Iowa - #7 Land

The land use freedom category includes eminent domain reform and land-use regulations. 
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Change since 2016
Land
#1
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CHANGE since 2016

Analysis

Like other midwestern states, Iowa has long been a standout on regulatory freedom. Even though the state has moved right in recent years, it is one of just a few states whose fiscal situation has deteriorated during the past decade. As a result, its fiscal policy ranking has cratered. Not so long ago, Iowa was a top-10 state on overall freedom, but its competitive policy advantages have faded.

Both state and local tax burdens are above average in Iowa. Iowans pay 10.6 percent of adjusted personal income to government, similar to the figure in California. The state tax burden rose from 5.7 percent in FY 2011 to 6.4 percent in FY 2020. Government GDP share is higher now than in 2000 (12.0 percent versus 11.5 percent). Debt is quite low, however. Government employment is about average: 13.3 percent of private employment in 2016.

Iowa has consistently stood out as a leading state on regulatory policy. Land-use freedom is much better than average, although the state hasn’t done as much as some others about eminent domain for private gain, and like everywhere else, local zoning has become tighter. It is a right-to-work state without a minimum wage, and workers’ compensation–mandated coverages were liberalized slightly in 2008. Unlike most other states, Iowa doesn’t mandate standing referrals or direct access to specialists in health plans. In 2017, telecom wireline regulatory authority was fully removed, and the state has statewide video franchising as well. Occupational freedom is about average and has fallen over time because of the licensing of new occupations, especially between 2005 and 2009 and again in 2016. Iowa has certificate-of-need laws for hospital construction and moving companies. Insurance freedom rose with a switch back to “use and file” in 2018. The civil liability system is rated well above average and has generally improved.

On the personal freedom side, incarceration and victimless crime arrest rates are now about average, as other states have caught up with Iowa’s previously relatively liberal approach. Iowa suspends driver’s licenses for drug offenses unrelated to driving but has low prison collect call rates. Educational freedom is somewhat high because the state has a long-standing tax-credit scholarship program as well as interdistrict public school choice. Homeschooling was significantly liberalized in 2013. However, private schools are tightly regulated, with mandatory state approval, teacher licensure, and detailed curriculum control. Gambling freedom is high, and the state legalized some online betting in 2019. Marijuana freedom is sharply limited; a single marijuana offense not involving minors can carry up to 50 years of prison time. For a rural state, Iowa does not do very well on gun freedoms compared with most other states, but it has liberalized in recent years. Sound suppressors were legalized in 2016 and Stand Your Ground was enacted in 2017. Open carry requires a license, and the state has a stricter-than-federal minimum age to purchase a firearm. Iowa has no legal requirement for motorcyclists to wear a helmet. Alcohol freedom is mediocre because of state involvement in wholesaling and high distilled spirits taxes.

Policy Recommendations

  • Fiscal: Trim spending in areas where the state spends more than the national average—education (especially higher education), hospitals, highways, parking lots, and sanitation—and use the savings to trim property, sales, income, and motor vehicle license taxes.
  • Regulatory: Repeal certificate-of-need requirements for new hospital construction and for moving companies.
  • Personal: Adopt constitutional carry and legalize Class III weapons.