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Discussion: Economic Issues & the Iowa Legislature

posted on January 17, 2007 at 4:21 PM

The rising cost of health insurance to both worker and employer has caused some businesses to drop the benefit altogether. To make plans more affordable and portable, lawmakers want to help small businesses form risk pools. Grouping employees from different businesses would allow insurance carriers to underwrite them more cost effectively, lowering premiums for both workers and their employers.

Here to discuss these and many other issues is Lowell Junkins. In a previous life, he was president of the Iowa Senate and a gubernatorial candidate. More recently he has been Lee County Economic Development Director, a post he left to join the private sector as an energy entrepreneur. David Yepsen is a columnist for “The Des Moines Register” and a long-time political observer of Iowa government. And also joining the discussion is Chris McGowan, the Executive Vice President of the Siouxland initiative, a tri-state economic development consortium. Welcome, gentlemen. David, what are the prospects of universal health care coming out of this legislature?

Yepsen: There will be something that comes out of this legislature. It's not clear yet how big it will be. They're trying to put together the money. But I think in this state and many others, some sort of expanded health care, particularly for some of the people we just saw in your set-up piece, that's going to happen.

Mundt: And from an economic development perspective, Chris, why would universal health care be an important thing?

McGowan: Well, I think certainly we want to see as many people as possible get health care coverage. It makes perfect economic sense for families, especially growing families like mine. But by the same token, we want to make sure that we do this in a way that protects the jobs that we're trying so hard to create throughout the state of Iowa.

Mundt: Does the lack of universal health insurance or health insurance that covers a greater number of people, is that a magnet that's pulling companies out of Iowa?

McGowan: I think that's difficult to assess at this time, but I certainly agree with Mr. Yepsen that we are seeing a trend toward some kind of coverage. Perhaps it's going to be modeled after what former Governor Romney did in the state of Massachusetts. Perhaps it's going to look like what Governor Schwarzenegger is trying to do at this time in California. But it is good policy to try and find ways, perhaps not universal health care through the government sector but avenues through the private sector.

Mundt: Lowell Junkins, turning that question around, will universal health care, if it's enacted, or some form bring in new jobs to Iowa?

Junkins: No question about it. Not only will it bring in jobs because you'll have a competitive advantage that you may not have today, it also allows the entrepreneurial spirit to go to work. If you see the problems that exist today with larger corporations, larger businesses, and the challenges they had, you can only imagine the impact that that has on smaller entrepreneur start-up businesses. If you really want to see Iowa grow and grow from the bottom up, then you've got to find a solution to this problem.

Mundt: It seems like minimum wage is going to change this year. Does that create another problem for especially the small businesses that are trying to get started in Iowa?

Junkins: It sure does. In both cases, I think you've got the same problem. You know, the light switches tend to come on an off politically. We'll do something; we'll wait ten years in the dark; we'll turn the light back on. Those kinds of shocks to the system can't be absorbed, especially by small businesses. Whether it be on the health care side or whether it be on the worker side, when you see the labor costs going to go up 40 percent in two years, a lot of folks that are hiring people at that level can't make that adjustment. There's got to be a policy that allows these adjustments to be more frequent and less shocking than what they are today both on the health care side as well as on the human resources. Both of those things have got to be done. People have got to have more money. If you don't lift the base, there will be no economic development.

Mundt: David; is there a chance that that will happen, that some kind of a more graduated increase will take place?

Yepsen: They're working on the details now. I think there's a sensitivity up at the legislature to what Lowell Junkins has just described. Politically it's very popular to raise the minimum wage. I think it will be pretty overwhelming. Most jobs in Iowa already pay more than the minimum wage. But there is a sensitivity to what it might do to rural Iowa and to a lot of small businesses, a lot of entrepreneurs who are just trying to get started. So the legislators are sensitive to that.Mundt: Bring a western and northwest Iowa perspective to this. That area of the state is looking at some great opportunities that are coming. How does minimum wage have an impact on that?

McGowan: Well, we certainly want to be careful to make sure that those very people that we're trying to benefit through increasing the minimum wage aren't in some other consumer capacity priced out of the market, because we all recognize simple economics dictate that many providers of services or providers of supplies, grocery stores and the like, are going to have to pass those labor increases onto consumers. So as these gentlemen say, we want to do this in such a way that doesn't price those people we're trying to benefit right out of that market.

Mundt: David, property taxes, I think there's been a consensus in Iowa for a long time that there's an imbalance. But is the legislature going to act to do anything to change that this time?

Yepsen: Not much, Todd. I think it will be a fig-leaf solution, frankly. Look, property taxes in this state are too high. Historically the only way you lower property taxes in Iowa is you cut the spending - people that get property tax dollars, like schools, they don't want that -- or you substitute property tax dollars for income and sales tax dollars. And people who get income and sales tax revenues from the state don't want to do that. So I think they'll put some kind of fig leaf on this, but it's a much larger problem than this legislature seems willing to tackle.

Mundt: Lowell, what do you think could happen? Put on your thinking cap here and look ahead and see what could come out of this, especially with the opportunity that perhaps ethanol and the bio fuels industry could bring to Iowa.Junkins: Well, with regard specifically to the question of whether or not we're going to see any significant thing on property taxes, I think until there's a total reform of the tax system, you can't make the adjustment that's necessary. We know what's bad about the tax system. You can't fix it alone. You've got to fix everything. It gets to your point in your lead-in about this legislature, that it's now a democrat legislature, democrat governor; they have the opportunity to really go in and tackle this thing. Hard to do when you've got -- when you've got a bipartisan kind of situation. There's a real opportunity here. Let's see if anybody takes it.

Mundt: David.

Yepsen: I think that's one of the differences between this legislature and the one you just talked about in 1965. Back then those guys knew they weren't coming back and they could do a lot of things. This group of legislators wants to get reelected, and so they're not likely to be one that does a lot of reckless or controversial things.

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