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Show Me the Money: Senator Mike Gronstal (D-Council Bluffs)

posted on March 20, 2009

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Borg: Show me the money. New projections from Iowa's revenue estimating conference tell legislators how much money they'll have for next year's state budget ... and it's not good. We're discussing the latest numbers with the Senate's Democratic 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. 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 ... 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. The Iowa Hospital Association ... supporting the missions and visions of Iowa's 117 community hospitals. The Iowa Hospital Association ... we care about Iowa's health.

On statewide Iowa Public Television this is the Friday, March 20th edition of Iowa Press. Here is Dean Borg.

Borg: A new quarterly report from the Iowa revenue estimating conference is setting the tone for the legislature's final weeks of this session and the news is stark. The latest projection made on Friday shows Iowa can expect $130 million less than what was originally expected in the current fiscal year, a year in which the current budget has already been drastically sliced. And as legislators are now crafting next year's budget they are told to expect state tax revenues will be falling $270 million below the austere estimate made just three months ago. One of the legislative leaders guiding the process now is Council Bluffs Senator Mike Gronstal who leads the senate's majority democrats. I'd say welcome back but I don't know that you feel that way.

Gronstal: I'm not sure it's a comfortable place to be right now.

Borg: Across the table the people who are going to be exploring what you're thinking right now, Des Moines Register Political Columnist David Yepsen and Associated Press Senior Political Writer Mike Glover.

Glover: Senator Gronstal, you've been waiting for these numbers for some time, now you've got them, the news is bad, what are you going to do about it?

Gronstal: Well, we're going to come in early next week and give our budget subcommittees new targets. We're going to make some very difficult, very tough decisions in the next couple of weeks here. An incredibly tight budget year and as you heard in the opening the national recession is deepening, unemployment numbers are going up, Iowans are out of jobs so we're going to have to make some really tough decisions.

Glover: And how are you going to approach this? There's several ways you can go about it. Is this a situation where you do an across-the-board cut? If so, how deep? Do you pick out specific areas? If so, is there something off the table?

Gronstal: I wouldn't say there's anything off the table. These are incredibly challenging times and what we need to do, we've got this shortfall now and, as I said, this is part of the national recession, continuing declines in the state revenues and all of that right now looks pretty bleak, the stuff that's right in front of us. But I've got to tell you, our long-term future I still believe is very bright in Iowa. So, we're struggling through very tough times, we'll make those tough decisions, I've been through those tough decisions before, did it in '92, did it back in the 80s during the farm crisis, we've been through that before so we will do probably in some cases across-the-board stuff. We will also make selective cuts. We'll come in on Monday, we'll give our budget subcommittees new targets. As you probably remember our targets were $130 million below the Governor's number. We've got to do a like amount again, about another $130, $140 million in cuts. So, that is the new targets we'll give our members on Monday.

Glover: Is this worse than the 1980s?

Gronstal: This is the worst I've ever seen. This is the worst in my 27 years in the legislature.

Yepsen: Why do you say that, Senator?

Gronstal: Well, think about the numbers for a minute, David. In terms of state revenues our decline in revenues is in the neighborhood of 10% and we never had 10% before. In the early 2000s we had about a 10% decline spread over two years. This is in one year a 10% decline so that is a giant number compared to anything we've experienced before.

Yepsen: One of the arguments that is going on up at the statehouse is the republicans are making the argument there's too much spending, that even with these declines state revenues are still doing well, the democrats counter by saying this is George Bush's fault, it's a national fault, there's probably some truth to all of it. But I'm curious what your reaction is to the republican attack that says democrats have just been spending way too much?

Gronstal: I appreciate the political angle of the things republican need to do. A few weeks ago we had to do an appropriation bill in the senate, we decided to cancel the state office building, saved the state a bunch of money, used the resources that were going into that building into the general fund to help balance this year's budget. Not one republican voted for it. I find it a bit disingenuous to criticize us for spending too much. The amendments they offered on that deappropriation bill were to spend more. Now, republicans like to talk a good game on this subject but where the money meets the road, when it's time to vote to actually cut budgets not one republican in the senate voted to cut budgets.

Yepsen: Even at the end of the '07 session remember you and I were talking off to the side there in the chamber and you acknowledged that you thought maybe too much had been spent. Any regrets looking back here now?

Gronstal: No, I wouldn't say I have a lot of regrets. What I acknowledged was we spent more and maybe even pressed the envelope a bit but that was because of years of neglect by the previous folks in charge. I continue to think it's a bad plan to have the highest community college tuitions in the country when we're a state that's below the national average in terms of our returnable income. That's bad, it was bad going to 42nd in teacher pay. So, we made some what we thought were critical investments in the future of Iowa and that's what we've got to preserve as we go through this budget process to make sure Iowa keeps growing our economy.

Yepsen: Let's look at the future and get back to this current situation that you face. Can you avoid layoffs? I heard a statement on Friday from the Governor we're going to try to avoid layoffs. How do you avoid layoffs in a situation like this?

Gronstal: I don't think we can, I think it's likely there will be layoffs.

Yepsen: How many? Where?

Gronstal: Listen, I don't have the answer to that today. We're going to do what we can to avoid that. The federal government has asked us, with the stimulus money, they have specifically asked us and recommended that states do what they can with those resources to avoid layoffs so that we don't add to the unemployment rates and compete with jobs of folks out there in the private sector. So, we're going to deal with that and we will try to avoid layoffs but I don't think we can say layoffs are off the table.

Yepsen: What about two other things that Iowa businesses are doing, pay freezes and pay cuts, more ways to reduce the payroll here, are those two options on the table?

Gronstal: That is a negotiated deal in the contract with the major union in the state of Iowa is a pay freeze.

Yepsen: A freeze, now how about cuts? Since you did that freeze you've now got a worse revenue estimate so how about pay cuts?

Gronstal: Making pay cuts after you've agreed to a collective bargaining agreement is by definition bad faith bargaining. So, it's not likely for something like that to happen.

Glover: Is that, in fact, completely off the table because at one point during the Branstad administration he tried to take over the contract ...

Gronstal: And he lost in the state Supreme Court. We're not going to have that same battle.

Borg: Does the new number for this fiscal year and for next year, the projection, does it change anything in the way of revenue enhancement? Up until now tax increases have been off the table. The Governor says no.

Gronstal: I think there's very much interest in seeing the legislature do what it can inside our caucus in cutting budgets, not increasing taxes at this point in time. So, I think there's a strong feeling that we need to balance this budget without raising taxes and we're going to fight pretty hard to avoid that. That said, if there are a few tax credits out there or some areas where we look at where we can identify things in the tax code that no longer serve a useful purpose in terms of incenting development or creating jobs we're open to looking at that. But in terms of any kind of real tax increase I don't think anybody is interested in that.

Borg: Does that include the gas tax? That has been on again, off again.

Gronstal: I think at this point the gas tax is off again. I think, like I said, in the legislature there's always been some interest in a bipartisan effort to deal with that, I think it's pretty clear that has gone by the wayside at least for this year.

Glover: And walk us through where you vote from here. You have said in the past once you have your hands on this revenue estimating number that you think you can wrap up a budget fairly quickly. How long do you think it's going to take you to put this thing together?

Gronstal: I always hesitate to put a number out there because then the republicans know what they've got to try and beat. But I've said it publicly many times, my goal, and it was an ambitious goal and I'm even using the past tense, my goal was April 2nd, two weeks from yesterday. That was my goal to get done on April 2nd. I thought that was an aggressive goal, I thought we would probably end up going over on that but that was my timing. We will give our budget subcommittee chairs new targets on Monday or early Tuesday, we will put them to work next week and we will start to move appropriations bills next week. So, it is still remotely possible we could get done by April 2nd but there's a lot left on the plate and we're going to stay as long as it takes to get our job done and done well. This is the last piece we need to know before we can leave.

Glover: Part of the thinking to wrapping this thing up fairly quickly that what you're going to have to do between now and the end of the session is not very pretty, it's not going to be a lot of fun, it's going to be something a lot of ...

Gronstal: I've described it another way, it doesn't get any easier to say no the fifth time. So, we're going to have to say no to a lot of people this year and you can say no the first time and then they'll come back and say what about if we did this and we say no the second time, it doesn't get any easier the fifth time so we might as well say no once, mean it and get done with this.

Yepsen: Senator, what about the effect of the stimulus package? Does the federal government, are they coming riding in here with a great rescue package that's going to enable you to instead of having to make these big cuts say, ah, we can use some of this money from the federal government, plug the holes and get out of here?

Gronstal: Certainly I don't want to get people's hopes up that all of the solutions lie in the stimulus funds that are going to be available to the state. First of all, those funds are for 27 months, for seven quarters, so they are spread over several years. We don't intend to spend it all at once. But the feds have been pretty clear they'd like us to use this to avoid things like layoffs so we're not adding to the unemployment and some of that will be very helpful. The feds have recognized it's a national recession, that state's didn't really create this on their own, the national recession has doubled the number of people eligible for Medicaid in this state so for this year, for '09 right now we're cautiously optimistic that by using some of the federal stimulus money tied to Medicaid that can solve our problem, our shortfall we have identified this year for fiscal '09. We're cautiously optimistic that a few significant but still fairly easy steps for us to take can get us past '09. '10 is a very serious challenge. There will be some, everybody in the legislature knows this, there will be some stimulus money available for people to count on to solve some other problems, Medicaid probably being the biggest one. But also in education there's some new resources there.

Yepsen: Quite often there is a disagreement between the Governor and the legislative branch on various things we've noticed. Is there any disagreement here between the legislature and the Governor on how the stimulus money ought to be used?

Gronstal: There are a set of shared priorities and then there are a set of people with a little different angle as to what those priorities, how much each of those priorities should get. I think people pretty much share we want to take care of job creation, we want to take care of healthcare, people's healthcare needs, we want to take care of the educational facilities in our state, make sure that we've got good education for our citizens and we want to do pretty good stuff when it comes to rebuilding after last summer's disaster. So, I think there's general agreement on that. And then I think different people have different priorities. Some people say it's all about housing in terms of disaster recovery, getting people back in their homes, some people say it's all about roads and bridges and rebuilding those things. But there's some different priorities there. That's the kind of thing a legislature works out every year with the executive branch and we'll do that.

Glover: Put yourself in the shoes of a typical Iowan watching this show. How are they going to feel the impacts of this budget cutback? What is the ordinary person going to feel? How are they going to notice it?

Gronstal: Things are going to take longer, phones aren't going to be answered as quickly, courthouses may not be open as many days of the week or as many hours as they have been open in the past and in a variety of state departments there's going to be real challenges. It's going to be difficult and it's going to be painful. But the long-term still is pretty bright.

Yepsen: What is so painful about having to stay on the phone a little bit longer? The fact is most Iowans don't go to the courthouse in a year. Mike's question I think is relevant. Most people aren’t really going to see this are they?

Gronstal: Oh, I think people will see some pain that goes along with this. I think people will see things that don't get done that they'd like to get done.

Glover: To what extent is this an opportunity to step back and say let's rethink how we're doing things?

Gronstal: I think it's a great opportunity to do that. We've had a number of people working on those kinds of things in terms of restructuring. Our state government committee chair is working on a bill on consolidating IT inside state government instead of having that kind of diffused out through individual departments, I think there's been people talking about an expanded purchasing pool so the state can get a bigger bang for their buck, I think there's people talking about doing things differently.

Yepsen: Those things have been talked about for years at the state capitol. Why do we expect them to happen now?

Gronstal: When times are tough that's when you get those things done.

Yepsen: But next year you won't be able to ask, do you really expect to see those things happen?

Gronstal: Yes, I expect to see some of those things happen.

Glover: But aren't you really running out of time? You've already set a couple week deadline for the end of this session. How can you do those kinds of big picture things?

Gronstal: A number of those things have already moved forward in our process and are on our calendars and are being debated.

Yepsen: Senator, let's switch gears onto some of the other issues besides the budget that face the legislature. One proposal up there is the Governor's bonding proposal, he wants to borrow $750 million, the legislature is talking about $700 million. Is that going to happen? What will it look like?

Gronstal: It's still a little hard to say what it will look like but I think people of good faith can sit down -- I think every idea I've seen out there is a good idea so I don't think anybody argues with the idea but everybody gets into the details of what is the funding source for this piece of it, what is the funding source for that piece of it, how big should the bond issue be, should it be $700 million, that may be stretching the envelope in terms of the available resources, may be a little too tight so we want to do this right and I think we're going to work together, I think we're very close to the Governor on what's going to be in this. It takes us a little while to work that out.

Yepsen: Senator, if you look at the ideas that are being floated around there's a lot of meat and potatoes type projects here that you're looking at, flood protections, things like that. Why are there no signature projects in here? Why are there no wild projects? Why is there nothing that we'll be able to point to in 50 years and say we did that back in the hard times in 2009?

Gronstal: The trouble is there will be things you're not particularly thrilled about 50 years from now. You're not particularly thrilled when you go see a levee and if there hasn't been any heavy rain since then and you haven't been saved from that you don't think much of it, it isn't very interesting to look at a sewage treatment plant. This state is consuming some of its infrastructure, some of its resources, we are using it up. When we talk about transportation issues and highways we talk about the fact that we have the 12th largest road system in the country and we're about 38th in terms of resources. We are using up our infrastructure, we are using up our physical capital in this state and that's what this is about is replacing some of that physical capital.

Yepsen: Sewage treatment plants are not in either version of this.

Gronstal: Actually there are some things in there about sewage treatment -- I think there are a lot of people that are interested in helping communities meet the requirements of the federal Clean Water Act by helping assist local governments by increasing the amount of resources available for infrastructure.

Glover: We've got way too many issues and way too little time -- one of the issues you've tried to deal with this year, unsuccessfully so far, are a package of what we call labor bills, bills that are backing organized labor things like paying contractors the prevailing wage, expanding the topics that workers can be bargained for, are those dead?

Gronstal: I don't think they're dead.

Glover: Are they troubled?

Gronstal: Sure, listen, in the kind of circumstance we're in right now with the state budget pretty much everything is in trouble. It's a very tough session, people are really focusing on the budget and that's taking people's energy and talents and drawing it into that discussion. These aren't labor bills, these are middle class bills, these are about strengthening Iowa's middle class. That's what I believe they're about and all I have to do is look to the states around us to figure out where that works. So, I'm open to and we're continuing to consider those bills that build a middle class in this state. That is what has been run down over the last ten years across the country and in this state is the middle class.

Glover: Most likely that's next year?

Gronstal: I still think there's opportunities this year.

Yepsen: Generally at this stage of the session when you've turned your attention to the budget if stuff hasn't gotten done it gets chucked over the side. So, as a practical matter it's highly unlikely that the labor bills are going to become law.

Gronstal: That can be your judgment, David, it's not necessarily mine.

Yepsen: What about mental health parity?

Gronstal: Mental health parity I think there's a decent shot that the house is going to get that passed and that the senate will turn around and pass it as well.

Glover: And you have passed a bill taking the next step in expanding children's healthcare in the senate, is that going to become law this year?

Gronstal: Yes, completely the version that passed the senate, probably not but pretty close, pretty close.

Glover: But the broad outline?

Gronstal: The broad outline of 30,000 more kids having access to health insurance is going to happen.

Glover: And is that going to be what you can point to as the accomplishment of this session?

Gronstal: I think we are very proud of our record. I think we are a leader in the nation when it comes to the number of the percent of children in our state covered and I think by the end of next year, the year after this one we'll be able to say every kid in our state has access to affordable health insurance coverage.

Yepsen: Let's look into your crystal ball for next year. What is on the plate? What issues do you know that are coming at the state of Iowa and the general assembly that you're going to have to deal with in 2010? Do you know you're going to have to postpone until then things like the gas tax, for example? Take a look into your crystal ball for us.

Gronstal: The thing I'd personally most like to focus on is continuing to grow our economy with things we can all be proud of. Who would have guessed ten years ago that we'd produce more energy than we consume in the state of Iowa when it comes to liquid fuels, who would have guessed that ten years ago? None of you would have. Who would have guessed we're the nation's leader in wind energy production on a per capita basis? I'm going to leave here this afternoon, I'm going to drive to Council Bluffs and I'm going to drive past 150 turbines that weren't there last year when I left this program. We're going to continue to try and be a world leader in that area, that's why we created the Power Fund, the Governor's Power Fund last year, we're going to continue to try and stay on the cutting edge of renewable energy in this state and become energy independent.

Yepsen: Will the gas tax be back next year? You told Dean not this year, how about next year?

Gronstal: I think that's kind of an open question at this point as to whether it's back next year.

Glover: It wouldn't be an official Iowa Press program if we didn't spend a couple of minutes talking just about politics. Next year strikes me as an interesting year. It's the mid-term of the democratic president's first term, that says republican year. The economy is sad, that says democratic year. Give me your take on that.

Gronstal: My take on this and if you've watched us over the years the legislature hasn't depended on what the national mood has been so when Bill Clinton was winning handily re-election in '96 we were losing in the Iowa senate. When George Bush was cruising to an easy victory in 2004 we were tying in the Iowa senate. This is about recruiting good candidates, people like Bill Heckrodt and Rich Olive and I'm going to leave somebody out if I go through the list, great people that represent their districts, recruiting people well connected that are already leaders in their community. I think that's what campaigns are really about. 80% of it is on recruitment. Once you get a good candidate recruited you're in pretty good shape.

Glover: Okay, then what are you telling candidates that you're trying to recruit? I want you to run for the Iowa senate and by the way here's what you can tell voters we did for them.

Gronstal: It depends on individual districts. One of the things we're going to be proudest of is our efforts on children's healthcare but we're also proud of our efforts to grow our economy, to improve education in this state, to make higher education more affordable for families in this state, there's a lot of things we're proud if but it just kind of depends on where the district is as to what's the most important.

Borg: And on that note will flooded districts that are looking for state help right now not get it and therefore democratic candidates might be in trouble in those areas because the numbers that we've been talking about in this program are bad news for those districts that are expecting some help from the state in getting back on their feet?

Gronstal: That's why I think democrats in the legislature believe in Iowa's future, that's why we're willing to go borrow money to invest in that future, to help those communities rebuild. I'm convinced that we're going to be the best state in the union.

Yepsen: We're still not recovered from it.

Gronstal: We won't be completely recovered. This was a 500 year flood, it's going to be a decade of rebuilding, it's going to be and we are moving quickly and we're going to deliver lots of resources and we're going to pass a bonding bill and every republican is going to vote against that bonding bill because they don't believe in Iowa's future, we do and we will make that case on the campaign trail that we believe in Iowa's future, that's why we borrowed money to invest in the things that are important to keep our economy strong.

Yepsen: One issue democrats have talked about is tax reform. It doesn’t look like anything is going to happen on that issue this session. How about next year? Commercial property tax? Federal deductibility?

Gronstal: I think the issue that a lot of people behind the scenes are working on this year and you might see discussion on that in the senate and the house is on this issue of working on a tax code that is more reflective of middle class family's needs. We believe we can come up with a tax plan that reduces taxes for middle class pretty much across the board.

Glover: In the next two weeks?

Gronstal: Yes. I honestly think there's a real shot at dealing with that issue and it's not about federal deductibility, that will be an element of it, but it's about cutting the tax burden for middle class families in this state that pay more than their fair share.

Borg: Senator Gronstal, we're out of time. Thanks for spending time with us today.

Gronstal: Sure.

Borg: We'll be back next weekend at our usual Iowa Press airtimes, that's 7:30 Friday night and 11:30 Sunday morning. 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. 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 ... 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. The Iowa Hospital Association ... supporting the missions and visions of Iowa's 117 community hospitals. The Iowa Hospital Association ... we care about Iowa's health.


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