Iowa car dealers have in less than two weeks sold at least 2,300 vehicles under the popular "Cash for Clunkers" program, but more than half of those dealers were making sales conditional as they waited to get reimbursed about $9.7 million from the federal government and to see whether the Congress would authorize $2 billion more for the program.
The Senate voted 60-37 on Thursday night to approve the additional money, and President Barack Obama signed the legislation on Friday. The bill cleared the U.S. House last week.
"I'm not complaining," said John McEleney, a Clinton, Iowa, auto dealer who's chair of the National Automobile Dealers Association. "I'm very pleased; dealers in general are very pleased we have this program. It gives us some confidence that business is turning around. There's pent-up demand, and people are willing to buy cars. We would have preferred much less bureaucracy, but we understand it's a government program."
Customers who trade in low mile-per-gallon vehicles are receiving vouchers for $3,500 or $4,500 - much more than the $800 to $1,000 that their cars are typically worth.
U.S. Representative Bruce Braley (D-Waterloo), who co-sponsored the Cash for Clunkers legislation and the bill that would give it another $2 billion, this week urged Obama and Transportation Secretary Ray LaHood to continue the program. He said it has great potential to spur sales in the auto industry and noted that the program was appropriated $1 billion, far less than the $4 billion originally authorized by the U.S. House on June 9.
"A suspension of this program would be a mistake," Braley said. "It is clear that the CARS [Car Allowance Rebate System] program has been a huge success, saving families money while reducing gas consumption and stimulating the economy. It is imperative that Congress and the White House act immediately to provide more funding to keep this program moving."
U.S. Senator Chuck Grassley (R-Iowa) argued this week that the program should be changed. "While the program has been unquestionably popular with consumers, dealers are facing significant obstacles and frustrations in dealing with the online registration and voucher-application process administered by the National Highway Traffic Safety Administration," Grassley said. "In other words, they didn't take enough time to get it underway in the first place."
McEleney said business for auto dealers was down about 40 percent nationwide in the first six months of 2009 compared with the same period in 2008. Sales in the Midwest and Iowa were down about 25 percent. "We started to see some improvements in mid-June, early July," said McEleney, who's president of McEleney Autocenter in Clinton and McEleney Autoplex in Iowa City. "July was a 10 percent improvement over the last two months. A big share was last week, with Cash for Clunkers."
The program has been so successful that car-lot inventories are now low. Dealers that normally keep a 75- to 100-day supply of cars now only have a 45- to 50-day supply. McEleney said his Clinton dealership usually has about 250 new cars but now has fewer than 75 cars.
"Selection is deteriorating," he said. "We're down to one-third of what we should have. The beauty of that [is] it's going to get the plants up and running. It's going to put people to work."
McEleney estimated the number of cars sold under the program based on the $9.7 million claimed but thinks the number is actually larger. "I'm sure there's been a lot more sold not yet applied for," he said. "We've only applied for half of what we sold. We tried last week repeatedly. The Web site would time us off. There were changes made over the weekend."
Stimulus Dollars Haven't Targeted Iowa Counties with Highest Unemployment
A new analysis finds that federal stimulus dollars, touted by backers as job creators, haven't been delivered to the areas with the highest unemployment rates in Iowa.
Lee County in southeast Iowa has the state's top unemployment rate at 9.3 percent but received only $471 per person, according to the analysis from the not-for-profit ProPublica. Davis County in southeast Iowa has an unemployment rate of 9.2 percent and was awarded $517 per person. And Montgomery County in southwest Iowa has a 9.0 percent unemployment rate and got $335 per person.
In contrast, three counties with lower unemployment rates -- Monona, Clarke and Fremont -- have been awarded much more stimulus money. Monona in western Iowa, with unemployment at 6.6 percent, got $5,246 per person. Clarke in south central Iowa, with unemployment of 7.1 percent, received $4,452 per resident. And Fremont in southwest Iowa, with unemployment of 6.6 percent, got $1,974 per person.
Overall, the analysis showed that Iowa, with a population of 3 million, received $1.17 billion from the American Recovery & Reinvestment Act. That's an average of $164 per person for a state with an unemployment of 6.2 percent. Spending ranged from $18 per person in Butler and Pocahontas counties to $5,246 per person in Monona County.
Polk County, Iowa's largest, has an unemployment rate of 5.8 percent and has received $142 per person in stimulus money. The ProPublica analysis tracked stimulus dollars through July 20.
See the Iowa county-by-county breakdown at http://projects.propublica.org/recovery/locale/iowa.
See the full ProPublica article at http://www.propublica.org/ion/stimulus/item/stimulus-spending-fails-to-follow-unemployment-poverty-805.
Sales-Tax Holiday Prompts Discussion of Expansion
Some Iowa lawmakers and groups are pushing for an expansion of state's annual sales-tax holiday despite the $1-billion state-budget shortfall expected in Fiscal Year 2011. This year's holiday is slated to save clothing shoppers across the state an estimated $2 million to $3 million.
"If you're talking about the essentials, we don't tax groceries, we don't tax prescription medicine, [and] we don't tax utilities, and maybe there ought to be a discussion about not taxing clothing," Senator David Johnson (R-Ocheyedan) said this week.
Johnson this year introduced a bill that would make clothes exempt from sales tax at all times of the year, instead of just items less than $100 sold during the first Friday and Saturday of August. Johnson lives a few miles from Minnesota, where clothing is tax-exempt year-round.
"Clothing is an essential part -- it's always food, shelter, and clothing -- and we get tax credits for our housing in some respects and all that, so I just wanted to put it out there because there are states that do not tax clothing," Johnson said.
Iowans for Tax Relief President Ed Failor, Jr. said "it wouldn't be a bad thing" to expand the sales-tax holiday to other times as well, and that the holiday benefits struggling families during the back-to-school shopping season.
Failor noted that the sales-tax holiday attracts shoppers from Nebraska and Illinois, where no sales-tax holiday or clothing exemptions exist. Missouri has a similar sales tax holiday August 7 through 9, which includes clothing up to $100, computers up to $3,500, and school supplies up to $50.
"In this weekend, what happens for Iowa businesses is people in Illinois and Nebraska come over and shop in Iowa businesses," Failor said. "The businesses make more, so there's more income tax to be paid at the end of the day."
Senator Tom Hancock (D-Epworth) this year introduced a bill that would bring Iowa's law closer to Missouri's by including information-technology devices in the sales-tax holiday, while Jim Henter with the Iowa Retail Federation said retailers would like to see school supplies included in the bill.
"Obviously there's a cost involved, and with budget concerns that's probably fairly unlikely in the near future," Henter said. "But it is very successful, and we've heard a lot of comments that this would be a great way to expand it into school supplies."
Henter agreed that Council Bluffs- and Quad Cities-area retailers probably see the most benefit from the law because of cross-border shoppers, but he expects that retailers across the state will see a significant boost in sales this year -- in part due to families' tight budgets.
Others are not as keen on expanding the holiday. Victor Elias of the Iowa Fiscal Partnership said his group has not taken a position on the issue but is calling on politicians to re-evaluate all tax credits, tax breaks, and tax exemptions the state offers - including the sales-tax holiday.
"We are facing a problem that needs to be faced on both sides of the budget, expenditures and revenues," Elias said.
Elias said tax breaks like the sales tax holiday need to be evaluated the same way spending is being evaluated, and on a regular basis -- but especially during a tight budget situation.
All parties agreed that it would be difficult to repeal the law because of its popularity and relatively small impact on the budget.
Governor, Analyst Differ on State-Revenue Picture
Total gross receipts to the state's general fund were $412.1 million in July, which was $4.7 million or 1.2 percent above the same period last year, but when refunds are taken into account, total net receipts for Fiscal Year 2010 decreased by $23.1 million or 6.1 percent.
Governor Chet Culver this week touted the positive number, saying state tax receipts for July are ahead of projections made by the Revenue Estimating Conference, which estimated an annual growth rate of negative 0.1 percent.
But the nonpartisan Legislative Services Agency's monthly revenue memo included refunds, resulting in the bottom line of a 6.1-percent decrease in year-to-date Fiscal Year 2010 net receipts.
Republican Party of Iowa Chair Matt Strawn criticized Culver's spin on the numbers. "Anyone who has spent two minutes in the private sector knows that gross revenues only tell half the story of a business's financial health," he said. "Either the governor doesn't understand his own budget or is deliberately misleading Iowans. Quite frankly, either is a problem."
Meanwhile, two separate indices -- the Iowa Business Conditions Index and the Iowa Leading Indicators Index -- showed continued declines.
Iowa's Business Conditions Index slipped below 50 in July after rising above "growth neutral" in June, according to Creighton University's monthly survey of supply managers. The index, a leading economic indicator, dipped slightly to 49.8 from June's 51.2.
"I expect Iowa's seasonally adjusted unemployment rate to peak at 6.5 percent, its highest level since 1986, in the fourth quarter of this year," said Creighton University Economics Professor Ernie Goss. "The state will continue to bleed durable-goods-manufacturing jobs in the months ahead. However, the pace of these job losses will diminish significantly from the rate experienced earlier this year."
Meanwhile, the value of the Iowa Leading Indicators Index dropped in June for the 15th consecutive month, although it was the smallest drop since October 2008, according to a report by the Iowa Department of Revenue. The 15-month streak of declines comes after the index reached a peak of 108.4 in March 2008.
One Thousand Same-Sex Couples Tie the Knot in Three Months
Three months after the Iowa Supreme Court ruled that same-sex couples have the right to marry in the state, approximately a thousand gay and lesbian couples have received marriage certificates, according to One Iowa, a group promoting marriage equality in Iowa.
Precise numbers from around the state are hard to come by; many county recorders said they don't keep track. Others noted that it would be nearly impossible to get a precise count considering that the parties to be wed no longer have to check "bride" or "groom." They may if they choose, but many are listed as "Party A" and "Party B."
"We would literally have to look through every certificate and guess at the names," said Black Hawk County Recorder Judith McCarthy. "It's just another marriage to us. It's not important."
In Polk County, there was a total of 1,166 marriages -- including 328 between couples of the same sex -- in the three months following April 27, the first day such unions were legal. Johnson County has seen 480 total marriages in the same time period, with 154 same-sex marriages.
Officials in both counties said they have seen significantly more women than men tying the knot together -- 211 versus 117 in Polk County.
County recorders interviewed for this story said they saw a rush to marry in the days and weeks immediately following April 27, but that marriages among same-sex couples have slowed to a steady trickle since then.
Many conservatives insist the issue is not yet settled. Bryan English, communications director for the Iowa Family Policy Center, said the next step for opponents is to support candidates who will back an amendment to the Iowa Constitution banning marriages between anyone but one man and one woman.
One such candidate is Steve Burgmeier, chair of the Jefferson County Board of Supervisors. Burgmeier is now the Republican candidate for Iowa House District 90. He is challenging Democrat Curt Hanson to replace Represenative John Whitaker (D-Hillsboro).
One Iowa is taking the challenge seriously. "Make no mistake, a Burgmeier victory would be a boost for opponents of equality," the group said. "They would use his victory to push for a constitutional amendment next legislative session and overthrow pro-equality candidates in 2010."
Stopping same-sex marriages in Iowa is a process that would take two years. Lawmakers would need to pass a resolution in two consecutive General Assemblies before a constitutional amendment would go to a vote of the people.
Republicans are using the issue to energize their supporters. Former Arkansas Governor Mike Huckabee recently invoked same-sex marriage while stumping in Iowa for Republican gubernatorial candidate Bob Vander Plaats. Vander Plaats continues to call for an executive order that would put a stay on same-sex marriages, while other candidates have called for a vote of the people.
Iowa is currently one of three states that allow same-sex couples to wed, along with Massachusetts and Connecticut. Vermont will begin allowing the unions on September 1, and Maine is scheduled to do the same around September 14. New Hampshire will begin allowing same-sex marriages on January 1.
Iowa Supreme Curt Strikes Down State's Rules on School Closures
The Iowa Supreme Court has upheld a decision by the Des Moines Public Schools to close five schools and also voided the Iowa State Board of Education's 1977 Barker rules, which outlined procedures for consideration by all Iowa school districts contemplating school closings.
The appeal was filed by eight Des Moines parents who challenged the July 12, 2005, vote to close Moore Elementary, Edmunds Academy, Adams Elementary, Cowles Elementary, and Central Campus.
The parents claimed the decision should be set aside because the district failed to comply with two administrative rules by the Iowa State Board of Education prescribing procedural steps to be followed by school districts when making school-closure decisions.
But the high court said that since there was no claim that the school district abused its discretion, "the plaintiff-taxpayers' appeal must fail."
The legislature's decision to withhold such prescriptive authority from the State Board of Education fits comfortably with lawmakers' belief in local control, the Iowa Supreme Court said in striking down the Barker rules.
"We have declined to find legislative authorization for agency rulemaking in the absence of a specific grant of authority," said the opinion written by Justice Daryl Hecht.
This weekly summary comes from IowaPolitics.com, an online government and politics news service. IowaPolitics.com staff contributed to this report.
