COGS News
January 2004
Call to Action: Understanding the State Budget Crisis and What You Can Do About It
States around the nation are facing the worst budget crises since WWII. Iowa is in better shape than most, but still we face the problem of a revenue stream that fails to fund services we expect government to provide. As a result we are facing unprecedented tuition increases and cuts in higher education funding. At the same time, state workers and university employees are experiencing increasing pressures on salaries, benefits and insurance costs.
Traditional state budget priorities, including education, services for children in crisis, assistance for the elderly, and public safety continue to suffer under a regressive tax policy. They will suffer even more without a reevaluation of priorities and fair adjustment to tax policy. Instead of balancing the budget by cutting more services, Iowa needs to raise revenue with a new, fair tax policy. As state legislators and the governor begin a new legislative session, it’s up to us as educators and researchers to help in this effort.
How it all started...
The state cut taxes through the mid and late 90s. But the legislature and the governor overdid the cuts. In fact, the total cuts have amounted to over $1 billion a year. Then when the economy slowed down, state revenue collections slowed down as well. Unfortunately, Iowa faced a double whammy as a result of the tax cuts enacted from 1995 to 2002. Those cuts have proven to be unsustainable in the absence of strong economic growth.
Compounding the problem, Iowa’s corporate income tax has steadily decreased over the years. In 1979, the corporate share of total state taxes was 8.3%. In 1989, it was 6.4%. In 2000 it was 4.1%. Throughout the 1990s Iowa offset declining corporate taxes with regressive increases in sales and excise taxes. At the same time, progressive taxes like income taxes were reduced.
For a couple of years, Iowa had some funds in reserve that could be used to cushion the shortfall. But now, we’re running out of reserves. Schools are cutting teachers and libraries and maintenance workers. State universities are raising tuition. State workers have been laid off. There are fewer OSHA inspectors, fewer people to hear injured workers’ claims, fewer child abuse investigators, and more Iowans without health care.
The University of Iowa has faced about $56 million in state funding reductions in the last two years. These cuts have served as a downward pressure on salries and benefits, that, to date, COGS has been able to withstand with aggressive rank-and-file action in bargaining.
Fourteen percent of the state of Iowa budget is in the form of “pass through” money to Iowa’s public universities. State funding cuts to public universities have been the primary factor behind the staggering 60% increase in tuition over the past four years.
The sad truth is that most of us will see few, if any, of the benefits of the tax cuts of the 1990s while increases in living expenses and hikes in tuition and fees, along with cutbacks in services have a large impact on students and graduate employees.
What next?
More revenue is needed to allow the state to fund the basic needs of Iowa’s citizens and make higher education affordable for all students.
Now, either we as a state step up and raise taxes in a progressive manner and put the budget back on solid ground or we continue making cuts that, at the end of the day, leave Iowa and its people and its students worse off.
COGS’ Response
At the outset of the state budget crisis in 2001, COGS established principles for preserving affordable, quality higher education in Iowa.
Then as now, COGS stands for:
Affordable, quality education When tuition increases are necessary, tying them to inflation If cuts are needed, making them in areas of the budget not directly related to the educational mission of the U of I Cutting administrative costs in the U of I budget Unionization of all U of I employees, including faculty Dipping into the state’s “Rainy Day” fund Establishing a more progressive and balanced state tax policy in which everyone, including corporations and the wealthy, pay their fair share. And then as now, COGS stands against:
Outrageous tuition increases making higher education unaffordable for average students Using money from the general fund for athletic department use Layoffs Any cuts in pay or benefits for people involved with the day- to-day operation of the University State defunding of Regents institutions Privatization of public education and other state services The political pitting of Regents institutions and other state agencies against K-12 education
Send Your Message to Des Moines!
Tell the governor, local state legislators and other state legislators that enough is enough. It’s time to end the cuts to University funding. Send them a clear message that cutting basic services and making higher education unaffordable can only hurt the larger state economy in the long run. Tell them that working people and students have had enough and it’s time that our tax policies be reevaluated and made more progressive with corporations and the wealthy paying their fair share.
It’s time to take the burden off our backs. It’s time for fairness.
Senate President:
Mary Kramer — Mary.Kramer@legis.state.ia.us
Speaker of the House:
Christopher Rants — Christopher.Rants@legis.state.ia.us
Senate Education Committee:
Nancy Boettger, Chair — Nancy.Boettger@legis.state.ia.us
Iowa Senate Appropriations Committee:
Jeff Angelo, Chair — Jeff.Angelo@legis.state.ia.us
Iowa House Education Committee:
Jodi Tymeson, Chair — Jodi.Tymeson@legis.state.ia.us
Iowa House Appropriations Committee:
Bill Dix, Chair — Bill.Dix@legis.state.ia.us
Local Legislators:
Sen. Joe Bolkcom (Democrat, Iowa City, Dist. 39) Joe.Bolkcom@legis.state.ia.us
Sen. Robert Dvorsky (Democrat, Coralville, Dist. 15) Robert.Dvorsky@legis.state.ia.us
Rep. David Jacoby (Democrat, Coralville, Dist. 30) David.Jacoby@legis.state.ia.us
Rep. Vicki Lensing (Democrat, Iowa City, Dist. 78) Vicki.Lensing@legis.state.ia.us
Rep. Mary Mascher (Democrat, Iowa City, Dist. 77) Mary.Mascher@legis.state.ia.us
