Sweet land of subsidies

The latest population numbers are out and, once again, it isn't good news for Iowa.

Overall the Hawkeye State is growing, but slower than the national average. And, if the state's population centers like Cedar Rapids, Iowa City and Des Moines are set aside, it becomes clear that rural counties throughout the state are facing significant and ongoing population declines.

Within each of Iowa's 99 counties are needs - infrastructure, government, education and industry. While previous research by the USDA Economic Research Service showed rural residents receiving slightly less gross federal subsidy spending than their urban counterparts (roughly $10,900 per urban person compared to $10,300 per rural person), combining federal and regional subsidies paid directly to or on behalf of rural counties shows significant investment. Also, if the comparison is changed from gross to net federal subsidy spending, rural residents receive far more than urban dwellers.

Obviously, needs differ between Iowa geographies. When needs are not or cannot be met locally, government incentives are often introduced as a way to bridge service gaps. A well-known example of these incentives are tuition reimbursement programs for medical or other professionals who agree to a term of service in inner cities or rural areas.

These and other programs are ongoing public investments, rarely removed from policy once enacted. And, unlike other subsidies, their return on investment is seldom a subject of debate. This is partly because many subsidy programs that specifically target rural communities are equalizers. That is, they seek to bring at least a modicum of service to state residents that would otherwise be without.

Can you imagine the outcry if a politician lobbied for removal of an incentive or subsidy that was responsible for bringing a doctor or dentist to a rural county? What about a subsidy that provided water service?

There is a sense and belief that, urban or rural, we are all Iowans and we are all in this together. Such unity messages make us feel better, but it remains to be seen if they result in the best economic choices. Should those that choose to make their home in a remote area bear more personal responsibility for the inconveniences of their location? Perhaps more importantly for Iowans, at what point does an inconvenience become an actual burden?

Even in our urban counties, we've seen housing developments within unincorporated county areas. These often affluent developments appeal to urban dwellers seeking a bit more elbow room and, at least in some instances, have come with a lower price point than similar city construction. But once purchased, homeowners are inconvenienced by the dust of gravel roadways, and concerned by slower emergency services.

If there is a point when society is justified in saying to these residents that they made a choice and will need to learn to live with it, then isn't it logical to also think there is a point when the return on investment for other rural subsidies and incentives is too low to remain viable?

Now, take it a step further. Perhaps, in the days of horse-drawn carriages, it made sense for Iowa to be divided into 99 separate county governments. Does it still make sense today?

Maybe it doesn't. Maybe it does. The point is, even as population in many of those 99 counties continues to decline, the question isn't being seriously considered.

Just last month the Battelle Technology Partnership Practice delivered its third report on economic development in Iowa. A dozen key industries that have previously driven the bulk of the Iowa economy are not expected to generate jobs in the future. Bringing new business to the state has become a highly competitive undertaking, with many industries expecting incentives combined with sustainable infrastructure and quality living. In addition, Iowa's lagging population will likely decline further, providing fewer skilled workers to businesses already here.

Yet even as this report calls for the state to recognize and identify 'naturally occurring economic regions,” there is little thought or commentary given to the ongoing federal, state and local investment in declining rural counties. There does not appear to be a single source for evaluation of programs earmarked as economic incentives. So, we simply don't know what has resulted in increased economic activity, what's helped to stabilize decline or what hasn't had any impact at all.

Iowans deserve a closer look at their rural investment portfolios.

' Comments: @LyndaIowa, lynda.waddington@thegazette.com or (319) 339-3144.