Borg: Making ends meet. Legislators convening Iowa's 83rd General Assembly Monday are facing major money problems. We're previewing the challenges with Speaker of the House Pat Murphy and 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. By Iowa's Private Colleges and Universities ... enrolling 25% of the total Iowa higher education enrollment and conferring 44% of the baccalaureate and 40% of the graduate degrees in the state. More information is available at www.thinkindependently.com.
On statewide Iowa Public Television this is the Friday, January 9th edition of Iowa Press. Here is Dean Borg.
Borg: Monday morning Iowa's 150 senators and representatives will be taking time for the ceremonial aspects of convening a new Iowa General Assembly. On Tuesday Governor Chet Culver delivers a Condition of the State Address. Traditionally both days are somewhat festive but this year there isn't much cheer around the statehouse. Iowa, like several other states, is feeling the shockwaves of the worldwide economic recession. Financial commitments are outstripping revenues. The current state budget has been twice trimmed, more is likely. Democrats ruling state government from the Governor's office to the sizeable legislative majorities will be providing leadership. Two of them from opposite sides of the state, Senator Majority Leader Mike Gronstal of Council Bluffs and House Speaker Pat Murphy of Dubuque are with us today. Welcome back to Iowa Press.
Both: Thank you, Dean.
Borg: No matter what you call it, setting priorities or making ends meet, it's still hard work.
Gronstal: Yes, tough decisions.
Borg: Tough decisions is right. Across the table two gentlemen you know at the statehouse quite well, Des Moines Register Political Columnist David Yepsen and Associated Press Senior Political Writer Mike Glover.
Glover: You both have said that this legislative session is going to be dominated by the budget. You both have said you've got to wait for a couple of things to happen. Senator Gronstal, let's start with you. You said that you need to wait for the federal government to decide how much of an economic stimulus they're going to get to you and they're going to decide how much flood relief they're going to get to you. What's the point? What are you going to be doing? Aren't you treading water until some point?
Gronstal: No, I think we're still going to have our members, in particular on our budget sub-committees, going through budgets, challenging departments in the state of Iowa on what their priorities are, on what they might cut, on what the fat is, on what the muscle is. I think our folks are going to go through this budget with a fine tooth comb and look for things that might be good things for us to do but that right now we can't afford. We've already made some of those decisions, things like pulling the plug on the state office buildings. It's a good idea, we need a new state office building, Wallace needs to be replaced but not today.
Glover: Speaker Murphy, the same question to you. What are you going to do for the first month or two?
Murphy: Well, actually in the first month or two I think you'll see a lot of legislators in the sub-committee process and the budget sub-committee process starting to take a look at individual line items to see where we can save, see if there's positions that haven’t been filled that we might not have to fill and see if we can find some new, innovative ways or ideas of how to come up with more money. And I think a good example is here last month, a lot of people immediately said it was strange and it was a goofy idea, was the whole idea of possibly leasing the lottery. Now, I'm not saying we're going to do it but the catch is if we would lease it out the initial estimates is we could get anywhere from $100 million to $200 million a year. If we were able to do that we would have been able to forego a 1.5% across-the-board cut here last month when Governor Culver did that after the revenue estimating conference met. So, I think you're going to see legislators looking at innovative ideas and seeing where they can save money.
Glover: Let's go right there then, the idea of leasing, selling the lottery, however you want to put it, has been put on the table. You seem to be speaking fairly favorable of it. Is that something you think the legislature is going to be forced into doing?
Murphy: We're not going to be forced into doing anything. But I use an example back in the 1980s the state had all those state run liquor stores, they helped balance the budget one year by selling all those properties and then selling liquor licenses to sell that liquor that was sold in those facilities and it ended up giving enough revenue that they were able to go through a year without raising taxes and still meeting the demands of what people expect out of state government. So, I think you're going to see us look at a lot of different options. I'm not saying we will lease it but one thing I've learned is especially when you're in a tight budget situation like we are you look at things that you normally wouldn't look at and I think this is something that we may look at.
Glover: Senator Gronstal, let's take that question to you. That's a specific that Speaker Murphy says is going to be on the table and he's speaking rather favorably about it.
Gronstal: First, I think there's a host of unanswered questions. I think there's a lot of details to be considered if we're going to do that. I think we need to make sure we're going to get a good deal for the state. We want to make sure if this thing is privately operated that the integrity of the system is maintained. So, there's a lot of unanswered questions. But at its heart are we willing to look at privatizing certain government functions that makes more sense for the private sector to do? Yeah, I'm certainly open to looking at that. Maybe we can get a good deal, maybe we can't. That's a discussion worth having.
Yepsen: What is a good deal? Is it a good deal if it leads to expanded gambling in Iowa?
Gronstal: I think those are all questions that 150 legislators on Monday are going to start to ask about that.
Yepsen: And the proposal has come from people with interests in casinos. Speaker Murphy, is it a good deal for Iowa to have the casino industry involved in the state lottery?
Murphy: Well, I think that's the part that we're going to have to take a look at. It's my understanding that there's several different institutions, there's financial institutions looking at it as well as people that have gaming interests. But the big part at this point, David, is if we're to ever do something like this -- and this is only talk at this point -- but if we're going to do something like this it's going to be put up for an RFP and we're going to try to get our best deal for the state. So, we don't know who will end up getting, if we were to do this, who would end up being the one that would manage the lottery for that period of time.
Yepsen: Senator Gronstal, I have to say just as an observer, it sounds like you're putting this on the table. This sounds like this idea has got some legs to it just from Speaker Murphy brought it up, you're not ruling it out.
Gronstal: Listen, I'm not going to rule it out but I'm also not ruling it in. I think there are a host of unanswered questions. The fundamental question is, is the state willing to look at some of the functions it does and figure out whether they could be done more efficiently and more profitably in the private sector. And that is a decent issue for the legislature to consider. And we may come to the conclusion that yes, we can and we may come to the conclusion that no, we have to rule this out.
Glover: Senator Gronstal, take David's question to you as well. If you lease, sell, however you want to define it, the lottery, won't that inevitably lead to expanded gambling of some form? That's the only incentive someone would have to buy it.
Gronstal: I don't think that's true. I think it's certainly possible that the private sector can operate it more efficiently. That's possible. I don't know that that's true. I'm not willing to reject ideas out of hand.
Borg: Have you talked, either of you, to the bean counters? Speaking of people like State Auditor Vaudt who, a couple of weeks ago on this program, called that idea short-sided, that you would be taking immediate revenues and sacrificing future revenues.
Murphy: Well, it's a lot easier for David Vaudt to look at this as an auditor than it is for legislators that have to make sure we meet the needs of education, healthcare, making sure that we have the public safety needs, corrections officers we need at institutions. The only reason that this is even on the table I think is the fact that we're going to have to look at cuts, which have already happened, we've had a 1.5% across-the-board, the Governor has done selective cuts, so I think it's a proposal that has been put out there. We're not saying that we're going to do it but we're just saying we're going to look at innovative options. And the other part too is every year the auditor, before we start session, and it didn't matter if it was David Vaudt or if it was Richard Johnson, his predecessor, we always talked about the deficit that has occurred within state government. We don't always fully fund all those things that fit into fit into 'that deficit' that we have. So, we will have to make decisions on what we will fund and what we won't fund. And so I think when he's sitting there talking about it being short-sided he's not in the same position that legislators are where you've still got to make sure that you meet the needs of Iowans and balance the budget at the same time.
Gronstal: But that's also short-sided to reject an idea before anybody's even seen any details on the idea.
Murphy: I would agree.
Gronstal: Somebody has laid out the concept is it possible that the state could generate more resources for the state by privatizing this. I for one don't think you should reject that out of hand. I think you should do some analysis before.
Yepsen: The gambling industry makes campaign contributions to state legislators. How much does that have to do with this decision? If the gambling industry wants to buy the lottery from you and you're getting thousands of dollars in campaign donations doesn't it get sold?
Gronstal: No, David, I don't think that's true at all. Look, I think it's an interesting idea, it's one worth considering. If we go through that process we very well may decide, no, it doesn't make sense. But why reject the idea of considering it? I think that's fairly silly to reject even considering an idea. I'm actually really surprised at your critical questions. The legislature has often advocated considering privatization.
Yepsen: We always ask critical questions, Senator.
Gronstal: But the idea of privatization shouldn't be rejected out of hand.
Yepsen: How about privatizing other functions of the state's workforce, Senator? I'm thinking specifically the fact that this week we learned that the AFSCME union is asking for a 5% pay raise for state workers next year and then another 5% after that. How many private sector workers are getting that kind of raise, Senator?
Gronstal: Well, other than the CEOs of some major corporations I don't know very many.
Yepsen: Every state worker makes 30% more than the average citizen.
Gronstal: I'm not going to comment on the collective bargaining process. I don't think it's the legislature's role to comment on that. I think it's bad faith bargaining for us to engage in that discussion while negotiations are going on. We will wait until -- it's the executive branch's responsibility to negotiate that contract, not ours.
Yepsen: Isn't that a cop out? You guys have to pay whatever gets negotiated and public employee salaries are the single biggest driver of the state's budget. So, you're sitting here telling us you may be forced to lease the state lottery but you're not going to make a comment about a big pay raise like this for state workers.
Murphy: I'll go back to what you said, you said that may 30% more than what people make in the private sector but here's the point I'll just point out. Nobody in the private sector has to do what a Department of Human Services worker does where they sit down with a couple that has an abused child and say, Mr. and Mrs. So-and-So, I'm sorry, we're going to have to take your child because we believe they are in imminent danger. They also take more public criticism. When a child ends up injured or dead it ends up being news across the state and then we have people that want to have people have criminal charges and they end up losing their job. Along with that you have law enforcement officers which, quite frankly, they don't have an easy job. No matter what they do they get blamed. It's the same thing with corrections officers. So, I really think it's unfair to sit there and say -- because there is nobody in the private sector that performs the same jobs as state employees. And they do face much more criticism when something goes wrong than people in the private sector.
Yepsen: Is it possible that we will see some quid-pro-quos here, that the state's position in this -- this does involve the legislature -- is we can't afford to give you a 5% raise this year and another 5% next year but instead we'll give you open scope bargaining? Is that the kind of negotiation we can expect here?
Murphy: The only one that could answer that is Governor Culver because he's the one that is negotiating with the union right now because that is his job. But I'll tell you right now, quite frankly, they've got to have good faith bargaining and the bottom line is the Governor is going to have to make hard decisions knowing that we have an economic climate that is not good for the near future and he will have to make decisions and when they make those decisions that may affect how we're able to deal with the state budget. So, to be honest with you this is one of those things where you have both sides offering proposals and when you sit there and talk about 5% the Governor probably isn't going to give them what they want right out of the box. That's the other part you have to remember.
Borg: I want to ask you, Speaker Murphy, because you're from the eastern side of the state as I pointed out, there are some eastern side of the state priorities, not that Mr. Gronstal here would ignore being from the western side of the state, I don't think he would anyway, but does the eastern side have regional priorities that transcend these budget priorities?
Murphy: I think when you're talking about the floods the answer is yes. I think that is our top priority this coming session. We want to make sure that we do everything we can to address the needs and concerns of communities like Cedar Rapids, Iowa City, Columbus Junction, Oakville, there's no question that there's issues that we need to address there. And quite frankly I think you'll see this is something that will cover and permeate the session and I think will actually be bigger news than the budget because we need to make sure that we address some of their concerns in regards to rebuilding, flood planning for the future and it's so much of an issue that both the house and the senate have created the Rebuild Iowa and Disaster Committee and we have people on there that have a lot of experience and people from those communities that are affected.
Yepsen: Senator Gronstal, you have indicated that the state will probably spend at least part of its economic emergency fund in order to take care of some of these expenses and I could see where people would say that's what it was put there for.
Gronstal: It's called the rainy day fund, I think it rained.
Yepsen: What about the rest of the cash reserve? You've got 2.5% that's in the rainy day fund and 7.5% that's in the cash reserve. Do you expect this session of the legislature to start dipping into the big cash reserve?
Gronstal: I would prefer not to. We're going to look for every way we can to avoid that. In early December we thought we had, based on consultation with people claiming to know, we thought we had done in the neighborhood of what was enough for the '09 budget. In a space of 10 days we all made a judgment that we had not, in fact, done enough. So, we had to do more. Right now we don't know if we're at the bottom of this thing or not. So, anything is possible out there but I want to say I am reluctant in a recessionary time to go too deeply into either of those funds.
Yepsen: And do you give all of the rainy day fund to eastern Iowa?
Gronstal: Everybody always tries to put a number on it, no, I'm not going to put a number on it right now. We're working closely with the Governor on this and we're going to have that discussion and expect action early in the session. We're going to move forward on something early in the session.
Yepsen: What have you got to cover the floods of '09 ...
Gronstal: That scenario, David, we never use the funds because there's always a potential disaster around the next corner.
Glover: Speaker Murphy, the task force that you created has come up with some recommendations that you give cities and counties power to impose a series of local option taxes, a menu of nine separate taxes. What kind of a future does that have?
Murphy: Well, I think it has -- with the session coming up I'm very optimistic about a lot of bills. But I do think that we'll have more of an opportunity to look at this for basically two reasons. One, because of the budget crisis that we're having and because of the recession we're in I think we'll have more time to look at these types of issues whereas we were trying to meet up with some of the unmet needs of the last four or five years the last two. I think you'll see much more of a focus on looking at this bill and figuring out what we can do for local communities. But I think the second and more important piece is the community that's been the biggest proponent of this is the city of Cedar Rapids and other ones that have been devastated by the flood. So, I think that we will look at that and I think it will get a lot of attention. I won't predict that we'll pass anything but I do think that it will get more attention than it's gotten in the last five years.
Borg: Why would you not?
Murphy: Well, I think the big part with that, Dean, is making sure that we can get 51 votes to put something together. The first part you've got to remember is the state isn't putting any money into this and we are giving locals some options. And the question is getting 51 votes to put that together. In the past we've been able to get a bill out of the house but it hasn't met consensus in the senate, the senate ahs been able to do some things in the past that the house hasn't been able to agree to. So, I think there's no question that we want to look at it but it's the ability to get the consensus of 51 votes in my chamber, 26 in Mike's and then also getting the Governor to sign it.
Glover: Senator Gronstal, let's go over to the senate side and that same question. It's a local option tax but it's a tax increase in a recession with somebody else opposing it.
Gronstal: He described the challenges of reaching consensus, I won't repeat that. We believe property taxes in the state of Iowa are too high. We're willing to look at mechanisms that bring those down. But finding consensus has eluded us in the last two years, eluded the republicans in the previous ten years, it's not an easy situation.
Glover: Three-quarters of that new money would be used for property tax relief, a quarter of that new money would go to whatever they want to use it for.
Gronstal: Look, that's a recommendation of a committee for the legislature to consider. Don't make it sound like that's the final bill. It's obviously going to go through a political process inside our institution and a policy process where people make judgments about that. Property taxes in Iowa are too high, we're going to continue to look at mechanisms that can help bring those down.
Murphy: And I would just add this, Mike, if you look at the surrounding states around Iowa most of them so that they don't have such a high reliance on property taxes allows other fees to be charged to residents so that they're not heavily reliant on property taxes. That is the goal of what this interim committee has come up with and quite frankly when you look at the other states surrounding Iowa they do allow much more flexibility to local government. But they have to approve it, they'll have to approve it.
Glover: Philosophically isn't it a tax increase as we head into a recession?
Murphy: That's a decision that local cities and counties will have to make that decision. We won't impose a tax, we will give them options and it will be up to local cities like Cedar Rapids or Dubuque or Preston, Iowa if they want to go this route and look at those fees.
Yepsen: Senator, speaking of tax increases, a lot of powerful interest groups want to raise the gas tax by a nickel a gallon. Will the legislature vote to raise the gas tax?
Gronstal: I don't think we know the answer to that yet. But are we willing to consider the challenges of transportation infrastructure in this state? Yeah, we are and I for one -- but obviously a huge diversity of opinion on this -- I for one think it probably makes sense to have a user fee that out-of-state Iowans pay as they travel across our state. Some of us think that kind of makes sense. So, we're certainly willing to take a look at it. If something on that front is going to happen just as it has happened for the last 30 years it's going to need bipartisan cooperation.
Yepsen: Speaker Murphy, do you have 51 votes in the Iowa house to raise the gas tax?
Murphy: I think it's way too early. I use the example of Time 21 funding that we came up with last year. The Governor said no to the gas tax. After he said no we started looking at other possibilities but we didn't know that until we got our 100 members together. Representative Hueser worked very well with both democrats and republicans to put a compromised proposal together to get something passed. I think it will be the same thing this time. But we may not know that until March or April.
Yepsen: I just heard the majority leader in the senate say he likes the idea of raising the gas tax. Do you like the idea of raising the gas tax?
Murphy: I'll tell you right now I think it's something that I like the idea as well but the part I think needs to be a focus of if we do this I think we should be doing the same thing that the president-elect is talking about where if you're going to put projects together, the projects that you can put people to work on the ground, palling ground, laying gravel, laying concrete and it needs to be within a 30 to 120 day time span. That is what I think we should look at and just remember, this will create jobs in the state, they're talking between 4,000 and 4,500 jobs that a nickel would create and quite frankly in a recessionary time if you're going to do something it should be to create jobs to put people back to work.
Glover: Governor Culver has said last year he ruled out the gas tax, this year he said he'll wait and see what you send him. Does he have to step up to the plate and say, send me the gas tax, politically to make it happen?
Murphy: I think the Governor is smart on this proposal, he's going to let legislators negotiate amongst themselves. I think the big part he has to do is he has to let us know at some point when we start getting a package together that looks like we can pass giving us an indication that it's something that he would accept.
Glover: Senator Gronstal, one of the steps the legislature has taken in past years was a large increase in teacher pay bringing the state to 25th in the nation in teacher pay. Can you sustain that in these economic times or doesn't that realistically have to be on the table as well?
Gronstal: That would be my last choice to go to that area. We are going to do everything we can to preserve that. We think it was a mistake to say to Iowa's best and brightest go elsewhere for your future if you're in education. We think that was a mistake and getting to 25th was our priority and we're going to do everything we can to try and stay there.
Glover: Speaker Murphy, can you protect it in the house?
Murphy: I would agree with the Senator. We're going to do everything we can to protect early education, we're going to try to continue to make teachers at least at the median average for teachers in the country. So, I think those are two things that we're going to try to stay committed to through this year.
Borg: Senator Gronstal, I said earlier twice trimmed the budget already, part of it across-the-board. Corrections took a hit there. It's been recommended to the legislature that you reinstate those funds that were taken away from the corrections budget. Will you?
Gronstal: It's highly likely that we will do that, yes.
Borg: What about building a new prison? Should that be deferred?
Gronstal: Look, I still think there are dangerous people in the state of Iowa that need to be locked up for a very long period of time.
Borg: Aren't they being now?
Gronstal: Not everybody agrees with that, in a prison that's had more escapes than any other prison in the state of Iowa -- but in addition to that we think a new prison is much more staff efficient than one that is older than the state of Iowa. So, we think it makes sense to proceed with that and we'll come up with a way to do that.
Yepsen: Speaker Murphy, we've only got a couple of minutes left. Do you expect this legislature to debate gay marriage?
Murphy: To debate gay marriage? No.
Yepsen: Constitutional amendment.
Murphy: No, we're going to let the courts make that decision.
Yepsen: Senator, same deal in the house?
Gronstal: Same answer.
Glover: Senator, you have said you want to shorten this legislative session trimming per diem to 100 days instead of 110 days and you want to focus on the budget.
Gronstal: Budget and disaster recovery.
Glover: Budget and disaster recovery, kind of the same thing. That inevitably means that there will be some things that you won't have time to debate. What is off the table this year?
Gronstal: I'm not going to give a list of things that are off the table. We're going to get the budget done and then we're going to get done early.
Glover: Speaker Murphy, same question to you. What is off the table because of the budget crunch and the pressure to shorten the session?
Murphy: Well, I said earlier this year I promised to make no promises and I never say never to anything but it's hard to say at this point what would be off the table. I think we've got to wait and see.
Gronstal: We've got 25 new members, we've got 150 people coming in that were on the campaign trail last summer and fall and they're coming here with new ideas and we're going to do our best to accommodate -- every new general assembly has to bring those new folks in and hear what they have to say and reach consensus.
Yepsen: What is the legacy going to be, aside from selling the lottery and cutting the budget and raising the gas tax, what is the legacy of the legislature going to be?
Gronstal: I think the legacy is going to be in tough times we make tough decisions, balance the state's budget but maintain our priorities about growing our economy, continuing to be the world leader in renewable fuels and responsibly deal with the budget.
Yepsen: Ten seconds.
Murphy: I think on top of that the other thing that we will be remembered for is the work that we did to rebuild devastated parts of the state.
Borg: You said just a moment ago get done early is your goal, we have an allotted time here and we call it quits and that's where we are right now. Thank you both for being our guests today. We'll have you back soon. On our next edition of Iowa Press we're getting perspective from the Iowa legislature's minority republicans. We'll be questioning Senate Republican Leader Paul McKinley. You'll see that conversation at the usual airtimes, 7:30 Friday night and 11:30 Sunday morning. And a program reminder too -- Iowa Public Television will be at the statehouse for you Tuesday morning when Governor Chet Culver delivers his annual Condition of the State Address. You'll hear the Governor's speech as he delivers it at 10:00 that morning with a rebroadcast at 6:30 Tuesday night. I hope you'll be able to catch either the live broadcast Tuesday morning or the playback that night. 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. By Iowa's Private Colleges and Universities ... employing over 10,000 Iowans and enrolling 25% of the total Iowa higher education enrollment. More information is available at www.thinkindependently.com.