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Iowa News Analysis: May 14, 2009

posted on May 14, 2009 at 5:42 PM

Iowa Journal host Paul Yeager discusses news of the day with Radio Iowa news director Kay Henderson.

Paul Yeager: Right now we turn to Kay Henderson of Radio Iowa for a look behind the headlines.  Kay, the first thing we're going to talk about, Governor Culver was in Marshalltown today and signed the I-Jobs bill, this is a bonding bill.  There's varying price tags but it looks like the bonding is going to be about $830 million.  What does that mean to the folks at home?

Kay Henderson: Well, part of the $830 is $100 million for the University of Iowa expressly for flood recovery on the Iowa City campus.  The other $730 is for a variety of infrastructure related projects.  The reason the Governor was at the Veteran's Home in Marshalltown is because about $22.5 million will be used to update that facility which cares for about 720 patients.  The rest will be used on a wide variety of things from improving storm sewers to building roads and bridges.

Paul Yeager: Are these the shovel-ready projects that President Obama talked about but on a state level?

Kay Henderson: Exactly, the Governor in early January said he wanted to have a state level stimulus package similar to what was happening at the federal level because not all of the federal stimulus money will finance all of these "shovel-ready" projects.  Legislators who were participants in drafting this also wanted to make sure that the state responded in a meaningful way to the flood disaster that occurred in Iowa last June and July.  And so a great share of this money will be used for flood recovery, for instance, in dealing with water quality issues and building berms and those sorts of things.

Paul Yeager: Republicans who are opposed to this bill, they're saying that this is going to end up costing the state $1.7 trillion.  So, you've got $830 million all the way to $1.7 trillion.  That sounds like a Bernie Madoff type investment or something that would get that quickly, what is the story behind that?

Kay Henderson: Well, math is hard for journalists but let me try this.  The state is essentially borrowing, I know we throw around this term called bonding, but the state is essentially borrowing in the current environment and interest rates are probably not as good as they might have been a couple of years ago in the bond market.  So, the expense, if you will, of borrowing, the interest rates that are going to be paid on those are a little bit more expensive and the cost, the price tag is estimated to be in the neighborhood of $1.7 trillion.  Now, back to those University of Iowa bonds, that is a separate project whereby the tuition that students pay to go to the University of Iowa will be used to sort of collateralize or be the collateral for those bonds, that borrowing project.

Paul Yeager: Students used as collateral, haven't heard that one in a while, that's interesting.  22 Chrysler dealerships in Iowa will be closing, at least that's the news that we're getting out of Dodge, Chrysler and Jeep.  They're all over the state, Osceola, Shenandoah, Burlington, Harlan, Cedar Falls, Winterset, you name it there's probably a dealership close to you.  Any reason why these 22 were targeted?

Kay Henderson: I'm sure that someone in Washington, D.C. or someone at the Chrysler Corporation headquarters could tell us perhaps succinctly why they were targeted.  I think one of the things that those of us who grew up in Iowa maybe miss in relationship to other states is that we have a fair number of towns in Iowa and our population is fairly well distributed even though we have population centers in areas like Des Moines and Cedar Rapids and so we in Iowa may have had more dealerships as a result of the way our cities are spread throughout the state.  But, of course, this is not only just losing your local dealership, this is losing the jobs that are associated with that dealership, it's losing the brand, making it harder for people who perhaps want to buy a Chrysler, making them go more miles to buy one.

Paul Yeager: If they wanted to buy local it just got a lot harder.

Kay Henderson: Exactly.

Paul Yeager: One other thing I want to talk about is the casino expansion, if there is such a thing.  There were a couple of studies that came out this week.  One said, yes, Des Moines could maybe afford to have one.  Another one said, really Lyon County is the only spot we could see where there could be expansion and not hurt other casinos.

Kay Henderson: And for viewers who aren't familiar with Lyon County it's way far up there in northern Iowa and it sort of is part of the Sioux Falls, South Dakota media market, Sioux Falls being a major population center and maybe the only population center in South Dakota and the idea is that a casino there would draw customers from across the border.  The interesting thing to me about the study is that there is really no push currently for licenses to be granted and the Racing and Gaming Commission, the state regulators that grant those licenses are not even in the process of soliciting license applications.  So, these studies occurred in a really interesting environment.

Paul Yeager: And it maybe gives thought for some of these organizations or cities or locations that thought that they should be in it and it could make a case for voters?

Kay Henderson: Well, and you have areas such as Newton, such as Ottumwa who had hoped that these studies would show that their population centers would be able to support a casino and they were, the people who support those casinos in those locations were disappointed.

Paul Yeager: Well, we're never disappointed when you stop by, Kay.

Kay Henderson: Thank you, Paul.

Paul Yeager: Always good to have you, Kay Henderson, News Director for Radio Iowa, thanks for stopping by tonight.

 

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