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News Analysis: November 20, 2008

posted on November 21, 2008 at 3:06 PM

Iowa Public Radio's Jeneane Beck talks with host Paul Yeager about the state of Iowa's economy and Governor Culver's proposed budget cut.

Paul Yeager: Jeneane, you were at a press conference this morning with Iowa Attorney General Tom Miller and he was celebrating the ten years since the tobacco settlement happened and he also was marking since 1950 it's the lowest number of smokers and lowest cigarette consumption.  But there is more to this story.  Let's talk about 10 years of this settlement.  Iowa got a lot of money.  Where has that all gone?

Jeneane Beck: Well, over this ten years so far we have received more than $540 million and initially lawmakers had hoped and promised that that money would be spent only on healthcare and health related items or cessation and smoking prevention programs.  And while there has been some money spent on smoking cessation and prevention programs and money spent on healthcare there has also been money devoted largely to other programs, the state's general fund and once it goes into that pool you don't know where it goes because it just is spent in a lot of different ways.  And the money was also comingled.

What the state did was to securitize the money meaning that in case these tobacco companies went bankrupt we sold bonds to get our share of the money early.  So, that money was sometimes comingled with gaming revenue taxing receipts and so it's very hard to track.  But over the course of the years you see years where $7 million, $9 million, $20 million was dumped into the general fund. 

One year $40 million of it was spent for teacher salaries, that teacher quality initiative, that student achievement program they had, you see money going to the universities, even for lake restoration.  And so over the years that endowment fund, which was supposed to be self-sustaining, is now on the verge of running out of money and is in fact expected to next year.

Paul Yeager: So, no money left for any of those programs or the grand ideas that we heard ten years ago?

Jeneane Beck: Well, in many cases they have started to phase out funding from that fund knowing that it was dwindling.  So, when you look at the Department of Human Services and a lot of the Medicaid funding that came from it those programs have been weaned off of it for the general fund so that they'll be okay.  But there are programs that remain on it that are going to find some trouble next year and a lot of those are Department of Public Health pet projects, smoking cessation programs, things like that.

Paul Yeager: So, what you're saying it that money is going to the general budget which is already looking to possibly have a cut, $30 to $40 million what the Governor is calling for.  Where does he think these cuts are going to come from?

Jeneane Beck: Well, he has asked his individual department heads to look at their own budgets and try to trim some fat.  They're not going to think it's fat because, of course, these are priorities for them.  But $30 to $40 million isn't a particularly large amount of money when you consider the state is expected to come in with a structural budget deficit of $500 to $700 million which means money that they promised in future years, say they thought the budget would grow by this percentage for this agency or for this program, may not be able to because they simply will not have that revenue. 

So, there are certain departments that have to grow because there's federal mandates that you cover patients enrolled in Medicaid, for example, so the Department of Human Services there's only so much you can trim.

The Department of Corrections, well you're federally mandated to supply healthcare and residence for these inmates, you can't cut that budget that starkly.  So, you're looking at what about state troopers, you're looking at Department of Administrative Services, Natural Resources, Cultural Affairs, those kinds of agencies are nervous.

Paul Yeager: So, nobody appears to be sacred other than the ones that are federally mandated that you're talking about?

Jeneane Beck: They'll try to spread the pain across, they're not talking about furloughs or layoffs yet.  What they'll probably hope to do is leave vacancies open, not fill positions where someone has moved onto another job or retired, so staff will be leaner, departments will be leaner.

Paul Yeager: And that is something the democratic majority is going to have to maintain.  They have kept their leadership.  Republicans have changed, they have been both new in the house and the senate.  What were some of the reasons for making those changes other than we've lost seats?

Jeneane Beck: Well, it's funny because the one that people seem to be most surprised by was the loss of Christopher Rants, the minority leader in the Iowa house.  He used to be the majority leader, he moved up to speaker and then they lost control and so people say, look, it's not a surprise that he's no longer in charge because usually when you lose control of your chamber they oust you and they didn't, they had that much confidence and they kept him around. 

But they were starting to worry that his persona was becoming the party persona and while he is an aggressive, combative person, I wouldn't call him angry, but that might be what is perceived by the public and they felt that they were concerned that the public felt republicans are angry and that's not the message they want to send.

Paul Yeager: What is that message?  What are some of the things they're going to target or say this is what we are about now as the Iowa Republican Party?

Jeneane Beck: They're going to talk about fiscal responsibility and they're in a prime time to do that as the state looks at a difficult budget, tax cuts, keeping spending in the black, not shifting funds from various programs to another to make the budget balance in sort of a skeptical way and back to party principles.

Paul Yeager: Quickly in ten seconds do we have any idea yet who the GOP chair would be?  Would that have any reflection on the two?

Jeneane Beck: There is a real battle of whether that will be a Christian conservative, whether it will be a social conservative or more of a moderate who is fiscally conservative and there is an internal battle and we don't know.

Paul Yeager: Jeneane Beck of Iowa Public Radio, thank you so much for stopping by tonight.  

Tags: Chet Culver governors Iowa news science

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