Overview / Major Events
Today marks the arrival of the first big legislative benchmark with the first legislative funnel. Policy bills that have failed to be approved in their committee of origin by the close of business today are technically dead for the year. As action in some committees could extend later into this evening, a full run down of what made the cut and what failed will be included in next week’s update. The next funnel is exactly four weeks from today (and that requires passage on the floor in one Chamber and committee approval in the other Chamber for continued eligibility).
Governor Reynolds unveils significant Tax Reform proposal
Governor Kim Reynolds started the much anticipated tax reform discussion in Iowa with the introduction of her plan to reduce and reform Iowa’s personal income tax system. Tax reform has taken on a new sense of urgency in Iowa due to a quirk in Iowa law called “federal deductibility”.
Iowa is one of only a few states that allow Iowans to fully deduct the federal income taxes they pay on their Iowa returns. While this keeps Iowa’s tax rates artificially high, it also means that when the federal government CUTS taxes (as they did, significantly, late last year) it results in state tax INCREASE (as you have a much smaller federal deduction and that means your taxable income in Iowa is higher and subject to state tax).
Rural Mainstreet Index Sinks for January: Rising Farm Loan Defaults Identified as Greatest 2018 Challenge
January Survey Results at a Glance:
OMAHA, Neb. (Jan. 18, 2018) – The Creighton University Rural Mainstreet Index declined slightly in January from December’s weak reading, remaining below growth neutral, according to the latest monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The index, like all indices in the survey, ranges between 0 and 100 with 50.0 representing growth neutral, fell to 46.8 from 47.8 in December. Though the overall index remained below growth neutral, it is significantly higher than the reading for January 2017.
“While the overall Rural Mainstreet Index (RMI) for January declined and remained below growth neutral, year-over-year indices are trending higher. Clearly, based on our recent surveys, the negatives are getting less negative,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
When asked to name the greatest 2018 economic challenge for their banks, four in 10 bankers reported that loan defaults represented the biggest challenges for the year ahead. This is well ahead of the second ranked challenge of competition from Farm Credit coming in at 15.6 percent.
Farming and Ranching: The farmland and ranchland-price index for January rose to 42.2 from 39.8 in December. This is the 50th straight month the index has fallen below growth neutral 50.0.
Rural Mainstreet Index Improves for December: Retail Sales Soar to Highest December Reading Since 2014
December Survey Results at a Glance:
OMAHA, Neb. (Dec. 21, 2017) – The Creighton University Rural Mainstreet Index improved from November’s weak reading but remained below growth neutral, according to the latest monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The index, like all indices in the survey, ranges between 0 and 100 with 50.0 representing growth neutral, expanded to 47.8 from 44.7 in November. While the overall index remained below growth neutral, it is up approximately 11.4 percent from December, 2016.
“While the overall Rural Mainstreet Index (RMI) for December remained below growth neutral, this is the highest December reading that we have recorded since 2014. Clearly, based on our recent surveys, the negatives are getting less negative,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Only one-fifth, or 20.4 percent, of bank CEOs reported that their local economy was expanding. While this indicator remains bearish, it is well up from the 8.7 percent reporting an expanding local economy in February 2016.
by Dave Caris, CEO - Community Bankers of Iowa
Tax reform legislation has not yet been introduced in the Iowa Legislature, but the Governor, the House and the Senate are all expected to release their versions of tax reform legislation in the next several weeks. Tax or Ways and Means Committee bills are not subject to the funnel deadlines of the Legislature, so comprehensive tax reform, including the issue of credit union taxation, will be a live issue until the end of the Legislative Session in April. Prior to the introduction of legislation and the resulting debate, the Credit unions have launched a massive media and grassroots campaign in an effort to maintain their "FREE RIDE."
It's important that bankers speak out to policy makers on this critical issue to counter the onslaught of contacts from credit unions. The Iowa Bankers Association has developed an excellent and quick method of finding and emailing your State Legislator to speak out on this issue. Just click here. The IBA and CBI are united on this major issue. We urge you to email your State Senator and Representative and, in your own words, tell them it's time to end the free ride. The following are a few key points you may want to consider:
by Dave Caris, CEO - Community Bankers of Iowa
Iowa's credit unions have launched a massive media and grassroots campaign before even seeing legislation to finally require them to pay their fair share of taxes. When you are talking to your employees, friends, neighbors and policy makers about this issue, keep the following key points in mind:
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