The Elbert Files: Why $54 Iowa refund is a bad idea
Friday, December 06, 2013 7:00 AM
I was walking east on Grand Avenue trying to get rid of some extra turkey when I saw a small, rolling cloud of steam headed my way.
As I got closer, I saw it was my old friend K.C engaged in a conversation with himself. The cold air was turning his words a frosty white as soon as they left his mouth.
He was muttering something about $54 and how stupid it was.
“What’s stupid?” I asked.
“You know, that tax rebate,” he said nodding in the general direction of the state Capitol. “They think we’re dumb enough to fall for it, and we probably are.”
“Wait a minute,” I said. “Back up. What are you talking about?”
“The Legislature,” he said. “You remember last spring when they finally approved property tax relief.”
“Yeah,” I said. “It only took them 10 years.” (Actually, it was longer.)
“It was a grand compromise,” K.C. said sarcastically. “Everybody got something, even the people who didn’t need or want anything. People like you.”
“Yes,” he said. “You’re going to get a $54 tax rebate in January because the Legislature wasn’t smart enough to figure out how to spend the surplus built up by the farm economy.
“So they’re going to return about $30 million to taxpayers, at $54 a pop,” K.C. said.
“Why don’t they spend that money on transportation,” I said. “I keep reading about how we need to raise the gas tax because there’s not enough money to keep our highways and bridges safe.
“Or spend it on passenger train service. This is the same Legislature that took a pass on making a small commitment that would have eventually resulted in train service between Des Moines and Chicago.
“Or spend it on conservation. Clean up our nitrogen-polluted rivers and lakes,” I said.
“You know,” K.C. said. “This is the same dumb mistake Iowa made in 1979.”
“How so?” I asked.
“You remember 1979,” K.C. said. “The farm economy was going great guns, just like now.”
“Sure,” I said. “That was back when people were saying that Iowa had a recession-proof economy. We were the envy of the whole country.”
“Just like now,” K.C. said.
“Pretty much,” I agreed.
“And the state had a big surplus, too,” he said. “About $50 million, as I recall.
“Do, you remember what Bob Ray did with that surplus?” K.C. asked.
“Yeah,” I said with a sigh. “He gave it back to the taxpayers as a rebate in 1980. Just like they’re going to do now.”
“And just like now, it seemed like a no-brainer,” K.C. said. “But it wasn’t. It was a terrible mistake. In fact, that’s what George Kinley said at the time.”
Kinley was a state senator from the south side of Des Moines, where he owns a golf supply store. At the time, he was one of the few truly smart guys at the Statehouse.
“The other night,” K.C. said, “I was reading Jon Bowermaster’s oral biography of Ray. Kinley has a great line where he talks about how hard it was to vote against the 1979 rebate. He said it was like voting against motherhood and apple pie.
“But George was right,” K.C. continued. “It was a terrible mistake, because once they’d cashed all the rebate checks, the farm crisis began. The state was out of money, and before long, it was borrowing just to meet expenses.
“You know what’s happening in the farm economy now?” he said. “You should; you wrote last summer that farmland values had peaked.”
“Yes,” I said. “The price of corn is down about 40 percent for the year.”
“Need I say more?” K.C. said.
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