public services. Indeed, as explained in the next chapter, these state laws encouraging increased reliance on local consumption taxes come at the same time that the state has been imposing more strict local property tax limitations. -36- CHAPTER SEVEN IOWA PROPERTY TAXES owa's property tax is the oldest source of tax Irevenue in the state, dating to the 19th century. It is also the largest source of revenue in the state, comprising 34.4 percent of all state and local tax collections in 1997. Iowa's reliance on the property tax has, however, been declining. In 1985 property taxes raised 39 percent of Iowa state and local taxes (9th nationally). By 1995 property taxes had fallen to 35 percent of tax revenue (15th nationally). Iowa property taxes as a share of personal income increased slightly from 4.1 percent in 1985 to 4.2 percent in 1995. The 1.4 percent a year average annual growth in per capita property taxes in Iowa from 1985 to 1995 was the slowest in the region and slower than all but 9 states nationwide. Average Annual Growth in Per Capita Property Taxes: 1985-1995 Growth Rate US Rank Illinois 3.1% 19 Iowa 1.4% 40 Minnesota 2.9% 21 Missouri 5.6% 2 Nebraska 1.5% 39 South Dakota 1.6% 38 Wisconsin 2.5% 31 ALL STATES 2.3% Source: Bureau of the Census One reason for this slow property tax growth has been limitations and cuts imposed by the state on local governments. These tax cuts and growth limitations have had the effect of constraining localities' ability to raise revenue and provide for essential services as they see fit. While the state has restricted localities' ability to raise property taxes, the state has granted greater authority to impose local sales taxes. Property taxes are primarily administered and collected by more than 2,000 local authorities-- counties, cities, and school districts. Homeowners pay the largest share of all property taxes42 percent in 1998. Agriculture accounts for 19 percent, connmercial real property for 20 percent, utilities for nine percent and industrial real property for four percent. Three percent of property taxes are from personal property such as industrial machinery.45 Iowa's property taxes are regressive. The 20 percent of lowans making less than $14,000 pay 4.4 percent of their incomes on property taxes. The middle 20 percent oflowans, with average incomes of $32,100, pay 2.7 percent of their incomes in property taxes. The wealthlest one percent of Iowa residents, with average incomes of $476,000, pay 2.2 percent of their incomes on property taxes.46 The chief reason that Iowa's property taxes are regressive is that home values are a much higher share of income for middle- and lower-income families than for the wealthy. It is common for a middle-income family to own a home valued at two or three times their annual income. For most middle-income families, it will be the largest and most important single investment in their lifetimes. Since property taxes are based on property value, they end up taking a larger share of income from middle-income families than from the better-off. 4% ~ 3% ~ 2% 1998 Iowa Property Taxes as Shares of Family Income {Includes both individual and business taxes) 1% __ Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1% 45For share of total state and local taxes, 1997 data is used because that is the most recent available from the Iowa Department of Revenue. 1998 data is used to detail property tax collections by property classification because that is the most recent available from the Iowa Department of Management. 46These data include homeowner property taxes, business property taxes and ad valorem motor vehicle taxes. -37- Property Taxes by Various Measures As a % of Personal Income US US 1985 1995 Rank Rank Illinois 3.6% 19 4.1% 16 Iowa 4.1% 14 4.2% 13 Minnesota 3.5% 21 4.0% 17 Missouri 1.8% 44 2.6% 38 Nebraska 4.2% 11 4.3% 12 South Dakota 4.1% 15 4.1% 14 Wisconsin 4.3% 9 4.8% 7 ALL STATES 3.1% 3.4% Source: Bureau of Economic Analysis, Bureau of the Census 1985 3.1% 3.6% 2.9% 1.5% 3.5% 3.4% 3.8% As a % of GSP Per Capita (in 1995 Dollars) US US US US 1995 1985 1995 Rank Rank Rank Rank 17 3.4% 13 $ 753 16 $1,006 12 10 3.5% 10 751 17 864 17 19 3.4% 14 705 20 939 14 44 2.2% 37 340 41 555 38 14 3.4% 12 777 14 911 15 15 3.1% 17 654 23 773 21 9 4.1% 7 810 12 1,041 10 2.6% 2.9% $ 618 $ 782 Renters, too, pay property taxes--but not directly. Rather, they pay property taxes indirectly in the form of higher rents. Property taxes are also levied on businesses. A good portion of the business property tax is exported to out-of-state shareholders and owners. This is an important consideration, because without the business property tax, many businesses that utilize Iowa government services would go largely untaxed. As is the case with Iowa's personal income tax, a portion of Iowa's property taxes on individuals is offset by federal income tax deductions--resulting in a "discount" of about $100 million compared to a non- deductible tax. Limitations on Property Tax Growth he state imposes limits on the amount local Tgovernments can raise through the property tax. Such limits, of course, ,estrict the ability of local governments to raise revenue and provide for essential services. In some cases the state has provided funding to offset the revenue loss to the local government. Whether this funding continues is at the discretion of the legislature. Rollback State law caps the rate at which the taxable value of property can rise. This limitation, introduced in 1977, is referred to as rollback. Rollback is not applied at the level of individual properties. Rather, it applies across entire classes of property (the rate of tax growth in one home does not matter, but the tax growth of all homes combined does matter). For all property classes except utility property, the growth in taxable value is limited to four percent over the previous year. Utility property is limited to eight percent growth per year. Also, when calculating the rollback percentage, state law links residential and agricultural property value growth. If the property value growth of either classification is less than four percent, the lowel' actual growth rate between the two is applied to both classifications.47 Rollback is accomplished by reducing the taxable value of each property in a class by the same percentage to bring the total taxable value in the class within the growth rate. Because rollback limits are applied to classes of property, they cause the relative burden borne by those classes of property to remain fairly constant over time. The decline in the value of agricultural land has, however, resulted in a small increase in the portion of the property tax borne by residential and business property classes. Levy Rate Limits Another method of property tax limitation is a state-imposed tax levy rate limit. The state sets levy limits for the three types of local governments authorized to levy property taxes: counties, cities, and school districts. Rates in excess of the specified limits are, however, permitted for specified uses. In some cases voter approval is required. 47This only applies when a class of property is at 100% valuation, which has been the case with agricultural property. Because the actual value of agricultural property has been fairly stagnant, rollback has not pushed taxable value below actual. -38- Rate limits have different impacts on areas with valuable property versus areas with less valuable property. Property-rich counties do not need to apply as high a tax rate to raise the same amount of revenue as property-poor areas. Tax Limits and State Substitution Iowa also directly restricts the amount of property tax that may be collected. The most general of these restrictions bars counties from collecting more in property tax than they collected in the previous year. There are several exceptions to this limit, including those for debt service, hospitals and emergency management. The most general exception is one that allows additional funds for unusual or compelling programmatic needs. Under this exception, however, collections may only increase by a growth rate based on government purchases. The limits on property tax collections come in several forms. For example, in 1995 the state increased assistance for locally provided mental health and education services and required counties to reduce their property taxes proportionately and constrain their spending on mental health programs. The state subsidy is set at $95 million annually in perpetuity (out of total property tax collections of about $2.5 billion in 1998). State aid in funding education also has an impact on property taxes. Iowa's school funding system is beyond the scope of this study. In general, however, the more the state provides in aid to schools, the less schools need to raise through property taxes. The long-term trend has been for the state to pay for a greater share of school finance. The state, however, also places several limitations (to which there are several exceptions) on school property taxes. This limits taxation (and spending) for education. As discussed in chapter 2, the level of school funding, state and local, has declined relative to the rest of the country. In 1995, business property taxes were cut when the Legislature decided to phase in, over a 10 year period, a total property tax exemption on a businesses' machinery, equipment, and computers. All purchases made after January 1, 1994 are completely exempt from the tax. For purchases made before this date the tax will be phased out by 2004. The machinery and equipment property tax is collected by local governments. While the state will cover the entire cost of this phase-out through fiscal year 2001, local governments will begin bearing the majority of this state-mandated burden by fiscal year 2003. Indeed, over the 10 year phase-out schedule, local governments will lose $220 million dollars in lost revenue because of this business property tax cut.48 Property Tax Credits i owa provides several state-funded credits targeted at specific types of properties or people. Homestead Credit This credit has been in existence in one form or another since 1937. It is equal to the amount of tax levied on the first $4,850 of the assessed value of the home. This credit ranges from $71 to $246, depending on the local tax levy. $114 million will be claimed in homestead credits in fiscal year 1998. Beginning in 1998, the state will fund the entire amount of this credit. Prior to this, the state funded most of the credit and local governments paid the rest. For example, in 1997, the state funded 83.6 percent of the credit. Iowa's homestead credit is progressive because it provides relief based upon a fiat amount of the tax levy. The amount of tax on the first $4,850 of home value will mean much more to someone who owns a $35,000 home than for someone with a $100,000 home. It is, however, not adjusted for inflation. Thus, its value in real terms has been declining. Low-Income Credit An elderly and disabled property tax credit has been available for homeowners and tenters since 1974. This is an income-based property tax rebate, in which the state refunds a percentage of property taxes. The percentage refunded is greater at the lowest income levels. The 1998 Legislative session increased the maximum income to qualify for this credit from $14,000 to $16,500, and this ceiling will be indexed for inflation every year. This credit is fully funded by the state. The low-income credit is a relatively small credit-- only $11.6 million will be claimed in fiscal year 1998. Two limitations, in particular, minimize its impact. 4sPhase-Out of ProperO' l~t.r on Machinet3· & Equitmwnt. Legislative Fiscal Bureau, 1998 Session. -39- First, it is available only to those with incomes under $16,500. Second, it is available only to the elderly and disabled. Restricting such a progressive credit to such a small population limits its effectiveness. By law, this credit is also available to all low- income homeowners and renters. It has not, however, ever been funded for groups other than the elderly. Given the relatively modest cost of such a provision (about $25 million}, such an extension to this heavily burdened population would be a simple and sensible step. (This is one of the tax reform options discussed in chapter 10.} Other Credits In addition to the homestead credit and the low- income credit, there are other, more narrow property tax credits. For example: · The Military Service Credit, effective since 1886, is available to veterans of war service. Only $2.8 million will be claimed in fiscal year 1998. The state funds 100 percent of this credit. · The Agricultural Land Tax Credit, in place since 1946, is available for farms with 10 acres or more-- $29.1 million will be claimed in fiscal year 1998. The Family Farm Credit has been available since 1990-- $10 million will be claimed in 1998. The state funds 26 percent of these credits--local governments fund the rest. Property Tax Summary ~ owa's property tax limitation measures have restrained the growth in property taxes for both . homeowners and businesses. In the case of the exemption of machinery, equipment and computers exemption, the benefit will go entirely to business. To some extent, in specific cases, the limits on local taxation have been compensated for by state assistance. Such assistance, however, is not guaranteed into the future, and in some cases, is explicitly scheduled to decline or not keep tap with expenses. In addition, as a condition of receiving state aid, local governments are restrained in how much they can spend in the program areas for which they receive state assistance. Raising the homestead credit and expanding the low-income credit would be a more progressive and less mind-boggling means of reducing Iowa property taxes. The homestead credit is a simple and effective means of relieving homeowner property taxes in a progressive way. The low-income credit has the virtue of extending its relief to tenters and targeting it to those most in need. -40- CHAPTER EIGHT OTHER IOWA TAXES: CORPORATE & INHERITANCE The Iowa Corporate Income Tax he corporate income tax has been a declining Tsource of revenue. It raised 4.1 percent of all Iowa taxes in 1997, down from 4.7 percent in 1978. In 1978, corporate income taxes were 0.38 percent of gross state product, ranking Iowa 28~h nationally. By 1996, Iowa's corporate income tax fell to 0.27 percent of gross state product, ranking Iowa 35th' Corporate Income Taxes as a % of GSP 1978 Rank 1996 Rank Illinois 0.31% 39 0.45% 15 Iowa 0.38% 28 0.27% 35 Minnesota 0.76% 3 0.52% 12 Missouri 0.25% 44 0.27% 37 Nebraska 0.32% 36 0.28% 34 South Dakota 0.05% 46 0.20% 42 Wisconsin 0.66% 8 0.43% 16 ALL STATES 0.47% 0.40% Source: Bureau of Economic Analysis, Bureau of the Census. The corporate income tax is, in theory, levied on the profits of corporations. The Iowa tax, however, is largely based on the rules used in the federal corporate income tax. These rules create many loopholes that allow corporations to pay far less than they would if they were being taxed on their true profits. (See Chapter 9 for a discussion of Iowa- specific loopholes). Businesses that are not incorporated (sole- proprietorships and partnerships) and "S- Corporations" {as defined in federal tax law} are generally not subject to the corporate income tax. When, however, a business entity takes on certain characteristics of a corporation it may be subject to the tax, notwithstanding its non-corporate status. If all of a corporation's business is conducted within Iowa, then its total net income is subject to tax. If the corporation's business is conducted both in and out of Iowa, a formula is used to allocate a portion of the income to Iowa. The apportionment factor used is the single factor sales formula, which only includes in taxable income the percent of total sales made within Iowa. Most states, however, use a three-factor formula based upon an average of the percent of total sales, property, and wages which are made or located in the state. One of the virtues of the corporate income tax is that it is largely exported out-of-state. Because many corporations that pay corporate income tax operate in a multitude of states and have shareholders through- out the world, the burden of the corporate income tax is distributed throughout the country and the world. As a tax on profits, it is generally seen as lowering the return on investment for shareholders more than raising prices for consumers or leading to lower wages for employees. Since shares in corporations are disproportionately held by the wealthy, the corporate income tax is a progressive tax. The Iowa Inheritance Tax ince 1896, Iowa has levied a tax on inheritance. SUnlike the federal estate tax, Iowa's inheritance tax is levied on beneficiaries. So while the federal tax applies to the owner of the estate, lowa's tax applies to the individuals who receive money or property from an estate. The amount of the Iowa tax depends on the value of the inheritance and the relationship between the beneficiaries and the donor. The federal estate tax and lowa's inheritance tax interrelate. The federal government allows states to collect a portion of the federal tax. This is referred to as the "pick-up" tax, since the states are "picking-up" a portion of the federal estate tax. Every state has an incentive to levy an estate tax in an amount at least equal to this federal pick-up--after all, if a state doesn't levy at least the pick-up tax, the money would simply go to the federal government instead of to the state. !owa's inheritance tax applies only if it exceeds the "pick-up" of the federal tax. Both the pick-up tax and the inheritance tax have exemptions. The federal exemption is in the process of being increased over several years. For 1998, the exemption is $625,000 per estate. As a practical matter, because any portion of an estate transferred to a spouse is exempt, the exemption is double this amount for most estates. Because the exemptions on the pick-up tax are so high, the inheritance tax has been greater than the pick-up tax for most estates. Only a few extremely large estates have been subject to the pick-up tax. lowa's inheritance tax contributed a relatively small portion--1.5 percent--of all state and local tax revenue in 1997. But inheritance tax revenue is expected to decrease substantially--dropping From S109.3 million in 1997 to $66.6 million in 1999--due to a 1997 law decreasing the number of people subject to the tax. Before this legislation passed, only spouses ofthe deceased were exempt From paying the inheritance tax. The 1997 legislation extended the exemption to all lineal relatives--including parents and children--of the deceased. Before this exemption was granted, these lineal relatives paid nearly half the inheritance tax. Many of these newly- exempted relatives are not Iowa residents: non-residents paid 37 percent of the inheritance tax in 1995.49 The 1997 inheritance tax cut was regressive. The exemptions prior to the tax cut already excluded many inheritances From the tax. Before the 1997 changes, over half of the tax liability was on estates worth over $500,000. Now, even with the continuing existence of the pick-up tax on extremely valuable estates, many of these large estates will pay less than they would have under the inheritance tax. Some only slightly less valuable estates will avoid tax entirely, For example, much of the 54 percent of inheritance taxes that used to be paid on estates valued at between $300,000 and $750,000 will no longer be collected. And the tax cut for smaller estates will be small. Estates valued at less than $100,000 accounted for less than five percent of estate tax collections.5° One of the arguments put forward in 1997 for reducing the inheritance tax was the heavy burden it is said to put on farmers. With appropriate estate planning the Iowa inheritance tax need not cause heirs to sell the family farm. Even so, farms account for only ten percent of the estate tax. If preserving farms were the true concern of those opposed to the inheritance tax, measures could be taken to relieve that burden while continuing to subject valuable property to the tax. Iowa's Inheritance Tax Rules, Old & New Type of beneficiary Spouse (or Iowa non-profits) Child Parent, grandchild Other lineal descendants Sibling, son/daughter in-law Uncle/aunt, niece/nephew, cousin, brother/sister in-law Out-of-state non-profits For-profit organizations Old Law New Law Exclusion Tax Rate Exclusion Tax Rate ALL No Tax All No Tax $50,000 1%-8% All No Tax 15,000 1%-8% All No Tax 15,000 1%-8% All No Tax 15,000 5%-10% $15,000 5%-10% -- 10%-15% -- 10%-15% 10% -- 10% 15% -- 15% 495umnlaly of Data from Selected Sample of Iowa Inheritance Tax Returns, Iowa Department of Revenue and Finance. ~old' -42- CHAPTER NINE TAX BURDENS, BUSINESS TAX INCENTIVES AND ECONOMIC GROWTH uch is often made of the need to cut taxes Mto encourage economic growth. But there is little empirical evidence that the level of state taxation has a substantial impact on a state's economic well-being. A recent, comprehensive review of the economic literature on this issuesl found that: · There is no evidence that state and local tax cuts, when paid for by reducing public services, either stimulate economic activity or create jobs. · There is little indication that state and local tax levels matter much in business location decisions. · State and local business tax incentives and financial inducements are not the only, or even the primary, influence on business investment decisions. · Factors such as the cost and quality of labor, the quality of public services (schools, roads and highways, sewer systems, recreational facilities, higher education, health services, etc.}, the proximity to markets, and the access to raw materials and supplies are more important than tax incentives in business location decisions. · There is little evidence that job losses or job transfers from one state to another are a consequence of business tax incentives. While the benefits of tax cuts and incentives are debatable, their costs are clearer: · Tax cuts and incentives cause state and local governments collectively to lose billions of dollars annually in tax revenues. · Because of reduced revenues, tax incentives force state and local governments to cut back on the quantity or quality of public services. These reductions can damage the economy because businesses often need these public services to thrive. Indeed, there is evidence that state and local tax cuts, accompanied by reductions in public services, cause job loss and economic decline. · Business tax incentives provided to some firms put competing firms at a disadvantage. Hence, increases in output and employment by firms receiving incentives may be at least somewhat offset, and perhaps even outweighed, by the decreases in output and employment of in-state competing firms not receiving comparable subsidies. An examination of Iowa and its neighboring states appears to bear out these conclusions. Of these seven states, only one consistently posted economic growth rates higher than the national average across a broad range of measures of economic performance. Within the region, Minnesota topped the list in the rate of GSP growth since 1978, personal income growth, employment growth and growth in average annual pay. Minnesota was second to Wisconsin in median income growth. Minnesota also was at the top of another kind of list--taxes. Minnesota is first or second in the region in several measures of tax burden. Minnesota ranks just behind Wisconsin in taxes as a share of GSP. Minnesota tops the list in two other measures of taxes that often are claimed to have an adverse impact on economic development: corporate income taxes and the top marginal rates for the personal income tax. Wisconsin is also at, or near, the top in these tax ratings. Hardly. Median income growth in Wisconsin is tops in the region since 1984. Wisconsin is third in personal income growth and ranks in the middle in GSP and average annual pay growth. In contrast, South Dakota shows tip very low in the measures of tax burden we have used here. But South Dakota is at the bottom of the list in median income growth and second from the bottom in average annual pay growth (falling 0.8 percent). So, if South Dakota's low taxes approach created jobs, it didn't create very good ones for the most part. 51Do State & Local Tax Incentives Work?. Dr. Robert G. Lynch, Economic Policy Institute, 1996. Changes in Average Annual Pay, 1981-96 Minnesota +0.6% Illinois +0.4% Missoud +0.2% Nebraska +0.1% Wisconsin +0.1% South Dakota -0.0% Iowa -0.2% US Ave. +0.4% Economic Growth Indicators (All dollar figures are adjusted for inflation) Average Annual Average Annual Average Annual Growth in Gross State Growth in Personal Growth in Median Product, 1978-96 Income, 1978-96 Income, 1984-96 Minnesota +3.7% Minnesota +2.5% Wisconsin +2.1% South Dakota +3.4% Missouri +1.9% Minnesota +0.9% Nebraska +2.9% Wisconsin +1.7% Iowa +0.8% Wisconsin +2.8% South Dakota +1,6% Illinois Missouri +2.3% Nebraska +1.3% Missouri +0.7% Illinois +2.1% Illinois +1.3% Nebraska +0.4% Iowa +1.7% Iowa +0.5% South Dakota +0.1% US Ave. +2.5% US Ave. +2.5% US Ave. +0.4% Source: Bureau of Economic Analysis; Bureau of the Census; Institute on Taxation and Economic Policy. Average Annual Employment Growth, 1978-96 Minnesota +2.4% South Dakota +2.0% Wisconsin +1.8% Nebraska +1.7% Missouri +1.6% Illinois +1.1% Iowa +1.1% US Ave. +2.0% Does this mean that states should increase their tax burdens in order to spur economic growth? No. But it clearly shows that higher taxes are not the kiss of death for economic success. High tax burdens do indicate that a state--such as Minnesota--has placed a high priority on investing in government services that are necessary to cultivate long-term, sustained economic development. Why Low-Tax Strategies Don't Work if Iowa offered complete tax amnesty to any new businesses moving into or expanding in the state, there would be little doubt that Iowa would attract a substantial number of corporate immigrants. Of course, the state would also have a very difficult time paying for these incentives and still provide basic government services. The price of granting business tax subsidies might be poorly maintained roads and parks, inferior schools, cuts in police protection, and ineffective social programs. In fact, lowa's economy might well be worse off. No executive or corporation wants to relocate or expand in a state with poor or marginal quality of life issues. High crime, poor infrastructure and an unskilled workforce are significant barriers to quality, sustained economic development. And businesses already in Iowa would lose government services they rely on and face new, subsidized, competition. Fortunately, no one in lowa is proposing this outlandish scenario. But the fact is that when government funds are used--either in the form of tax relief or spending to subsidize business-- there is a cost, either in the form of reduced government services or higher taxes for others. Because, however, the benefits of business incentives tend to be concentrated while the costs dispersed, this tradeoff is sometimes hard to see. After all, if one teacher is laid off in every elementary school in the state, the impact on education will not be immediately apparent. Over time, among the hundreds of thousands of children sitting in larger classes, there will undoubtedly be some for whom a little less personal attention will make a critical difference. But that impact will be impossible to isolate from all the other influences in their lives. On the other hand, the 100 employees now working for a hypothetical company moving to Des Moines from Chicago will be welcomed with a ribbon- cutting ceremony. It may be that, overall, the incentive that brought the business to the state does Tax Level Indicators Total Taxes 1978-96 Corporate Income Top Marginal Personal Taxes 1978-96 as a % Income Tax Rates in as a % of GSP of GSP 1998 Wisconsin 10.8% Minnesota 0.52% Minnesota 8.5% Minnesota 10.3% Wisconsin 0.50% Wisconsin 6.77% Iowa 9.5% Illinois 0.39% Nebraska 6.68% Nebraska 8.8% Iowa 0.34% Missouri 6.0% Illinois 8.7% Nebraska 0.27% Iowa* 5.22% South Dakota 8.0% Missouri 0.23% Illinois 3.0% Missou d 7.5% South Dakota 0. 19% South Dakota -- US Ave. 9.0% US Ave. 0.42% *Adjusted for state deduction for federal income taxes. Source: Bureau of Economic Analysis; Bureau of the Census; ITEP. -44- more harm than good, but that won't be the public face of it. There is a continuum of incentives ranging from extremely targeted to very broad. The most targeted type of incentive is a provision that only benefits one company. An example of a very broad incentive is cutting the corporate income tax rate. Broad incentives have the virtue of causing less economic distortion. If a state lowers its corporate income tax rate, all profitable companies benefit no matter what their industry, how many employees they have, whether they're new to the state, etc. Thus, the market, instead of the tax law, is more likely to decide where capital is invested and which companies thrive. This makes for a better functioning economy overall. On the other hand, broad incentives are a very inefficient use of government resources for the promotion of economic development. Most of the revenue loss from lowering the corporate income tax, for example, would go to companies that are already located in Iowa, have no intention of leaving and would have made the same investments in the state with or without the tax cut. Only a small amount will go to inspiring companies to increase or start investing in the state. Thus, for the many dollars of reduction in government services, and the attendant negative economic and social impacts, only a very few dollars go to changing corporate conduct in a way beneficial to the state. The narrowest of incentives are more akin to a business deal than government policy-making. A legislated benefit for a particular company can be either good or bad for the state. It depends on the terms of the deal. It is, however, highly unlikely that the state will ever get a great deal. Too many states and localities are bidding for business for there to be any bargains. In fact, some have argued that there is almost always at least one community that is willing to over-bid for the business. If this is true, and the high bid usually wins, most deals will cost the victorious community more in lost government services or higher taxes than it receives in benefits from increased private investment. In between the very broad incentives and the single company deals, there are incentives that are targeted at specific types of companies engaged in specific conduct. These obviously create distortions in economic behavior in favor of certain conduct or types of companies, and create economic inefficiencies. Also, as is the case with broad incentives, a significant portion of the revenue loss will go to compensating activity that would have happened anyway. These narrow incentives can have two possible consequences. One is that they have no effect on business behavior at all. If that's the case then they are clearly a poor use of public resources. The other possibility is that they do affect business behavior. That, however, could be just as bad. It means that businesses are responding to the incentives of the tax law instead of the market. This is economically inefficient. Under either scenario, therefore, narrow incentives can cause adverse consequences. The bottom line is that business incentives rarely are as good as they look. There are enormous hidden costs that will often outweigh the limited private investment that such deals attract. Tax Expenditures tee on Taxation notes: The term tax expenditure is based on the assumption that the objectives of these tax provisions could be accomplished by direct expenditure programs. Tax expenditures, in this view, are analogous to those direct expenditures which have no program spending limits, and which are available as entitlements to individuals and corporations who meet the statutory and regulatory criteria established for the programs.52 The essential insight provided by the "tax expenditure" concept is that a law that lowers a taxpayer's tax liability has no different effect in theory than a law that requires a direct payment to the taxpayer. And if the law is designed to accomplish a public-policy goal distinct from the equitable collection of tax revenues, then it is better to evaluate it under the standards we evaluate spending laws than the standards by which we evaluate tax law. Accomplishing spending program objectives through tax expenditures creates several problems: . High Priority. Tax expenditures are given an exalted status that they do not necessarily warrant. They are not subject to the normal prioritizing that takes place in government budget-making. · Distorts the Debate. New tax expenditures are often treated in a budget, and rhetorically, as a tax cut. Removing a tax expenditure is treated as a tax s2Estimates of Federal Tax Expenditures for Fiscal Years 1991- 1995, Joint Committee on Taxation, March 9, 1990. -45- hike. This contributes to the growth of tax expenditures at the expense of other spending without well-considered prioritization. · Poorly Understood. Placing spending programs in the tax law often hides their function. The tax expenditure for accelerated depreciation on the corporate income tax, for example, costs millions of dollars per-year. This program, incorporated from federal tax law, essentially gives companies interest free loans when they make capital investments. The public and policy-makers would have a clearer view of this program if it were structured as such through a direct spending program. · Limited Oversight. Tax expenditures are generally entitlements available to those who meet the qualifications set out in law. There is typically only minimal review of applications. Tax expenditures are not routinely evaluated to determine if they are efficiently accomplishing their goals. If, for example, 90 percent of a research and develop- ment tax credit on a corporate income tax goes to companies for work they would have done in the state anyway, it is, arguably, an inefficient subsidy. Yet, structured as a tax expenditure, it is unlikely that policy makers would be aware of this. !f the program was structured as a direct spending pro- gram it is more likely that its effectiveness would be subject to careful review. And it would be more likely to be structured in a way that would target state dollars to where they are most needed. · Agency Involvement. Government agencies with expertise in the area covered by a tax expenditure are typically not involved in their administration. Thus, the agency does not routinely assess whether the tax exponditure is the best way to achieve the agency's policy objectives. · Simplification. Tax expenditures complicate the tax system. The complications go beyond the initial form-filing. Businesses often restructure their affairs and relationships with other businesses to take advantage of lucrative tax expenditures. The inevitable legislative responses to excess utilization of tax expenditures (the Alternative Minimum Tax, for example) adds even more complexity. · Wasteful. Corporations sometimes go to great lengths to take advantage of tax expenditures. For example, those who have more tax expenditures than they can use in a year enter into transactions to transfer their tax benefits to those who can make use of them. The most commonly cited example of this is the trading of the benefits of accelerate depreciation and other investment incentives through leasing deals. The costs of implementing tax avoidance schemes can end up absorbing much of the tax break, making it a very inefficient tool for achieving its original purpose. A substantial portion of what are reported as large tax compliance costs in the United States would probably be more accurately reported as "tax avoidance costs." Iowa offers business incentives in many ways, including through tax expenditures. Yet, there is no comprehensive system for evaluating these incentives for their effectiveness. Here are several steps that could be taken to ensure that Iowans economic development tax dollars are spent efficiently: · Iowa could, as do many states, create an annual tax expenditure budget. This would consist of a listing of tax expenditures, their cost to the state and a description of how they work. In addition, information on the types of companies, characterized in a variety of different ways, including size, could be reported. · Tax expenditures could be subject to automatic sunsetting rules to ensure that they receive periodic review similar to that received by other forms of government spending. · Agencies could be assigned responsibility for periodically evaluating tax expenditures in their program areas. · Greater disclosure by companies receiving tax expenditures could be required. This would allow the public and policy-makers to know where their tax dollars are going and to evaluate whether the tax expenditure programs are accomplishing their goals. These steps would go a long way toward putting Iowa's citizens and policy-makers in a better position to evaluate the state's tax expenditure subsidies. In addition to these steps, accountability should be built into business subsidies in every way possible. If the program is designed to create jobs, businesses should be required to create jobs. If they fail to live up to their commitment there should be penalties. Many state and local governments are putting more and more conditions on the companies they are subsidizing to ensure that their goals are achieved and that they are building a community of good corporate citizens.s3 53Grey LeRoy, No More Candy Store (1994). -46- CHAPTER TEN TAX OPTIONS FOR IOWA his chapter includes descriptions and analyses Tof eighteen distinct approaches to reforming Iowa's tax system, as well as a discussion of the proposed "Taxpayer Rights Amendment." Each tax proposal is accompanied by a distributional analysis which measures the net effect on Iowans' tax burden. The proposals are grouped into three general categories: revenue-raising proposals, revenue- reducing proposals and revenue-neutral proposals. The charts accompanying the text show tax changes as a percent of income by income group. The solid portion of each bar represents the tax change (after taking federal offset into account) for each income group. Where there are federal tax ramifications stemming from a proposal (because of federal itemized deductions for iowa income and property taxes paid), the accompanying chart also includes dotted lines which show the proposal's effects before consideration of the federal offset. We have presented our data in this way because for those who itemize deductions on their federal tax return, changes in state income tax or property tax can produce substantial changes in federal tax liability. For example, if an itemizing Iowa taxpayer in the 28 percent federal tax bracket has a $1,000 cut in property taxes, the value of her federal itemized deductions will fall by $1,000. This means that $1,000 more of this taxpayer's income will be subject to federal tax after the Iowa tax cut. Since this additional income is taxed at 28 percent, federal tax liability increases by S280. So the net overall tax cut for this itemizing Iowa taxpayer from a $1,000 cut in state tax liability is actually $720, not S 1000. The charts accompanying the proposals generally describe the tax burden for all families and individuals. The charts describe the change in tax burden as a percent of income for each group, rather than the absolute value of the tax burden. The baseline tax burden estimates from which these changes are calculated are included in Appendix A. All sales tax and property tax revenue estimates and distributive analyses are for calendar year 1998. Personal income tax estimates and distributions are for tax year 1998. TABLE OF CONTENTS FOR OPTIONS Revenue-Reducing Options ...................47 Revenue-Neutral Options ......................50 Revenue-Raising Options ......................52 "Taxpayers' Rights Amendment". ......... 54 Revent!e-Reducing Options r~his section offers several revenue-losing tax reform options. These proposals share the - advantage of increasing taxpayers' after-tax income and the disadvantage of reducing government funds available for providing public services. 1. Increase The Earned Income Tax Credit Principal Features · Increases lowa's Earned Income Tax Credit (EITC) from 6.5 percent to 30 percent of the federal EITC. · EITC is made refundable. · Reduces revenue by 545 million. · Targeted at Iowa's lower-income working families. Discussion Iowa's EITC is discussed in Chapter 5. It is the second-lowest among the nine state EITC's in place as of 1998. lowa's EITC is also non-refundable, a trait shared by only two other states with E[TC's. This option corrects both of these shortcomings by increasing the value of the credit to 30 percent of the federal credit and by making the credit refundable. With the increase in the EITC, the need for lowa's filing thresholds and alternative low-income tax calculation is substantially reduced. Because this credit exclusively affects lower- -0.15% - -0.40% - -0.65% - Low 20% 2d 20% Mid. 20% 4th 20% Next 15% Next 4% Top 1% Increase EITC % Tax Changes as % of Income (All Families and Individuals) -0.90% - -47- income families who rarely itemize deductions on their federal return, the impact of this option on federal tax deductions for state income taxes paid is negligible. 2. Increase the Standard Deduction to Conform with the Federal Deduction Principal Features · Increases Iowa standard deduction from $1,440 ($3,550 for marrieds) to $4,250 ($7, 100 for marrieds) in 1998. · Reduces Iowa state revenues by $150 million. · Larger tax cuts for lower- and middle-income taxpayers. Discussion The Iowa standard deduction is low relative to the federal deduction and that of most states. As a result, many iowa residents who do not itemize on their federal returns do itemize on Iowa returns. This makes filing taxes in Iowa more complicated for taxpayers. Iowa's low standard deduction also means that taxpayers who are unable to take advantage of itemization (typically lower-income fliers) pay tax on a greater percentage of their income than is common in other states. Changing the standard deduction to mirror the federal deduction addresses both of these problems. Low 20% 2d 20% Mid. 20% 4th 20% Next 15% Next 4% Top 1% -0.25% - -0.50% - -0.75% - -1.00% - Conform Standard Deduction to Federal Tax Changes as % of Income (All Families and Individuals) 3. Increase the personal exemption credit from $40 to $120 Principal Features · Triples exemption credit from $40 per person to $120 per person. · Reduces revenues by $180 million. · Provides greater tax cuts for lower-income taxpayers. · Federal income taxes increase by 520 million. Discussion Iowa provides a credit for each member of the family, and an additional credit for each family member age 65 and over. The credit is subtracted from tax liability to compute final personal income tax liability. This proposal triples the current per-person credit from $40 to $120. The result is a tax cut that is greater (as a percent of income) for low- and middle-income taxpayers who owe personal income taxes. Low- income families that currently do not owe income tax do not benefit from this option. Low 20% 2d 20% Mid 20% 4th 20% NxI 15% Next 4% Top 1% -0.25% -0.50% -0.75% -1.00% Personal Credit Hike to $120 Tax Changes as % of Income (All Families and Individuals) OPTION 3 4. Exempt 1 O0 percent of capital gains income from taxation Principal Features · Revenue loss of $150 million. · Tax cuts primarily to the wealthy. · Federal tax liability increases by $45 million. Discussion Because the wealthy receive a far greater share of capital gains income than middle- and low-income families, this tax cut would benefit better-off Iowans the most. Proposals to exempt capital gains from taxation on the national level are claimed to encourage economic growth through increased investment. This claim, however, is subject to much debate. A general, state-level exclusion is highly unlikely to benefit Iowa's economy, since the additional investment (if any) encouraged by the capital gains exemption could take place anywhere in the United States or the world. The linkage between exempting capital gains income and investment in Iowa's economy, therefore, is even more tenuous than the linkage between capital gains tax cuts and economic growth nationally. Another criticism of option 4 is that a substantial portion of this tax cut would flow not to the pockets of Iowans but to the federal government. In fact, lowa's federal personal income taxes would go up by $45 million under this option because of the decrease in deductions for state personal income tax paid. While this option reduces state revenues by 5150 million, only $105 million of this cut finds its way back into the pockets of Iowans. The rest goes directly to the federal government in the form of increased federal tax liability. Low 20% 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% -0.5% - -1.0% - Exempt capital gains income Tax Changes as % of Income -1.5% - OPTION 4 5. Sales Tax Rate Cut Principal Features · Rate cut from 5 percent to 4 percent. · Revenue loss of $360 million. · Tax cut greater for lower-income families. Discussion This plan provides progressive tax relief. Lower- and middle-income lowarts see a significantly greater tax cut as a share of income than do the wealthy. Unfortunately, this plan requires a substantial reduction in state and local government services to pay for it. Low 20% 2d 20% Mid. 20% 4th 20% Next 15% Next 4% Top 1% -0.5% - -1.0% - Cut Sales Tax Rate Tax Changes as % of Income (All Families and Individuals) 6. Increase Homestead Exemption Principal Features · Increases homestead exemption from $4,850 to $10,000. · Reduces revenues by $130 million. · Progressive tax cut. · Increases federal tax liability by $11 million. Discussion Under current law, Iowa's homestead exemption provides property tax relief equal to the amount of tax levied on the first $4,850 of the assessed value of a taxpayer's home. This proposal increases the homestead exemption amount to $10,000. This exemption increase will have a progressive impact on Iowans' tax burdens, because the amount of tax on the first $10,000 of home value will mean much more to someone who owns, for example, a $35,000 home than for someone who owns a $100,000 home. Low 20% 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% -0.3% -0.5% - OPTION 6 Increase Homestead Exemption Tax Changes as % of Income (All Families and Individuals) 7. Expand the Low-Income Property Tax and Renter Credit Principal Features · Extends property tax and rent credit to lower-income families. · Lose revenues of $23 million. Discussion As discussed in Chapter Seven, Iowa provides a tax credit to those elderly and disabled homeowners and renters with incomes under $16,500. This proposal extends this credit to all low-income Iowa households. -0.5% - Low 20% 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top I% Expand Property Tax Credits Tax Changes as % of Income (All Families and Individuals) -1.0% - OPTION 7 -49- 8. Across the Board Personal lncon~e Tax Cut Principal Features · Cuts tax rates in a proportional manner. · Reduces revenue by $195 million. · Federal taxes increase by $35 million. Discussion "Across-the-board" personal income tax cuts are often misconstrued as even-handed tax cuts. After all, proponents argue, if all tax rates are cut by 10 per- cent, then everyone gets the same tax break. The flaw in this argument is that the state personal income tax is only a portion of state and local taxes--the most progressive portion. This means that a cut in the per- sonal income tax while leaving other, more regressive, taxes untouched makes the tax system as a whole more regressive. Ira 10 percent cut were proposed in all state taxes, such a cut would indeed be "across the board" and even-handed. It would also, of course, be tremendously expensive and would do nothing to reduce the regressivity of the current system. While this option reduces state revenues by $195 million, only $160 million of this cut finds its way back into the pockets of lowarts. The rest goes directly to the federal government in increased federal taxes. Low 20% 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% -0.25% - Across-the-board -0.5o% - 10% PIT Cut Tax Changes as % of Income -0.75% - (All Families and Individuals) OPTION 8 Revenue-Neutral Options n this section we offer several tax reforms that, while having little impact on total Iowa tax collections, have other significant impacts. 9. Simplify the personal income tax Principal Features · Large exemptions result in an increase in Iowa's effective filing threshold. · Progressive tax relief. · Tax structure treats married couples fairly. · Federal taxes cut by S55 million. Option 9: Income Tax Simplification All Individual Married Filing Fliers Jointly Exemptions-- Taxpayer(s) $12,500 $25,000 Per Dependent 1,700 1,700 Rates on Taxable Income-- 6.0% Up to $25,000 Up to $50,000 7.5% $25,000 + $50,000+ Discussion This option simplifies lowa's income tax by starting with federal adjusted gross income and by eliminating deductions, lowa's pension exclusion, all credits, the alternative minimum tax and Federal de- ductibility. These elements of the Iowa tax are replaced by one large exemption--S25,000 for a married couple and $12,500 for a single person. !n addition, $1,700 is exempted for each dependent. The large exemptions result in a higher filing threshold than Iowa's current law. lowa's nine-rate structure has been compressed into two. For most taxpayers, this option reduces the current Iowa tax form (with 10 steps and 75 lines) to a total of 3 steps and 6 lines. It is ~scally responsible, since it costs the state nothing to enact. It eliminates the penalty on married Iowans who file jointly. This option increases the progressivity of the tax system by cutting taxes on the bottom 80 percent of the income distribution. The tax hike on the best-off~ve percent is partially offset by a decrease of $55 million in total federal tax liability. Nearly all of this $55 million goes to the top five percent. +~.2% - Simplify w/single deduction ............... +0.8% - Tax Changes as % of Income +0.4% - (All Families and Individuals) -0.4% - -0.8% - OPTION 9 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% -50- 10. New brackets and rates Principal Features · Eliminates deduction of federal income taxes from Iowa income. · Reduces top tax rate from 8.98 to 6.5 percent. · Federal taxes reduced by $10 million. Option 10: New Brackets & Rates Tax Rates on Taxable Income Married Filing JointlySingle Tax Rate Up To $30,000 Up to $15,000 4.0% $30,000 - 60,000 $15,000 - 30,000 5.0% $60,000 - 120,000 $30,000 - 60,000 6.0% $120,000 + $60,000 + 6.5% Discussion This option is revenue-neutral with respect to Iowa st,~te tax revenues. A reduction in the moderately regresslye property tax is offset by a tax increase in the relatively progressive income tax. The property tax reduction element of this proposal extends the homestead exemption amount to $10,000. As explained in the text accompanying option 6, this exemption increase will have a progressive impact on the tax burden. To offset the reduction of revenues, the personal income tax is increased by repealing the deduction of federal income taxes. The standard deduction is increased to that of the federal, and a new tax rate structure is applied. Discussion While merely eliminating the Iowa deduction for federal taxes would constitute a tax increase on the wealthy (for whom the deduction is most valuable), it is largely offset by a significant reduction in the top in- come tax bracket from 8.98 percent to 6.5 percent. This proposal also ends the penalty on married Iowans filing jointly. This proposal increases lowa's standard deduction to the federal standard deduction amount, and creates a new tax rate structure, while reducing the number of rates and brackets from nine to foul · 0.s% -New Brackets and Rates Tax Changes as % of Income ................................. (All Families and Individuals) -0.5% - Low 20% OPTION 10 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% 11. Increase homestead exemption credit, increase personal income tax Principal Features · Increases homestead exemption from :54,850 to :510,000. · New personal income tax rate structure. · Standard deduction increased to match the federal deduction. · Repeal deduction of federal income taxes. · Federal income taxes decrease by $75 million. +1.0% - +0.5% - Homestead Credit & Income Tax Hike Tax Changes as % of Income (All Families and Individuals) -0.5% - OPTION 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% 12. Income tax at 30.4 percent of federal personal income tax liability Principal Features · Simplifies Iowa tax calculation. · Defines Iowa tax liability as 30.4 percent of federal tax liability. · Federal taxes decrease by :5100 million. Discussion This greatly simplifies Iowa's tax system--taxpayers merely multiply their federal tax liability by 30.4 percent. For most taxpayers, this reduces Iowa's income tax to three steps and just 2 lines. This option has a progressive impact, since the tax is calculated by applying a percentage of a progressive tax. +2.4% - +1.8% - +1.2% - +0.6% - -0.6% -1.2% - Low20% OPTION 12 30.4% of Federal Tax Tax Changes as % of Income (All Families and Individuals) 2d 20% Mid 20% 4th 20% Nxt 15% Next 4% Top 1% -51- 13. Increase sales tax, decrease property tax Principal Features · Increases sales tax rate from 5 percent to 6 percent. Cuts property taxes across tile board to be revenue neutral. · Federal Taxes increase by $10 million. Discussion This option raises taxes on low- and middle- income taxpayers. Increase sales tax, decrease property tax Tax Changes as % of Income After Federal Offset (All Families and Individuals) +0.50% +0.25% ./. -0.25% - Low 20% 2d 20%Mid. 20% 4th 20% Next 15% Next 4%Top 1% eroded by inflation or legislative neglect. If the credit is to be administered through the income tax, low-income Iowa taxpayers who would otherwise not have to file tax returns (unmarried taxpayers with income under $9,000 and married couples filing together with income under $13,500) would have to fill out a tax return to receive such a credit. Utilization of such credits for low-income families frequently is low. -0.5% - 4.0%- Food Credit, Sales Tax Base Expansion -1.5% - Tax Changes as % of Income -2.0% - (All Families and Individuals) Low 20% 2d 20% Mid. 20% 4th 20% Next 15% Next 4%Top 1% 14. Eliminate sales tax exemption for groceries, introduce grocery credit Principal Features · Extends sales tax to currently exempt groceries. · Introduces $200 per flier refundable sales tax credit Discussion This plan provides progressive tax relief while leaving total Iowa tax collections unchanged. The fixed amount of the credit makes it more valuable to those with lower incomes than those with higher incomes. The plan also represents a different approach to relieving the tax burden on food. Instead of exempting groceries from taxation (as Iowa currently does), this proposal would tax all groceries and provide a credit intended to mitigate the regressivity of a tax on food. An argument in favor of a food credit is that it can be targeted more precisely to benefit those who need it most, while an exemption is available to anyone who purchases food, regardless of their need. While this equity-based argument has some force, in practice food credits tend to be too small to offset the regressivity of the tax on groceries. Experience in other states suggests that even if credits start out as being adequate, their effectiveness is Revenue-Raising Options ,,, n this section we offer several revenue-raising tax reform options. A primary value to the public of -these proposals is that they increase available funds for public services. The primary objection that can be made against any of these proposals is that those paying more in taxes will have lower after-tax incomes and that higher taxes may have an adverse impact on economic growth. As the discussion of the economic impact of taxes in Chapter Nine indicates, there is little evidence that higher state taxes have significant adverse economic impacts. The benefits of well-funded public services appear to play at least as significant a role in determining a state's economic well-being. 15. Cap deductibility of federal income taxes at $3,000 ($1,500 for singles). Principal Features · Raises $450 million in additional revenue. · Progressive tax reduction. · Federal taxes decrease by $110 million. Discussion This proposal removes one of the most significant impediments to progressivity in lowa's income taxm the deduction for federal income taxes paid. Iowa is one of only three states to allow taxpayers to deduct -52- ADDENDUM: "THE TAXPAYER RIGHTS AMENDMENT" ~ he "Taxpayer Rights Amendment," as passed by the 1998 Legislature in the form of Senate Joint -~ Resolution 2004, would place spending restrictions in Iowa. In addition to the expenditure limitations outlined in Chapter 2, the proposed amendment would require that any increase in the state personal income tax, corporate income tax, sales tax or use tax be approved by a three-fifths majority of the legislature. In addition, a three-fifths majority is required to impose a new tax. To become ratified, the amendment would have to be passed by the next General Assembly and ratified by the voters. The "super-majority" requirement in this proposed amendment is particularly troublesome because: · It gives a minority of the legislature tremendous power to prevent tax hikes or extract legislative prizes in times where a majority believe revenue increases are needed. · The tax system becomes a victim of a constitutional bias against the only progressive taxes in the state's tax policy arsenal. To be sure, the most substantial regressive tax is also restricted. But excise taxes and local property taxes are not. Inevitably, these taxes will grow relative to the personal and corporate income taxes. · If passed, the amendment will inevitably shift revenue raising back to local taxes. The state will eventually be unable to sustain the current level of subsidies for local governments. There will be demands f r relaxation of property tax constraints--legislation that could be passed with a simple majority vote. in addition, more local governments will be compelled to adopt local option sales taxes. Thus, the transition from progressive income taxes to regressive taxes will be perpetuated--raising taxes on middle- and low-income families relative to better-off lowans. In addition, efforts by the state to assist less wealthy areas of the state will become less viable. · Reversal of the shift, documented elsewhere in this report, from progressive taxes to regressive taxes will be highly unlikely. Although the amendment does allow revenue neutral tax shifting without a three-fifths vote, such tax reform is exceedingly rare. There is rarely the political will to change tax policy unless there is a need to raise money or the opportunity to provide a net tax cut. The process that Iowa has seen is virtually always the way tax policy develops. In poor economic times, taxes are hiked so that government can continue to provide needed services. In good economic times taxes are cut. The three-fifths vote requirement takes away an entire side of the equation. Thus, over time, evolutionary improvement of the tax system is unlikely to OCCUF. · The three-fifths requirement makes tax cuts less likely. Experienced, responsible, legislators will be unlikely to support tax cuts, even in times of surplus, if they know that in times of need, the system is biased against raising taxes. The super-majority requirement would make it very difficult for the state to conform its tax policy to the economic circumstances of the time. In short, the super-majority requirement is likely to thwart the development of good tax policy, lead to higher local property taxes, lead to backroom legislative deals with legislative minorities and make tax cuts in good times less likely. CHAPTER ELEVEN CONCLUSION I n this report, we have discussed Iowa's social and economic conditions and its government tax and expenditure policies. The data show that Iowa is in a transitional position in many areas. · The state's economy is performing better than it has in a long time, but faces risks. · Government services are, in many areas, producing good economic and social results. But the state's commitment to continuing to provide good services is unclear. Restrictions on taxation, existing and proposed, pose serious threats. · The state's tax system is firmly regressive and has been made more so by recent tax changes. While it is a clich~ to say in a report like this that "Iowa is at a critical juncture," that indeed appears to be the case. Iowa may choose to pursue a low-tax, low-government-services strategy with the heaviest tax burden on those least able to pay. Or Iowa may choose a tax structure that asks those who have the most to pay the most, and to invest in education, in- frastructure and all of the other assets that make a state strong economically and a good place to live. As Iowa continues to wrestle with these issues, we hope that this report will help Iowa's policymakers and the public to make informed and wise decisions. -55- APPENDIX A: DETAILED DISTRIBUTIONAL TABLES Iowa Taxes in 1998 As Shares of Family Income for All Taxpayers Income Lowest Second Middle Fourth Top 20% Group 20% 20% 20% 20% Next 15% Next 4% Top 1% Average Income in Group $8,200 $19,900 $32,100 $48,700 $75,600 $133,000 $476,000 Income Less than $14,000- $26,000- $40,000- $61,000- $101,000- $212,000 Range $14,000 $26,000 $40,000 $61,000 $101,000 $212,000 or more Sales, excise &gross receipts taxes 6.3% 5.6% 4.7% 3.9% 3.0% 1.9% 1.3% General sales tax, individuals 3.1% 2.8% 2.3% 1.9% 1.5% 1.0% 0.7% Excise &gross receipts taxes, individuals 1.7% 1.5% 1.3% 1.1% 0.9% 0.5% 0.3% Sales, excise & gross receipts taxes, business 1.5% 1.3% 1.0% 0.8% 0.6% 0.4% 0.3% Property taxes 4.4% 3.4% 2.7% 2.6% 2.6% 2.5% 2.2% Property taxes on families 4.0% 2.9% 2.2% 2.0% 2.0% 1.6% 0.8% Business property taxes 0.4% 0.5% 0.5% 0.6% 0.6% 0.9% 1.5% Income taxes 0.5% 1.8% 2.8% 3.3% 3.8% 4.1% 5.0% Personal income tax 0.5% 1.8% 2.8% 3.2% 3.7% 3.9% 4.8% Corporate income tax 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% Total before Federal Itemized Offset 11.1 % 10.9% 10.2% 9.8% 9.4% 8.5% 8.5% Federal Itemized Deduction Offset -0.0% -0.0% -0.1% -0.2% -0.7% -1.0% -1.7% Net Taxes after Federal Offset 11.1 % 10.8% 10.1% 9.6% 8.7% 7.5% 6.8% Iowa Taxes in 1998 As Shares of Family Income for Married, Non-Elderly Taxpayers Income Less than $30,000- $60,000-$100,000- $200,000 Range $30,000 $60,000 $100,000 $200,000 or more % of couples in group 17.7% 38.7% 32.8% 8.0% 2.1% Average Income in Group $20,100 $45,500 $74,500 $129,000 $419,000 Sales, excise &gross receipts taxes 5.8% 4.4% 3.1% 2.0% 1.4% General sales tax, individuals 2.7% 2.2% 1.5% 1.0% 0.7% Excise &gross receipts taxes, individuals 1.8% 1.3% 0.9% 0.6% 0.3% Sales, excise & gross receipts taxes, business1.3% 0.9% 0.6% 0.4% 0.3% Property taxes 3.6% 2.4% 2.3% 2.3% 1.9% Property taxes on families 3.2% 2.1% 2.0% 1.7% 0.8% Business property taxes 0.4% 0.4% 0.4% 0.6% 1.1% Income taxes 1.3% 3.3% 3.9% 4.1% 5.0% Personal income tax 1.3% 3.3% 3.9% 4.0% 4.8% Corporate income tax 0.0% 0.0% 0.0% 0.1% 0.1% Total before Federal Itemized Offset 10.8% 10.2% 9.3% 8.4% 8.3% Federal Itemized Deduction Offset 0.0% -0.1% -0.7% -1.1% -1.8% Net Taxes after Federal Offset 10.8% 10.0% 8.6% 7.3% 6.5% -56- Iowa Taxes in 1998 As Shares of Income for Unmarried, Non-Elderly Taxpayers Income Less than $15,000- $30,000- $50,000- $100,000 Range $15,000 $30,000 $50,000 $100,000 or more % of taxpayers in group 36.4% 32.8% 22.9% 5.7% 0.6% Average Income in Group $8,250 $22,900 $37,300 $62,500 $306,000 Sales, excise &gross receipts taxes 6.0% 4.7% 3.5% 2.5% 1.2% General sales tax, individuals 3.0% 2.3% 1.8% 1.3% 0.7% Excise &gross receipts taxes, individuals 1.5% 1.3% 0.9% 0.7% 0.3% Sales, excise & gross receipts taxes, business1.5% 1.1% 0.8% 0.5% 0.3% Property taxes 3.2% 2.1% 2.0% 2.1% 2.2% Property taxes on families 2.9% 1.8% 1.8% 1.6% 0.7% Business property taxes 0.3% 0.3% 0.3% 0.6% 1.5% Income taxes 1.1 % 3.3% 4.0% 4.4% 5.3% Personal income tax 1.1% 3.3% 4.0% 4.3% 5.1% Corporate income tax 0.0% 0.0% 0.0% 0.1% 0.2% Total before Federal Itemized Offset 10.3% 10.0% 9.5% 9.0% 8.8% Federal Itemized Deduction Offset -0.0% -0.1% -0.2% -0.7% -1.5% Net Taxes after Federal Offset 10.3% 10.0% 9.3% 8.3% 7.3% Iowa Taxes in 1998 As Shares of Family Income for Elderly Taxpayers Income Less than $15,000- $30,000- $50,000- $100,000 Range $15,000 $30,000 $50,000 $100,000 or more % of tax units in group30.4% 28.5% 23.3% 13.1% 4.2% Average Income in Group $9,700 $22,200 $38,100 $58,300 $203,000 Sales, excise &gross receipts taxes 6.2% 5.4% 3.8% 2.8% 1.2% General sales tax, individuals 3.2% 2.9% 1.9% 1.6% 0.7% Excise &gross receipts taxes, individuals 1.5% 1.3% 1.0% 0.6% 0.2% Sales, excise & gross receipts taxes, business1.6% 1.3% 0.8% 0.6% 0.3% Property taxes 5.1% 5,5% 4.3% 4.2% 3.4% Property taxes on families 4.5% 4.3% 2.8% 2.4% 1.1% Business property taxes 0.6% 1.2% 1.5% 1.7% 2.3% Income taxes 0.1% 0.6% 1.3% 2.2% 4.2% Personal income tax -0.0% 0.4% 1.1% 2.0% 3.9% Corporate income tax O. 1% 0.2% 0.2% 0.2% 0.3% Total before Federal Itemized Offset 11.3% 11.5% 9.5% 9.2% 8.8% Federal Itemized Deduction Offset -0.0% -0.0% -0.1% -0.1% -1.0% Net Taxes after Federal Offset 11.3% 11.4% 9.4% 9.1% 7.8% Source: Institute on Taxation and Economic Policy Microsimulation Tax Model, September 1998. APPENDIX B: METHODOLOGY & COMPARISON WITH KPMG PEAT-MARWICK ANALYSIS About the Institute on Taxation & Economic Policy and the ITEP Microsimulation Tax Model The Institute on Taxation & Economic Policy has engaged in research on tax issues since 1980, with a focus on the distributional consequences of both current law and proposed changes. [TEP's research has often been used by other private groups in their work, and ITEP is frequently consulted by government estimators in performing their official analyses. Over the past several years, 1TEP has built a microsimulation model of the tax systems of the U.S. government and of all 50 states and the District of Columbia. What the ITEP Model Does The ITEP model is a tool for calculating revenue yield and incidence. by income group, of federal, state and local taxes. It calculates revenue yield for current tax law and proposed amendments to current law. Separate incidence analyses can be done for categories of taxpayers specified by marital status, the presence of children and age. In computing its estimates, the ITEP model relies on one of the largest databases of tax returns and supplementary data in existence, encompassing close to three quarters of a million records. To forecast revenues and incidence, the model relies on govermnent or other widely respected economic projections. The ITEP model's federal tax calculations are very similar to those produced by the congressional Joint Committee on Taxation, the U.S. Treasury Department and the Congressional Budget Office (although each of these four models differs in varying degrees as to how the results are presented). The ITEP model, however, adds state-by-state estimating capabilities not found in those government models. Below is an outline of each area of the [TEP model and what its capabilities are: The Personal Income Tax Model analyzes the revenue and incidence of current federal and state personal income taxes and amendment options including changes in: · rates--including special rates on capital gains, · inclusion or exclusion of various types of income, · inclusion or exclusion of all federal and state adjustments, · exemption amounts and a broad variety of exemption types and, if relevant, phase-out methods, · standard deduction amounts and a broad variety of standard deduction types and phase-outs, · itemized deductions and deduction phase-outs, and · credits, such as earned-income and child-care credits. The Consumption Tax Model analyzes the revenue yield and incidence of current sales and excise taxes. It also has the capacity to analyze the revenue and incidence implications of a broad range of base and rate changes in general sales taxes, special sales taxes, gasoline excise taxes and tobacco excise taxes. There are more than 250 base items available to amend in the model, reflecting, for example, sales tax base differences among states and most possible changes that might occur. The Property Tax Model analyzes revenue yield and incidence of current state and local property taxes. [t can also analyze the revenue and incidence impacts of statewide policy changes in property tax--including the effect of circuit breakers, homestead exemptions, and rate and assessment caps. The Corporate Income Tax Model analyzes revenue yield and incidence of current corporate income tax law, possible rate changes and certain base changes. Local taxes: The model can analyze the statewide revenue and incidence of aggregate local taxes (not, however, broken down by individual localities). Addendure: Data Sources The ITEP model is a "microsimulation model." That is, it works on a very large stratified sample of tax returns and other data, aged to the year being analyzed. This is the same kind of tax model used by the U.S. Treasury Department, the congressional Joint Committee on Taxation and the Congressional Budget Office. The ITEP model uses the following micro-data sets and aggregate data: Micro-Data Sets: IRS 1988 Individual Public Use Tax File, Level I11 Sample; IRS 1990 Individual Public Use Tax File; Current Population Survey: 1988-93; Consumer Expenditure Survey, 1988-90 and 1992-93., U.S. Census, 1990 Aggregated Data Sources: Miscellaneous IRS data; Congressional Budget Office and Joint Committee on Taxation forecasts; other economic data (Commerce Department, WEFA, etc.); state tax department data; data on overall levels of consumption for specific goods (Commerce Department, Census of Services, etc.); state specific consumption and consumption tax data (Census data, Government Finances, etc.); state specific property tax data (Govt. Finances, etc.); American Housing Survey 1990; 1990 Census of Population Housing; etc. Acknowledgments ITEP would not have been able to build its microsimulation model without the kind cooperation of the staffs of the Congressional Budget Office, the Joint Committee on Taxation, the U.S. Treasury Department and the Internal Revenue Service. For More Information: For a complete, detailed explanation of the methodology underlying the [TEP Model, see Who Pays? A Distributional Analysis of the Tax Systems in All 50 States (ITEP, 1996). Comparisons with KPMG Peat Marwick's Distributionai Analysis for 1993 While this study provides a comprehensive overview of lowa's tax structure and predicts the incidence of income, sales/excise and property taxes on taxpayers at all income levels, it is not the first to do so. In particular, KPMG Peat Marwick used a similar methodology to derive similar results in their 1993 report "A Study of the Iowa State and Local Tax Structure." The Peat Marwick study includes seven components of the Iowa state and local tax system, comprising (by their estimate) approximately 90% of state general fund taxes. These include sales and use taxes, personal income taxes, corporate income taxes, excise taxes on motor fuels, cigarettes and alcohol, and property taxes. ITEP's analysis includes the same taxes. -58- Three problems stand in the way of direct comparisons between ITEP's results and those of KPMG. First, ITEP's study looks at Iowa taxes in 1998, while KPMG estimates the 1993 tax burden. There have been significant changes in the personal income and property taxes of Iowa in these five years. Second, the two studies use different income categories. Whereas ITEP's breakdown oflowa's population is based on the distribution of income in Iowa and describes the tax burden on equally-sized "quintiles," or fifths, of the population, KPMG's study breaks down the population into groups by fixed income levels, without regard to the number of taxpayers in each group. This means, for example, that researchers interested in comparing each study's estimate of the tax burden on the poorest lowarts must take into account that ITEP defines the poorest income group as the poorest twenty percent of Iowa taxpayers, which turn out to be those with 1998 income of less than $14,000, while KPMG defines the poorest group as taxpayers with 1993 income under $10,000. Finally, the KPMG study generally asstimes that a higher percentage of business taxes are passed on to Iowa residents than does the [TEP methodology. The ITEP model reports more business taxes being exported to out-of-state owners of business, customers and visitors to the state. This means that KPMG's estimate of the tax burden on lowans will be higher, other things equal, than ITEP's estimate. This is especially true of the business property tax burden and the corporate income tax burden, and most noticeably affects the overall results for the poorest income groups. For example, ITEP's analysis predicts that business property taxes falling indirectly on the poorest 20°o of lowarts amount to less than half a percent of income, while KPMG's estimate (for [owans making less than $10,000) exceeds five percent of income. The following chart summarizes KPMG's 1993 results. The most comparable ITEP result is the first table in Appendix A. Considering the differences in income groups and passage of time, the overall results are similar for the top 80 percent of the income spectrum with the KPMG analysis reporting somewhat higher burdens for the reasons described above. At the bottom of the income scale, however, KPMG reports very high tax incidence, apparently due to their assumptions regarding business tax distribution. Across all income groups, KPMG reports a more regressive tax system than the ITEP model, especially with regard to the poorest of lowarts. Comparisons: · The personal income tax results are quite similar. The only signi,~cant difference is in the effective tax rate for the top income group. The lower ITEP result is probably due to the fact that ITEP's top income bracket starts at a considerably higher level than does KPMG's. · The individual property tax results are quite similar for the top 60% of the income distribution. But ITEP predicts a considerably smaller property tax burden than does KPMG, particularly at lower income levels.. · The individual sales and excise tax burden results are difficult to compare because KPMG does not disaggregate these tax burdens into individual and business shares. Having said that, the aggregate (that is, individual and business) sales and excise tax burden can be compared quite easily. KPMG's results are higher across the board. · The corporate income tax results are noticeably different. [TEP finds that very little of the corporate tax is passed on to lowans and that the tax is greatest as a share of income for the wealthlest Iowans. KPMG predicts a greater pass- through to individnals at all levels, and predicts that the tax as a share of income is greatest for the poorest lowans. In summary, there are some difficulties in comparing the tax burden predictions of KPMG to those of this study, most of which are driven by the differing assumptions of business tax incidence in the two models. The net effect of the different treatment of business taxes is that ITEP finds that a lower percentage of business taxes are passed through to Iowa residents, so that the ITEP estimate of tax burden due to business taxes is lower across the board. On the other hand, the tax burden estimates that are least affected by these assumptions--the individual personal income and individual property tax--are broadly quite similar across the two studies. The bottom line is that both studies find that lowa's tax system is regressive~with the KPMG study finding it more so. KPMG Estimates of Iowa Taxes in 1993 As Shares of Income for All Taxpayers Income Less than $10,000 - $20,000 - $30,000 - S50,000 - $75,000 - $100,000- Over Range $10,000 $20,000 $30,000 $50,000 $75,000 $100,000 $200,000 $200,000 Consumption Taxes 9.2% 6.0% 5.1% 4.4% 3.8% 3.2% 3.0% 1.7% Sales and Use Tax 66% 4.3% 3.7% 3.3% 2.9% 25% 2.4% 149': Excise Taxes 2.6% 1.7% 1.4% 1.1% 09% 0.7% 06,1 0.3% Property Taxes 12.2% 9.2% 6.9% 5.1% 4.1% 3.1% 3,1% 1.6% Property Taxes on Families 7.1% 49% 3.7% 26:,';, 2.1% 1.6% 1.5% 0.7% Business Property Taxes 5.1% 4.3% 3.2% 2.5% 2.0% 1.5% 1.6% 09% Income Taxes 1.7% 2.3% 3.2% 4.0% 4.2% 4.3% 4.6% 6.2% Personal Income Tax 0.7% 1.6% 2.6% 3.4% 3.7% 3.8% 42% 5.9% Corporate Income Tax 1.0% 0.7% 0.6% 0.6% 0.5% 05% 0.4% 0.3% Total Before Federal Offset 23.1% 17.5% 15.2% 13.5% 12.1% 10.6% 10.7% 9.5% Federal Itemized Deduction Offset -02% -0.4% 0.2% -0.6% 1.1% q.0% 15% -16~'~ Net After Federal Offset 22.9% 17.1% 15.0% 12.9% 11.0% 9.6% 9.2% 7.9% -59- The Institute on Taxation and Economic Policy The Institute on Taxation & Economic Policy has engaged in research .on tax issue~ since 1980, with a focus on the distributional consequences of both current law and proposed changes. ITEP's research is relied on by the public and policymakers, and ITEP is frequently consulted by government estimators in performing their official analyses. iTEP's Microsimulation Tax Model is based on a very large sample of federal tax returns, Census data, Consumer Expenditure Survey data and information from many other sources. It encompasses 690,000 statistically-matched records, selected to produce reliable results on a state-by-state basis. The ITEP Model includes all significant current national, state and local tax laws, and is equipped to evaluate changes to those laws. This report relies on the ITEP Model for its distributional analyses of Iowa's tax policies. IT P Institute on Taxation and Economic Policy 1311 L Street, NW · Washington, D.C. 20005 ° (202) 626-3780