East Iowans greet dollar coin idea with skepticism

Brooke Fitzgerald and Mike Monnahan both own coffee shops in downtown Cedar Rapids. Both handle scores of $1 bills from customers on a daily basis, and both are reluctant to add stress to their businesses.

That's why Fitzgerald and Monnahan are skeptical about an idea that could have a lasting impact on U.S. currency and possibly the industry of Cedar Rapids - replacing use of the $1 bill with $1 coins.

Fitzgerald, who has owned The Early Bird cafe, 316 Second St. SE, since November, is afraid it will be cumbersome for her business to make the change. She said she and her staff already sometimes struggle to identify a 50-cent piece or a current $1 coin.

“I'm not sure about dealing with another coin when we have four already,” she said. “When it's really busy, and you're dealing with a lot of people, the big coins can be confusing.”

Monnahan, who has owned the Blue Strawberry Coffee Co., 118 Second St. SE, since 2003, has similar concerns. But he also wonders about the national savings.

“It would be cumbersome and probably inconvenient to have to deal with a dollar coin,” he said. “I'm picturing big bags of coins in canvas bags. But if there's a significant savings, and in the long haul it would save money, then we as merchants would adapt.”

They might have to. The $1 bill has been around since 1862, but under legislation introduced in January by Sen. Tom Harkin, D-Iowa, it would be phased out over four years and replaced by a coin.

The idea is bipartisan - 2008 GOP presidential nominee Sen. John McCain, R-Ariz., is a co-sponsor, and it has a companion bill in the House by Rep. David Schweikert, also an Arizona Republican.

Harkin isn't the first senator to explore the idea, but he has become it's longest and biggest champion, trying since 1990 to get it through the Senate. He told The Gazette he originally got the idea while serving overseas with the U.S. Navy in the 1960s and noticing coins of large denominations.

“It occurred to me that we don't have anything like that,” he said. “It became clear that the dollar coin would be better for us and save us money, but it wouldn't really work unless you did away with the dollar bill.”

Harkin has the Government Accountability Office on his side.

Six times between 1990 and 2011 the GAO has studied the concept, always concluding it would save hundreds of millions of dollars a year. The most recent estimate: Up to $500 million annually. That's because the government considers the $1 coin simply cheaper to produce and longer-lasting. Most dollar bills now in circulation are less than 3 years old, while a $1 coin supposedly lasts 30 years.

Harkin and McCain's bill is parked in a Senate committee and a House subcommittee.

But with Congress in a cost-cutting mood, Harkin thinks this could be the year it passes. He noted that the Bush administration's tax cuts will be expiring at the end of the year – President Barack Obama has vowed not to renew them - and unemployment benefits will be curtailed as well.

“I want to be realistic,” he said. “As we get to the end of the year, a lot of things will happen and the committees that put this together will be looking for (savings).”

Cedar Rapids organizations that typically handle small-scale transactions are neutral about the idea.

Brad DeBrower, Cedar Rapids' city transit manager, said his agency upgraded its fare boxes about 10 years ago to accept $1 coins. The agency's fares are all grouped around $1 – from 50 cents for the elderly or disabled to $1.25 for adults.-- but DeBrower said because of the upgrade, Harkin's idea “wouldn't make a huge difference.”

Harkin said one Cedar Rapids organization that could benefit in particular is PMX Industries, a copper mill in the southwest quadrant with 400 employees.

For years, companies like PMX were shut out of the bidding process for U.S. government minting contracts. After that changed in 1993, PMX won a contract and now provides 50 percent of a certain alloy material for coins in the U.S.

Doug Neumann, president and CEO of the Cedar Rapids Economic Alliance, sees the possibility that PMX Industries could win more business as the biggest local benefit.

“For us, there's more interest in this because of that than anything else,” Neumann said.

PMX Industries belongs to a lobbying effort in Washington called the Dollar Coin Alliance, a coalition of business groups, mass transit agencies and advocacy groups. According to Alliance officials, Britain, Canada, Australia, Japan, Switzerland and England all have coins with higher exchange values than one U.S. dollar. But they privately acknowledge that resistance to change has historically doomed the idea among U.S. consumers.

Fitzgerald said she believes younger Americans would be “adaptable” to such a change. But Monnahan said it will still be a challenge.

“You're changing people's habits and traditions,” he said. “It's going to be difficult.”