December 21, 2014

Supreme Court rules cable company serving Sioux City also a phone company

The Iowa Supreme Court says an Arizona company providing phone service via the internet to western Iowa can be taxed as a phone company. Cable One Incorporated provides cable TV services to Sioux City, and in 2006 it began offering what’s called Voice over the Internet Phone service. The Iowa Department of Revenue ruled the internet phone service qualified Cable One as a telephone company and it should pay state property tax.

Cable One argued its wiring was not originally installed to provide telephone service and it should not have to pay the tax. An Administrative Law Judge, and a later Polk County District Court ruled Cable One was operating a cable broadband network and not phone lines, so it shouldn’t be defined as a phone company.

The Iowa Supreme Court looked at the historical interpretation of laws governing technology and says when telephone service began while the telegraph was still being used, phone service was not mentioned in state statutes. But the courts found both services provided communication through wires through different methods are were both subject to taxes. The Supreme Court says even though Cable One’s telephone service is provided through wires originally intended for cable TV, it is still acting as a telephone company.

The Supreme Court sent the case back to the district court for more action.

See the full ruling here: Internet phone ruling PDF

Speakers at statehouse budget hearing call for income tax cut as well as raising money for roads

Governor Terry Branstad held an hour-long hearing Thursday evening, to give members of the public a chance to comment on state spending priorities for the coming year.

Most of the 20 people who spoke represented trade groups and associations. Sharon Presnall, a vice president of the Iowa Bankers Association, is also on the Iowa Taxpayers Association board of directors. She urged the governor to “seriously consider” cutting income taxes.

“Frankly states with the best tax climates have broad bases and low rates and this is an area that we think that Iowa can do a little bit better in,” Presnall said. “And I also think at the end of the day by doing that you actually generate more revenue.”

Justine Stevenson, director of government relations for the Iowa Cattlemen’s Association, urged the governor to find a way to finance repairs of “deteriorating rural roads and bridges.”

“A delay in addressing the shortfall in transportation infrastructure has increased the cost to make those necessary repairs and improvements,” Stevenson said. “Recognizing the serious condition of our roads and bridges, you are working with legislative leaders and interest groups to craft a bipartisan solution. We commend you for this effort and will work to support the responsible funding plans that may be developed.”

For the past five years legislators and the governor have talked about raising the state gas tax or finding a new way to finance road and bridge construction, but there’s been no resolution. Scott Newhard is executive vice president of the Associated General Contractors of Iowa, the trade group for companies that build highways and bridges or supply the materials for that construction.

“Roads should be paid for by users, including out-of-state drivers on a pay-as-you-go basis and with constitutionally protected funds,” said Newhard, who was the first speaker at last night’s hearing.

State fuel taxes are placed on the Road Use Tax Fund and, according to the state constitution, money in that fund may only be used for the state’s transportation system. Newhard asked the governor to tamp down any talk of using general state tax dollars to pay for roads and bridges.

Each speaker at last night’s budget hearing was given three minutes to make their pitch and about 10 people who came to speak were unable to make it into the hearing room in the one-hour allotted for the event. The governor did hear from lobbyists for community colleges and nursing homes concerned about state support of their institutions, plus trade group representatives seeking state money for water quality initiatives. Members of Iowa Citizens for Community Improvement who were stuck waiting outside the hearing room said state government should focus on preventing water pollution by limiting manure and farm chemical use on cropland rather than giving farmers money to construct barriers that prevent run-off.

Report provides ‘blueprint’ for state economic development efforts

BatelleA new report concludes Iowa’s businesses overall have been “highly productive” and there’s been good job growth in the state in the past decade. However, the study warns Iowa’s low population growth and a lack of graduates with science, engineering and math degrees could dampen future economic growth.

The Iowa Partnership for Economic Progress, a state advisory board appointed by the governor, commissioned the report from the Ohio-based Battelle Memorial Institute. Governor Branstad was on hand for the report’s release.

“I think they did a very thorough and a very good job assessing what we have accomplished, but also the challenges ahead,” Branstad said, “and kind of helping us with a strategy to kind of grow the Iowa economy and bring more good jobs here.”

The study measured the state’s economic output and workforce and it concluded Iowa’s rebound from the 2008 recession has been higher than the national average. Iowa has outperformed the nation in the number of new jobs that require advanced skills, but the report also found that Iowa’s colleges and universities aren’t producing as many graduates with science, technology, engineering and math degrees when compared to all U.S. colleges.

“It shows that the focus on STEM makes sense. We’ve got to accelerate it and we’ve come a long way in the last couple of years,” Branstad said. “We need to continue to keep that focus. I think it is catching on and will make a difference.”

From 2009 to 2013, there was a 31 percent increase in the number of Iowa college graduates with so-called STEM degrees. However, only one out of every 10 Iowa college graduates earned a degree in a STEM-related field. The report also warns Iowa’s population growth is less than half the national average and that will limit the ability of Iowa businesses to expand and hire more workers.

Branstad notes the report also focused on the state of Iowa’s infrastructure, it’s roads, bridges and railroads as well as broadband capacity. The governor along with leaders of Iowa’s business community met Thursday afternoon to publicly discuss the report.

“This will be really a helpful blueprint for our future direction,” Branstad said.

Winnebago posts first quarter profits, but below market expectations

WinnebagoWinnebago Industries is reporting lower-than-anticipated profits for its first quarter. Winnebago CEO Randy Potts cites additional labor costs and delayed delivery of supplies to make the recreational vehicles as the reasons.

“A lot of the labor constraints were caused by the supply chain issues and that can be a little bit confusing,” Potts says. “If the issue is in the supply chain oftentimes that disrupts the production process and the resolution to that is to work more hours to correct those issues and when you work more hours, you create these labor constraints, so it’s a multi-faceted issue that we dealt with in the first quarter.”

The Forest City-based motorhome manufacturer reported a profit of profit of $9.9 million or 37 cents per share in its first quarter. That compared with profits of $11.1 million during the same period a year ago or 40 cents a share. Market analysts had expected the company to post a profit of 45 cents a share in this year’s first quarter. Potts says they need more employees than they currently have, so the current staff is working more overtime.

“So you manage that using a lot of different tools,” Potts says. “In this particular case, while we were short some employees, it was exacerbated by having these other issues that disrupted production.”

Despite falling short of expectations, Potts says it still was a good quarter and 2014 was a good year for Winnebago.

“We need to keep that trend going, so we’ll be looking for every possibility to make 2015 a successful year, too,” Potts says.

Sales of Winnebago motorhomes rose nearly one percent, to $224.4 million. Shipments of motorhomes to dealers grew 1.3 percent in the quarter, while shipments of towable units rose nearly 13 percent. ​

(Reporting by Robert Fisher, KLSS, Mason City)

Federal officials reach agreement with car company over advertising

A car dealership and advertising company have reached an agreement over claims they violated rules in advertising and marketing cars. The U.S. Attorney for the Northern District of Iowa says Billion Auto Group and and Nichols Media have agreed to a $360,000 judgment to resolve claims they violated a 2012 Federal Trade Commission’s order against deceptive advertising when marketing the cost of buying or leasing a car.

The federal complaint against Billion Auto Group, which owns a chain of 20 dealerships, including those in Sioux City, Iowa City and Clive, says they frequently focused on only a few attractive terms while hiding others in fine print, through distracting visuals, or with rapid-fire audio delivery. The complaint says some dealership ads promoted low monthly payments or attractive annual percentage rates and finance periods, while concealing other material items, such as the low payments being for leases, not sales; major limits on who could qualify for discounts; and significant added costs.

A statement from U.S. Attorney Kevin Techau says “The action taken in this case is an important step to protect Iowans and sends an important message to the marketplace.”


Government drops seizure case against northwest Iowa woman

A woman who gained national attention for her fight against the IRS over money seized  from a restaurant she had operated in northwest Iowa has gotten some good news. The IRS seized nearly $33,000 from Carol Hinders in 2013.

Larry Salzman is an attorney with the Institute for Justice, which fought to help Hinders get back the money that was a part of her operation of Mrs. Lady’s Mexican Food in Spirit Lake. “The government has filed a motion to dismiss its own case. They took depositions of Miss Hinders, sworn testimony, and afterwards, decided to drop it,” Salzman says.

Hinders operated the restaurant for 38 years and accepted only cash. Her frequent cash deposits caught the eye of the IRS and the whole ordeal began. Salzman says they are now working to have the case put to bed forever. “The government filed its motion to dismiss with what’s called ‘without prejudice,’ which means they are asking for the right to refile the case in the future if they would like to do so. It would also make it harder for Miss Hinders to get interest from the money that was seized,” Salzman says. “We’re filing our own papers to oppose that. We think it should be permanently dismissed and there is no basis for them to ever file it again.”

Salzman says they are happy the IRS decided to give the money back. “It’s good that the government has done the right thing, the case was baseless. Carol Hinders was just and innocent, hard-working restaurateur.” Salzman says the concern still remains about the way the IRS handled the case. “It’s one of the main problems of civil forfeiture, is that it allows the government to take money from people based on a mere suspicion, even if they never charged, let alone convict them of a crime. And they didn’t get away with it here, and we hope they don’t do it to others,” Salzman says.

Iowa Senator Chuck Grassley is expected to become chairman of the Senate Judiciary Committee in the next Congress, and says he plans to pursue reform of the forfeiture law. Salzman says reform is needed.

“I know Carol would love to testify in front of a committee to tell here story and help the reform effort,” according to Salzman.

Salzman says Carol Hinders recently retired and sold the restaurant.


Casey’s still working on pizza delivery plan

Caseys-sign2The Casey’s convenience store chain is still tweaking its delivery system for pizza. Casey’s chief financial officer, Bill Walljasper, talked about the effort in a conference call Thursday on the company’s second quarter financial results.

He says the Ankeny-based chain hopes to add pizza delivery to 70 more stores, but has already cut delivery in some areas. “Effective December 1st, we discontinued delivery in 21 locations and reduced 60 stores to delivering four days per week,” Walljasper says. “We’ve also modified our delivery hours for the remaining stores in the program.”

Walljasper says the analyzed all the information on the stores which were delivering pizza so they could take action to make the operation profitable. “You either discontinue the delivery, or modify the hours in an effort to reduce operating expenses, because in those particular hours they were just not generating the appropriate amount of revenue to either justify the delivering, or days of the week being delivered that I mentioned,” Walljasper says.

Casey’s began as a company that had stores in smaller towns in the state, and have expanded in recent years to larger cities. He says that’s where they have had the most success in the pizza business. “The locations that we see as most prevalent are stores that are a little bit higher populated stores than our store base in order to take market share from somebody. And so those are the stores that we’ll be targeting going forward,” Walljasper says.

The company has also been running a test recently for on-line sales of pizza. “Just to make sure that there are no glitches in the programming, it’s gone very well,” Walljasper says. “We’ll continue to roll that out here in the Des Moines metro areas in the next several months, and then continue to monitor that and roll that out accordingly. We are excited about that program.” He says they only been running the tests on a small scale with members of the company using the on-line system to order from the stores in Ankeny as they look to work out any bugs.

Walljasper was asked about the on-line efforts of rival Dominoes and how they have impacted the sale of the pies at Casey’s. He says he can’t say how that may be impacting them because they may not be competing directly with all their stores, but he says the sale of food produced in the stores has increased in the last quarter, which is a positive sign.

Walljasper says the price of cheese had been and issue for them as it had been averaging $2.43 a pound in the second quarter, compare to $1.97 cents for the same period last year. He says the price has now dropped to $1.85 a pound, which has help them meet their goals for the amount of money they want to make on the sale of their instore products.