The Iowa House approved a major “deappropriations” bill, House File 45, on January 19 by a party-line vote of 60 to 40. Republican leaders fast-tracked what they call the Taxpayers First Act, which passed the House Appropriations Committee on the third day of the 2011 session. The bill would cut dozens of programs while increasing spending in a few areas. In addition, $327.4 million from this year’s surplus revenue would go into a new “Tax Relief Fund,” instead of being used to help close the projected budget gap for fiscal year 2012. This bill summary (pdf) lists the budget cuts and supplemental appropriations in House File 45. Click here for the full bill text.

Although the majority of speakers at a January 18 public hearing opposed the bill, and organizations lobbying against the bill outnumber those that have signed on in support, the House Republicans passed the bill with few significant changes. Democrats offered many amendments as floor debate went late into the evening on January 19, trying to save funds for the statewide voluntary preschool program, passenger rail, smoking cessation programs, and sustainable communities, among other things. Representatives rejected almost all those amendments on party-line votes. This page shows what amendments were filed, and the House Journal for January 19 contains the roll call votes.

House File 45 now moves to the Iowa Senate, which has a 26-24 Democratic majority. Democratic senators are likely to back increased expenditures for mental health services and indigent defense while opposing many of the spending cuts. After the jump I take a closer look at some of the most controversial provisions in House File 45.

State Representative Chris Rants promised to run his gubernatorial campaign on “Diet Coke and Casey’s pizza and ethanol,” but attacks on Governor Chet Culver are the real fuel for his political ambitions. He’s been bashing Culver’s economic policies all summer. His latest target is the Power Fund, which Rants would ax to help balance the state budget.

Culver and his office have repeatedly cited a study by the Green Jobs Initiative Committee, which estimated that Iowa has more than 8,700 “green jobs,” a substantial increase in the past few years. Culver has credited the Power Fund with helping create thousands of jobs, while Rants says Culver is misleading Iowans because fewer than 100 jobs can be directly attributed to Power Fund grants.

If I were Culver, I would seize the chance to debate renewable energy with Republicans.  

The business network CNBC threw a wrench in the Republican sound bite machine yesterday by ranking Iowa the fourth best state in the country for doing business. Click the link to read Iowa’s scores for 2008 and 2009 in the ten different categories CNBC considered in compiling these rankings. (Iowa ranked ninth overall in 2008.) You can also watch the CNBC segment here.

Iowa improved in almost all of CNBC’s categories from 2008 to 2009. The biggest improvement was in the “economy” category, where Iowa went from 29th in 2008 to 4th in 2009, even as the national recession deepened. While the recession is hurting Iowa along with every other state, we are doing reasonably well under the circumstances. CNBC also moved Iowa up quite a few notches under “technology and innovation” and “transportation and infrastructure.” We have a ways to go to reach the top-ranked states in those areas, which is why the Culver administration is smart to be investing heavily in our infrastructure with the I-JOBS bonding program.

Speaking of I-JOBS, now that most of the bonds have been sold, money is starting to be awarded:

Every city and county in Iowa will receive a portion of $45 million in additional funding under I-JOBS for local street and road projects. These funds will begin being distributed to cities and counties starting next Tuesday.

In addition, $50 million in I-JOBS funds will improve 55 state highway system bridges in 29 counties across the state. Projects in the metro Des Moines area include two I-35 bridges over the Iowa Interstate Railroad, the Iowa 17 bridge over the Des Moines River, and U.S. 69 bridge over Scott Avenue.

Scroll to the bottom of this page to find links to pdf files containing a “list of I-JOBS road funding amounts for all Iowa cities and counties, as well as bridge projects.”

Meanwhile, Iowa Republicans continue to proudly oppose the I-JOBS program. Today Senate minority leader Paul McKinley and others are triumphantly Twittering about an article in the Des Moines Register: Economists question impact of I-JOBS plan. My response is after the jump.

Last year at this time I was scrambling to make as many phone calls and knock on as many doors as I could before the Iowa caucuses on January 3.

This week I had a little more time to reflect on the year that just ended.

After the jump I’ve linked to Bleeding Heartland highlights in 2008. Most of the links relate to Iowa politics, but some also covered issues or strategy of national importance.

I only linked to a few posts about the presidential race. I’ll do a review of Bleeding Heartland’s 2008 presidential election coverage later this month.

You can use the search engine on the left side of the screen to look for past Bleeding Heartland diaries about any person or issue.

One thing I’ve never understood is why a smart guy like Tom Vilsack put the full weight of his administration’s political capital behind the Iowa Values Fund.

As Jason Hancock discusses in this story at Iowa Independent, the impact of that fund on jobs created and retained in Iowa has been questionable:

Colin Gordon, senior research consultant with the Iowa Policy Project, said the fear many critics of the Values Fund have is that once contracts expire and companies have received their last payment, the jobs that were created will disappear.

[…]

Companies make location decisions based on infrastructure needs, available workforce, skill level of the workforce and amenities, to name just a few reasons, Gordon said.

“It does not follow – just because a firm pockets money from the Values Fund – that the Fund can claim credit for all the jobs and investment that come afterward,” Gordon said. “We have no way of knowing whether Values Funds money actually attracts these firms. Certainly the academic research on this question is unequivocal that firms make location decisions based on local suppliers, customers and workers. No one turns down subsidies or tax breaks being thrown at them, but these are rarely the keys to investment and location decisions.”

Competition is fierce among states, IDED’s Bjornson said, and if Iowa doesn’t pony up, other Midwestern states will.

Swenson called this a “race to the bottom,” with Midwestern states trying to beat their neighbors but only making matters worse.

“Infrastructure, amenities, education, it all suffers, and thus, the Midwest becomes a less desirable place to do business,” he said. “The Midwest, including Iowa, is doing more damage to itself than anything else.”

Hundreds of millions of dollars have been doled out by the Values Fund, Swenson said, but Iowa has still grown at only one-third the rate the rest of the nation has. In 1982 Iowans made 92 percent of the national average for earnings per job. Today that figure stands at 78 percent.

[…]

Gordon said IDED can point to a few scattered success stories, but in the end the true impact of the Values Fund is murky at best.

“It diverts money from improving the things that truly matter to companies, and that hurts Iowa in the long haul,” he said. “These incentives are a short-term, politically easy fix to a much bigger problem. If you ask a business, and they answer honestly, they will say these incentives make very little difference to their final decision of where to locate.”

Count me among those who think the Values Fund is glorified corporate welfare. In some cases corporations didn’t even need to promise to create new jobs to receive money–they just had to promise not to decrease their current number of employees. But in an economic downturn, I don’t think those promises will make much difference.

Look at Lennox International. The slowdown in home construction has to be brutal for that manufacturer of heaters and air conditioners. Not surprisingly, the company will lay off 150 people in Marshalltown this August and 100 more people there next year. The Values Fund promised Lennox $6.6 million in forgivable loans in 2006, but it looks like Iowa taxpayers aren’t going to receive good value for that money.

We needed more leadership from Governor Vilsack on other economic policy issues, but he seemed to focus way too much on the Values Fund.

If anyone has any educated guesses or inside knowledge about why Vilsack believed so strongly in the Values Fund, please post a comment or send me an e-mail about it. It’s a real puzzle to me. A policy wonk like Vilsack should have been aware of research indicating that these state and local incentives are not major factors driving employment figures.