Policy Documents

The Leaflet - Heartland’s Valentine’s Day in Topeka

January 31, 2013

Next week experts from Heartland will spend Valentine’s Day in Topeka, Kansas testifying on a bill that would amend the state’s renewable portfolio standard (RPS). The bill would postpone the deadlines by which utilities are required to increase the percentages of electricity they sell from renewable sources, which are more expensive and not as reliable as traditional sources of energy.

Kansas is one of many states considering reforming their renewable portfolio standards to improve their business climates and provide significant relief to ratepayers, especially those on low or fixed incomes. The Institute for Energy Research reports electricity prices are 40 percent higher in states with mandates than in those without.

According to a joint report by the Kansas Policy Institute and Beacon Hill Institute, the RPS mandates as currently written would cause 2020 electricity prices to be 45 percent above baseline estimates and cost the state 12,110 jobs and $1.483 billion in real disposable income.

If you would like Heartland to come to your state to provide a fresh, independent, free-market voice to your state capitol, call John Nothdurft at 312/377-4000 or email him at jnothdurft@heartland.org. In addition to RPS reform some of our other main areas of focus this year include:

- Medicaid Expansion/Health Insurance Exchanges
- Income Tax Reform
- Pension Reform
- Parent Trigger
- Vouchers
- Hydraulic Fracturing/Mining

This week’s edition of The Leaflet features research and commentary addressing 9-1-1 fund raiding, frac sand mining, attracting independents and Democrats with school choice, Louisiana tax reform, tax breaks for banks, and Medicaid expansion.


John Nothdurft
Director of Government Relations
The Heartland Institute


Research & Commentary: 9-1-1 Fund Raids

The 9-1-1 and emergency response systems play a key role in public health and safety. These services are funded through fees added on to telephone bills;; the fees are then placed into a fund that is supposed to be used only to maintain and improve these systems. In some states, however, these funds are being used for other purposes or even moved into the general budget.

The Federal Communications Commission (FCC) recently issued a report examining how states were maintaining their 9-1-1 funds and if they were using the funds for purposes unrelated to emergency response. The report, which covers state management of the funds during 2011, found seven states and territories used 9-1-1 money for other purposes that year.

A common method states use to help balance budgets are fund sweeps, under which states divert unspent money from dedicated funds into their general funds. In 2011, five states—Arizona, Illinois, Maine, New York, and Rhode Island—reported to the FCC they moved 9-1-1 fees and charges from their dedicated fund to their state’s general fund. Georgia also reported it used 9-1-1 funds for non-9-1-1 purposes, but it did not provide details on how the funds were used. Guam used 9-1-1 money for other purposes related to public safety. The District of Columbia and Louisiana did not respond to the FCC study in 2011.

Raiding 9-1-1 funds, vehicle taxes, or any dedicated revenues for reasons other than their intended purpose is bad public policy. Public safety groups have criticized states for using 9-1-1 funds for other purposes. The National Emergency Number Association, National Association of State 911 Administrators, and 9-1-1 Industry Alliance called these sweeps “less than honest” and stated the diversion of funds places the nation’s 9-1-1 systems at risk while breaking “the trust established with the public.”

In addition to the public safety problems these fund raids create, taxpayers also should be concerned about how their tax dollars are being managed. When states are allowed to raid dedicated funds and divert those taxes from their stated purpose, these dedicated revenues become de facto slush funds and additional phone taxes will likely be tacked onto phone users’ bills. If a dedicated 9-1-1 fund builds up “extra” revenue, lawmakers should reduce the tax to a more reasonable level and not raid the fund for other expenditures.


Research & Commentary: Minnesota Frac Sand Mining

According to Minnesota Gov. Mark Dayton, topping the list of environmental issues for the 2013 state legislative session is silica or “frac” sand mining. Newly usable reserves of natural gas have sent demand for frac sand skyrocketing because it’s one of the main ingredients in the energy extraction technique known as hydraulic fracturing. Some Minnesota residents are concerned about what the expansion of frac sand mining in Wisconsin could mean for their state, especially since Minnesota roads are used to transport Wisconsin sand to North Dakota oil fields.

Policy Analyst Taylor Smith writes, “Economic activity related to frac sand mining supported 19,000 good-paying jobs in [Minnesota], and the number is expected to grow to 42,000 by 2035 – 1.2 percent of the state’s labor force,” and “banning or overregulating any form of sand mining is unnecessary and inhibits job creation and tax revenues.”

Blog: How to Appeal to Independents and Democrats: School Choice

Republicans looking for policy issues that can appeal across party lines and to independents without sacrificing conservative principles ought to look toward schools choice. In a Heartland Institute blog post, Research Fellow Joy Pullmann walks us though the charts and numbers that support this idea.

Joy writes, “[School choice] is a way to champion the downtrodden while simultaneously making the most of tax dollars and reducing the liberal indoctrination camps 90 percent of the country’s kids are required to attend. Republicans should make more of it, and white suburban and rural conservatives should stop putting their own prejudices ahead of a better education system for all.”

Research & Commentary: Louisiana Tax Reform

Budget & Tax

Louisiana Gov. Bobby Jindal recently announced a new tax reform proposal that would eliminate Louisiana’s personal and business income taxes while increasing state sales taxes and removing certain tax breaks. Gov. Jindal says these reforms will save Louisiana families money and encourage businesses to come to Louisiana, invest, and create new jobs.

In this Research & Commentary, Senior Policy Analyst Matthew Glans says Jindal’s tax reform plan is a strong step towards improving Louisiana’s economic competitiveness and returning tax dollars to Louisiana citizens and businesses. Income and corporate tax cuts have improved state economies across the country; while more details are needed about how the plan will work, Louisiana should give this proposal serious consideration.

Banks Pay Billions to Settle Complaints, Receive Billions in Tax Breaks
Finance, Insurance, and Real Estate

In this article from The Heartlander digital magazine, Steve Stanek examines an interesting story that questions the support financial institutions receive from the federal government. Stanek points out the seemingly contradictory fact that the banks that are now paying billions to settle government complaints over banking and mortgage lending practices are also receiving billions of dollars of tax deductions.

The story collects comments from various legislators who oppose the practice. In a letter to federal financial regulators and the U.S. Department of Justice, Sen. Sherrod Brown (D-OH) argued, “The acts of these institutions are doubly harmful to ordinary Americans. They suffer first as homeowners, consumers, and investors, but they suffer again as taxpayers because companies can deduct the cost of penalties from their federal tax bills. It is simply unfair for taxpayers to foot the bill for Wall Street’s wrongdoing.”

Sen. Charles Grassley (R-IA) also voiced opposition to the banks being allowed to deduct the settlements from their taxes. “The government is abetting the behavior by not preventing the deduction,” Grassley told Marcy Gordon of the Associated Press. “The taxpayers end up subsidizing the Wall Street banks after the headlines of a big-dollar settlement die down. That’s unfair to taxpayers.”

Policy Tip Sheet: Medicaid Expansion
Health Care

In the wake of the U.S. Supreme Court’s decision on the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, states must now decide whether to expand their Medicaid programs by accepting a larger federal subsidy.

Kendall Antekeier argues expansion adds to state costs as well as expands a system already producing poor quality care. She states, “In reality, the money isn’t free. Accepting federal funds to expand Medicaid rolls will impose new costs upon states and, ultimately, state taxpayers.”