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Governor Terry Branstad discusses the economy, jobs

posted on April 15, 2011

Lines in the sand. During these final weeks of Iowa's final 2011 legislative session rhetoric becomes action. Governor Terry Branstad this week vetoing appropriations legislation because it didn't meet his insistence on a two-year budget. A conversation with Governor Branstad on this edition of Iowa Press.

Borg: You'll recall that during last week's Iowa Press program we were questioning two legislative leaders, Kraig Paulsen, Speaker of the republican controlled House and Mike Gronstal who lead's the Senate's democratic controlled majority in the Iowa Senate. Even though they provided insight into future legislative action there's a third dimension in what eventually becomes law or in some cases what doesn't. While respecting the legislative process as a former state representative himself, Governor Terry Branstad isn't shy about telling legislators what he'll sign into law. It happened this week, Mr. Branstad vetoing the first appropriation bill reaching his desk. We have invited him back to the Iowa Press table now to talk about that and other things. Governor Branstad, thanks for taking time to be with us today.

Branstad: Thank you, Dean. Not only did I veto one appropriation bill, I item vetoed another one so it sent a message to both the House and the Senate that we need to restore honest budgeting and not be using these political gimmicks that have been used the last several years and we need to have a biannual budget and one that is going to be sustainable for the long-term where we're spending less than we take in every year.

Borg: I can see that's something you want to talk about. We're going to be doing that. But I'd like to introduce statehouse reporters Mike Glover of the Associated Press and Radio Iowa's News Director Kay Henderson. Mike.

Glover: Governor, the issue that is on the top of minds of most people at the statehouse is the legislature has approved a new map of congressional and legislative districts sending it to your desk. You have not publicly taken a position on it. What is your intention with that map?

Branstad: I intend to sign it. I think the system that we have in Iowa is a good system, it's a non-partisan system. It was developed back when I was Lieutenant Governor and it has worked through, this is the fourth reapportionment cycle and every ten years after the census so we did this in '80 after the '80 census, the '90 census, 2000 and now this one and although nothing is perfect but I think they did a very good job of keeping the variance between the districts very minimal. We've gone from five to four congressional districts but there's, the variance between the districts in terms of the number of people is very small and it does not, and it maintains county lines. I know there's some people in southwest Iowa and Council Bluffs that don't like being thrown in with Des Moines. Unfortunately that is the situation with this but I talked to all five of the congressmen and I came to the conclusion that this is a piece of legislation that should be approved. So, I will be signing the reapportionment bill and I suspect that, I've already heard that we have a couple of congressmen that are going to be moving and probably several legislators that could be good for the real estate business.

Glover: What's the fallout from this map? Does it help republicans? Does it help democrats? Is it neutral?

Branstad: I think our system really is pretty non-partisan and so I don't think it really gives advantage to either side. Obviously in some individual instances there may be an advantage given to one party or the other in a particular district where we have incumbents thrown together but for the overall I think it is a very competitive situation and I don't think either party has a particular advantage out of this. I think it really is going to depend upon the quality of the candidates and the kind of campaigns that they run and that usually determines who wins elections in Iowa.

Henderson: Congressman Latham, who is from Ames currently, has announced that he will move into the new third congressional district which is where Congressman Leonard Boswell, a democrat, lives. What about that general election matchup? What do you think of that?

Branstad: It's going to be real interesting. You have two long-time incumbents, two very effective campaigners. I happen to live in Latham's district now, in Boone County, and Latham has been a very good vote-getter. Not only does he carry Ames in Story County, which is hard for a republican, but he carries Dallas County and Madison County and Warren County, all in this new district. Of course, you have Polk County, which is where Leonard Boswell moved ten years ago. He used to live in southern Iowa. He moved there and so now you're going to have two congressmen, both whom have moved that will be up against each other, both are incumbents, both of them are very strong candidates so that will be an interesting race. And, of course, I also think that Congressman Loebsack, as I read it, Loebsack has already announced that he's going to move to Johnson County into that new district where there's not an incumbent, in fact, he kind of kiddingly told me that he's going to ask Congressman Braley to help him move. I talked to each of the congressmen and we had a very good conversation with all five of them.

Glover: Let's assess that race in the new district, with Loebsack moving into that new second district and Braley holding onto his northeast Iowa district. Can republicans challenge either one of those? Those look like two pretty good solid democratic districts.

Branstad: Well, actually the numbers, I think all of them are competitive. I think all of the four districts, I think frankly, are competitive. Now, obviously Steve King's district he has an advantage. I think the district where, the southwest Iowa district with Polk County is going to be very competitive, could go either way. The two districts in eastern Iowa tend to lean democratic but those were fairly close races last time and the numbers are such that I think they could be very competitive especially the southeast Iowa district when you add Scott County. Scott County can be, and for me had been a very good county, and so I think a republican could be, especially if you had a strong candidate from that Scott County area running in that district.

Henderson: Let's return to this Latham-Boswell matchup. Every couple of years republicans put up a candidate to run against Leonard Boswell and that candidate gets defeated. Is this the time that that cycle is broken given the fact that Latham will have unlimited support from John Boehner, the Speaker of the House?

Branstad: Well, I think it's really more to do with Latham's respect and support here in Iowa. You know, he started out in northwest Iowa and then he ended up with northeast Iowa and going down to central Iowa and hooked down around south of Des Moines. And so even though he has not represented Polk County he certainly is well known in Polk County but don't count out Leonard Boswell. I mean, Boswell has been up against tough competition every time. He is a very formidable candidate so I think you have two real strong candidates and it's going to be, I think it will be an interesting race.

Glover: And you're not on the ballot next year. What is your role in these races? These are some pretty hotly competitive congressional races. Do you envision yourself being involved?

Branstad: Well, I'm certainly going to try to do all I can to help the republicans both in the congressional and in the legislative races. We're going to work very hard to gain control of the Senate. We made big gains in this last election. It is now 24 republicans, 26 democrats. I think Senate republicans feel that they've got a really good chance to gain a majority in the next election. Obviously as Governor I'd like to have my party in the majority and we'll work hard for that but I also believe that once the election is over you've got to work with everybody and we've been doing that this year with a split legislature and we've had good cooperation. I want to say we've just gone through the confirmation process, with the exception of two disappointments we've got all of our people confirmed but I would like to say that I think Senator Gronstal was reasonable to work with through that process and obviously I want to work with him and with Speaker Paulsen and both House and Senate democrats and republicans to resolve the differences on the budget and get things done.

Borg: Governor, on the budget, that's what I want to ask about. Let's go back to the conversation you and I had as we opened this program. You vetoed this week a transportation appropriations bill because it didn't meet your insistence on a two-year budget, it was an annual budget. Are you going to do that for every bill that comes that is not a two-year budget? What is going to be the effect? Are you willing to either call a special session or lengthen this session, keep on vetoing bills like that?

Branstad: Well, I wanted to send a real clear signal very early that I was serious about this because remember when I ran for governor last year we had a financial mess in this state, we had a situation they were using one-time money for ongoing expenses, they used trust fund money to pay for general fund expenses, they purposely underfunded entitlement programs like indigent defense, they didn't even -- they had $84 million of undesignated cuts the governor was supposed to make and that he didn't make them on time and then he left us with a big mess that jeopardized health and safety. And so ...

Borg: Where we are right now, though, what are you going to do? Are you going to ...

Branstad: I'm going to insist on a two-year budget and I want to make sure that it's balanced, that every year we spend less than we take in and that we have a five-year projection so that the decisions we make on this year's budget project into the future where we're going to have sustainable ability to deliver services for the next five years.

Henderson: Is this a power grab on your part? Legislators are concerned about that second year because they are afraid that once they give you a two-year budget they will have no role in really deciding what happens in that second year.

Branstad: This is just to restore the balance that existed before 1983. Before 1983 we always did a two-year budget in Iowa. Many other states, including Minnesota and Wisconsin and Nebraska and Texas and many others, use a two-year budget and that gives you more long-range planning and more stability. And the other thing, if indeed the legislature in the second year, if there is a problem they can correct it. But what we need to do is correct this problem that exists right now. The big battle this year has been over indigent defense, the lawyers aren't getting paid for representing criminal defendants. And why did that happen? Because last year the legislature misled the public and purposely underfunded that program by about $20 million so they could say they didn't spend as much money as they really did and that's the kind of political chicanery that I was elected to correct and I'm going to see to it that we do it.

Borg: I'm going to go back to the question that I asked, though. Do you intend to keep on vetoing bills?

Branstad: Well, I think they got the message and if I have to veto more bills I will but my intent is to work with the legislature and resolve these issues. It looks like my item veto has now worked, it looks like there is a tentative at least verbal agreement on Senate File 209 which would provide the funding for indigent defense and also for these health and safety issues in our mental health institutes and in ...

Henderson: The prisons and patrol?

Branstad: Prison, right, and in the Highway Patrol. Those are all issues that we inherited because of the mismanagement of the last General Assembly and that we're correcting. I know it’s not been easy but I'm appreciative of the fact that after item vetoing that previous bill we now look like we have an agreement on that.

Glover: Governor, what I seem to be hearing you saying is I want this, I want this, I want that from the legislature. I recall when you were governor in the 1980s and you had a democratic legislature you were very good at making deals with legislators. What happened? Do you still need to compromise with these folks?

Branstad: Well, then along came 1992 and in 1992 I finally said enough is enough, I'm tired of the political chicanery, I'm tired of the budget mismanagement and I got the state's finances -- you may recall that session -- 1992 we had major spending reform. In fact, Leonard Boswell was very involved in helping us pass that legislation that made it possible for us to put in place spending reforms, the revenue forecasting council, legislature not spending more than 99% of projected revenue and fully funding entitlement programs. Okay, we put that in place, it worked as long as I was Governor and I left the state with the state budget balanced on generally accepted accounting principles and a $900 million surplus. Fast forward and the last four years that thing has gotten totally out of hand, the legislature has used notwithstanding language and circumvented the 99% spending limit, they have used one-time money, trust money like the Senior Living Trust Fund to pay for ongoing expenses, they used to one-time federal bailout money which is no longer available. Those days are over. We're going to restore honest budgeting and we're going to share with the people of Iowa that the revenue, ongoing revenue goes for ongoing expenses and we're going to have a two-year budget and we're going to make sure that it's sustainable for the long-term. That is the stability, predictability Iowans elected me to do and I want to work with the legislature to get it done.

Henderson: Some of the Iowans who helped you win, Iowans for Tax Relief, are now running radio advertisement critical of one of your proposals, it is a 64% increase on the tax on the state's casinos. They say it's a cash grab for bureaucrats in Des Moines. They say it's bad for the economy. Is that going anywhere or is that completely dead in the legislature?

Branstad: Well, first of all I think we need to point out the rest of the story. The rest of the story is that I was elected by people that said we need to focus on jobs and reducing the tax and regulatory burden on Iowans to bring jobs.

Henderson: And their argument is that this is a tax that hurts jobs.

Branstad: It's not the case at all. In fact, we have revamped that proposal now so that the smaller gaming interests will pay very little more but the ones that are making huge profits will pay more, it's still less than our neighboring state of Illinois or Indiana or Ohio. So, we're asking them to pay a little more. The gaming industry is always coming to the legislature asking for more things. I don't think it is inappropriate to ask them to pay a little more in taxes so we can reduce the corporate income tax and make Iowa more competitive for the entrepreneurs and small businesses.

Glover: You have three competing property tax proposals awaiting your decision. Do you have a favorite? Are you willing to threaten to veto the ones that you don't like?

Branstad: Well, I've got a proposal that is pretty well thought out and it addresses an issue that hasn't been addressed in this state for 30 years and that is the commercial property tax. We have the second highest commercial property tax in the country. It's been promised that action would be taken on that for years. We've got a plan that says new commercial property we'll only tax it at 60%, not 100%. That will help us attract new commercial -- we haven't had much commercial development in recent years. We need that and then we're going to phase down the existing from 100% to 60% over a five-year period and we would also provide reimbursement to local governments so we protect them in the process. This is permanent tax relief. I appreciate the fact that the Senate recognizes the problem but what they have proposed is a tax credit that could go away. I think our approach makes more sense. We want to work with the House and with the Senate to eventually get permanent commercial property tax relief and we also want to put limits on and prevent increases in residential and agriculture property as well.

Glover: But the question is will you veto that if it lands on your desk?

Branstad: Well, I don't like to make decisions on vetoes until I see it in its final form. I prefer instead to work with the legislature to get those things worked out. But I have made it clear we want permanent commercial property tax relief and we want to limit the potential for increases in agriculture and residential property as well.

Glover: Earlier this year you said that proponents of the gas tax increase should go out and gin up public support for that and if they gin up public support, you could support it. Has that happened?

Branstad: Well, let me just say I have already appointed a task force of citizens to look at the needs – the transportation needs of our state for the state, cities and counties. That citizens groups, which is going to be co-chaired by Nancy Richardson and Allan Thoms – and there are citizens from all over Iowa serving on that – they’re going to get input and ideas from Iowans. What we’re looking at is a way to meet these transportation needs, doing it with – first of all doing it with – on a pay-as-you-go basis with user fees. Now, remember it’s changing, transportation today. Now you have electric cars. You have hybrid vehicles. You’re going to have trucks running with natural gas. So when you look at a user fee, I think you’ve got to – instead of looking at a gas tax, you’ve got to look at a user fee and also make sure that out-of-state residents that are using our roads pay their share too. So I want them to look at what is the best mechanism and the fairest mechanism to meet the transportation needs of our state and make a recommendation to me and the legislature on how to deal with that. I’m confident with the group of citizens we have that we’ll get some good ideas.

Henderson: Speaking of user fees, are you suggesting that Iowans would be ready to pay for the amount of miles they drive on the roads?

Branstad: Well, I guess what I’m saying is we need to have an open conversation with Iowans on what’s the best way to finance the transportation needs. We’re hearing from cities and counties as well as from the state that there are some critical unmet needs out there, and now we need to look at it. And also, we recognize the fact that it’s the users that benefit from it, so it should be the users that should pay the cost of it.

Borg: Governor, last week I asked the legislative leaders what would they advise parents of preschoolers and superintendents of schools on what they’re going to be doing this fall on preschool. You had a pretty bold revision that hasn’t met – has stirred up a hornet’s nest and it hasn’t been met with a whole lot of support.

Branstad: Well, actually it passed the House very strong. The Senate has refused to take it up. I think if we could get it debated in the Senate, we could get it passed. I really believe that Iowans are willing to pay for preschool if they can afford it. I think we should target the resources – the limited resources we have to provide assistance to the families that need it.

Borg: I know that’s your stand, but what do you think is going to happen? What are you willing to compromise on, if anything?

Branstad: Well, first of all, the other thing we need to have is accountability. Instead of just throwing money at a problem, we need to make sure that we’re doing assessments to make sure that these kids know what they need to know when they start kindergarten. And so our approach is to have accountability, to have assessments, and to have something that’s sustainable for the long-term. And I’m willing to continue to work with the legislature on this. I know there’s a partisan divide on this issue. But I think we all want to see the best quality education. And we don’t want to rob from K-12 education – that has been done the last couple of years – to start a new entitlement program. That’s the reason why I said I believe that we need to restore stability and predictability. The state needs to fully fund its obligations under the school aid formula, which was not done last year. And we need to avoid across-the-board cuts, and then look at the best way to make sure that every four year old has the opportunity for preschool

Henderson: Governor, in February you appointed three new members to the Iowa Supreme Court, replacing the three who were voted off the bench in the November election basically as a fallout from the 2009 ruling on gay marriage. Is that issue dead? Are people moving on? Or do the four justices who remain on the court who joined in that unanimous opinion, should they expect to be targeted in upcoming retention votes as well?

Branstad: Well, they don’t all come up at the same time.

Henderson: Right. But there is one who comes up in 2012.

Branstad: There is one that comes up next time, and I suspect there will be a lot of people, especially in light of the fact that he chaired the judicial nominating commission and the way he treated some of the applicants to that – and that was all on videotape. I suspect there’s going to be some people that have grave concerns about the way he has operated. So I do expect that Wiggins will face some challenge in that. I don’t know. It’s going to depend –

Henderson: Justice David Wiggins, for viewers who may not know.

Branstad: Yes, Justice David Wiggins. And I think a lot of people were concerned. I’ve even heard this from some of the judges that were up before him about the lack of temperament in the way he interviewed the candidates and the way they were treated and whether they were all treated in the same even-handed and equitable way. But that’s an issue, I guess, that will come up when that comes up. But I guess my feeling is that we need to do all we can to restore respect for the judicial system. I think it’s become too partisan, and I think we need to restore balance.

Glover: And just this past week they announced that the prison system population has gone past 9,000. At what point does the state begin to deal with prison population through sentencing, or is that just politically untouchable?

Branstad: No. I think the parole board is addressing those issues. And we did have a time that we had some vacancies on the parole board and things like that. Those have been filled and I think we’ve got really capable people on the parole board. I think they’re addressing that, but they need to obviously look out for protecting the safety of the public in the process. But also, if there are people that are a good risk to be paroled, certainly they should be considered. And as you know, the state is also building a new prison at Fort Madison, and I think Mitchellville, there’s some expansion going on there as well. But we need to make sure the public safety is protected, and I’m committed to that. And the quality of people that we’ve put on the parole board I feel confident will do that and do a good job of it.

Henderson: Back to our previous discussion about Justice Wiggins. It sounds as if you will actively campaign for his ouster.

Branstad: Well, no. The judicial branch of government is a separate branch from – and when I ran for Governor last time, I stayed out of that. But I know enough and I’ve heard enough from enough people that I think that he will face opposition.

Henderson: Okay. Governors in Wisconsin and Indiana have pushed through reform of those states’ labor laws to a much greater degree than you ever proposed. Are you jealous?

Branstad: No, I’m not jealous. Each state has their own circumstances and conditions. Indiana, for instance, Mitch Daniels was able to, by executive order, change the collective bargaining situation there because it wasn’t in the statute. Now, I took action by executive order to overturn this project labor agreement that my predecessor had done because I thought that was totally wrong. It basically was a back-door way to try to impose prevailing wage, something I vetoed back in the ‘80s. Nine states had repealed it since that time. He couldn’t get it through the legislature because six democrats in the House voted against it. So then he imposed prevailing wage, which drives up the cost of construction by 10 to 15 percent and has caused these big contracts for that prison in Fort Madison that we talked about and the University of Iowa project to go to out-of-state contractors and out-of-state unions. I think that’s wrong and not fair to the Iowa taxpayers and Iowa contractors.

Glover: Under a minute to go, Governor. There’s a caucus campaign going. What’s your role going to be in that?

Branstad: I want to be very involved in encouraging and welcoming candidates to our state. We want to see an active caucus participation both in the straw poll and in the caucuses. It’s just starting to heat up. I think we’re going to see a lot of candidates, and I hope they’ll spend a lot of time and a lot of money in Iowa.

Glover: And it wouldn’t be an official Iowa Press if we didn’t ask you this. Are you running again?

Branstad: It’s too early to make that decision. I love what I’m doing but that decision wouldn’t be made until we get to an election year, and that’s a long way off. I’ve got a big job to do. I’m enjoying it. I love the challenge. But I want to get through this session. I want to get the state’s financial house in order and keep the focus on jobs.

Borg: You talked about enjoying, we enjoyed having you on Iowa Press today.

Branstad: Thank you, Dean.

Borg: Thanks for coming by.

Branstad: Thank you.

Borg: On our next edition of Iowa Press, we’ll be questioning a former Iowa Governor, Tom Vilsack. He’s now in the Obama administration as U.S. Secretary of Agriculture. And with deficit and federal debt reduction themes permeating the federal government now, we’ll be seeking Secretary’s Vilsack’s perspective on how the farm program might be faring. You’ll see Tom Vilsack at the usual Iowa Press times next week, 7:30 Friday night and 11:30 Sunday morning. I’m Dean Borg. Thanks for joining us today.


Tags: 3rd Congressional District budgets economy government governors Iowa Iowa legislature jobs Leonard Boswell politics preschool redistricting taxes Terry Branstad Tom Latham U.S. Representatives unions