Iowa Public Television

 

Sen Bob Dvorsky and Rep. Jo Oldson, Iowa Legislative Appropriations Chairs

posted on April 11, 2008

Borg: Cautiously optimistic, that's how economic analysts are viewing Iowa's latest tax revenue forecast even as other states are struggling. How Iowa's better than expected revenue influences state spending is what we're asking the legislature's appropriations committee chairs, Democrats Jo Oldson and Bob Dvorsky on this edition of Iowa Press.

Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. The Iowa Bankers Association -- for personal, business and commercial needs Iowa Banks help Iowans reach their financial goals. And by the Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. By Iowa's Private Colleges and Universities where faculty teach and students learn. Iowa's Private Colleges employ over 10,000 Iowans and enroll 25% of Iowa's higher education students. More information is available at thinkindependently.com.

On statewide Iowa Public Television this is the Friday, April 11th edition of Iowa Press. Here is Dean Borg.

Borg: As economists are speculating whether the nation's economy is in a recession or just teetering on the edge Iowa's outlook is brighter. Economic analysts ratcheting up Iowa's growth rate to 7.4% and that is translating to a 2008 tax revenues additional increase of $78 million. And the analysts are crediting an ethanol driven booming farm economy, a steady manufacturing sector, increased Iowa exports and Iowa's relatively low unemployment rate. Last week on this program the Iowa Senate's Democratic Majority Leader Mike Gronstal told us the additional revenue is easing the pressure in crafting next year's state budget. But both Gronstal and Governor Chet Culver are promising spending restraint. Well, today we're seeking specifics with majorities in the House and the Senate -- democrats chair the Appropriations Committees. In the Senate that is Bob Dvorsky of Coralville. And in the House of Representatives is Jo Oldson of Des Moines. Welcome to Iowa Press.Thank you very much.

Borg: And across the table two people that you see every day up at the statehouse. Radio Iowa's News Director Kay Henderson and Associated Press Senior Political Writer Mike Glover.

Glover: Senator Dvorsky, let’s start with you. One of the things you're doing is you're writing a new state budget for the budget year that begins next July. When do you finish your work on that budget? How much more will you spend next year than this year?

Dvorsky: How much more will we spend? It's going to be a fairly status quo budget. We're not spending a huge amount. What we're trying to do is keep the commitments we made last year. Last year was what I would say a historic session where we tried to move Iowa forward in a number of areas, make us 25th in teacher pay, the power fund, pre-school, a number of commitments we made on the out years. So, first of all we want to keep those commitments. Those are about 3% increase in the state budget. We need to do that. In addition to that we have some other initiatives this year but very few. It's almost status quo. I'd say we're talking 4% to 4.5%.

Glover: Representative Oldson, same question to you. Do you agree that it will be in the 4% to 4.5% spending increase?

Oldson: Absolutely and I would echo definitely what Senator Dvorsky has said. We are looking to keep a pretty status quo budget this year and focus on those areas that we really see as Iowa's priorities in terms of education and growing our economy. And it's about a 4% increase.

Glover: Okay, if we increase state spending about 4% to 4.5% can you justify that to your friends and neighbors who may not be getting that kind of a pay increase this year?

Oldson: Yes, I think we can. I think Iowans definitely are interested in making sure our kids are well educated and that we do as much as we can to keep Iowa's economy growing and keep young people coming back here to Iowa.

Glover: Senator Dvorsky, can you justify that when you go back home to Iowa City and Coralville?

Dvorsky: My area we had one of the largest increases to the Regents ever so certainly we can justify -- unfortunately because of economic factors through the last several years we have had to cut back on resources to our Regents institutions and others and we were able to provide some more funding this last year. So, I think you're seeing some of the results of what we've done the last few years with this sort of good news from the REC, that we have diversified our economy and we are moving forward with biofuels and renewable economy and those things. And I think that is shown in the good REC numbers.

Henderson: Representative Oldson, how many state employees are there?

Oldson: Oh my, to be honest I'm not sure, Kay, I can give you an exact number. I don't know the exact number. Several thousand and they are spread across the state doing all sorts of things from keeping our corrections facilities safe to taking care of children and families, thousands of state employees.

Henderson: Well, Senator Dvorsky, do you know?

Dvorsky: I think it's like 150,000, it depends on if you count the Regents or who you count. There's lots of different agencies that might be state employees or might not quite be state employees.

Henderson: Isn't that something you should know?

Dvorsky: It's like 140,000.

Henderson: How many new programs? You mentioned there will be new programs in this budget. How many new programs? And how much new spending will account for those programs?

Dvorsky: I think you're not going to see a lot of new programs. The Governor has several new programs that he has put in place, some of those we'll probably be able to fund some of those, some of those we won't. It just depends on budget by budget and program by program.

Henderson: Representative Oldson, give us an idea of what new program will be instituted as a result of the action you take.

Oldson: Again, we are predominantly focused on keeping the priorities that we have set last year. New programs will be mostly along the line of education, looking at ways to improve our education, making sure that kids are getting as top quality education as they can so that they're ready to go out and be effective in the workforce. But predominantly this budget will maintain a status quo and you won't see a lot of new programming at all.

Borg: Senator Dvorsky, you're not an economist, at least I don't think you are. But everything that you do -- and you're chair of a very powerful committee, the appropriations committee -- everything you do is predicated though on what economists tell you. What are they telling you about the state of Iowa's economy as you make those big decisions?

Dvorsky: I think the state of Iowa's economy is quite good right now despite sort of what is going on nationally. The daily revenues are coming in at least 10% and some days 11% increase in daily revenues and I think the bioeconomy is really doing well, the farm economy is doing well. My district is doing well in our areas of various educational programs and such institutions as Rockwell Collins are really doing well. So, there's lots of things I think you can point to the economy of Iowa doing very well.

Borg: Representative Oldson, same question to you but I will frame it in this way. Do you see, as you look down the road and look around you and listen to what is happening elsewhere, get a little shiver up your spine?

Oldson: I think we're cautiously optimistic. As you noted at the very beginning of the show certainly as Bob has noted our revenues continue to come in strong, our unemployment rate is low, people are employed and bringing home good wage. But we're Iowans and we're cautious and we aren't unnoteworthy of what is happening around us and so we will be very cautious as we move forward to make sure that we live within our means and yet deliver the services that Iowans need.

Glover: Representative Oldson, this goes back just a little ways but the last time I heard people talking about Iowa being recession proof, in other words Iowa's economy being insulated from the national economy, was in the late 1970's when they said a booming farm economy made Iowa recession proof. And then the 1980's happened. Are you confident that Iowa is recession proof?

Oldson: No, I don't think I would ever use the term that we're recession proof. We're probably proof away from anything. But we're optimistic that we have things going in the right path in terms of not dipping to hard if a recession does set in and we will proceed optimistically but cautiously.

Glover: Senator Dvorsky, should a recession hit Iowa has a series of reserve funds which are designed to tie the state over if the economy goes south. Are you confident those reserve funds are healthy enough to get the state through a recession?

Dvorsky: Proposals we have in place for fiscal '09 I think the so-called rainy day fund is going to go up to something like $616 million. So, I think we're in pretty good shape should that happen. I would also never use the words recession proof. I think the economy is doing well in Iowa and also it has diversified. We have diversified a lot since the 70's and 1980's and if you look at the economy, the economy that is going on in my senate district in Lynn and Johnson County is different than the one say in Senator Kibbey's up in Emmetsburg, that sort of thing because they depend a lot on ethanol and those sort of things. We're more educational related, more manufacturing related, those sort of things. So, it's diversified all across the state.

Glover: Representative Oldson, are you satisfied? You're in charge of filling up these reserve funds, what Senator Dvorsky referred to as a rainy day fund, are you satisfied those funds will be healthy enough when you folks adjourn at some point this month that you can tie the state through a recession?

Oldson: Absolutely, I anticipate that they will be at their statutory caps and as solid as they have been for many, many years. So, I feel good about the position we will leave when we leave at the end of session.

Henderson: Talking about the economy one of the things I remember people saying when Iowa was in the doldrums in the farm crisis was that Iowa's economy is counter-cyclical. In other words, we're down when everyone else is up. Representative Oldson, do you think that this budget that you crafted which does make commitments in terms of education spending in a number of areas might set the state up for a tax increase in future years if there is an economic downturn?

Oldson: I don't anticipate that we will be talking about tax increases in the near future by any means. I think we have set up a budget that is pretty solidly put together for the needs that Iowans have told us they are interested in making sure we fulfill, education is obviously top concern for many Iowans and I think we will be able to continue to fund education and make sure our kids get the education they need.

Henderson: Senator, is this budget that you're crafting today setting the state up in any way for a tax increase down the road?

Dvorsky: I don't think so. I think it's a fiscally sound budget and we're going to start filling up the senior living trust fund, this budget takes it up to about two-thirds back to the $300 million there and the rainy day funds will be at the highest level ever. And I think it is a fiscally sound budget and one that we can really hang our hat on so to speak.

Glover: Representative Oldson, you're not really in charge of how you get the money you spend, you're in charge of spending it. But I'm sure you have thoughts about the mix of taxes that are used to support this budget you're writing. Are you satisfied that the mix we have in the state of property taxes, sales taxes, income taxes is a proper mix? Or is it time to step back and take a look at things?

Oldson: That is a discussion, Mike, that we have had in this state for years. I think we will continue to have that conversation and always should have that conversation because our mix of our industry and our job situation and the mix of the kinds of people that live here change constantly. I am not an expert in tax policy by any means and so I'm not certain I should say it's good, bad or indifferent but I think we always need to review it. There's always room for improvement.

Glover: Senator Dvorsky, same question to you. Are you satisfied with that mix?

Dvorsky: No, and Dean is here and maybe he's heard me talk at forums back in our area, I've maintained this for the last several years that we need to look at all the formulas we have in place. The school aid formula we put in place in the 1970s, is that adequate to what we have now? Obviously the road use tax formula, does that deal with the roads we have here now and that situation? So, there's lots of different things, our tax mix, commercial, property, income tax, all those things really need to look at for the 2009, 2010, not when they were put in place in the 1970s.

Glover: How do you go about that?

Dvorsky: Well, it's a big job. We need interim committees or whatever or task forces -- I think we really need to look at those things in the next few years.

Henderson: The racing and gaming commission is looking at the impact Iowa's newly licensed casinos are having on the industry as a whole. Representative Oldson, don't you already know the impact based on the amount of gambling revenue that you are taking and allocating in many instances for infrastructure projects?

Oldson: Certainly we know what the impact is currently.

Henderson: Good, bad or indifferent?

Oldson: I think it depends on who you are and you'll get a different answer to that for everybody you ask depending on how they feel about up, down in terms of ...

Henderson: Are gambling revenues up or down?

Oldson: They are holding, as I understand it, pretty even, up a little bit but we aren't seeing major growth as I understand it.

Henderson: So, you have a casino in your area in Riverside. Have these new casinos done well for the state in terms of tax revenue? Are you seeing an impact of these? Is there a saturation that you can see when you look at the money that you guys are allocating?

Dvorsky: I think you have to look casino to casino. The riverside casino is doing very well. They have done pretty well for Washington County and surrounding areas and that sort of thing. But it goes from casino to casino. I know some casinos aren't doing as well as maybe they should. Riverside is doing very, very well. So, it really has different impacts I think across the state.

Glover: Representative Oldson, one of the new programs that is going to be started this year is there has been a bill that is moving through the process that would set up a program to expand healthcare to eventually cover all children in the state. The proposal right now would call for spending $25 million over the next three years to expand healthcare to almost all of the 53,000 kids who don’t have it now. Will that be the new program this session will be remembered for? And is that one you're comfortable going back home and justifying?

Oldson: I think it certainly will be one of the programs that this session will be noted for. As you are aware we had a commission that spend countless hours during this past interim traveling the state and talking to people about what they're most concerned about and healthcare was time and again the thing they talked about and they spent a lot of time trying to put a proposal together that would start us down the path to making sure all Iowans have access to healthcare. I think the proposal we have out there is giving us some good discussion points. I think it's important that we start with kids and look at a way we can get kids insured as quickly as we can. It's I think vital to making sure they are capable of learning and healthy enough to get to school.

Glover: Senator Dvorsky, Iowa with this proposal is becoming merely the latest state to start to wade into the whole healthcare debate. Is that because states are just deciding the federal government can't do it, can't hack it?

Dvorsky: Well, the federal government has to date not really done a lot. Hopefully in the near future we'll be getting a new president and healthcare has been one of the issues they've talked about there. So, hopefully there will be some movement at the federal level also. But I don't think the states want to wait around and I really want to commend Senator Hatch and one of my representatives, Representative Ro Foege and others who really worked hard on this to get us moved. I think as I understand it it's an election year in 2008 and I think that it would be a great campaign to say we helped insure all Iowa's kids. I think that is a tremendously thing to campaign on, tremendous thing for the state and I think it's another one of those historic things we're going to be doing in 2008.

Glover: Are democrats who are putting this proposal forward taking a chance?

Dvorsky: It's a bipartisan thing also.

Glover: I understand but the last time there was a national healthcare debate was when Bill Clinton was president. The republicans in the insurance industry started the Harry and Louise ads and kicked the heck out of you.

Dvorsky: $100 million.

Glover: Are you setting yourself up to have that happen again?

Dvorsky: I don't think so in that situation. I think people really want to have healthcare now. I think that the times have changed a little bit, people understand that people need to have healthcare and I think there's a lot of support in Iowa for what we're doing.

Borg: Just to follow up on what are you setting yourself up for, Representative Oldson, is the state though setting itself up for big obligations in the future? Anybody who takes on health insurance and trying to pay for it is paying the price right now. In fact, manufacturers and other employers are trying to get out of that burden, the state is taking it on. Does that give you some concern?

Oldson: I think we always have to frame the whole conversation around the fact that we are paying now, in many respects, people that are uninsured, it costs all of us in some aspect whether it is they go to an emergency room and get uncovered care, they are missing work, are not productive in our economy, struggling to keep their kids fed and clothed and off to school so to say that we are taking on more burden I'm not certain you can necessarily say that because there is a cost to people not having coverage now. With respect to kids I think that cost in the short run quite frankly can be much less expensive than the costs that we end up paying in the longer scheme.

Henderson: Senator Dvorsky, one of the major decisions you'll be making in terms of spending will be a plan to build a new maximum security prison and it has been decided, I guess, that it will be built in Fort Madison. Has there really been enough thought about this? That is a huge expenditure and is the deal that's been cooked up whereby the state borrows this money the appropriate way to go?

Dvorsky: I think it is a huge expenditure and it is important -- Fort Madison is the first prison built west of the Mississippi so that is a long time ago. There is a great story that there was a deal the legislature cut that Fort Madison would get the prison, Iowa City would get the University of Iowa. And some people say in Iowa City they may have won or lost depending on how you look at it. But to your point I think that it is an old prison, it's very inefficient, it's not as safe as it should be, a lot of problems with just the maintenance and upkeep of the prison. We do need a new facility there. We're not necessarily increasing how many people they're going to serve there, the number is going to be about the same, about 800. But we need to put that in place to protect, if nothing else to protect the correctional officers we have and to protect the inmates because they need a new facility that works out. And I think we're going to be able to put in place a financing plan to handle that and other prison expenditures, community based expenditures also.

Henderson: Representative Oldson, a quarter of a billion dollars and there's been very little discussion of this in the open. Is this well thought out?

Oldson: Actually I think there has been some discussion and certainly a lot of study of the issue of the safety of our prison system. So, I have no doubt that it has been well looked at. I have no doubt that it's needed. When you've got a prison that is more than 100 years old and way overcrowded it is not in the best interest of the public safety or the workers' safety to continue with the situation as it is.

Borg: But what part of her question was, discussion in the open. Are you certain that all entities have had a chance to weigh in on whether a new prison should be built and where it should be built?

Oldson: I think that conversation will continue to happen as we make decisions. But I think people have had opportunity to talk about it and have conversation around that issue.

Glover: Senator Dvorsky, the state centerpiece environmental program is the resource enhancement and protection act. That has never been fully funded. Will you fully fund it this year? And how much money will you put into it?

Dvorsky: Currently fully funding it would be $20 as I understand it and last year we were at the highest level ever.

Glover: And that was?

Dvorsky: $15,500,000.

Glover: And this year?

Dvorsky: This year we're looking at $16 million, it's an increase. It's not up to $20 million but that's what we're looking at right now. We continue to move forward to get close to $20 million.

Glover: Representative Oldson, it strikes me that we hear a lot of talk about environmental issues around the statehouse but it doesn't seem to have much impact out there on the campaign trail. Is that why REAP has never been fully funded?

Oldson: I can't answer historically that question. I can tell you I think those issues are becoming more on the forefront of Iowans' minds particularly as I think people start to see our natural resources as not just a farm issue but as an economy growing issue, as a tourism issue and an ability to get out an enjoy Iowa's beauty. So, I think you're seeing Iowans become more and more aware of the necessity of making sure we have resources.

Glover: And you think it will be about $16 million?

Oldson: I think about $16 million.

Glover: Can you tell your environmentally friendly friends that you're working towards the $20 million?

Oldson: Absolutely, I feel like we're making progress in the right direction.

Borg: Senator Dvorsky, you and Representative Oldson a minute ago said that you don't see tax increases. Even so Governor Culver in his Condition of the State address and budget had about $300 million in revenue enhancements built into that budget. But legislation where that is contained hasn't made any progress yet. How are we going to fill those holes?

Dvorsky: I don't think we're going to be doing the so-called revenue enhancements nearly to the level that the Governor has proposed. We have a couple of revenue enhancements -- one of the bills that I'm working on in appropriations in the Senate is delinquent debt collection situation with all this debt, it's $400 million of court debt that is owed out there and we're trying to put in place, streamline this debt collection situation and we're talking around $11 to $18 million increase there and possibly some others on income tax that is owed. So, we're trying to streamline that to get this debt collection in place so that would be about a $20 million situation there that would be a revenue enhancement.

Glover: Representative Oldson, same question to you. Where do you dig out the $300 million?

Oldson: I think you'll find that as we mentioned earlier in the show that we are really looking at a pretty status quo budget this year. We understand Iowans don't have a flavor for tax increases and took that into account as we started building our budget. So, we built it pretty status quo while trying to keep our focus on education.

Henderson: Speaking of education there has been a debate over the past few years about the level of state spending, the commitment to the state supported universities in Ames, Iowa City and Cedar Falls. Is there an appropriate mix at present of state funding coupled with student fees and student tuition?

Oldson: I think we're getting closer to that good mix. Certainly last year we made great strides and we saw for the first time tuition rate increases down in the single digits and so that would be to me an indication that we are getting closer to have a good mix so that students and their parents aren't having to shoulder a huge burden on sending their kids off to college.

Henderson: As a legislator from Iowa City I'm sure you get questioned about this frequently from students. Are students paying enough?

Dvorsky: That is always a question -- I guess my question is are state regents universities affordable enough for students from Iowa? And I think we were teetering on the edge of not being affordable enough and now I think the increase in tuition is the lowest in 20 years or something like that, 30 years. So, I think we're finally getting back in the ballpark where we should be. By the way, I'm a legislator from Johnson County, I'm from Coralville, we're very proud of our little community there and I do represent two precincts in Iowa City but I am from Coralville.

Glover: Point made, Senator Dvorsky. Let's turn to another issue where you're going to spend some money to do a study and that is to do a study of confinement livestock operations and how they affect the environment. What is it that we don't know about livestock manure that we need to know?

Dvorsky: That's an area that I'm not overly well versed although strange as it may seem in my senate district and house district over the years I've had three national pork producer presidents living in my district. But anyway, I think they're trying to figure out different ways to try and deal with the odor situation and make sure that these hog confinements are good neighbors to everyone in their area and I think that is the biggest thing is the odor situation they're working on, Iowa State and others.

Glover: Representative Oldson, what is it that this study is going to accomplish?

Oldson: You're asking two city people here.

Glover: But two city people who are writing the budget.

Oldson: Again, I don't know that I can answer that. I haven't been intimately involved at all in the policy part of this discussion. I know there's a lot of conversation around how much money do we want to invest in the study and from Bob and my perspective, from the appropriations perspective I don't think you'll see, again, new influxes of money into further studies. Whether there is policy out there to discuss that issue that could be those conversations are still taking place.

Henderson: Senator Dvorsky, one last question, one last number. Tell Iowans how big the budget will be in terms of cash dollars.

Dvorsky: An overall number?

Henderson: Yes.

Dvorsky: Something like it's 6.4 billion now and I think we'll end up probably not much more than that.

Borg: I'm dealing with some other numbers that deals with time. We're out of it. So, saved by the bell perhaps. Thanks so much for your insights today.

Oldson: Absolutely, thanks for inviting me.

Dvorsky: Thank you.

Borg: That's it for this weekend's edition of Iowa Press but with the legislature nearly adjournment now be sure to watch next weekend for insight and additional updates. You'll see Iowa Press at the usual times, 7:30 Friday night, 11:30 Sunday morning. I'm Dean Borg. Thanks for joining us today.

Archive editions of Iowa Press can be accessed on the World Wide Web. Audio and video streaming is available as are transcripts at www.iptv.org.

Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. The Iowa Bankers Association -- for personal, business and commercial needs Iowa Banks help Iowans reach their financial goals. And by the Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. By Iowa's Private Colleges and Universities where faculty teach and students learn. Iowa's Private Colleges employ over 10,000 Iowans and enroll 25% of Iowa's higher education students. More information is available at thinkindependently.com.


Tags: budgets finance interviews Iowa Iowa legislature politics