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Legislative Leaders Discuss 2012 State Budget

posted on April 8, 2011

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Crunch time. Three weeks remaining in the 2011 Legislative Session. Much remaining to be accomplished, including a State Budget. We're questioning Republican House Speaker Kraig Paulsen and Senate Democratic Majority Leader Mike Gronstal of Council Bluffs on this edition of "Iowa Press."

Borg: Even before the opening gavels convened the current legislative session, we knew it was going to be a tough one. Tax revenue wasn't meeting spending obligations. Outgoing Democratic Governor Chet Culver gave unionized state workers pay raises during his final days in office, leaving the incoming Governor, Terry Branstad, and state legislators with figuring out how to pay for the new contracts and a lot of other things. And the General Assembly is politically divided: Democrats controlling the Senate; Republicans, the House of Representatives. And adding to the work load, consideration of maps reapportioning Iowa’s congressional and legislative districts this session. It's a recipe for gridlock, but that may not be the outcome. We're questioning two leaders with keys to compromise. Hiawatha Republican Kraig Paulsen leads his party, the Republicans, as Speaker of the House. And Council Bluffs Democrat Mike Gronstal leads a two-seat majority for his party in the Senate. Gentlemen, welcome back to "Iowa Press."

Paulsen: Thanks.

Gronstal: Happy to be here.

Borg: And across the "Iowa Press" Table: "Associated Press" Statehouse Reporter Mike Glover and "Radio Iowa" News Director Kay Henderson.

Glover: Speaker Paulsen, let's start with you. There's an issue that the Governor trotted out when he did his Condition of the State Speech that we haven't heard much since, and that's the tax on gambling. He proposed a significant tax increase on gambling. There's been no discussion of it. It's not advanced. Can we assume that's dead?

Paulsen: Well, I don't know if you want to assume that anything is dead yet. The only gambling discussion right now is taking place in the Senate. I don't know whether they're going to decided to debate that or not and send it over to us, and we'll go from there.

Glover: Senator Gronstal, the same question to you. There was a proposal from the Governor for a significant increase in the gambling tax. That has not been discussed. It's not been debated. It's not advanced at all. Can we assume that's not going to happen?

Gronstal: I think, as far as the Senate is concerned, we're not particularly interested in raising taxes. We're a little surprised that the Governor recommends tax increases, and we're also a little surprised he's going to single out one industry for tax increases so that he can give breaks to other industries. I guess I’d say you better hope you stay on the Governor's good list, or he'll start picking on you with his tax policy. We don't think that makes sense.

Glover: Speaker Paulsen, is that a local issue that local people ought to be deciding, or is it a statewide issue?

Paulsen: Gaming taxes?

Glover: Yeah.

Paulsen: Well, I think that's a question for the legislature.

Glover: And you're not going to address it.

Paulsen: House Republicans didn't campaign on raising taxes.

Borg: But I think what Mike means by a local issue is there are radio ads now running making it a local issue saying the increased taxes will take away local revenue that goes to payrolls here in our local community, contact your state legislator because we don't want to send this money that's going locally now to Des Moines to be used by bureaucrats.

Paulsen: Well, I think from that standpoint that every issue has got some sort of local impact. And I think this one does have that definite connection, both because of the jobs that it created and also because of the support that goes to the local foundations.

Glover: Speaker Paulsen, I’d like you to step back for just a second and look at the bigger picture. You have a fairly solid republican majority in the House, fairly narrow democratic majority in the Senate. Is that, as Dean mentioned in his intro, a recipe for gridlock?

Paulsen: I think it's a recipe that could result in gridlock.

Glover: Is it?

Paulsen: I don't think so. I actually think the institutions are having healthy dialogues. I think the committee chairs are having good dialogues. I think the leaders are having good dialogue. There's going to be some things we disagree on that aren't going to happen, but I think we also all recognize that we need to govern. And we're going to get the work done for Iowans.

Glover: Senator Gronstal, the same question to you. Is that a recipe for gridlock? I haven't seen a lot of –

Gronstal: A bsolutely not. We've got -- we've got lots of experience in this kind of a world, a split government in Iowa. We've had split government in many different forms over the twenty-nine years I’ve been in the legislature. So obviously this session people have strong feelings in both parties, and there's going to be some real battles about what they think is important. But I just gently say Speaker Paulsen and I are smarter than they are in Washington, D.C. we're going to figure out a way to govern. We're going to look for common ground. We're going to set the things that we disagree with aside, and we're going to find a way to govern.

Glover: You're smiling, Speaker Paulsen. Are you smarter than folks in Washington?

Paulsen: I’m not sure I’m smarter than anybody. I do know this: we're serious about making sure we work on behalf of Iowans; we're going to make sure we do good policy; and I’m very satisfied with the progress we've made; and I’m very satisfied with the dialogue that's taking place. It's been slower probably than any of us like, but I think we're laying proper foundation so that we can find a way to make the decisions that have to be made as we move through the next several weeks.

Henderson: Gentlemen, as of this week there are three competing plans that would reform property taxes in Iowa on the table. The Senate Democrats' plan deals with commercial property taxes. The Governor's plan deals with commercial property taxes. The House plan deals with all classes of property taxes. Speaker Paulsen, which one will prevail?

Paulsen: My expectation would be that some part of all of them. We're very serious in the House about looking at all classes of property. We're also very committed to making sure we do something with commercial property taxes. We still have, I think the last study I saw said something like, the second highest property taxes -- commercial property taxes in the nation. I mean that's unacceptable and I think we all are in agreement on that and we all want to address it.

Henderson: Senator Gronstal, do you agree that something will emerge or legislators may wind up as they have in the past, not being able to come up with something significant?

Gronstal: I think we can come up with something significant on commercial property taxes. I think that is a very real issue for Iowa in terms of economic development. I think the Governor's proposal isn't really a tax cut. It's really a tax shift. So he reduces commercial property taxes. He reimburses the lost revenue for a while, but not permanently, and that means it's a tax shift to residential and other classes of property. So we think we can work through our differences on this and come up with something that's acceptable.

Henderson: If I might speak on behalf of property tax owners, in the 1980s I believe there were reforms at the statehouse that said the court system would be funded by the state and, therefore, property taxes would be lowered. In the 1990s there were efforts to have the state bear more of the cost of mental health care, taking it off the rolls of property taxpayers. Is there any guarantee that property taxes will actually go down based on what you do, Senator?

Gronstal: I think, first of all, nobody ever on those issues you just described actually said there will be property tax cuts. What they said is it would slow down the growth in property taxes, and it did. You know, $160 million for the courts now that used to be on property taxes is now out of the state treasury. About $125 million on mental health, same thing. That would have been on local property taxes but no longer is because the state stepped in with the revenue. We're now looking at commercial property taxes. If we don't reimburse with state dollars, there will be a tax shift. So I think people will see a difference in their taxes, but nobody is promising that there's going to be a cut. But it we'll definitely reduce the growth in property taxes.

Borg: Speaker Paulsen, I want to follow up on Mike's Gronstal's comment a here just a moment ago, we're smarter than they are in Washington, considering the impasse that's going on in Washington. Does that -- is that telegraphing that, apparently on Mike Gronstal's part, but you said I don't know that I’m smarter than anybody -- I said earlier you two hold the keys to compromise in the legislature. Does that indicate that you already see middle ground, Speaker Paulsen?

Paulsen: I think on so many of these issues, I see a pathway to finding something that meets the needs of the Senate and the House.

Borg: Impasse is not in your vocabulary right now?

Gronstal: I think there's little likelihood of impasse at least between Speaker Paulsen and myself. We're both by the nature of our positions guiding a caucus. There's -- you have to find common ground inside a caucus. We have different pulls inside both of our caucus. So we're used to looking for common ground and compromise. That's kind of the nature of our positions as the leader of a caucus.

Borg: But, Speaker Paulsen, you're looking for compromise even within your own party in the House.

Paulsen: You put 60 people in the room, guess what, they don't all agree on everything. I mean that's exactly right. I also think it's just a function of the way the institution operates. I mean we are all right there and can't get away from one another, compelled to have some of these conversations, and I think the system in Iowa is designed to lead us down that road. We're not anyplace we haven't been before. It's just different people but it's similar circumstances.

Gronstal: Speaker Paulsen an issue that you're going to face probably in this coming week is a new map that's been drawn by a temporary redistricting commission for new legislative and congressional districts. From what I’m hearing, there's a lot of momentum towards proving that map. Is that a done deal?

Paulsen: I would not say that it's a done deal. We'll make those decisions next week. Let the commission finish their work, and then we'll come back and see what they have to say. I will say this: as I look at the House map, I see a pathway to Republican control; I can also see a pathway to Democratic control. So that tells me maybe there's a heightened level of fairness.

Glover: So you kind of like what you see.

Paulsen: We'll make that decision next week whether we like it or not.

Gronstal: I’d actually say the opposite. We kind of both don't like what we see but don't figure there's a way to get a better map. If it was actually stacked pretty well for Democrats, I’m pretty sure Speaker Paulsen is going to take it down in the House and vice versa. So we both look at the map and see no guarantees, but we both see a pathway. And that is --

Glover: Well, let me ask you this --

Gronstal: -- And that is -- that is kind of the essence of a fair map.

Glover: Let me ask you this. There was discussion earlier that whichever chamber was probably going to beat this map would take it up first. Who's going to take it up first, Senator Gronstal?

Gronstal: We haven't decided that yet. And like I said, we are going to wait and see what the Temporary Redistricting Advisory Committee recommends, so we're going to -- we're going to wait till we get that report from them and we'll make that evaluation.

Glover: Senator Paulsen, you haven't had any discussion with who starts this thing?

Paulsen: No. We'll figure that out. I'm not sure -- I guess it matters if we're going to not take it. I'm not sure it matters if we are.

Glover: I was going to say it matters if you're not going to take it because the chamber that's going to beat it is going to take it. What I’m hearing is neither chamber is going to beat it.

Paulsen: Well, we'll make that decision next week.

Henderson: Let's talk about ending. When is the end date for a decision on the level of general state aid for schools? School districts are facing a deadline for drafting their budgets. Will school -- that decision on the general level of state aid to schools, Mr. Speaker, be done at the end of the year or do you plan to make it in the next couple of weeks?

Paulsen: My expectation is that that will probably come more towards the end to the extent it hasn't already been made. I mean --

Henderson: So you've already made a decision and we just --

Paulsen: No. I mean the Governor has proposed zero. We proposed zero. That's a $250-million commitment. We're extremely frustrated that $250 million only buys zero percent allowable growth, but that's due to the underfunding and the across-the-board tax cut -- or not across-the-board tax cuts, spending cuts.

Henderson: The 10 percent that Governor Culver ordered in October of 2009.

Paulsen: Correct. And we're very frustrated that the taxpayers put forth that level of commitment, and it's at zero percent. But we also know that whatever we say we're going to do, we're very committed to making sure we follow through on that, which means fund it and don't cut it halfway through the year. And we believe we can do that.

Henderson: Senator Gronstal, is one percent the middle ground since Republicans --

Gronstal: We thought 2 percent was the right place to be. We analyzed what happens with most school districts in the state of Iowa. About two-thirds of the school districts kind of do best at that 2-percent level, less than that. There's a bigger property tax impact at the local level, and I know the House Republicans have said they will cover that property tax impact. But that 2 percent is kind of the sweet spot for where this ought to be. We did not come into it saying let's ask for 2 and hope we can get 1. If we were going to play that game, we would have come in at 4.

Borg: Let me give you --

Gronstal: So, we continue to believe 2 percent is the right number. That costs about $65 million over and above what we've already talked about, about $65 million. At the end of this year, we're going to have $300 million over and above the reserve funds. We think $65 million for -- this is the first time in the history of the state when the state has authorized zero percent allowable growth. There have been times with across-the-board cuts that have cut into whatever it is we've allocated. But this is zero for the first time since 1974. And it's not zero for one year; it's zero for two years. We think that's unacceptable.

Henderson: And, Mr. Speaker, you'd prefer to use that money for tax relief, that $65 million that he mentioned, correct?

Paulsen: I mean that will be part of the discussion. Again, I mean what we looked at is what can the state afford and what do we not have to worry about having to come in and undercut or take back away from the schools. We think a $250-million commitment is a pretty serious commitment.

Borg: Let me give you a hypothetical, Mr. Gronstal. If you were to receive a telephone call from two people today, a parent of a preschool person going into preschool next fall and a school superintendent. The House has passed revamping of the preschool program in Iowa. You haven't done anything with it in the Senate. It's still probably viable. It can come up as an attachment to any bill. What would you advise the school superintendent and the parent planning for preschool next fall?

Gronstal: I would advise them to talk with their Republican Legislators and convince them that zero percent allowable growth is wrong and that broad-based access to preschool programs are incredibly important to the next generation of workers in this state.

Borg: But I’m asking for a crystal ball. That is, what's going to happen?

Gronstal: You know, I don't do crystal balls. I tell people to advocate for what they believe in and to fight for what they believe in. That's what we're doing. I've had both those phone calls, by the way. And I’ve told -- you can get into the nuances of we can't make them act on 2 percent. Well, they can't make us act on repealing preschool. So both process wise on allowable growth, advantage Republicans. On preschool, advantage Democrats.

Glover: Senator Gronstal, the House has passed a measure which would prohibit most abortions after twenty weeks of pregnancy. What's the future of that in the Senate?

Gronstal: I think it's hard to say right now. That bill has been assigned to the Government Oversight Committee. Senator Courtney will assign the subcommittee to that sometime soon here. He's got seven days to do that after he receives it, and we'll see what they produce.

Glover: But it's a viable option issue.

Gronstal: It’s a viable option.

Glover: Speaker Paulsen, same question to you. Is that as far as you're going to go on abortion? You've got some pretty hard-core antiabortion folks within your caucus. Is this as far as you're going to go on abortion?

Paulsen: Make no mistake, the House Republican caucus is a pro-life -- pro-life caucus. I don't know whether we address it or any other issue yet this year. We'll have to see. I know we chose not to, I guess it was last week, to bring up another bill.

Glover: You had a bill which would have prohibited virtually all abortions, and some people have suggested it would prohibit some --

Gronstal: Contraceptive --

Glover: Contraceptive procedures.

Paulsen: Yes. No, there was -- there was -- the language needed to be vetted one more time, but I don't know whether or not that happens this year or next year.

Glover: So you're done.

Paulsen: We'll see what the caucus decides.

Henderson: One thing that has been happening behind the scenes is a small group of people have been working on what's been called a redesign of the delivery system of mental health services in Iowa. And during House debate this past week, there was discussion of this in light of what occurred in southeast Iowa this week, in which a gentleman who suffered from mental illness shot and killed a deputy. Speaker Paulsen, how will this be resolved? Will the state commit more resources to this, or will they just shift resources around. How do you address the concerns of people in rural communities who have to drive maybe two or three counties away to get to a psychiatrist?

Paulsen: Well, I mean the -- what we're trying to do is make sure that, first of all, every Iowan has access to the same quality and type of service. Right now there's kind of this patchwork quilt of in this county you can get this and in this county it's something different, so on and so forth. And there ought to be some sort of uniformity across that. And the other thing is to yet have it administered at the local level. So I guess in air force terms, it would be centralized control, decentralized execution. And that's kind of what we're looking for there, and we think that serves Iowans well. The other piece of that is actually part of that discussion goes back to the property tax discussion. There's -- that's a significant amount of their funding. Is that something the state is also going to assume, some of those responsibilities.

Henderson: Senator Gronstal, how will this be resolved?

Gronstal: Well, I think both sides are struggling through appropriately some ideas about the redesign of the system, so both the House and Senate are working on that. I do think -- I do think both sides have agreed we're going to put some more resources into this system. But Speaker Paulsen is right. There's a patchwork of services across the state of Iowa. They're uneven and we're going to look for ways to kind of reduce that unevenness across the state and make sure we have better service. I think everybody agrees it's going to take more resources.

Borg: Senator Gronstal, another crystal ball here projecting. Is it likely that the Senate will allow monitoring of Iowa’s water quality to be shifted from the Department of Natural Resources into the Department of Agriculture?

Gronstal: No. We're not going to move monitoring out of the regulatory body. We are looking at something relative to the on-farm conservation projects that DNR currently contracts with Ag to do. We are looking at where that money is parked. And if we move that over to Ag -- and we may, in fact, be looking at a way to maybe even add some resources there, but the monitoring is not going to move. The regulatory function of protecting Iowa’s streams and waterways is going to stay at DNR.

Borg: And that's a done deal. You're saying is going to stay and is not -

Gronstal: Yes. Yeah. We're not moving -- yes, I said it as firmly as I -- I deliberately said it firmly. We are not moving monitoring out of DNR.

Glover: Speaker Paulsen, the House has acted on a proposed constitutional amendment to allow voters to voice their views on whether gay marriage ought to be prohibited in the state. The Senate has not acted on that. Is there anything else the House can do to try to advance that issue, or are we at stalemate here?

Glover: I think Iowans can advance that issue and Iowans will need to engage their Senators, you know, and then a decision will have to be made. The House has done what the House has done, and now they have to, you know, figure out what's going to happen in the Senate.

Glover: And there are those who suggest that there is one person in the state of Iowa who is standing between Iowa and the right to vote on whether gay marriage ought to be prohibited, and you're sitting next to him. And there are some Republicans who are saying they're going to target him and try to get him in next year's election. Would you support that effort?

Paulsen: Would I support -- I will endorse every Republican on the ticket. If there's a Republican running against Mr. Gronstal, I’ll support him.

Glover: Senator Gronstal, the same question to you. Do you feel any kind of political vulnerability? I mean you've been --

Gronstal: I don't waste my time worrying about vulnerability. I try and do what I think is right. I try and listen to my constituents. You know, one of my Senators last week at a forum said to a fairly large audience, would anybody in this room identify for me how their marriage has changed because of this decision. And there's this long pause and this puzzled look on people's faces, and then people started to applaud because two loving people's commitment to each other doesn't injure my marriage, it doesn't injure anybody else's marriage. And that was the point the Senator made a week ago. So I’m not convinced -- you know, two-thirds of Iowans voted against a constitutional convention, you know. The low fifties percent threw some judges out. But two-thirds of Iowans had the quickest path to a constitutional amendment on gay marriage was to hold a constitutional convention, and two-thirds of Iowans voted against that.

Glover: So you're politically comfortable where you're at on this thing.

Gronstal: You know, I’m really comfortable every morning when I look myself in the mirror as I shave. I think I’m doing the right thing for Iowa.

Henderson: Gentlemen, the other factor in your negotiations for making decisions about the state budget is Governor Terry Branstad, the Republican who retook the office in January. He has indicated that he wants legislators to draft a two-year rather than a one-year budget, and he's vowed to call you back in special session after special session to come to that agreement. Speaker Paulsen, is that a good use of taxpayer dollars, to come back in special session when maybe you could just make a deal later this month and be done with it and get your work done?

Paulsen: Well, absolutely we need to get our work done. House Republicans are supportive of that initiative. The Governor said he's going to insist on that. He's going to, you know, get his first opportunity here to change his position or stated position or rhetoric, whatever expression you want to use, into action. We're going to send him the transportation budget, which is was a budget that both the House and the Senate agreed upon, the substance of the fiscal year '12. The Senate disagreed on fiscal year '13. They took it out. Sent it over to the House. So we concurred on their amendment, and the Governor will probably get that on Monday.

Glover: So you'll know within a week or so whether the Governor is serious about this two-year budget year.

Paulsen: Well, if we send it to him on Monday, we'll know by Wednesday.

Henderson: Do you -- how do you answer critics who say that gives away authority legislators now have and puts more concentrated authority in the hands of the Governor by drafting a two-year budget?

Paulsen: Well, we're also addressing that by looking at some of the transfer authorities, and so on and so forth. But the legislature always has the -- has the right to go back in and change the budget. The other thing is if you make the assumption that the budget is going to be perfect, when we walk out, then, yeah, that would be a concern. But then again, if we got it perfect, then he wouldn't have to make any changes. I'm not making the assumption that it's going to be perfect. My expectation is we would come back in the following year and there would be some adjustments.

Henderson: Senator Gronstal, how will this end?

Gronstal: I think it's hard to tell how it will end right now. But let me say the Democrats worked with Governor Branstad in the '80s on State Government Reorg. We worked with him in 1992 on the Budget Reform Law that we currently operate under. We worked with Governor Culver last year on a reorganization effort that saved the state a quarter of a billion dollars. We're going to work with this Governor. You know, there are some alternative ways to protect the power of the legislature to control the purse strings and, you know, somebody has got to be a check and balance on this Governor.

Glover: Senator --

Gronstal: Let me finish this. We could come up with a two-year budget the first year, whatever we work out between us. The second year could be something like a 50-percent base budget and we don't go -- and we only appropriate 50 percent of the money for that second year. And we say we're going to go through a process with agencies where we're going to talk to them about what they -- what their functions are, what they do, do a little better program evaluation. We can come up with something that way where we still have to come in next year and finish that budget, but where we do -- where we go through a thoughtful process --

Borg: Senator Gronstal--

Gronstal: So zero -- sorry.

Borg: We'd let you finish but we're out of time. Thanks so much for being with us.

Paulsen: Thank you.

Borg: While we've just heard the legislative agenda and the prospects, next week we're going to be questioning Republican Governor Terry Branstad. You'll see our conversation with the governor at the usual "Iowa Press" time. That's 7:30 Friday night and 11:30 Sunday morning. I'm Dean Borg. Thanks for joining us today.

Tags: abortion budgets education government Iowa Iowa House Speakers Iowa legislature Kraig Paulsen Mike Gronstal politics redistricting State Representatives State Senate Majority Leaders State Senators taxes water quality