Fact Check: Branstad ad makes claims on capital investments, employment success

The advertisement debuted Wednesday

By Hayley Bruce, Erin Jordan and Brian Morelli, The Gazette
Published: June 6 2014 | 3:24 pm in Fact Check,

Introduction

This fact check will weigh on 13 claims made in the most recent advertisement released by the Branstad-Reynolds campaign. The claims are listed and rated in the order they appear in the advertisement.

Source of claim

“This is our Comeback” advertisement released by the Branstad-Reynolds campaign on June 4.

Analysis

1. (:10) More Iowans are employed than ever before: 1,544,400: True

The state's nonfarm employment was 1,544,400 in April 2014, which is an all-time high according to Iowa Workforce Development.

 

2. (:13) Iowa unemployment reduced 30 percent: True

When Gov. Terry Branstad took office in Jan. 2011, the unemployment rate was 6.1 percent. Data from Iowa Workforce Development shows it is currently 4.3 percent which is a 30 percent reduction.

 

3. (:16) Iowa's unemployment has gone from 6.1 percent to 4.3 percent: True

 

4. (:20)$8.8 billion in private capital investments: True

Branstad-Reynolds listed eight companies, including Google, Cargill and Microsoft, that have made financial investments to build or expand in Iowa. The dollar amounts listed in the ad appear to show the investment promised, not what the company has already spent, said Tina Hoffman, spokeswoman for the Iowa Economic Development Authority.

But Hoffman said the $8.8 billion is accurate, based on contracts the state has with corporations listed in the ad. “If anything, the number is conservative,” she said.

However, the ad doesn't say how much Iowa has paid the companies in incentives to promote these projects. Iowa has so far awarded $176 million in cash and tax incentives to the eight companies listed in the Branstad-Reynolds TV ad.

The Iowa Fertilizer Plant, now under construction in Lee County, was offered more than $100 million in tax credits to supplement $130 million in local incentives.

 

5. (:24) Largest tax cut in Iowa history: True

This claim relates to a 2013 rollback of commercial property taxes, which is likely the largest tax cut in Iowa history, said Jeff Robinson, a senior legislative analyst with the state's Legislative Services Agency. The only other tax cut that would compare was a 1997 reduction of income tax, which would have been smaller when it was originally implemented than the 2013 changes.

See the next claim for more information.

 

6. (:28)$4.4 billion in tax savings for taxpayers: Mostly true

The commercial property tax rollback of 2013 was expected to reduce taxes for business owners and multi-residential property owners. The bill also doubled the Earned Income Tax Credit for low-income Iowans.

The changes were projected to save Iowans about $385 million in fiscal 2018, the first year of full implementation, according to a fiscal note prepared by the Legislative Services Agency.

To get to the $4.4 billion listed in the Branstad-Reynolds ad, you would have to include the savings for more than a decade of implementation.

The claim also doesn't account for the estimated $312 million the state will pay in fiscal 2018 to offset losses to local governments from the property tax reduction.

 

7. (:36) Largest investment in Iowa schools in state history: Mostly true

This is a claim that is more vague than it may appear, and its accuracy depends on how you look at it.

We'll focus on primary and secondary education.

Iowa invested $2.65 billion in state aid for schools in fiscal 2013, and the state plans to invest $2.71 billion in 2014, according to the Annual Condition of Education Report by the Iowa Department of Education. Both are historic highs.

When adjusting for inflation, it's the highest at least since 2000.

Looking through a different lens at per pupil investment, Iowa's also at an all-time high of $8,429 spent per student, according to the Legislative Service Agency.

The $2.71 billion Iowa plans to spend on state aid for schools this year represents 41.8 percent of the total state budget, which is the second-lowest proportion since the 2001-2002 fiscal year.

Considering education more broadly, the education appropriation bill captures funding for the public universities, community colleges, scholarships and Iowa's special schools, such as the School for the Blind. The appropriation this year for fiscal 2015 was for $986 million, which is a sharp increase from the previous year.

However, the spending was higher in fiscal 2007, 2008 and 2009. And, under Branstad's watch, the fiscal 2012 appropriation was the smallest since 1997, according to data from the Iowa Legislature.

But the ad addresses college tuition separately, so we'll give Branstad the benefit of the doubt that he was referring to kindergarten-through-grade-12 education and rate it mostly true.

This is a claim that is more vague than it may appear, and its accuracy depends on how you look at it.

 

8.(:38) 2013, 2014 historic higher education tuition freeze, first time in 35 years: True

After the Legislature met a request to increase funding for the Iowa Board of Regents, the agency followed through with a promise to not increase tuition for a second year in a row in 2014. The agency reports this is the first two-year freeze since 1975.

 

9. (:41) Nation's eighth-best rainy day fund: True

National Association of State Budget Officers Fiscal Survey of State for fall 2013 supports this claim. The report shows that Iowa will have $650 million balance in its rainy day fund, and for the past three years Iowa has saved approximately 10 percent of its expenditures.

For fiscal 2014, that ranks the eighth-highest rate in the country.

 

10. (:43) Second-best managed state: Unverifiable

This claim is subjective because “best managed” can take many meanings and different. However, a few publications put Iowa toward the top of the list in different “best managed” rankings. Barron's ranks Iowa No. 2 in its analysis of best-run states.

The ranking is based on performance in the municipal bond market, and it focuses on debt and unfunded pensions as a proportion of gross domestic product. Combined debt and unfunded pensions in Iowa represents 1.3 percent of the GDP.

 

11. (:46) Iowans' personal income growth fifth best in nation: Mostly true

Iowans personal income grew from 2012 to 2013 by 2.68 percent to $45,114, which ranks No. 4, according to Bureau of Economic Analysis. When looking at Branstad's entire term, the personal income growth rate is 3.07 percent, which ranks No. 8.

 

12. (:50) 500 regulations eliminated: False

The definition of “eliminate” is to remove or get rid of something. This claim suggests there were 500 existing regulations cut by the Branstad administration.

But Tommy Schultz, Branstad's campaign communication director, explained they arrived at the number by calculating the average annual number of rules proposed during Gov. Chet Culver's term, from 2007 through 2010, which was 453. They compared it with the annual average number of proposed rules for Branstad's first three years of office, which came to 298.

Following that pattern, over a four-year term, Branstad will have proposed at least 500 fewer regulations than Culver, Schultz explained.

“Five hundred rules didn't go into effect under Gov. Branstad,” Schultz said.

Branstad's claim that he eliminated 500 rules is misleading, at best. If rules were never created, then they weren't eliminated.

 

13. (:51) Seventh-lowest unemployment rate in the nation: True

April 2014 unemployment rates ranked by state by the Bureau of Labor Statistics show Iowa has the 7th lowest unemployment rate.

 

Conclusion

Ten of the 13 claims in this advertisement were true or mostly true. Because we are rating the advertisement as a whole, we give this advertisement a rating of mostly true.

 

Sources

Iowa Workforce Development unemployment rates April 2014: http://www.iowaworkforce.org/news/2011/04192011.pdf

2013 Condition of Education Report: https://www.educateiowa.gov/sites/files/ed/documents/2013ConditionOfEducation.pdf

Education Funding for Iowa Students: https://www.legis.iowa.gov/DOCS/LSAReports/k12Education/historical_per_pupil.pdf

Administrative rules proposed each year: https://www.legis.iowa.gov/law/administrativeRules/bulletinSupplementListings

National Association of State Budget Officers Fiscal Survey of State (Page 57): http://www.nasbo.org/sites/default/files/NASBO%20Fall%202013%20Fiscal%20Survey%20of%20States.pdf

Bureau of Labor Statistics State Rankings by unemployment: http://www.bls.gov/web/laus/laumstrk.htm

Barron's: http://online.barrons.com/news/articles/SB50001424053111904881404577603301566976464

Bureau of Economic Analysis, Regional Economic Accounts: http://www.bea.gov/iTable/drilldown.cfm?reqid=70&stepnum=40&MajorAreaKey=3&GeoStateKey=0&GeoFipsReis=XX&TableIdReal=21&LineKey=3&YearReis=2013&YearReisBegin=-1&YearReisEnd=-1&UnitOfMeasureKeyReis=PercentChange&RankKeyReis=1&Drill=1&nRange=5

The full advertisement can be viewed here: http://bit.ly/1kEPoSR

This Fact Checker was researched and reported by Hayley Bruce, Erin Jordan and Brian Morelli.


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