Hawkeye Reporter

Iowa was ready.

Truth in Accounting has released the 11th edition of its Financial State of the States and it ranks Iowa’s financial condition the nation’s 10th best. Alaska topped the list, followed by North Dakota, Wyoming, Utah, Tennessee, South Dakota, Nebraska, Idaho, Oregon and then Iowa.

Truth in Accounting, a Chicago-based nonpartisan think tank founded in 2002, credited Iowa with being prudent and prepared for stormy fiscal waters.

Chris Ingstad | File Photo

“Going into the coronavirus pandemic, Iowa had some resources set aside. Based upon the state’s latest audited financial report, which is dated before the crisis began, Iowa had a Taxpayer Surplus of $1,500, earning it a ‘B’ grade from Truth in Accounting,” its assessment states. “According to rough estimates by Truth in Accounting, Iowa is projected to lose $3 billion in revenue as a result of this crisis.

“Unlike most states before the crisis, Iowa had more than enough resources available, $1.6 billion, to pay all of its current bills, including public employees’ retirement benefits. This means that Iowa’s elected officials have truly balanced their budgets. When broken down, the amount available to pay future bills resulted in a surplus of $1,500 for each Iowa taxpayer.”

Truth in Accounting said while the surplus will help the state survive for some time, the uncertain nature of the pandemic “makes it impossible to determine how much will be needed to maintain government services and benefits.”

Iowans for Tax Relief President Chris Ingstad said the Hawkeye State has performed well by keeping a hawk-like focus on finances, and that is now paying off.

“What I think is more important than their exact ranking is that in recent years Iowa has maintained a strong and responsible financial position while still funding their budget priorities,” Ingstad told Hawkeye Reporter. “Simply put, Gov. (Kim) Reynolds and the Legislature have kept our state living within its means. Where this really pays off is when tough times hit.

“Coming into the current pandemic, Iowa’s reserve funds were full and our state was positioned as well as any to weather the storm of coronavirus,” he said. “The key is you only get to be in that position if you have years of responsible spending and don't attempt to squeeze every last dollar out of the taxpayer."

Ingstad, an eighth-generation Iowan, was named president of Iowans for Tax Relief in December 2016. He previously served as policy director and vice president, and worked for the Pearl Management Co., an investment management firm founded by the late David Stanley, founder of ITR.

Ingstad said while the old saying is that government officials are financially cavalier because they are using money that came out of other people’s pockets, Iowa leaders have resisted that urge.

“Everything gets back to spending restraint. Our founder liked to say that once someone is elected to office, they find it way too easy to spend other people's money,” he said. “By tempering that desire to spend, Iowa hasn't had to come up with new tax schemes to keep the budget above water, even during COVID. If anything, Gov. Reynolds and the Legislature have proven it is time to look at reforming our tax code by reducing tax rates in a significant way.”

Other states could learn from Iowa’s example, Ingstad said. They don’t need to rely on the word of experts or financial analysts, he said.

“Instead of finding another study, just look at what’s happening in other places across the country,” Ingstad said. “Illinois has a tax increase on their ballot next month. New York is begging the federal government for a multi-billion dollar bailout. Even a state like Virginia that has historically been politically moderate is considering tax increases next year. Leadership in our state has realized Iowans have already sacrificed enough because of coronavirus and they aren’t going to ask us to send an even bigger check to Des Moines next year.”

John Hendrickson, policy director for the Tax Education Foundation of Iowa, told Hawkeye Reporter it is a matter of sticking to established principles.

“Gov. Kim Reynolds and the Legislature have been following prudent budgeting principles,” he said. “This is true even before the COVID-19 pandemic. Iowa is in much better fiscal position than many other states. Gov. Reynolds and the Legislature have demonstrated that following fiscal conservative policies of limiting spending, following conservative revenue estimates, and keeping tax rates low lead to responsible budgeting.” 

Hendrickson and Jonathan Williams, the chief economist and executive vice president of policy for the American Legislative Exchange Council, have written several opinion pieces for Iowa newspapers advocating for serious tax reforms.

“How can Iowa lawmakers provide property tax relief for all Iowans? One elegant policy idea comes from Utah’s Truth in Taxation law, which is considered the gold standard for property tax reform,” they wrote in an op/ed published in the Sioux City Journal on Sept. 15. “Utah’s policy successfully provides both transparency and accountability to what can otherwise be an extremely frustrating and complicated process for taxpayers. Too often, local governments take advantage of informing taxpayers that they have reduced rates, but after corresponding assessment increases, many times taxpayers are left wondering why their property tax bill has significantly increased from the previous year. This method of hiding tax increases through assessment-driven measures that never receive a public hearing or vote is unfair and dishonest.”

Hendrickson and Williams said more open tax laws would create a rising tide that would lift all boats.

“Strengthening Iowa’s property tax accountability and transparency law will help all taxpayers,” they wrote. “Thankfully, Utah has proven the effectiveness of the Truth in Taxation model, which controls the growth of property tax burdens, drives real participation in the process of local spending decisions and, most importantly, serves the interests of the taxpayer.”