A mountain to climb. Legislators in Iowa facing huge fiscal problems in crafting a new state budget. We’re questioning the Speaker of the Iowa House of Representatives, Pat Murphy of Dubuque, on this edition of Iowa Press.
Borg: It seems that every day brings new reminders of Iowa’s fiscal problems: courts closing, universities warning of eliminating academic departments, Governor Culver warning schools to expect to tighten their budgets very, very stringently. And so far the governor is using executive authorities, refusing to call the legislature into special session to deal with the crisis, saying that he can handle it himself under executive authority. But the legislature convenes its second session of the 83rd Iowa General Assembly on January 11, and then it is all budget and it's in the legislators' laps. But that session, even that session is constricted to try to save money. Well, guiding that debate will be the Speaker of the Iowa House of Representatives -- at least in the Iowa House of Representatives he'll guide that debate -- and he's Pat Murphy of Dubuque. Welcome back to Iowa Press.
Murphy: Thank you for having me, Dean.
Borg: And across the Iowa Press table, two statehouse journalists, Associated Press Senior Political Writer Mike Glover and Radio Iowa News Director Kay Henderson.
Glover: Speaker Murphy, the governor has ruled out a tax increase to solve the state's budget problems. Two-part question: Do you agree with that and what's your initial take on how big the deficit you're going to be facing next year is?
Murphy: Well, the first part of that question, I would agree at this time with the governor that we should rule out a tax increase, and one reason why. I think the first reason is the largest tax increase ever done in state's history was in 1992. That was a $250-million tax increase. Our current -- because of his of 10-percent reduction, we have -- and with the revenue estimating conference having met in October, we actually have about a $465-million shortfall. And because of that, a tax increase isn't going to cover our problem that we're in. We do have a revenue problem. It’s not a spending problem. If you take a look at our current budget right now, we're spending about $5.2 billion. If you go back to three years ago when republicans were in control, they were spending about $5.4 billion. So we have about a $.2-billion difference in actual spending in the last four years, so it is a revenue problem. Now, to go to your second part of the question in regards to -- what was the second part of your question again?
Glover: How big do you see the deficit? You’ve focused -- if you do it only by cutting spending, how many more layoffs will that force?
Murphy: I think that's too early to determine. First of all, we have to thank AFSCME and State Police Officers Councils because they're doing the same thing that every other middle-class family in this state and in this country is doing. We’re in the biggest recession since the Great Depression. I think we're hitting historic problems that we've never seen before. Because of them amending their contracts, we're going to save about 450 to 500 jobs that we otherwise wouldn't have. I know we were looking at 700 to 800 layoffs initially when the governor did his 10-percent across-the-board cut so I think that we'll have minimal layoffs this time around. But we'll have to continue to work about -- do our work for fiscal year 2010 and figure out, you know, whether or not we have to have further layoffs. So I think a lot of things have yet to be determined in regards to that.
Glover: And you can do all this in 80 days?
Murphy: There's no question it's going to be difficult, but I think it's important for us to do like the governor did. When the revenue estimating conference came in and, you know, pointed out that we had a negative number of 7.9 percent, he acted swiftly, came in and did a 10-percent across-the-board cut. I think it was the right thing for the governor to do. And I think it's a responsibility for the legislature to, first of all, cut our reimbursements, which is what we did. We went from 100 days down to 80. I think one of the other things we need to do then is get it done quickly so everybody knows exactly what page they're on.
Henderson: One of the issues that came up this fall, state tax credits. The governor suspended the film tax program amid revelations that it was not properly managed. Now there's a review of all state tax credits. Do you anticipate that the 2010 legislature will get rid of some of the state tax credits?
Murphy: I don't know if we'll get rid of them. I think that is a possibility, but I think anybody that's getting a tax credit -- and I’ve told this to every group that receives them that I’ve been visiting with over the last several months -- there's no question that you're going to have to prove why you need that tax credit, what it does to retain or create jobs in this state, and what's the reason for your tax credit. If we have groups that can't really answer those questions -- and I think the other part we're going to ask for is -- I hate using this word, because it's sort of a buzz word these days; but we're are going to have to have some level of transparency so that we don't have the problems that we had with the Iowa Film Office. I think that we're going to probably look at this. I think the oversight committee, Vicki Lensing, is going to be looking at it; but I think the ways and means committee, Paul Shomshor's committee, should take a look at it as well. And if people can't prove why they're using these programs and what they're for, then I think we should look at eliminating them.
Henderson: Are there some that don't meet the criteria you've outlined?
Murphy: I think some may have a problem.
Henderson: And what are those?
Murphy: That's a good question. I think one of the things that we will do is we will put further caps on these programs so that everybody knows what the limit is. I’ll just tell you one that's very popular that they used their $10-million credit every year for private schools for kids to get tuition assistance. They have a cap of $10 million in their program. They can't go any higher than that. I think we will probably put similar caps on other parts of different state programs. The other one is the historical tax credit. There’s a limit on how many tax credits we can give out a year. I think that's the kind of stuff that we'll end up doing.
Henderson: You earlier said at this time you don't see tax increases. But might you be looking at enhanced revenues by allowing liquor license holders to have video lottery games?
Murphy: I think that that's a debate that right now I think if we were to -- I think if you polled legislators, I think you would find out that there's probably not enough votes to do that. But once we get into the legislative process and people have to make tough decisions, you may have that discussion come up. And Representative Brian Quirk, who is the chair of the transportation committee but also serves on state government that handles the gambling issues, he's been a big proponent of it and I know he's pushing for us to look at that again this year. So I think that that -- I’m not ruling it out but right now I don't think the votes are there. But you know how the legislature works. When people have to make tough decisions, they vote on things that they usually wouldn't do. And I think this is one of those that come March, we might look at that program.
Borg: Might one of those tough decisions, though, be the tax credit for private schools that you just mentioned earlier? Might that be diminished?
Murphy: I don't think that program will be diminished. I’ve made it very clear to them that they need to educate legislators on what the program does, the benefits of it, and the fact that -- you know, in several communities, mine being one of them, we have private middle school, high school, and elementary schools. I think they have a good economic impact on a lot of communities, so I don't expect that one to change.
Borg: What about the public schools? Within the first thirty days, Iowa law says you have to tell them what their allowable growth is going to be in the future. So what do you think that might be? What are you going to do in first thirty days, because that's going to be an indication of how serious the fiscal problems are and how legislators are reacting?
Murphy: Well, it's interesting you bring that up. This week I met with some education groups, and some of them are asking us not to do a -- not to do an allowable growth number for -- in the first thirty days. Senator Gronstal and myself I think both agree that we probably should do a number, but I don't know what that number is going to be yet. I think we have to look at the whole budget picture. And we're going to wait to have to see what the governor proposes in his budget before we act on that.
Glover: And one of the things the governor has talked about is forcing local schools to use their surpluses before they go back to property taxpayers for more. Will that pass?
Murphy: Yes. I would agree that we -- a lot of schools are -- without us acting, are spending down their reserves before they look at property taxes. And I think you will see -- if we don't see all school districts doing that -- we don't want to see somebody sitting out there with 15 or 20-percent reserves when the state is going to be dipping into our reserves. And we're at less than 10 percent now. So I think if we don't do a bill, I think school districts need to be able to come forward and show us that they are spending down their reserves before they raise property taxes.
Glover: And early next year the regents are going to have to make a decision on the tuition. How much more are students and parents go to have to bear because of the state's budget problems?
Murphy: Well, here's the first point.
Glover: I know regents make that decision, but what are your recommendations that they be?
Murphy: I’ve had some conversations with people from the regent universities. We have worked very closely with them in the three years that we've been in the majority. When you take a look -- one of the reasons I feel democrats did gain the majority was I think republicans stopped listening to people and we think we had a 90-percent increase in tuition in the five previous years before we held control. 90 percent! So that means a student that went to Iowa, Iowa State, or UNI almost saw their tuition double if they took five years to go through school, and some of them may have because of the financial end of it because it kept rising so quickly. We’ve kept it at the rate of inflation or lower for the last three years. I think it will be difficult to do that this year. But we've had some private discussions with them, and I think -- I think they are going to try to restrain it. I think they understand the financial situations that middle-class families are in this situation. So, you know, I’m not going to sit here and tell them what I think the numbers should be, but I know that they know that we're going to try to work closely with them to lessen that increase.
Glover: Are you worried about accessibility?
Murphy: Listen, I think the most important thing for anybody that's graduating high school today or anybody that's lost a job is having access to higher education whether it's a community college. And our rates are some of the highest rates in the country, but we've been lowering that with what we've done over the last three years. We’re getting access to an institution of higher learning that's a four-year regent institution. So there's no question in my mind that we need to make sure that we keep it as accessible as possible, especially during tough economic times like the ones we're in.
Henderson: Let's talk about some bills which stalled in the Iowa House this year and whether they will come back, be resurrected in 2010. First of all, a bill that would have restructured Iowa’s income tax system failed. Will you bring that back up in 2010?
Murphy: I don't know yet. Last year we were looking at it in a different respect but, quite frankly, 60 percent of middle-class families would have received a -- would have received a tax cut with the federal deductibility bill that we were looking at last year. We would have taken the highest tax rate, which is at 8.9 percent, almost 9 percent, and lowered that to 6 percent. That’s a third percent cut. The state wasn't taking any of that money, and we were trying to make ourselves basically more competitive with the surrounding states. And the reason why is everybody looks at that highest tax rate when they look at coming to Iowa and they see that our tax rate is 9 percent. Most of the other states around us are between 3 percent and 6 percent. Our goal was to be more competitive from an economic perspective. So we may look at that, but I think it's too early to make a determination on that yet.
Henderson: Labor bills which were favored by organized labor in Iowa failed. One of them failed in a rather dramatic fashion. Will you be bringing that bill up for a vote again in 2010?
Murphy: I think it's a possibility. If we can pass any of those major labor bills -- we passed collective bargaining two years ago. That was vetoed by the governor. But if we have 51 votes for any of those bills, we will take them up and pass them.
Henderson: Which one?
Murphy: I don't know at this point in time. I think that's -- I think that's one of those that you need to tune in -- tune in, in 2010 and see what we do. But I will tell you this, last year the reason the prevailing wage bill was such a big issue was you had the city of Cedar Rapids, you know, where you had large chunks of that town that had flooded and we were doing the I-jobs program and we were going to be handing out hundreds of millions of dollars to communities. And it gets into this whole issue of making sure that you reward hard work with good pay and good benefits. We just wanted to make sure that if somebody was getting state money to rebuild homes or to redo projects or to do a sewer project in any community that they had to pay the wages of what those communities were, and I think that was a good thing for us to do. So if we can put that together, we will take it up and pass it, but we're one vote short.
Glover: Let's expand on that just a little bit. Talk about your relationship with organized labor. It’s the base of the Democratic Party. What’s your relationship with organized labor? You haven't been able to pass many of their bills.
Murphy: Yeah. But, you know, the other part too, though, is you need to take a look at some of the things that we have done. For example, we've raised the minimum wage. Labor supports higher wages for all individuals, not just the people that are in their labor unions. Along with that, they increase access to health care. We’ve done some great programs in regards to expanding health care in this state and expanding health care so that maybe every child can be covered here in the next two to three years. Those are some of the things that I think we still have a good relationship with them. It’s just that some of their highest priorities we've come close but haven't been able to pass.
Glover: And there are cynics out there who suggest that there may be a little bit of a quid pro quo going on right now. Major labor unions took concessions to help the state balance its budget, and they'll come to you in the next session of the legislature and say, 'We did our part. Now we want our labor bills.' Is there such an agreement?
Murphy: No. No, there isn't such an agreement. I’ll tell you right now the American Federation of State, County, and Municipal Employees, State Police Officers Council, they did the same thing that every middle-class family in the state is doing, which is it's tough economic times, a lot of people are getting furloughed, laid off, they're losing their jobs. And we're not as bad as most other states. Iowa’s unemployment rate is still, like, 6.7 percent. We’re holding steady. But they did -- they made -- they did the same thing that every family is doing in this state. They made tough decisions. I know a lot of them are not happy about it, but they decided that it was more important for them to make sure the state could still function in a safe manner and at the same time keep more people at work, which I think helps the economy. So I think that they really deserve a lot of credit. But there's no quid pro quo. There is not.
Henderson: There are six democrats in the house who were termed 'the six pack' because they resisted the labor bill and the income tax bill. Do you actively support the reelection of those six folks to the Iowa House?
Murphy: I’ve supported every incumbent in every race that we've had since I’ve been the minority leader and the speaker.
Borg: Every democratic --
Murphy: Every democratic incumbent I have supported.
Henderson: That's past tense. What about future tense?
Murphy: Present, future -- past, present, and future, okay, to cover all three. When Dolores Mertz had a primary, I went up and actively worked for her. When Kevin McCarthy, the majority leader, had a primary in 2004, I supported him. In 2006 we had primaries; I supported our people. And in 2008 Wayne Ford, Geri Huser, and Deb Berry from Waterloo all had primary opponents. I supported our incumbents and I always will, period.
Henderson: Does McKinley Bailey have a tough reelection if Stewart Iverson, a former senate republican leader who also spent some time in the Iowa House, seeks that seat?
Murphy: Whenever you have an opponent, you've got to take it that you can get beat. And so I think McKinley, I think, will take this race just as seriously as his other two. He won a seat that was held for a long period of time by republicans, and we've won that seat and held it, and I expect him to get reelected. But I will say this about Senator Iverson -- and no disrespect to Senator Mike Gronstal -- I don't think Senator Iverson had tough opponents. He’ll find out that he has his hands full with a guy that has served his country in Iraq and Afghanistan and has done an excellent job as a legislator for Hamilton and Wright counties. I think he'll find his hands more full than he's ever had them in his political life. And I hope -- and I hope he doesn't mind defeat.
Borg: I’d like to sample how you think the fiscal crisis is affecting political will on tough situations. This past week Governor Culver told the Iowa Farm Bureau Federation that he is going to spearhead governmental reorganization. The time is right, he says, and he gave some examples. Does the legislature have the political will to do some of these things which are very, very politically sensitive?
Murphy: This is actually the best time to do them because we have a state reorganization committee that's looking at a number of things. State Representative Mary Mascher from Iowa City is heading that, and it's coming through her committee in state government that she chairs. And she is looking at a lot of things. In fact, sometimes she's looked at more things than probably a lot of our members feel comfortable with at this point. But this is the best time to do that, and the reason I say that is with tough economic times, you can make decisions that when the economy is going, people are saying, well, there's no reason to look at this right now. But I think that is something legitimately that once we get into session people will look at things that they otherwise wouldn't. And because of the tough economic times, it gives us the best opportunity to do it.
Borg: Of course, there are always low hanging fruit, and they aren't politically sensitive. But what are some of the things that you think might otherwise not be feasible that might be now?
Murphy: Um, you know, getting into the specifics, I think it's difficult because, really, we should leave that up to the committee chairs and to people that chair the state government committee.
Borg: Don't you think that the Chief Justice of the Iowa Supreme Court has taken a lead, Marsha Ternus, in really being tough in doing some reorganization that's been painful? Does the legislature have that will?
Murphy: I think -- well, in Chief Justice's Ternus' case, I think, first of all, they're a separate branch of government. She has to make the same tough decisions that the legislature does. So she's making decisions that, quite frankly, other states have already stepped up and done. And, quite frankly, they're unpopular because, quite frankly, a lot of attorneys in this state are -- you know, like the way that our court system operates. But, you know, quite frankly, we're in the 21st century and we're having to do things because of the recession that we're in that I don't think otherwise would have happened unless we were in this position.
Glover: And it wouldn't be an official Iowa Press show if we didn't talk just a little bit about just pure politics. You run the house 56 to 44. You run the senate 32 to 18. What do you have to do in these tough economic times to keep control of both chambers of the legislature?
Murphy: Well, I think the first thing is -- in order to keep control, I think the first thing is we need to be fiscally responsible. I really believe that. Democrats are always accused of that. I mean the PEW center has ranked this as the second most -- best managed state in the country. I think republicans are going to have a hard time arguing that. We’re one of the few states with reserve accounts. We’ve got over $400 million in our reserve accounts. There’s probably no question that we're going to spend some of that money this year. We’re one of the few states that has money left over from the stimulus package. We actually went out and created jobs last year, not just using stimulus money but using the I-jobs. And I think we will keep the focus on what Iowans want us to focus on, which is really focusing on the jobs and the economy and the middle class -- middle-class families. So I think that's how we keep control, but we have went out and picked people. And I think we'll go back to Representative McKinley Bailey and the Stew Iverson seat. We picked somebody that fits that district very well. His dad has been very active in the school board and in education. He’s a county supervisor. McKinley, with his war record, served his country proudly, graduated from the University of Iowa, and he was the best fit for the district. You know, the Democratic Party still is the big ten party, so we do try to pick the best candidates we can find, and we're going to continue to do that.
Glover: But typically legislators have to give something to those people out in the lobby to win their support in the next election. You don't have the ability to give them very much because of the budget and the recession. How do you overcome that?
Murphy: Well, I think one of the things that -- one of the things I think we'll be focusing on this year, though, is there's still a few things that we will try to do in regards to the health care bill that just was voted out here in the last day or two. I think that's something that legitimately we will be able to focus on. Plus, I still think it's not just necessarily about taking care of lobby because, quite frankly, private interest groups don't -- you know, quite frankly, that's one of the things people complain about. The best thing we can do is, quite frankly, focus on people that are outside the building. Focus on -- really focus on middle-class families and what their issues are. And I think if we make tough budget decisions -- because I will tell you this, the one thing I’ve noticed from talking to different people in the state and different groups, I went through the recession in '91-'92, and everybody hollered about our mismanagement. I went through the recession in 2001, 2002, and 2003. Everybody hollered about mismanagement of state government. This time people understand that this is something that's beyond the control of the Iowa state legislature. It’s a national recession. It’s a worldwide recession. And they want to see us make tough decisions, listen to them. and I think one of the things that governor culver is doing at this point is we're not talking about just automatically raising taxes, because middle-class families just can't go out and make more money right now because there's not a lot of jobs out there. I think along with that we have also focused on making sure that we fund our priorities, which is going to make sure it's education and make sure that we try to take care of those health care programs so that it's still accessible.
Henderson: Speaking of health care, Mr. Speaker, you said there will be an effort at state level health care reform. Why are you doing that? Do you assume your democratic colleagues at the federal level are not going to enact health care reform?
Murphy: No. If you ask me today, I feel positive about the fact that the U.S. Senate is -- I agree with senator Harkin, although I don't talk to U.S. senators on a regular basis. I feel confident that they will do a health care reform package this year. As to what's in it, I have no idea. But there's no question that with the work of State Representative Mark Smith, State Representative Lisa Heddens have done in regards to health care, I think that we are much better prepared and much better to be out front on doing health care reform, especially for children, than most other states are.
Glover: And the top race on the ballot next year will be the governor's race. Governor Culver has not formally announced it, but not many of us doubt that he's running for a second term. (a) What does he have to do to get reelected? The polls show he's in some trouble. And (b) will you coordinate your campaigns again?
Murphy: Yes, we will work -- listen, the one thing democrats have been successful at is we have always coordinated our programs from the top of the ticket down, whether it's -- whether it's been presidential or gubernatorial or U.S. Senate, we have always worked as a team to get everybody elected, so we will continue to do that. On the second part of your question, though, Governor Culver, yeah, part of the reason his numbers are down is he's having to make tough decisions. But if you take a look at where Tom Vilsack was at this same time seven years ago, his numbers weren't particularly good either. But they made the tough decisions. I think people will respect them in the long term for that. And quite frankly, he has an excellent record to run on from minimum wage to job creation, to what he's done to raise teacher pay to the national average, to early childhood, to school infrastructure, to expansion of health care. I think it's going to be pretty hard for republicans to argue he's mismanaging the budget when groups outside the state say we are one of the best managed states and that we have a AAA bond rating. They’re trying to say the emperor has no clothes when he's fully clothed and has a hat on.
Glover: Is he in trouble?
Murphy: No. I think the big part is -- let's face it, it's the top race on the ballot this coming election, and he's going to be the top target. But I think -- I think he'll -- I think we'll be sitting here a year from now with him getting ready for his second term.
Borg: Quick question, Kay.
Henderson: Congressman Bruce Braley endorsed Roxanne Conlin, one of the three democrats seeking the U.S. Senate seat in Iowa to face off against Chuck Grassley. Will you endorse one of the three candidates?
Murphy: Yes, I already have, and I’m endorsing Roxanne Conlin for United States Senate.
Murphy: I think Roxanne Conlin brings some unique skills. She has always fought for the underdog. She’s always fought for middle-class families. She’s helped the state in the Microsoft case. She’s about the most -- she is the best example of a private citizen that has done more for public causes in Iowa than anybody. And quite frankly, she's delivered a lot more than Senator Grassley has to this state, so I think she has a great track record to run on. And, quite frankly, I think she has the best chance of beating him. I think this is -- and I think that's the first real race that he's going to have in thirty years.
Borg: And you had the last word there. Thanks so much for being with us today.
Murphy: Thank you.
Borg: Well, that's the Iowa Press show for this week. We’ll be back at the same times next week, at 7:30 Friday night, 11:30 Sunday morning. And if you want to communicate with our Iowa Press staff, you see the address now on the bottom half of the screen. It’s email@example.com. I’m Dean Borg. Thanks for joining us today.
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