i9 Fact Checker: Ad attacks Treasurer for not speaking up on policy issues

CEDAR RAPIDS, Iowa (KCRG) - A political ad airing on TV9 argues Iowa Treasurer Michael Fitzgerald (D-Des Moines) is losing interest in his job after being elected in 1982.

Source: Smith for Treasurer

According to documents from the Iowa Ethics and Campaign Disclosure Board, Smith for Treasurer is the candidate committee for Sen. Roby Smith (R-Davenport). He is running against Michael Fitzgerald to become the state treasurer.

Claim #1: When Biden’s IRS tried to snoop on your bank account, Fitzgerald said nothing.

Analysis: This claim is based on one of many proposals from the United States Treasury Department in May 2021. This specific proposal would require financial institutions to report gross inflows and outflows from all business and personal accounts if the amount is more than $600.

This proposal wouldn’t let the government “spy” or look at specific transactions. Instead, it would require banks file annual reports on how much total is deposited or withdrawn from an account.

The Treasury Department said in its proposal it’s missing about $166 Billion in tax revenue and this would give the Internal Revenue Service (IRS) more tools to find more people who weren’t paying their full share of taxes along with better target audit resources.

The American Bankers Association said the change creates concerns over people’s privacy, data security and would require banks to spend significant resources to comply with the regulation.

Republican lawmakers including multiple Republican State Treasurers released statements condemning the regulation.

Michael Fitzgerald, a Democrat, didn’t release any statement to support or oppose the policy. He said at a debate on Iowa Public Television state treasurers have no influence on the policy of the United States Treasury.

“The U.S. Treasury makes their decisions and policies regardless of what state treasurers say. They have no influence on what the U.S. Treasury does on forming their regulations. Yeah, there was 15 or 16 right wing treasurers that said oh no, we don’t want to see that. They had no effect. But they made noise and that was about it, noise because they have, the Treasury makes its own rules.”

Conclusion: Whether or not Fitzgerald should have given an opinion on a federal policy he had no influence on is a matter of opinion but he did stay silent. However, the misleading description of the IRS spying on bank accounts is why this gets a C.

Claim #2: When he had the chance to support eliminating taxes on retirement income for Iowa’s seniors, Fitzgerald did nothing.

Analysis: This claim is referring to House File 2317, which Governor Kim Reynolds signed into law in March. The Treasurer’s Office never registered to support or oppose the bill.

According to the Legislative Services Agency, the law eliminates state taxes on retirement income like 401(k)s and IRAs.It also created a flat tax of 3.9% on state income taxes starting in 2026 and a lower corporate tax rate.

Michael Fitzgerald said at an Iowa Press Debate the legislature rather than his office is responsible for making decisions to decrease or increase taxes.

“Our responsibility in the Treasurer’s Office is taking responsibility for the funds the state has and we’ve done a great job of doing that. That is what our mission is, keeping the money safe. Now, if the legislators and the Governor want to increase taxes or decrease taxes, that is their decision. It’s not something that directly effects programs that we run in the State Treasurer’s Office like unclaimed property or College Savings Iowa or IAble where we’re helping Iowans with disabilities save. That is the things we register and support.”

We found no government agencies or elected offices lobbied for or against the tax cut bill. However, the Treasurer’s Office has lobbied on issues in the past. We found 10 bills this past session that the Treasurer’s Office declared a formal lobbying opinion, mostly dealing with establishing or maintaining trust funds it manages.

Conclusion: Lobbying support is often symbolic and it’s unclear what, if any, influence the Treasurer’s lobbying would have done on the tax cut bill. However, Fitzgerald could have lobbied a position and chose not to, so this gets an ‘A’.

Claim #3: Under Fitzgerald, were one of only four states with a college savings plan downgraded to a D.

Analysis: Morningstar, which is based in Chicago, provides research and investment management services to investors. Each year the service grades different 529 plans, which help people save money for higher education.

Those grades are gold, silver, bronze, neutral and negative. The service rated Iowa’s plan Neutral in 2021, which was a downgrade.

The Chicago based service said it downgraded the plan because it “delivers a set of glide paths that court unnecessary timing risks compared with other plans” using different investment advice.

Morningstar said it doesn’t recommend neutral-rated plans unless residents qualifyfor additional benefits like state income tax breaks.

Morningstar released its newest rankings on Wednesday for 2022. Iowa was upgraded to Bronze this year, which the rating company considers “well-positioned for the future”. The company said the plan was upgraded because it got rid of the programs management fee, which made it one of the cheapest plans.

Conclusion: The Iowa 529 plan was downgraded to neutral, the second lowest rating possible, at the time of this ad. However, D sounds a lot worse than Neutral and likely why the ad used this non-existent rating. That’s why this claim is misleading again and gets a C.

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