On December 16, 2009, Michael Fiala blogged on this site concerning Iowa’s abysmal ranking as the nation’s 46th worst tax climate for the creation of jobs. This article dovetails with that idea except that it concerns Iowa’s top ranking in the nation as the most liberal for pay and benefits for our state employees.
In a period of fiscal emergency whereby Iowa currently has a billion dollar spending and revenue gap it is time to repeal Chapter 20 of the Iowa Code.
In a seminal policy study published in November 2009, by the Public Interest Institute in Mt. Pleasant, Iowa, author Amy K. Frantz reveals that Iowa ranks not only first in the nation as the state where the pay gap between private sector employees and public service employees is consistently 45-49%, but also the gap is so significantly large as to be in double digits with respect to the next highest state!
Entitled Iowa’s Privileged Class: State Government Employees, the study convincingly nails a compelling reason why Iowa is a high-tax, low jobs state. The report, while detailed, is readable and easily understood by anyone – in other words not the typical wonkish drivel one might expect on a topic typically as byzantine in nature as tax studies generally are.
The link following provides a pdf document easily downloadable and I commend it to the reader who wishes to develop a clearer understanding as to why Iowa’s fiscal house is in such disarray. [This article quotes liberally from that source without resort to use of footnotes.] http://www.limitedgovernment.org/publications/pubs/studies/ps-09-9.pdf
In 2007 the average private sector worker in Iowa earned $35,256 as compared with $44,356 nationally. Iowa’s government employees earned an average of $51,688 more that 12% higher than the national average of $45,916.
This gap between government and private sector jobs in 2007 represents a 147% difference, an almost unheard of situation as compared with the rest of the nation.
But it gets worse. Iowa has held that distinction for more than two decades and the gap looks to widen in 2009 to as much as 153%.
When the normally liberal Des Moines Register began to highlight the enormous divergence in an article on July 1, 2009 writer Jason Clayworth pointed out that state pay raises would add $121 million to state wages in the current budget year. Out years promise even higher merit raises which add significantly to the budgetary crisis the state legislature grapples with during this session.
State employee wages present such a disproportionate impact on state finances that taxes must be raised to meet the mandate which in turn creates the vicious circle that guarantees Iowa remain a high tax state not favored by employers seeking to do business and create jobs here.
The current state of affairs ensures future budgets to be unmanageable unless taxes are increased significantly, such as a current consideration in vogue at the statehouse to repeal federal income tax deductibility.
The reader might at this point be asking how Iowa arrived at these two unenviable distinctions.
One factor looms large: Chapter 20 of the Iowa Code. Enshrined in our state law is the concept that collective bargaining on behalf of state employees will quarter no review in times of economic distress – the state employees will get raises regardless.
We see that happening on all fronts as government employees from municipal, county and state government continue to receive pay raises in spite of falling tax revenues and poor economic indicators.
I refuse to argue the point of the merits of their work contribution to good governance, but rather that in times of a weak economy raises should not be given, much less be automatic, but that there should be commensurate reductions until the state coffers again begin to fill with taxes collected from increased numbers of tax payers. Chapter 20 essentially puts raises on autopilot for state employees and drives the budgetary process to focus elsewhere to balance the books often cutting essential services such as police and fire protection.
Having personally brought to our state representatives the idea that collective bargaining for state employees is a luxury Iowa cannot afford in the current economy, the resistance of those representatives was astonishing.
One legislator indicated that the process is encoded in Iowa law and is of such long standing such that nothing feasible could be done – contractual obligations cited as the impediment. Have our representatives not heard of the repeal process? Why is it that the Iowa legislature can run helter skelter to embrace social legislation not generally favored by its citizens and yet drag its feet to act decisively to put its fiscal house in order?
Iowa citizens should begin to firmly exert pressure on our representatives to revisit the notion that state employees are entitled to a collective bargaining process that has excessively rewarded our state servants with wages grossly in excess of those earned by ordinary Iowa wage earners. (N.B. commonsensepoliticsblog.us has a link to your representatives; contact me by email at fbadams at gmail dot com and I can send out a full listing of Iowa legislators’ email addresses).
It is no secret that poorly thought out law coupled with resultant budgetary excesses are linked to the inevitable outcomes of poor business climate (because of high taxes) leading to weak jobs growth and subsequent revenue shortfalls to the state treasury.
The current system is broken, yet seemingly legislators avoid the hard choices and instead focus on enacting silly laws against text messaging while driving (one shouldn’t do it, but is it worthy of time at the legislative level?) and trying to convince a skeptical public of our social insensitivities toward a distinct but vocal minority.
We need more jobs, lower taxes and fewer legislative boondoggles. If we in concert demand change to bad law our representatives will either listen and act accordingly, or absent such commonsense, will face the voters’ wrath come election time. Both the electorate and our representatives are on notice.
Frank B. Adams
Mason City, IA
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