Survey gauges federal policies’ effect on Iowa City area businesses

Tariffs and reductions in grant funding emerged as major concerns for Johnson County businesses and non-profits in regards to federal changes, according to a Greater Iowa City, Inc. impact and policy outlook survey published Feb. 26. In response to inquiries from Iowa City area businesses and community leaders about the potential impact of federal funding freezes, cuts, and budget changes on the local economy, Greater IC launched a survey to assess both known and perceived effects on Johnson County's economic climate. Local businesses, community leaders and nonprofits were invited to participate in the effort. The survey focused on three early areas of concern: the National Institute of Health fee reduction imposed on universities across the nation, which is currently paused; tariffs on steel or aluminum, and federal actions related to green infrastructure. The business survey received approximately 60 responses and reflected a broad geographic scope. Nearly half of respondents were primarily local, 20% operated statewide, and the remainder were evenly split among regional, national, and international businesses. The majority of participants were small business owners with fewer than 50 employees or executives in leadership roles. Key findings:

• A majority of respondents reported that federal policies enacted in the past month had a very or somewhat unfavorable impact on the current business environment.
• Many anticipate that upcoming federal government actions will create challenges or major disruptions to their businesses over the next six to 12 months.

The survey asked participants questions on three specific federal issues:

• NIH reduction in indirect cost payments: Respondents were asked if this policy had or would affect their organization.
• Tariffs on steel and aluminum: Participants were asked whether these tariffs would impact their business in the near future.
• Federal actions on green infrastructure: The survey examined potential effects on businesses.

According to the survey, tariffs had the broadest impact, with 42% of respondents indicating a negative effect and none reporting a positive one.

When asked about potential business adjustments due to federal policies, nearly half the respondents anticipated budget cuts and one-third expected delays in projects or product launches. “Reduced funding for healthcare will reduce our clients ability to maintain and expand their facilities,” one respondent commented, while another said that “Reductions in grant funding to the University will reduce purchases from our company. We have already seen this with local governments.”

Nonprofit sector

At the request of local policymakers, the Community Foundation of Johnson County, United Way of Johnson & Washington Counties, and Better Together 2030 conducted a survey geared toward the nonprofit sector to better inform local, state, and federal leaders of the impact a federal funding freeze would have on the nonprofit sector. The survey garnered 19 responses, which predicted several major issues:

• Local nonprofits’ dependence on federal funding

Local nonprofits estimate funding losses would be between $5,000 and $5 million, with an average loss of $946,000 per organization, according to survey responses. Federal funding accounts for an average of 29% of their budgets, though reliance varies widely, ranging from less than 1% to 67% of total funding.

• Federal funding cuts would undermine local economic stability

Cuts to programs such as the Community Development Block Grant (CDBG) and Child and Adult Care Food Program (CACFP) are expected to hinder affordable housing development and economic opportunities for low- and moderate-income families, the survey found. Programs like AmeriCorps, which support food recovery, community outreach, and farm partnerships, would lose critical volunteer support, reducing the distribution of 80,000 pounds of fresh produce to 2,500 local residents.

• Vital crisis intervention services would be severely impacted

The potential loss of federal funding would threaten essential crisis services in the community. According to the survey, the end of the CommUnity Crisis Services 988 contract would leave over 50,000 clients without emergency support for emotional distress and suicidal thoughts. Healing Prairie Farm could face the closure of its housing program for unhoused youth if it lost Basic Center Program funding. Meanwhile, cuts to domestic violence and sexual assault emergency services would limit access to hotlines, shelters, and forensic exams, leaving survivors without critical support.

• Vulnerable populations would bear the brunt of funding cuts

Federal funding cuts could have widespread consequences for housing, food security, and education, the survey found. Reductions in Section 8 Housing Choice Vouchers may discourage landlords from renting to vulnerable populations, limiting access to stable housing. Loss of funding for food assistance programs such as TEFAP and Feeding America would impact over 25,000 individuals, straining local food pantries like CommUnity Food Bank and North Liberty Food Pantry. Meanwhile, cuts to State Wrap, Universal Preschool, and Childcare Assistance would reduce affordable childcare and early education options for low-income families, potentially hindering children's academic growth and future success. “The loss of these vital funding sources will create a cascade of negative consequences. Without access to food, housing, and crisis services, communities will face higher rates of homelessness, food insecurity, and economic hardship,” the survey concluded. “Local nonprofits and community organizations will be overwhelmed by the increased demand for services while facing the challenge of losing critical federal funding. This will reduce the ability to maintain programs, lay off staff, and cut services, leading to a breakdown in community stability and well-being.”