Borg: Projecting power. After increasing their legislative majorities democrats are crafting agenda priorities for Iowa's general assembly. We're getting insight from Senate Majority Leader Mike Gronstal 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.
On statewide Iowa Public Television this is the Friday, November 14th edition of Iowa Press. Here is Dean Borg.
Borg: Democrats are riding solid majorities when Iowa's 83rd general assembly convenes January 12th, the question is how they'll use those voting margins in both houses. In the Iowa senate legislative veteran Council Bluffs Democrat Mike Gronstal leads the majority. Senator Gronstal, welcome back to Iowa Press.
Gronstal: Happy to be here.
Borg: And across the table statehouse reporters Des Moines Register Political Columnist David Yepsen and Radio Iowa News Director Kay Henderson.
Henderson: Senator Gronstal, what is the status of the undecided race in the senate that shows a very thin margin for Senator Danielson?
Gronstal: It was finished, there was a canvas last night at 7:00 at night that finished the canvas on Monday -- all but two of the precincts that had had machine malfunctions. So, they have canvassed those precincts and Jeff Danielson is ahead by 14 votes and that election has been certified. There will be a recount I am sure, I believe it was filed for yesterday.
Henderson: What is the ramification on state government, on state policy makers of the Obama election, of an Obama administration in January?
Gronstal: Well, I think one of the things you'll see is a better partnership between states and the federal government and I think in particular you'll see some efforts, I'm not quite sure on the timeline, but you'll see some real efforts to deal with healthcare in this country. I think that is a positive development. I think the states will have a role in whatever kind of expansion of access to healthcare happens under the Obama administration. I think that will be good for all of us.
Henderson: So, do you anticipate additional expenses?
Gronstal: I think that's a little hard to say right now. The monkey wrench in the whole thing at the moment is the challenge of the national economy and the collapse of the credit markets and all of those circumstances. That is going to require some immediate attention. But clearly the Obama administration is going to work well with the states in terms of -- healthcare was a big issue in these campaigns until the collapse of the credit markets took everybody's attention away from that.
Yepsen: Which leads me to my question ... what is the condition of Iowa's economy? And what does that mean for the state budget?
Gronstal: Let me tell you, I kind of expect you to ask me some tough questions about the challenges we face and we do face challenges. But let me set the stage just a little bit. I think Iowa is in an incredible position in our economy right now. We have opportunities that we haven't had in my entire lifetime. We're a net fuel exporting state. Nobody, none of you believed that would happen when you were young and in school. We have an incredible opportunity in this state to lead the world in a renewable fuel economy. So, I'm very excited about Iowa's long-term economic prospects. We have a significant bump in the road this year that we're going to have to deal with. Our revenues, while not off as much as they are at the federal level, our revenues are stagnant or maybe even slight declines. The revenue estimating conference will meet in December and we'll figure that out. And we'll have challenges just as we had challenges back in 2001 and 2002 and 2003. We will have challenges but I've got to tell you, I am more optimistic about the future of Iowa and the future of our economy than I have ever been in my life and I think that's a pretty unique circumstance.
Yepsen: The Legislative Service Bureau has indicated that you have some $600 million worth of what are called built-in expenditures, things that previous legislatures and governors have said, yes, we want to do this in the future, healthcare, education, pay raises, all that sort of thing. You have often said those figures can be adjusted. So, what are you looking at for how many built-in expenditures you've got to take care of on top of flat revenues?
Gronstal: David, I remind you that over the last eight years we probably walked into every session with somewhere between $300 and $600 million projected built-in that we didn't have revenue for, every year for the last eight years that's probably been the number $300 to $600 million. So, while it's a significant problem and it's a challenge and it's on the high side of those numbers over the last eight years democrats are going to stay committed to our priorities, we're going to come in and we're going to pass a responsible budget, a balanced budget and we're going to deal with that. The numbers -- we'll determine that after the December revenue estimate.
Yepsen: But can we cut through it a little bit, Senator? You guys also play financial games, you know, you not withstand certain sections of the code, taking money from various funds. Is the democratic majority in the legislature committed to honest accounting in this budget?
Gronstal: Let me say this, and I mean it sincerely, I believe we played less games in the last four years, less games than were played by the previous folks that controlled the place. We will fix up, we will continue to fix up the state's budget. We have more money in savings than the republicans ever had in savings when they controlled the place. They spent our reserve counts down to about 2.5%. We're at 10%. We've got $620 million in the bank. Republicans never had a number that high.
Yepsen: One last question on this, Senator. Will you have to dip into that cash reserve?
Gronstal: I think that remains to be seen. Look, I'm very concerned about the economy and there is a significant bump in the road and we're going to have to tighten our belts and we're going to deal with that but we're going to do that while maintaining our priorities. I'm not going to rule anything out or rule anything in. At this point one of the things I want to make sure Iowa does, one of the challenges beyond just balancing the budget, is make sure we have a good disaster recovery, a rebuild Iowa effort after the natural disasters of this summer. So, that's going to take a challenge. If I was going to dip into the rainy day fund I'd want to dip into it because of the rain. So, that would be my response to that.
Borg: Senator Gronstal, around the world -- you have used the phrase twice here already -- collapse of the credit markets. Governments around the world are trying to deal with that in regulating and bailing out, if you will, financial institutions. Des Moines has over the years attracted significant insurance industry and it is an insurance center, Iowa as a whole is. Do you foresee in this legislative session any adjustments to regulation of financial institutions that is going to be necessary because of the current credit crunch?
Gronstal: That is something that we will have discussions with the insurance commissioner about. We have passed strong laws in this state on insurance company solvency. We have adjusted those laws over the last 15 years through democratic and republican administrations. We work closely with the insurance industry to make sure that we don't get ourselves into trouble on that. So, we have a pretty strong insurance division that has dealt well with the issue of solvency relative to insurance companies. We're going to continue to take recommendations from them about what it is we need to do.
Borg: Are you actively looking into it?
Gronstal: Yes, we are. We have asked the insurance commissioner for proposals to deal with these issues.
Yepsen: What about the larger question of Iowa efforts to help mitigate the home foreclosure crisis?
Gronstal: The good news in Iowa is the vast majority of our financial institutions, in fact, didn't loan money to people that couldn't pay it back. In fact, community banks across the country have been pretty good, in particular in Iowa, they have been very good in terms of that. So, we don't have the same level of challenge that they have at the national level but there are challenges and we will look for potential solutions if we can help on that. But Iowa bankers have done a good job of assessing risk and loaning money to people that can pay it back.
Yepsen: It doesn't sound, Senator, like you feel that there is a big need for the state to do much of anything at this point.
Gronstal: On the housing side I don't think so at this moment but we're still assessing that.
Henderson: There are some budget issues that you haven't covered, we've talked in general, but specifically commitments towards teacher pay? Will that be fulfilled or in an era of tight budgeting will you forego that increase?
Gronstal: Look, we are not going to back up on our commitment. There is a graduating class of teachers, there was a graduating class last spring at UNI and other higher education institutions in this state that didn't have to look to Wisconsin or Minnesota to get a job that paid enough so they could pay their college loans back. We are not going to back up on our commitment to being 25th in the country on teacher pay.
Henderson: You mentioned the rebuild Iowa effort. A state senator from Cedar Rapids, Rob Hogg has suggested forestalling some long-term projects, the state prison, some state building projects. Do you anticipate doing any of that?
Gronstal: I'm ready to walk from the state office building, I'm ready to say it's time to pull the plug on the state office building for at least the short-term foreseeable future. I continue to believe we have dangerous people that need to be locked up in secured facilities. I think we should continue down the track of rebuilding the prison in Fort Madison. I also think in the end that prison begins more staff efficient if it is built to new standards, it becomes more staff efficient and in the long run it will actually save us money to replace that prison.
Borg: One of the fallouts right now that we know of, of the staggering economy is the increase in Medicaid enrollments, up I think 40% to 60% if I recall. How are you doing to deal with that increased expense?
Gronstal: That is one of the challenges we're going to face in this next session of the legislature. And let me repeat, I think we're going to have a better partnership with the federal government on these issues. It is clear that Speaker Pelosi and Majority Leader Reed have talked about an additional stimulus package that would help that states with things like food stamps and Medicaid. So, I'm confident we'll work together with the new administration and come up with solutions to those problems. They are challenges and we do have a difficult budget ahead of us. And anything that isn't kind of nailed down is probably going to get cut.
Yepsen: At the end of the day that state still has to come up with money for Medicaid.
Yepsen: And there are more people who are being tossed into poverty. So, at some point do you not have to say we have to put more state dollars into taking care of the poor people?
Gronstal: Absolutely, of course we do. Listen, this is a challenge for the state. It's a disaster for the family that has to access healthcare services through Medicaid. It's a disaster for them. For us it's a challenge and we'll respond to that challenge and we'll divert resources to our most important functions.
Yepsen: What about the larger question of healthcare? The past session the democratic legislature has tried to expand healthcare opportunities, you passed some legislation to do that. Does the financial crisis now change that? Do you wait for more from the Obama administration? You've got talk of S-chip being passed by the new congress. What does the economy and the new administration do to whatever healthcare debate you want to have here in Iowa?
Gronstal: Let me repeat -- I think what the new administration gives us and gives every state is a new opportunity for true state-federal partnerships that I think it's going to be a much more responsive administration in terms of those kinds of issues. So, I'm pleased with that. I don't know how that will all play out yet. Like I said, I think the first item of business will be to find some solution to calm the credit markets but then after that I think we'll be back to the issues that were about building the middle class, that's what we want to do both in our state and in our country.
Yepsen: I want to go back to the question on using state infrastructure dollars to help Cedar Rapids. How big of a commitment does the state of Iowa, do the people of Iowa owe the people of Cedar Rapids? Cedar Rapids is talking about a huge recovery project, years. Do the taxpayers of Iowa, should they be expected to pay for this?
Gronstal: First of all, you make it sound as if it's just Cedar Rapids. The stuff I've seen says Cedar Rapids is a little over 50%, maybe 54% of the challenges across the state. 88, 89 counties were impacted by weather related disasters this summer. That is a pretty big ticket item. Cedar Rapids is our second largest city. I think we do owe an effort to rebuild there collectively in the state of Iowa. We're going to move forward on that. We're going to establish a committee that is about rebuilding Iowa. And I think that's important to do. I was in New Orleans this summer at a conference. I drove through the 9th Ward in New Orleans. I really believe the Culver administration, Chet Culver, Patty Judge did a better job at disaster response than any state in the union. I am proud of our effort at the response directly to the disasters. Going through New Orleans I want to make sure our disaster recovery is the best in the nation as well and when you drive through the 9th Ward and you see those devastated block after block after block of abandoned houses and vacant lots I don't want that to happen in Cedar Rapids. I don't think that's good for the state of Iowa. So, I think Iowans do need to respond to this.
Henderson: Salaries account for a huge chunk of state spending. Companies across the state are starting to lay off workers. Do you anticipate any layoffs of state government workers? Or do you anticipate delaying or cutting pay raises?
Gronstal: We will make that judgment after we assess the magnitude of the revenues. We'll make that decision after the December revenue estimates. As I said before, I wouldn't rule anything in, I wouldn't rule anything out. We have real budget challenges this year and we're going to respond to those and we're going to pass a balanced budget that preserves our priorities. We may be able to manage some of those things with leaving vacant positions open for longer periods of time, those kinds of things, hiring freezes. We may be able to deal with some of those things without actually laying people off.
Henderson: You mentioned earlier that anything that's not nailed down is on the table. What about an across the board cut on state spending?
Gronstal: Let me repeat -- I'm not ruling anything in or anything out. We don't know the numbers yet. We don't know the full impact. The October revenue estimate basically said flat to very slight. They identified I think about a $7 million ending balance which is for practical purposes nothing. So, we're going to have to respond both to fiscal '09 which is the year we’re in and then make tough decisions about fiscal 2010.
Yepsen: Senator, let me as you a question maybe you can answer. How are you getting along with the Governor these days?
Gronstal: I'm getting along just great with the Governor. We have had a series of meetings starting before the elections. The Governor did work going out and campaigning for our candidates. You guys like to focus on our disagreements.
Yepsen: But you did have a little disagreement as I recall.
Gronstal: Of course we did, I have disagreements with my wife every day but I agree with her about 90% of the time, the other 10% I assume I'm wrong. So, listen, I would tell you we have had more than weekly meetings with the Governor since about the first of October. So, we are getting along very well, communication is better and that's always hard to start in a new administration and establish patterns for communication. We're getting along just fine.
Yepsen: What about the core issues that led to this disagreement, the labor questions that the legislature passed, the Governor vetoed? What are you going to do specifically about open scope, about fair share in the coming session?
Gronstal: We’re going to have those discussions with the Governor and figure out what level of funds he is comfortable with, have some discussions inside our caucus as to what we're comfortable with and figure out what we're going to do.
Yepsen: Is there some middle ground here that you can reach with the Governor, something that you can do, that he can sign, that you can do that the labor movement will say is fine?
Gronstal: That's why it's important to have communication, go back and forth and figure out what we think will be asked for the state of Iowa.
Borg: What I hear you say is yet, so what that means is there will be something?
Gronstal: I think it's highly likely there will be something.
Borg: In dealing with Iowa's current labor law?
Gronstal: I think it is highly likely there will be something on that subject.
Yepsen: What is the case then for this legislature opening up the scope of things that can be bargained for collectively? A lot of the local governments didn't like that idea.
Gronstal: Look, I understand people that were fearful of that idea. Let me return the question to them. What is wrong with a cop sitting across the table from the city bargainers and saying, we'd like to have bullet proof vests. I've got to tell you, I think it's okay for a cop to be able to ask his employer to supply bullet proof vests. I think it's okay for firefighters to talk about the equipment they need to do their job to both save their lives and save the lives of the people that are going into a burning building. So, I think there are issues like that in collective bargaining that it isn't a bad thing that people bargain, it's bargaining, it doesn't guarantee they win. Every state around us has open scope bargaining so I think that whole issue has been exaggerated quite a bit.
Yepsen: And what about fair share, the notion that non-union workers in union shops should be required to pay a fee for the services the union provides?
Gronstal: What about the concept that the union has to represent the worker in the shop when there is a dispute in the workplace? What about that concept?
Yepsen: That's in the law now.
Gronstal: That is unfair now where the union has to, even though they get no contribution from a member, has to represent them when there is a dispute on the job. So, if you get fired by your employer you can go to the union and make them represent you all the way to court, they can represent you in that dispute about your firing. Is that fair?
Yepsen: Doesn't that guy Iowa's right to work law?
Gronstal: I don't believe it does, I don't believe it does.
Yepsen: You don't have to belong to the union but you do have to pay them a fee. What's the difference?
Gronstal: The difference is -- so you want a free ride. You want to be represented, that's not called freedom.
Yepsen: Why don't you change the law to say I don't want to be represented?
Gronstal: Because you can't under the federal law. Under federal law in federal court cases they are the exclusive bargaining agent for the employees in that workplace.
Yepsen: Are you telling me we don't have to get into the state right to work law to accomplish fair share?
Gronstal: It depends on whether you do fair share for public or fair share for private.
Yepsen: Will you do it for public and private?
Gronstal: All of that is subject to some discussions, ongoing discussions we're having with the Governor.
Borg: The idea was last time that you were going to -- the foot in the door with public employees.
Gronstal: It wasn't foot in the door, it was a decision we made that public employees in the state of Iowa are restricted in a host of ways in their power to bargain in the workplace, they're restricted in a host of ways and this was one small way to tip the balance. Look, the whole right to work issues is such a giant symbol and frankly it's a symbol to both sides. But whose economy would you rather have? Whose average family income would you rather have? South Dakota's or Nebraska's or Minnesota, Wisconsin and Illinois'? If you look at those states their family incomes are higher than Iowa. They are fair share states. Nebraska and South Dakota aren't and their family incomes are lower than Iowa's. Whose economy would you rather have? If this is such a great economic development tool how come there aren't six lanes of highways coming in from Wisconsin, Illinois and Minnesota into Iowa and only one lane going out because all the businesses should be rushing to Iowa and they haven't. They haven't in the last 60 years. It's a bogus issue.
Henderson: Let's talk about highways. There are some who build them who wish that the gas tax would be increased. There are cities who say that their roads are in need of repair and the gas tax should be increased. Will that be on the table?
Gronstal: I think that's on the table for us in particular since I think we have some challenges on infrastructure related to disasters in 89 counties in this state. I think there may be some interest in pursuing something in that area. I don't know -- we're going to have those discussions in our caucus. We haven't even elected leaders yet amongst the senate democrats let alone had a policy discussion.
Henderson: Your counterparts in the house, fellow democrats have said not at this time of high gas prices. Obviously gas prices aren't as high as they were last month.
Gronstal: And that has led some people to say, again, we've got to assess this inside both of our caucuses and with the Governor, that has led some people to say okay, prices were doubling to $4, now that they are under $2 maybe now is the time.
Borg: You're facing big budget issues as you have already admitted at the state level. Cities and towns are having the same thing. Is it likely that you might yield to some of their requests now for additional taxation flexibility such as income tax surcharges?
Gronstal: I think there is clearly a group of people that are looking at the possibility of providing local governments with several choices whether that be local option sales tax, income tax, franchise tax, all of those kinds of ideas out there -- it's clear Iowa has too high a reliance on property taxes, I think that is clear and I think people would like to deal with that. In return for some revenue sources there would probably have to be some mechanism that ratcheted down how much local governments could expand their spending. So, if something happens on that front it's going to have to be a give and take kind of deal where a significant portion of that revenue is dedicated to property tax relief and where there is some limitation on the growth of budgets of local governments. I see the possibility of something like that happening.
Henderson: There are those who argue in an economic downturn taxes should not go up. Will taxes in Iowa overall go up?
Gronstal: I don't know the answer to that yet.
Gronstal: I've got to have a policy -- I've got 32 members, I've got new people in my caucus that have to have some discussion about what it is we want to pursue this session, what they have heard on the campaign trail. They have to share that with 50 senators and 100 house members and the Governor and figure out where we're going from there.
Henderson: What is your philosophy?
Gronstal: My philosophy is to grow Iowa's middle class, create jobs, grow Iowa's middle class. I think there are a host of things that are a part of that. I think job training is key to that. I think strong community colleges and training mechanisms so we can train people for the jobs of today and the jobs of tomorrow, I think that's important. I think efforts for renewable fuels and keeping us on the cutting edge of those kinds of things. So, I think there is a host of elements to that but my goal is to grow Iowa's middle class and really it's even more selfish than that. It's to create the kind of economy that our children and grandchildren will see opportunity in Iowa and not elsewhere.
Yepsen: Senator, we've got less than a minute. Racing and gaming is doing a study on expanding gambling in the state. It's never an official session without a gambling discussion. Is this legislature going to weigh into that question?
Gronstal: I think it's unlikely we'll weigh into that question.
Yepsen: So, you would be comfortable with more expanded gambling in Iowa?
Gronstal: I think they are going through the appropriate process to assess what the marketplace looks like out there and they have hired consultants to determine whether there are underserved markets in the state of Iowa. They are going to go through that process, I think that's good. The legislature has avoided at every turn the opportunity to literally say, you're going to build a casino there, you're going to build one there. We have avoided that and I think that's good, I think it's important that we stay insulated from making that decision directly.
Borg: We'll have you back when you've consulted with some other people. Thanks for the insights you have given us today. We'll be back next weekend with another edition of Iowa Press. I hope you'll watch 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.