Borg: Storms and subsequent flooding devastating much of the upper Midwest, Iowa no exception. We discuss this week's developments and the aftermath and the role of the Iowa General Assembly possibly with House Majority Leader Kevin McCarthy on this edition of Iowa Press.
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On statewide Iowa Public Television, this is the Friday, June 13th edition of Iowa Press. Here is Dean Borg.
Borg: Devastating tornadoes, torrential rains, widespread flooding and the prospect of more to come -- those descriptors pretty well define a number of locations across the nation's midsection right now, Iowa included. The events of the past ten days or so in Iowa bring a recall of the great Iowa flood of 1993 when much of the state found itself under water, without drinking water and without electricity in some areas. Well, today all levels of government, federal, state, county and local are assessing the damage to the infrastructure in commerce and the process will be ongoing because the damage is ongoing. The role of the Iowa General Assembly now being assessed and to that end we've invited Representative Kevin McCarthy, House Majority Leader of the Iowa Legislature to the Iowa Press table today. Welcome to Iowa Press.
McCarthy: Thank you.
Borg: It's sobering across the state.
McCarthy: It really is, this probably is the largest natural disaster Iowa has ever faced. It's a crisis, make no mistake about it.
Borg: I want to bring journalists David Yepsen of the Des Moines Register in the conversation and Mike Glover of the Associated Press. Mike?
Glover: Mr. McCarthy, as Dean mentioned it's a natural disaster of historic proportions. The legislature has already begun to take a look at it. What will the role of the Iowa legislature be in trying to react to this disaster?
McCarthy: We don't know exactly what our role is going to be. We think we'll be able to play a productive role at some point but we want to make sure that when we do, if we do get involved that it's something that's very productive and not premature. A premature session, for example, I think probably would result more in political pandering than something that would be very productive. This is going to be highly, highly complicated and the breadth of this I don't think we will know for a few weeks from now. And so if we have let's say some sort of special session, which it's premature to say whether we would do that at this stage, it would require a lot of bipartisan work with the Governor, with the federal government, meetings in advance to try to figure out what, if any role, the legislature will play. We have set in motion some committees to start getting that information from the legislative council which is a group of legislative leaders that kind of works on interim legislative issues, established an interim committee to look at livestock and agricultural related issues tied to the flooding and also insurance and things of that nature. We kind of set that in motion this week to start gathering information.
Glover: So, it's not too big a problem for the legislature to tackle, you're just trying to figure out how you're going to do it?
McCarthy: Well, it's going to be a big problem. It's going to require a whole lot of effort and a lot of dollars but we've begun the process of gathering this information. But we're in the midst of it right now and some parts probably have not seen the worst of this disaster and so right now what most of the citizen legislators are doing, they're back home in their districts helping sandbag and working with their friends and neighbors.
Yepsen: Representative McCarthy, you mentioned the fact that the state has emergency funds, 10% of the general fund revenues. I think that's $650 million in the thing right now. Do you think that here in the next few months the state of Iowa will have to tap into it?
McCarthy: Don't know, we hope we will not have to. The possibility always remains on the table for the so-called emergency or reserve funds. That is why they're there, for emergencies. But we also want to make sure that we do our best to try to avoid tapping those because one of the reasons that we're proud of the budget we passed this year, it's gotten some criticism for tapping various funds that occur in every legislative cycle, but we do have the largest savings account, reserve funds in the history of Iowa but we want to make sure moving forward -- there is going to be long-term ramifications because of this natural disaster, infrastructure needs, it could be some economic impact as it relates to the agricultural economy -- we want to make sure that our economy is going strong this next year and the year after. So, we want to make sure we don't try to unduly use reserve funds. So, it would be a last resort.
Yepsen: Do you have any timeline for deciding this special session?
McCarthy: No, right now everyone is solely focused on this current disaster that we're involved in. Cedar Rapids, for example, is just in crisis mode right now and we want to have some time to be able to assess all the damage that is out there and then there would be a lot of prep time before we just call a session. A session costs $40,000, $50,000 a day, that's a tremendous amount of people power that goes behind creating this special session. So, we want to do it after our ducks are in a row.
Borg: Have you talked with the Governor at all about that? Has the Governor mentioned we may have to call a special session?
McCarthy: The Governor has said that would be a possibility. We agree that it would be a possibility. Right now, though, it's just premature bit it is something that's on the radar screen.
Glover: So, what you seem to be saying is it's likely there will be a special session. The question of it is the timing of it more than anything else?
McCarthy: I'd say it's very likely there could be a special session but it's just premature at this stage. We want to make sure that we would have something to do in a very productive fashion. There is tremendous resources that the legislative council has at their disposal, that the federal government has. We have passed a piece of legislation last year to deal with the ice storm situation, an individual disaster relief assistance where individuals up to 130% of the poverty level can get up to $3300 of assistance. There's some things right now that individuals can tap into that are in place. And like I said there's a possibility that exists for a special session, it's just too early to say.
Borg: Dave talked about the reserve fund. Is there a possibility in Kevin McCarthy's mind that this might necessitate because of the magnitude of the loss and the state's involvement in helping to rehabilitate those areas that there might be a tax increase involved here?
McCarthy: No, I don't think so. I don't think that would be something that's on the horizon.
Yepsen: Specifically a gas tax increase? You talked about it in the last session anyway the crying infrastructure needs. Now with highways being washed out and bridges are you not looking at if not in a special session then certainly in next year's session raising the gas tax even though gasoline is $4 a gallon?
McCarthy: No, in fact, the gas tax discussion really is entirely a separate issue. There's a lot of groups that are advocating for a gas tax increase.
Yepsen: Even before this. But what I'm saying is going forward now doesn't that change this discussion?
McCarthy: Well, if you have a group of individuals in a particular community that's been very, very hard hit and you're looking to get some sort of package together to help them hitting them with a tax increase is probably not the best way to do it. Something like that is an absolute, absolute last resort. There's bonding mechanisms, there's infrastructure funds, there's a whole variety of federal aid. There's going to be insurance obligations that are going to have to cover these situations. So, that's just something I don't see on the radar screen.
Glover: Let's take another look at one of the things you mentioned earlier which is the impact this is having on the state's economy. It's likely to hammer the economy. How and to what extent and how big a dent is the economy going to take?
McCarthy: We're going to keep a close eye on this and it is my intention to be working closely with the Attorney General's office also to start taking prepatory steps for mediation with lenders, for example, as it relates to farmers because you have situations where because of this -- this has almost been a situation, I don't think we've been caught off guard as a state but in terms of our kind of consciousness of this disaster it's almost been like the story of the toad and the pot of boiling water where you put it in and it gets warmer and warmer and warmer, you don't realize what situation you're in. We had a lot of rain over a period of two or three months here and so a lot of farmers waited to plant their crops. And the old saying which is kind of antiquated but knee high by the Fourth of July, you know, normally it's above your head by the Fourth of July, but a lot of farmers waited because of the wet crops. Then they planted them just a couple of weeks ago and now they're under water, they're flooded. So, one of the things that we want to do with this interim committee we established and also as it relates to these potential economic concerns that you just mentioned are to look at how do we prevent a catastrophe that could have a chain reaction? Are there crops that could have a shorter term growth cycle? They may yield less, but they would allow somebody to maintain payments to their lending institution.
Yepsen: The fact is that saying is being modified that the water will still be knee high by the Fourth of July. What is that going to do to your revenue projections? I mean, if the economy is taking a hit from this doesn't that depress state tax revenues?
McCarthy: It very well could and that's why we're going to have to pay close attention to this. It kind of, I think, will depend upon how hard those that supply the ethanol industry around this country, the ethanol market, how hard are they affected. California is doing away with MTBEs and other markets that have opened up have largely fueled Iowa's economic boom that we've had. We've been one of the few state's that have avoided the economic downturn. Receipts in the month of April I think were somewhere around 12% above last year, May was somewhere around 11% above last year. So, we've been moving along very strong because of this ethanol market and so it's going to depend on what pockets in the state are hit. Is it soybeans that are the predominant crop that's affected or is it corn that is made for human consumption or is it corn that's made for use in ethanol facilities? And we're going to have to really see where the damage is allocated. But it's going to be something that we're going to have to keep a close eye on because if you have farmers who are going to have to take an extreme hit because of loss of crops then they might not be making their payments on time to the lending institution and then you have other loans and products that they owe money to and they might not be making payments there and the chain reaction that could occur could be pretty damaging. So, we're going to have to keep a close eye on this, it's going to have to be a multi-faceted effort with the Attorney General's office, with the state government, with the federal government and perhaps some state assistance, maybe in the form of tax credits, for example, to make sure that we can withstand what could be a pretty heavy hit from this disaster.
Glover: Let's turn this question on its ear if we could for a second, Mr. McCarthy, is there an up side to this? Yes, a lot of home in Cedar Rapids are flooded, they're going to have to be rebuilt. A lot of highways have been washed away, they're going to have to be rebuilt. In fact, isn't there going to be an economic upside of having to actually rebuild after this flood?
McCarthy: I guess I would refer to it as an upside. It may be an infrastructure necessity.
Glover: Inevitable consequence.
McCarthy: There may be some jobs and some infrastructure related jobs that are created as a result of this. I just wouldn't refer to this as anything positive. This is a really serious disaster the state of Iowa is in. We're going to do everything we can to help people out. There's people really hurting right now. I noticed recently that Mercy Hospital in Cedar Rapids has been evacuated, all the patients there, downtown Cedar Rapids is evacuated. The water there is increasing. Iowa City is looking at problems. Ottumwa is looking at looming problems. The city of Des Moines is not out of the danger zone yet. So, this is something that we're just going to have to keep a very close eye on.
Yepsen: Mr. McCarthy, I was listening to WMT Radio in Cedar Rapids which is really doing a fine job dealing with this crisis. And there was actually a discussion on there about how they're going to need to rebuild that city and that in fact they can have a better city out of it, that this is going to force some decisions, it's going to clean out some areas of town. Isn't there an opportunity in this for Iowa through some planning to really come out of this in five years, say, with a better Iowa?
McCarthy: Absolutely, I think the infrastructure can improve as a result of this. That occurred in 1993, our infrastructure improved and the reason why there's a lot of places in the state right now that are dry is because of the infrastructure improvements that were made in '93. Cedar Rapids in particular, they were looking at major development on their riverfront. They're raising about $60 million the state of Iowa gave them in the form of recap funding, $10 million this legislative session. I suspect they'll be altering some of those development plans to make sure that not only is it a beautiful landscape and a new riverfront there but also that the infrastructure is improved. And so I think we could have some positive benefits with regard to Iowa infrastructure.
Yepsen: On the flip side of that is in all infrastructure, I'm thinking of Davenport which periodically gets flooded by the Mississippi, they've had problems in their waterfront, they have essentially decided we're not going to build a levee in this city, we like our view but we're going to clean it out and it's going to be an area that, yeah, it will get flooded and it will be bad but we won't have these catastrophes. So, is there an opportunity there for some more parks and green spaces in Iowa as a result?
McCarthy: There could be. I certainly am no expert on that sort of global planning. I think it's something that the state when they start looking at comprehensive infrastructure plans as we try to rebuild and recover from this they're going to have to look at all those various issues and for those sorts of things, I mean, in terms of aesthetic type additions to infrastructure needs that should largely be left I think to cities and counties to decide.
Glover: And whether or not you have a special legislative session this summer or this fall you're going to be dealing with this issue when you reconvene in January. Is this going to be topic A for the legislature when it convenes in January, somehow dealing with recovering from the flood?
McCarthy: It could, it very well could. It's just too early to say. It depends upon what we do now and in the interim. We still have several months before the official legislative session would begin again. I expect there will be issues we'll be dealing with but we may be well underway of dealing with this situation prior to the official start of the legislative session.
Glover: And would this squeeze anything off the agenda? If you're dealing with a topic this big, a natural disaster this big does this mean you're going to be focused on this and other things are going to fall by the wayside?
McCarthy: Every year's budget is always crafted based upon the available pool of revenues that you have and the priorities that you go and you do a balancing act. And that's going to be true this time as well. Clearly public safety, infrastructure and public safety is the primary purpose of government and given the levity of the situation that we're in right now, the gravity of the situation we're in right now this is going to be very, very, very high priority. But if your question is we'll find a way to lower teacher pay to deal with something, no we're not going to do that.
Borg: Well, is there something that you're seeing here, Mr. McCarthy, in a would have, could have, should have already? Do you see -- you said public safety is the big concern -- is there something that has occurred already -- you said it started raining and it kind of snuck up on us that the situation was getting bad -- do you see something already that you wish could have been done as the legislative oversight in government?
McCarthy: It appears not and here's why -- they are starting to describe this flood not as a 100 year flood but as a 500 year flood and so when you have a 100 year flood 15 years ago in terms of planning and moving forward it's pretty darn difficult, not even Nostradamus I think would say we're going to have an infrastructure plan in place over the next decade that is going to protect us for a 500 year flood and then here we are 15 years later. I don't think anyone saw the gravity of the situation that we're in. And so given that I think that the folks that are dealing with the situation have done an unbelievably great job. The Governor has done a fantastic job, the Lieutenant Governor is doing a fantastic job and we have a situation -- I'd like to make one comment, just a personal observation of the strength of our local response and compare that to 1993. 1993 you generally had a number of cities and counties and state and federal, it was a hodgepodge situation. So, for example, if the city of Des Moines decided to close a road because of the water over it somebody coming in an ambulance from Pleasant Hill, let's say, might not know that road was closed. This time you have all the cities and counties working together. In 9-11-2001 that Homeland Security plan helped with that. We have coordinated responses now so if the city of Des Moines closes a road all the suburbs know about it, the social services agencies know about it, the federal government knows about it, it's a coordinated, multi-layer deep response. And I think you've seen that as you head around Des Moines, people are doing a lot of looking at the river levels and going to areas they know are kind of low lying and there are crews there working, they're adding to the levees, there are social services agencies walking around in these neighborhoods. It is really an unbelievable coordinated response that we are having. I just think that people are doing a great, great job.
Yepsen: But that's a response. I'm thinking in terms of proactively. What do we do to prevent this from happening again? What do we do to mitigate this? Look, if this is a 500 year flood 15 years after we had a 100 year flood clearly Iowa has got to do something different. Now, in your mind does that mean we've got to build more dams or does that mean we've got too many parking lots in Iowa, we've had too much development, we've paved over all this farmland, this water has no place to go? What do we do?
McCarthy: I think given these two recent floods this is not to pass the buck to some sort of commission but I think we do need something like a blue ribbon commission made up of the best engineers, the best experts, agricultural experts, folks from universities, folks involved with the infrastructure of roads and bridges, to come together to develop a plan to improve our state infrastructure because people talk about something and I don't want to sound new age here but people talk about global warming, the effect it is having on the environment, maybe there's something to -- we know global warming's effect -- but maybe there's something to this sort of change in flooding type situations as it relates to these issues. But I think we need some sort of blue ribbon commission that comes up with a very comprehensive plan that can present it then before the state of Iowa executive branch and the legislative branch that we could go to work on.
Glover: Representative McCarthy, you mentioned some reaction to this storm on the part of state officials and on the part of local officials, first responders and so forth. You didn't mention FEMA. How has FEMA done? Has this been a Katrina type of a response that FEMA has gone through? Have they done better? Have you see what they've done? And have you gotten all you need from them?
McCarthy: I think the book is still open on FEMA's response. I have no specific criticism of FEMA at this point. Senator Grassley and Senator Harkin did a press conference very recently calling upon FEMA to develop a specific plan to help us. We have largely been somewhat self-sufficient as a state in terms of our disaster response thus far. Our infrastructure as it relates to public safety with our police departments, our county sheriff departments, the fire departments, the state department of public safety and Iowa National Guard and their level of expertise has been just tremendous. And our Homeland Security and emergency management effort led by Lieutenant Governor Patty Judge and David Miller has created such a strong response effort that FEMA thus far has been here to kind of help supplement that and that was not the situation in Katrina where FEMA was the primary focal point for response and they failed miserably. But I think the book is still open because a lot of their help is going to be coming after this is over and we need to be working with them. So, I'm not prepared to make judgment on that yet.
Glover: But you're not saying the state can handle this on its own? We're going to need some kind of assistance?
McCarthy: I think we're going to need assistance, absolutely.
Yepsen: I want to ask you specifically about the state universities, Ames, Cedar Falls and Iowa City, all of them hit in some form by flooding. Do you see a need for more infrastructure funding specifically for the state universities both to clean up after this as well as to mitigate future problems? Or beyond infrastructure, programs whether it be additional expenses for equipment that is lost? It seems to me that the state university system here is going to take a hit.
McCarthy: I think they are one piece of a much larger pie that is going to take a hit in this crisis. They will be part of any sort of global planning that we do. I don't have any information at this stage regarding specific needs that our universities are going to have. Obviously that would be a priority for us. But it's too early to say what sort of needs or improvements that we're going to need to make at those facilities. I just don't know.
Glover: And you also mentioned the Attorney General earlier and while officials are now dealing with the immediacy of the flood at some point they're going to have to start dealing with the recovery from the flood and that means worries about fraudulent contractors and all that kind of stuff. Is there a need to be action or law enforcement to protect consumers as they try to recover?
McCarthy: There may be that, the Attorney General's office issued a consumer warning just a day or two ago about some folks that were posing as utility workers in an effort to get money and it was actually a scam. But the good news about Iowans is -- I don't have the stats to show you but I've talked to some people in law enforcement and they say that our crime rate has dropped significantly over the past week. And I think that is a testament to Iowa's character that in times of crisis people are actually not out committing thefts and crimes, at least at the level that they were, but they're focused on helping their friends and neighbors. That trend occurred in 1993 as well. I think that is a testament to Iowa that when we have a severe crisis we're not looking at looting and widespread theft, you're looking at people helping out their neighbors.
Yepsen: So, there is even some honor among Iowa's thieves is what you're saying, right?
McCarthy: At least they're on vacation right now.
Borg: I think it is that they can't swim.
Yepsen: What about the state's insurance industry? After all these crises in other states we have seen a lot of finger pointing and recrimination where people start applying for insurance, they find out they're not covered, they thought they were. You've been in consumer protection as a lawyer in the Attorney General's office. Do you see a need for the legislature to get in, will have to get in and start looking at these laws again to make sure Iowans are protected?
McCarthy: Yes, I think there will have to be very strong oversight working in conjunction with the insurance division and with the Attorney General's office and probably in conjunction with some sort of mediation that will have to occur at some levels. We hope that there's not widespread lending issues that will have to be involved with mediation but that would be a component of it. But we're going to have to be -- this is one of the things that we're going to be working on in terms of our interim committees that we just established is making sure that all this insurance coverage that is out there for these properties is a major, major component, that there is a watchdog, if you will, moving forward to make sure that the proper coverage is issued under these policies.
Glover: Is there a danger -- Iowa is a big insurance state, insurance companies are likely to take a hit because of flooding all over the Midwest and all these natural disasters -- are the insurance companies strong enough to weather?
McCarthy: Yes, I think our reserves with our major insurance companies are strong enough to weather it. But this is going to be a major -- I can't underestimate this is the largest natural disaster Iowa has ever faced hands down and this is going to be a serious, serious hit to Iowans. I agree with Governor Culver when he said Iowa is strong enough to handle this, we're going to come together and we're going to be better for it. But there's going to be serious challenges in every sector whether it's insurance, whether it's the ag industry and just individual folks that are dislocated. We're going to have to come together and help on a personal level, have plans on an infrastructural level, deal with long-term ramifications that could affect our economy and we're just going to have to be very workman like and conscientious in moving forward and not jump to any sort of rush judgments in this industry or that industry but really move in a pragmatic fashion.
Glover: Talk a little bit more about lending issues. There was already a housing crisis before this flood started and we've got a lot of people now who have a house that they're maybe behind payments on and it's under water.
McCarthy: I think we probably in the short-term are going to need to step up our mediation efforts. We have the Iowa Mediation Program, we have a mediation farm division in the Iowa Attorney General's office, we're probably going to have to get them more involved so that when payments come due if there is a specific crisis situation that we can get in and work out some sort of alternative program or payment system for those adversely hit individuals.
Yepsen: We've seen so far kind of a partisan truce. Senator Harkin and Senator Grassley are working together. You don't hear labor unions complaining about the Governor these days for vetoing Chapter 20. People like that. Now, could this be a trend that could continue or we've eliminated some of this partisanship and you and the Republicans start working together? Or will we be back to the old game after a while?
McCarthy: You bring up just a memory when I was quite a bit younger. Ronald Reagan I think with the United Nations said something at the time which he was criticized on because it seemed to be off the wall. But I think Ronald Reagan said something to the effect and speaking to various countries in the world that if we ever had a threat from aliens coming from outer space we'd all come together as a world and realize that our differences aren't so great. And I think he had a pretty good point looking back on it that you have these sort of petty differences that you get in political circumstances, you know, somebody wants to increase a budget line 8%, you want to increase it 6%, each side is calling each other evil, you've got maybe this issue over here that involves a particular interest group and they're upset and then all of a sudden somebody's home is floating down a river, those don't seem so important any more. The working relationship we have right now is great. Everybody is putting politics aside and working for the benefit of Iowans. I'm hopeful that continues as long as possible. The pessimist in me says that as we reach a few weeks before the November elections that truce might end. But I'm hopeful that it sustains itself as long as possible.
Borg: Well, as you suggested there is an end time now in politics leading up to that November election and our end time has come right now. We're out of time. Thanks so much. This is a tenuous situation still developing. Thanks for your comments today.
McCarthy: Thank you.
Borg: Well, that's it for this weekend's edition of Iowa Press. We'll be back next weekend at the usual times at 7:30 Friday night and Sunday morning at 11:30. I'm Dean Borg. Thanks for joining us today.
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.