Analysis: Our breakdown of Iowa’s IWILL proposal

On Jan. 14, Iowa Gov. Kim Reynolds announced her plans for the Invest in Iowa Act. Under this proposal, Reynolds is requesting the Legislature raise the sales tax in the state by one penny. Coupled with several tax cuts, including a minimum 10 percent income tax cut and property tax breaks for counties, this new funding includes the necessary three-eighths of one cent needed to fund the constitutionally-created Natural Resources and Outdoor Recreation Trust, also known as Iowa’s Water and Land Legacy or IWILL. Though many details are still unknown, we have completed this analysis by compiling all definitive data we've been given.

Our priorities with IWILL are three-fold:

1) The creation of the Watershed Staffing and Resiliency Pilot Program (WSRPP) or something similar. We proposed language to the governor’s office which would establish a program at the Iowa Department of Natural Resources to give five-year grants to watershed management authorities (WMA) to cover the costs (salary, office expenses, etc.) of hosting a watershed coordinator to execute the duties of a WMA. State support for locally-directed water quality and flood mitigation projects puts Iowa communities in the driver’s seat when they’re making these decisions.

2) Increased funding for locally-directed water quality, conservation, and flood mitigation projects on the watershed scale. Local control is a cornerstone of Iowa’s system of government, and we believe local communities are best equipped to make these decisions when given the right support.

3) Sustainable and enhanced funding for understaffed, but critical agencies, such as the Iowa Department of Natural Resources and Soil and Water Conservation Districts. These agencies provide critical support for water quality monitoring, cost share allocation at the county level, and providing leadership on these important topics.

During the past few weeks, the Center has been analyzing the governor’s proposal so we can make the most informed decisions possible. This proposal is expected to generate more than $450 million, of which $171.3 million would go to fund IWILL. When 63 percent of Iowans approved the creation of IWILL in 2010, they also approved an allocation formula to disperse the funds. In her proposal, Gov. Reynolds has suggested some notable changes to the formula. In our conversations with the governor’s staff, representatives have said the shifts are intended to reflect changes in the state’s need, as the state did not have the Iowa Nutrient Reduction Strategy or the Iowa Water Quality Initiative when voters approved IWILL in 2010. In the chart below, you will see how the governor’s proposal stacks up against the original IWILL formula.
 

Comparison: Gov. Reynolds’ proposal and existing IWILL formula

Comparison: Gov. Reynolds’ proposal and existing IWILL formula
 

The Center’s suggested changes to the IWILL allocation formula

The Center’s suggested changes to the IWILL allocation formula

If you look at water management in Iowa, we have seen time and again that local leadership which focuses efforts on watershed-level planning and project implementation offers the state’s most promising path forward. If the Center were to write the allocation formula for IWILL, we would want it to reflect this reality.

Here’s how we would do that:

In the original IWILL formula, the Soil Conservation and Water Protection Account would have generated $34.26 million on an annual basis. If—as indicated by the governor’s office—the state were to transfer the programs from the Water Quality Infrastructure Fund (created in 2018 under Senate File 512), the maximum cost would be $15 million a year. So, by adding the $34,260,000 original IWILL amount to the $15,000,000 maximum Water Quality Infrastructure Fund program cost, you come out with $49,260,000, or 28.76 percent. For simplicity’s sake, we have rounded up to suggest this account receive 29 percent of IWILL funding. This reflects changes in state need, while offering the opportunity to reallocate 5 percent to other accounts in the formula. As indicated above, local control and watershed-level efforts are the Center’s key priorities, so in our proposal, we suggest adding 3 percent to the Watershed Protection account and 2 percent to the Local Conservation Partnerships account.
 

Funding outcomes for all proposals

Funding outcomes for all proposals

The Center’s proposal secures more funding for local control and watershed-level projects, putting communities across Iowa in the driver’s seat on water quality improvement, flood mitigation, and improving their quality of life. Furthermore, under our proposal, the percentage differences between the existing IWILL allocation formula are no more than a 10 percent decrease or increase in any account—maintaining the integrity of the formula voters passed in 2010.

Agency + Rebuild Iowa Infrastructure Fund (RIIF) IWILL funding replacements

In Reynolds’ proposed budget for the next fiscal year (FY), she proposes zeroing out several existing funds to the Iowa Department of Natural Resources (IDNR), the Iowa Department of Agriculture and Land Stewardship (IDALS), and the Iowa Department of Transportation (IDOT). The charts below spell out how a total of $51,353,738 of existing state agency allocations and $19,800,000 in other programs are to be replaced by IWILL dollars. Importantly, the column labeled “First half” represents the fact that the sales tax increase to fund IWILL would not take effect until Jan. 1, 2021, thus representing only half of the fiscal year. Total decreases to existing funding are spelled out under “Full FY” columns. Lastly, the final chart outlines proposed replacements from the Rebuild Iowa Infrastructure Fund (RIIF).
 

IWILL IDNR funding replacement (Governor's proposal)

IWILL IDNR funding replacement (Governor's proposal)

Key Points:

  • Decrease to General Fund: $5,458,058
  • Decrease to Environment First Fund: $22,260,000
  • Decrease in first half of Fiscal Year: $13,859,029
  • Decrease in full Fiscal Year: $27,718,058
  • Total replacement for IDNR current allocations by IWILL: $27,718,058
     

IWILL IDALS funding replacement (Governor’s proposal)

IWILL IDALS funding replacement (Governor’s proposal)

Key points:

  • Decrease to General Fund: $6,335,680
  • Decrease to Environment First Fund: $17,300,000
  • Decrease in first half of Fiscal Year: $11,817,840
  • Decrease in full Fiscal Year: $23,635,680
  • Total replacement for IDALS current allocations by IWILL: $23,635,680
     

IWILL Rebuild Iowa Infrastructure Fund (RIIF) funding replacement (Governor's proposal)

IWILL Rebuild Iowa Infrastructure Fund (RIIF) Funding Replacement (Governor's Proposal)


Other key information

In all, the information above reflects this equation:

$171,300,000 (annual IWILL funding)
- $51,353,738 (proposed agency funding replacements)
- $19,800,000 (proposed RIIF funding replacements)
$100,146,262 (new money from IWILL)

The governor’s office has shared the following information with us about their IWILL proposal.

  • There will be a 14.6 percent increase in funding for conservation practices ($25,009,800).
  • Up to 58 percent of this money will go to water quality ($99,354,000).
  • The popular Resource Enhancement and Protection program (REAP) under IDNR would not change, but they would authorize up to $17.13 million and extend sunset to 2050. Current REAP funding sits at $12 million.

As we continue to analyze the governor’s proposal and advocate for investments in the Center’s priorities, we hope that each of you will take the time to share your thoughts. If you are willing to share your story, if you have questions, or would like to learn more, please email me at codys@cfra.org.