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Iowa News Analysis: August 28, 2008 Taxes and Flood Reports

posted on August 27, 2008 at 3:20 PM

Paul Yeager: There is much more talk of a speciallegislative session to address relief efforts. David Pitt of the Associated Press has been following the matter alongwith some other related legislative concerns. David, first question, are we going to see a special session of the Iowa legislature?

David Pitt: Well, I think that's still a big question.  The Governor's Office has been kind of sayingthey want to see a report from the commission that he established to take alook at damage around the state from tornadoes and flooding and I think once hegets a copy of that report then I think he'll decide whether he wants to bepart of a special session.

Paul Yeager: That was quickly issued after the Iowa flood waters wentdown, about a 45 day report.  It's hardto believe we're coming to that 45 days. There is also the Rebuild Iowa office. They have been very busy.  Infact, as we tape on Thursday they are going to go to Pelo yet tonight todistribute $1 million for debris removal, that's federal money.  We're seeing money starting to go out.  We're seeing hard numbers in Cedar Rapids, 739 homes in Iowa City, 245 homeowners saying they want a federalbuyout.  So, what is the Rebuild Iowaoffice going to be able to do and what are they doing?

David Pitt: Well, the Rebuild Iowa office is going tosubmit its 45 day report to the Governor tomorrow, is my understanding from atelephone conference call, they'll at least say this is what we have discoveredso far.  They've traveled around thestate, they've talked to a lot of people. We're looking at something like 22,000 homes have been affected by thisyear's devastating storms.  So, we'relooking at significant numbers.  It lookslike the agricultural damage may be a little bit less than what they hadoriginally anticipated.  There was a lotof re-planting done so some of the ag damage may not be as severe as theythought.  So, I think it's a matter ofwe'll see tomorrow what the initial report says and then they're going torelease a 120 day report, a more detailed, long-term report later and it'safter that report sometime in September if there is a special session it willoccur then.

Paul Yeager: And Republicans in their caucus at leasthave said this week, you know, we're looking at this report, looking at thosetotals that you just mentioned, how are we going to pay for things?  They're throwing out a couple of optionsaren't they?

David Pitt: Right, a couple of things they're looking atis there is money that is set aside, it's called the Iowa Power Fund and it'ssomething that the Governor had tried to get established and did getestablished and so they're looking at maybe tapping into that money.  There's also a plan to build a new prison in Fort Madisonand do some other work on the prison system and there is a proposal to takesome of that money and divert it into disaster funding.

Paul Yeager: And other state buildings, there could bethe Wallace Building reconstruction could be put onhold because of that. 

David Pitt: That's the proposal at least the Republicanshave tossed out.  Again, those would bethe kinds of things presumably they would discuss if they did call a specialsession.

Paul Yeager: Because they feel they can't wait untilJanuary or at least after the elections in November.  Let's talk also about the state, they'relooking at possible lower state tax revenues. The estimating conference came back. What did they find?

David Pitt: Well, in July it's, again, a snapshot of onemonth estimates. The July results were down about 11%.  It looks like their corporate taxes were downand the use taxes were down.  It lookslike personal taxes were up still a little bit. But looking at it overall about 11% decline.  Most economists would tell you not to look atone month, it is a snapshot, it could be the result of some of the damage tothe economy caused by the flooding and the devastating storms.  So, we don't know, I think we really need tolook at several months before we know whether it's a trend or whether it's justa one-time issue.

Paul Yeager: And there's already politics being played onthat.  You mentioned one of theDemocratic responses was because of the flood, a Republican response was you'reputting us in a position where the Democrats have been spending out of controland setting us up.  Is this going to bemore than politics right now or are we going to see what August and Septemberwill mean if there is more politics?

David Pitt: I think we'll probably have to see again whatthe trend is and if there is a trend, if a couple more months come and we see adecline in the tax revenue then you may see some other folks beginning to stepin and say we may have an issue here. But the Democrats are saying they refilled the state's emergency fund,there's something like $600 million in there.

Paul Yeager: David Pitt of the Associated Press, thankyou so much for stopping by.

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