December 19, 2014

Study shows gaming creates huge ripple in Iowa’s economic pond

aga-logoInformation from the Iowa Racing and Gaming Commission shows the gambling industry has a $1 billion direct impact on the state, and now a new survey shows the overall impact is more than double that amount. The president of the Iowa Gaming Association, Wes Ehrecke, says a study commissioned by the American Gaming Association looked at the secondary or “ripple effect.”

“When the employees from the casinos take their dollars and reinvest in the community, the many vendor companies that we use for this Buy Iowa First program, and that ripple effect shows that there’s a $2.5 billion annual economic impact supporting 16-thousand jobs and over 725 million in taxes generated,” Ehrecke says.

Ehrecke says that’s a lot of money turning over. “It spreads out throughout the entire economy of the state, certainly within these respective communities where these casinos are located — the 18, now soon to be 19 casinos. There’s that impact at the local level, but it also impacts the entire state, there’s certainly the taxes that the legislature allocates in many visionary ways,” according the Ehrecke.

The study by Oxford Economics comes on the heels of a study showing support of gambling has increased in Iowa. “Over 80 percent of people when polled think that going to a casino is an acceptable form of entertainment for themselves of others. That’s always remained pretty high,” Ehrecke says. “We strive to be premiere entertainment destinations and certainly want to be a viable part of Iowa’s economy, adding value to the state’s tourism and entertainment industry for years to come.”

Ehrecke says the casinos have weathered the economic downturn like other businesses and also have face some challenges recently. “January and February of 2014 was probably about as brutal as it could be with ice and snow and sub-zero temperatures for many weeks, and you just don’t get that back where people stayed home,” Ehrecke says. He says they face continued challenges with the ag prices being depressed and hurting Iowa’s economy, as all those things are is tied into where people’s discretionary income is spent. But Ehrecke says the industry is looking forward to the future.

“We’re optimistic that the next couple of years will continue to improve, as well as with the casinos going to land based, several more doing that, will help with that as well,” Ehrecke says. For more on the study, go to :



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.

Committee calls on legislature to help schools with transportation costs

A legislative committee is recommending that the 2015 Iowa legislature consider changes that would help schools deal with transportation costs, a particular problem in rural Iowa where many districts have long bus routes for students. A group of legislators met for four hours on Monday to discuss the details of how state aid to public schools is distributed and agreed lawmakers should find some way to address the budget difficulties in property-poor school districts, although the group did not make a specific recommendation.

Representative Ron Jorgensen, a Republican from Sioux City, is chairman of the House Education Committee.

“We all know the importance education plays in providing individuals and society with a higher standard of living,” Jorgenson says. “Having an education population will help increase wages and spur economic development.”

Senator Herman Quirmbach, a Democrat from Ames, is chairman of the Education Committee in the Iowa Senate.

“If our students in Iowa don’t get education that makes them competitive economically and in other ways with students raised in other states, then we are not being equitable to our own students,” Quirmbach says.

Quirmbach and Joregensen served on the legislative panel that met Monday to discuss preschool-through-12th grade education funding issues.

Falling gas prices may increase state tax revenue?

A panel of budget experts predicts state tax collections will grow by nearly five percent next year — and lower gas prices may help fuel that increase. Iowa Department of Management director Dave Roederer is one of three members of the state Revenue Estimating Conference.

“We know that for the most part apart other than on ethanol that lower gas prices do help our agricultural economy as well as other parts of our economy,” Roederer says.

Holly Lyons, the director of the Legislative Services Agency, is also on the state Revenue Estimating Conference. She says savings at the pump could translate into higher tax collections, depending on how consumers react.

“That theoretically means consumers will have more disposable income but it remains to be seen if they spend it on retails sales or other tax revenue generating investments,” Lyons says.

In the current year, the panel predicts state tax collections will amount to just under $7 billion. In the following budgeting year, their prediction is that the state will collect over $7 billion in taxes. However, that extra money may not quite match all the promises legislators made in the past to boost spending on education reform and property tax relief.

Farm Bureau president says support growing for gas tax hike to fix roads

Craig Hill

Craig Hill

The president of the Iowa Farm Bureau says the momentum is heading in the right direction for state leaders to increase the gas tax to help fund improvements to the state’s road system. Craig Hill spoke with reporters today following his speech to members at the Farm Bureau’s annual meeting.

“I think it’s the year, I am very, very positive about this. We have moved the needle, over the years we have talked about his, and we’ve persuaded a lot of the citizens of Iowa,” Hill says. “You look at the polling, citizens are starting to become informed, they are aware of the issue, increasingly they are becoming supportive.”

Hill says it was a good sign that Governor Terry Branstad said after winning another term that he would look at the options for increasing the funds to fix roads — including an increase in the gas tax.

“The governor has not promised to not veto, but he has promised to take an open look at this and look at all the possibilities. And he recognizes that we are going into debt as a state, county by county, we’re bonding for road improvements,” according to Hill. “And his home county — Winnebago County — is one of the biggest offenders of this.”

Hill says the bonds end up using property taxes to fund the improvements instead of the gas tax which charges the user of the roads. “Is that path that we want to take? Do we want a good quality road system that builds our economy, our rural infrastructure depends on that, farmers depend on that,” Hill says. He says farmers pay the bill when they take semis down the road with grain or livestock. “So, farmers are actually imposing a tax on themselves for something they think the government should be doing, and that’s good roads and bridges.”

He says the years of not fixing bridges in rural areas has taken a toll. “Well, there’s some very significant impacts, when you have to traverse 5 miles to get to that field that is a quarter mile or three-quarters of a mile down the road, but you can’t go through the bridge — that’s pretty serious,” Hill says. Hill says it also impacts people living in rural areas when they have to travel extra miles to get where they are going because bridges are limited.

Hill says a 10-cent increase in the gas tax would bring in enough money to fix roads. He says the governor has talked about using a mix of ideas to fund the road improvements and the Iowa Farm Bureau will not take a stand on how to do that, but will leave it up to the governor and legislators to decide.



Branstad says it’s time to consider ‘options & ideas’ for new road revenue

Governor Terry Branstad. (file photo)

Governor Terry Branstad. (file photo)

Governor Terry Branstad says he’s open to considering all options that might boost the amount of money available to fix Iowa’s roads and bridges.

“I’m interested in coming up with additional funding for the Road Use Tax Fund,” Branstad told Radio Iowa Wednesday afternoon, “and I want to look at a whole series of options and ideas.”

The state gas taxes paid when motorists fill up at Iowa pumps are deposited in the state’s Road Use Tax Fund, but transportation officials have said for the past several years there’s not enough money being generated from the gas tax to finance needed road and bridge repairs and new construction. It’s partly because modern vehicles get far better gas mileage — so fewer gallons of fuel are purchased — and partly because the state gas tax of 22 cents per gallon hasn’t been raised since 1989. Branstad said he isn’t calling on legislators to pass an increase in the state gas tax. Branstad suggested a wide-ranging combination of actions should be considered.

“I want to look at fees for heavier loads being transported across the state,” Branstad said. “I want to look at different options for diesel than gas and maybe different mechanisms in terms of the way it’s done.”

One idea floated last year would be to charge the state sales tax on fuel purchases. One of the complications lawmakers are considering is that drivers of new hybrid vehicles which primarily run on electricity pay little, if anything, for using the roads compared to those who pay the gas tax when they fill up.

“I really believe that we need a more modern and efficient system,” Branstad said, “and I also want to do something that will maybe give some option opportunities to local governments as well.”

Branstad wants to explore giving cities and counties that receive a combination of state and federal dollars to finance road projects a way to opt out of Davis-Bacon restrictions. Those federal rules require federally financed projects to pay construction workers the prevailing wage in the county. Republicans say that unnecessarily inflates the cost of projects and benefits construction firms that employ union labor, while Democrats have traditionally opposed efforts to do away with prevailing wage rules.

Iowa cities and counties already get a share of state gas tax revenue, but local officials have complained it’s not a large enough share based on the number of miles of city streets and county roads when compared to the number of miles of state-maintained highways. Some areas of the state with pressing needs have resorted to asking voters to raise their property taxes to finance local road and bridge projects. Branstad said he’s talked with leaders from both parties to see if there’s some way to come up with a “bipartisan consensus” among legislators this year, compared to previous years when no agreement emerged.

The 2015 Iowa Legislature convenes Monday, January, 12th.


Loebsack says congress should reconvene ASAP

Congressman Dave Loebsack.

Congressman Dave Loebsack.

Democratic Congressman Dave Loebsack of Iowa City says the U.S. House should reconvene this week to deal with some critical issues.

“We’ve got to get back and we’ve got to make sure that we extend the tax provisions that have been languishing for far too long for the production tax credit, for example, the wind industry. We’ve got to work on the Renewable Fuels Standard, make sure we get that back to where it’s supposed to be,” Loebsack said on Election Night. “There are a lot of things that we have to do when we get back to Washington, D.C. I think we should go back tomorrow.”

Loebsack was elected to a new, two-year term in the U.S. House on Tuesday, but that term doesn’t start ’til January. A so-called “lame duck” session is likely to convene soon for current members of congress, including Loebsack, and he says it can’t start soon enough for him. Loebsack was among those who called for congress to reconvene in October, when the House did not meet to give members time to campaign.

“We should have gone back to Washington to discuss what to do in Syria and Iraq and the region more generally,” Loebsack said Tuesday. “I think the president needs an authorization for the use of military force from congress to do what he’s doing in Syria. We need to have a serious conversation about that.”

Congress is expected to return to Washington next week, but will be in session for votes for just 14 days through the end of the year. Over 50 temporary laws that outline dozens of corporate tax breaks have been in limbo since the end of 2013, when their last authorized extension ran out. The tax breaks are for things as varied as Puerto Rican Rum production and NASCAR race tracks, as well as the wind production tax credit. Congress must also vote to authorize government spending past December 11, when the current stop-gap spending plan expires.