Happy New Year! The state of Iowa beginning its July 1st new fiscal year. Iowa legislators celebrating a new state budget and adjourning the arduous session. We're getting compromised details from two Iowa Senate leaders, democratic majority leader Mike Gronstal and republican minority leader Paul McKinley on this edition of Iowa Press.
Borg: It's the third longest legislative session in Iowa history -- 172 days, nine weeks past the scheduled adjournment. Facing all sorts of uncertainty about the state starting the July 1st fiscal year without new state budget spending authority, legislative republicans and democrats were modifying long-held philosophical differences. But there isn't agreement on revising property taxes, particularly business property, one of Governor Terry Branstad's priorities. Well we're seeking details today on the compromises that were made and how this affects next year's legislative session. Council Bluffs democrat Mike Gronstal leads his party's majority in the Iowa Senate. Chariton Senator Paul McKinley leads the minority republicans. Gentlemen, welcome back to Iowa Press.
Gronstal: Thanks for having us.
Borg: Congratulations on the new year.
McKinley: Thank you.
Borg: I'm not sure it's happy for everybody, we'll find that out. And across the Iowa Press table Associated Press Statehouse Reporter Mike Glover and Radio Iowa News Director Kay Henderson.
Glover: Senator Gronstal, let's start with you. As Dean mentioned in his introduction this was a long, messy session where a lot of things didn't get done or got only partially done. Why shouldn't we expect the same thing next year?
Gronstal: Well, I think there's a couple of things. One, I think it became clear at the very end here in the last several weeks that if you actually move bills to conference committee through the normal process and you get people into a room together from one chamber and from the other chamber all at the same time in a room talking about their priorities they can actually reach compromise. That did not happen until well after the scheduled adjournment where we actually kicked bills into conference committee. A couple of weeks ago the first four bills were kicked into conference committee. In that case four of them were resolved within 24 hours. But if we sit in our own caucus in the Senate and say hey, here's what we're going to send to the House and they sit in their caucus and say, here's what we're going to send to the Senate you don't get that communication between the two sides. So, the conference committee is the way you reach resolution when parties disagree.
Glover: Senator McKinley, was it simply negotiations weren't getting started quickly enough? Is that what caused all of this?
McKinley: Well, I would say that last November the voters sent republicans to the Governor's office, they sent republicans in overwhelming majority to the House and they narrowed the gap in the Senate. I believe that we had some successes, we didn't get everything done but we had a good first start. We've got a start on what they wanted us to do which was hold the limit on spending, to cut the size of government. Got a lot of work yet to do and I think as legislators go home they will hear from constituents, you've got to do more.
Glover: And so you expect the same thing next year?
McKinley: I think that legislators will come back with the opinion of their constituents, you guys get to work and cut spending, let's get some reform, let's get property tax relief because we're paying too much money.
Glover: Senator Gronstal, it's an election year next year. Why wouldn't the sort of thing I'm hearing from Senator McKinley dominate next year?
Gronstal: I think whether it's an election year or not an election year I think almost always good policy is good politics and I think our number one priority next session, mine going into the session is going to be to find common ground on commercial property taxes. I agree with that Governor that they are an impediment. Our approach was one that did not involve a tax shift to residential, the Governor's plan did, the biggest tax shift in the history of the state. I think we've got to go out and educate our constituents and to talk about that with them and I think -- let me repeat -- I think if we actually get all sides in a room together and have some discussion I think we can come up with a plan -- we think the plan ought to focus on Iowa businesses, some thing the plan ought to focus on out-of-state businesses on Wall Street rather than Main Street. We're going to continue to work on that. I think we can find common ground next year.
Henderson: Let's focus specifically on the property tax reform debate that was had for the past few months and what might happen in the future. Senator McKinley, he just mentioned the criticism that democrats waged at the republican plan. The republican plan would cut rates on commercial and industrial property anywhere from 25% to 40%. The hit on that is that it benefits corporations like Wal-Mart.
McKinley: The republicans believe that property taxes in all classes are too high. We need property tax relief in all classes of property. Likewise we know that our commercial property taxes are too high, it presents a real barrier to job growth. We're the second highest in the nation and we can demagogue this issue and we can talk about out-of-state corporations but I have Pella Corporation in my district, I have Hy-Vee, I have Vermeer Corporation, Kinsey, Pella Lace, I've got all kinds of hometown corporations that are paying too much in property tax, they are being enticed into other states and unless we get competitive we will start losing more corporations.
Henderson: Senator Gronstal, the rap on the democratic plan that republicans talked about this past year was that yours was just too little, too small.
Gronstal: And the interesting part of that is four out of five property tax parcels in the state of Iowa got a better break under our plan than under the Governor's plan, four out of five did better. It's a question as to whether it's about Main Street and growing Iowa's economy from the ground up inside our state or trying to get some companies from out-of-state to come in. We tried those policies of chasing smokestacks in the 80s, we didn't grow a very strong economy by doing that. So, we're trying to grow the economy from the ground up in Iowa and give tax breaks to Iowa companies.
Glover: I'm going to get back to my initial question here. I've heard those arguments, I've heard them for the last six months. The arguments haven't changed, your positions haven't changed, how is this going to be different next year, Senator Gronstal?
Gronstal: I think, let me repeat, I think when you get people in the same room together instead of the House passing a bill over to us or us passing a bill over to the House, that doesn't reach resolution. We both get our symbols but it doesn't accomplish anything. Getting some bill into conference committee when you're at loggerheads and having people communicate directly with each other is the solution.
Glover: Senator McKinley?
McKinley: I would say that when legislators go home it's very easy to get wrapped up in what's going on in the Capitol, that isn't what is important, it's what is going on around this state. People are paying exorbitant rates for property tax, they can not afford it, they see government growing at unacceptable levels and we absolutely must do something. I think the constituents, the people of this state are going to give the legislators that come home and listen an education.
Henderson: But is there something in the middle between your two plans?
McKinley: I think that the people of the state of Iowa ultimately will be heard on any issue that they're interested in. We can not continue paying property taxes at the rate they're going and they will rise dramatically, people will be hurt on this issue.
Henderson: Well, Senator Gronstal, is there a third way? We have one way and way number two, is there a third way?
Gronstal: I've made repeated offers to the Governor on some mix of both plans. I certainly think there's room for compromise but that involves people, it involves not drawing that line in the sand. It involves people recognizing most new jobs in this state are not going to come from large corporations. 80% of the new jobs in any state it's the economy, going to come from small businesses. Our focus was on giving a break to small businesses. If they'll recognize part of that, we'll recognize part of what they're looking for in terms of attracting businesses from out-of-state and we'll try to work with them on that. I think we can come up with things work.
McKinley: Nobody is a stronger advocate of small business than I. I was a small businessman. The problem with the democrat plan it was more interested in headlines than it was in realities. The state's income had to grow but four percent before there was ever any relief. When was the last time we had four percent in revenue growth? We're seeing a national economy that is stagnant, we're seeing a state economy with over 100,000 unemployed Iowans. It was a, I hesitate to call it a bait and switch -- but it was certainly not the kind of meaningful property tax needed.
Gronstal: We're ready, willing and able to have some discussions about what the appropriate trigger should be. The Governor's budget, the Governor's own budget projects for the next five years four percent growth in state revenues. So, we took the Governor's number and I guess the republicans don't like that number. Let me repeat -- five companies, four of them do better under our plan than the Governor's.
Borg: Senator McKinley, I'm just interested, we've been talking philosophically here and I have let that philosophy go but he, Senator Gronstal says, let's get it down to conference committee and that's where we can strike an agreement. I didn't ever hear you react to that because it occurs to me that Governor Branstad had a plan, the House of Representatives had a property tax plan and the Senate democrats had a property tax plan. Those all have leaders who are not in the conference committee. Is the mechanism simply to convene a conference committee and they can come up with a property tax agreement?
McKinley: I believe that quite frankly if we want meaningful property tax relief the problem is every line in the code has a constituency for or against. I think we should look at something like was done several years ago perhaps with the confinement operations. We get a group, a bipartisan group of legislators together over a long period of time, come up with a suggested solution and I think we can come to something. Frankly, I thought the House and the Governor had an awfully lot of public input on their proposals and it really did meaningful substantive changes and that's what we're talking about. We must have real change, not headlines.
Gronstal: And one of the meaningful substantive changes was residential will pay more. That was one of the impacts of the Governor's plan and of the House plan. Residential properties pay more. It's a tax shift, not a tax cut.
Henderson: I sense that this is not going to get resolved at this table. Let's move onto another issue, preschool. You sort of gave preschool one more year to exist, republicans did but didn't decide what to do in the future. Will republicans continue to push in 2012 to end state support of preschool for four-year-olds?
McKinley: The Governor was not ending state support of preschool, what the Governor was recommending was that everybody needs to have some skin in the game and if you have a little investment that you can easily afford we think people take it more seriously and it is a good thing.
Henderson: So, you don't support the House republicans, many of whom just want the state out of preschool all together?
McKinley: That was a position that was taken early, it was abandoned but I think the compromised position was we had too many things on the plate that could get discussed, the Governor let that drop in favor of concentrating on jobs, concentrating on controlling spending but that will be revisited.
Borg: And revisited in what way? That is, there's still strong sentiment that preschool will go away as state supported, is that right?
McKinley: No, I don't think it was ever that, it was to give parents the option to make choices, not force parents into a choice that they didn't make but rather give parents a choice on where and what their kids will do with their education.
Gronstal: Nothing in our law on preschool forces parents to do anything, I want to be clear about that.
Henderson: Will democrats ever cotton to the idea of giving vouchers to parents so that they choose which preschool to go to?
Gronstal: We're certainly open to having some discussion. What we tried to create -- we worked with -- actually this wasn't our idea, the Iowa Business Council came to us and said, in other countries they're starting with kids earlier. Growing research says 90% of their intellectual capacity is determined before the age of five. The Iowa Business Council said, if you want world class schools you better get a broad-based system of preschool in your country and start before the age of five with kids. That's what we put together. If you don't have a big chunk of that exist in the public school system there are hundreds of towns in the state of Iowa where there won't be any access to preschool.
Borg: Bottom line, did that decision just get kicked down the road to another session?
Gronstal: We made it -- clearly we have no interest in abolishing the statewide voluntary preschool system.
Glover: Senator Gronstal, towards the end of this session everything kind of ground to a halt while a lot of people started talking about an emotional social issue behind closed doors and that was abortion. At the end of the day you didn't do very much, you didn't make many changes. What was going on there?
Gronstal: I think there are -- this is an issue that has vexed our society for decades. It's a very, very tough issue and the version that the House passed over to us in the human services budget bill was a version that said the state would not provide for a poor woman that had been raped, would not provide for that abortion.
Borg: Through the Medicaid funding.
Gronstal: Through the Medicaid funding. That, from our perspective, was unacceptable. This is kind of a compromise that has exist in our country since the late 70s, that the Medicaid program will pay for abortions for life of the mother, rape, incest, so that compromise, whether it's right or wrong, but yet people on both sides, whether it's right or wrong, that is the compromise that has survived since the late 70s.
Glover: Another thing this legislation didn't do was you didn't do anything to stop a Nebraska doctor from moving to Council Bluffs and opening a late-term abortion clinic. Do you have a problem with that?
Gronstal: I believe we passed legislation in the Senate that would have accomplished --
Glover: But it didn't pass the legislature.
Gronstal: I believe we passed legislation in the Senate that would have accomplished that goal. Not everybody agrees with that. I am convinced that what the House did was nothing more than a court case. The South Dakota law has just been tossed out by a judge, by a federal judge. So, I believe their language was a court case, I believe my language, what was passed in the Iowa Senate, was something that would in fact stop Carhart from coming to Iowa.
Glover: Do you expect him to open a late-term abortion clinic in Council Bluffs?
Gronstal: I think it's more appropriate for you to ask him what his intentions are.
Glover: Senator McKinley?
McKinley: I think it's unfortunate that we got into a debate and we, again, were more concerned, I believe, about political cover than really what we do to prevent late-term abortion in this state. The bill that the Senate passed, we knew the House wouldn't act upon it. There's absolutely nothing in that bill that will prevent Carhart from moving as promised to Iowa and perhaps turning Iowa into the capitol for late-term abortion in this country. I think it's unfortunate, the people wanted us to do something about it, we didn't.
Gronstal: And Paul, that's simply untrue. That bill required a certificate of need before you open a clinic and in a state that had in 2009, the last year we have statistics, six late-term abortions in this state, Carhart being able to demonstrate that there was a need for another facility, it was pretty high hurdle and was incredibly unlikely that it would happen. But let me say, all you have to do to call my bluff is have the House pass it and see if in fact it keeps Carhart out.
Glover: Do you have political problems with that? What happens if he opens a late-term ...
Gronstal: I have been pro-choice my entire legislative career and it was interesting, a constituent asked me at a public meeting in Council Bluffs, do we need another clinic, another late-term abortion clinic in the state of Iowa? And nobody kind of asked that question that way before and when I thought about that I thought, he's right, so I encouraged our folks to work on something that would stop it because there isn't a need for another facility in the state of Iowa because there were only six in 2009.
Henderson: Let us move onto another subject about which you will not agree. The state's financial health. Senator McKinley, when you entered the legislative session republicans said the state had some sort of horrible problem looming over its head in terms of the finances. So, is the glass half empty or half full?
McKinley: Well, I think the glass is murky. We know that the Iowa economy is doing relatively well because of the high price of commodities. Thank goodness we have a very productive ag sector. Manufacturing continues to lag, we still have 100,000 Iowans unemployed but if what continue at a national level that could affect all of us. People were talking about an economic dip. Now is not the time to dip into the savings account to fund ongoing programs or start new programs. We absolutely must be fiscally responsible, especially with the floods in western Iowa.
Gronstal: No one proposed dipping into the savings account, not one proposal to dip into the savings account. Mike's glass is full, your glass if 40% full. We're supposed to have one of those glasses full and we in fact have 40% more than that. Our state is in pretty good financial shape. We've got $600 million in reserve funds and another $400 million in our accounts. We're supposed to have $600, that is the statutory, what is set in place and we've got $400 million more than that and we wanted $65 million for K-12 education. We agree in cutting government, we don't think that means cutting our local schools and our community colleges.
Henderson: Senator McKinley?
McKinley: I find it interesting that money is really burning a hole in their pocket, let's spend it. You know, with the economy the way it is we had better be very prudent about how we commit the future of this state from a spending standpoint. With the unprecedented flooding in western Iowa, which will dwarf Cedar Rapids, we have serious issues to look after and dipping into a savings account to spend for ongoing programs is just not a prudent thing to do.
Borg: Senator McKinley brought up the question that I was going to just ask and thank you for opening the door for that. What about that -- Council Bluffs is your home, Council Bluffs is right on the Missouri River, not being flooded right now but there are communities along the Missouri River that stand to have big losses ...
Gronstal: And there are dangers in Council Bluffs, there are real dangers in Council Bluffs. When this show is over I'm going back home to fill sandbags.
Borg: Cedar Rapids and Iowa City, other communities along the Cedar and Iowa Rivers are still rebuilding. What is going to be the state's responsibility there? And isn't that a use for a rainy day fund?
Gronstal: And they're still rebuilding and that is precisely what we did this session. They are still rebuilding and we need the match dollars that the state provides through a mechanism called performance of duty. The state helps local communities match the federal dollars that will come in and the dollars that are still coming in, in the Cedar Valley and that amount of money was capped inside the state general fund at $30 million. We moved that function to the economic emergency fund and we took the cap off. We actually passed legislation this year that would make sure the resources are there for those communities along the western border.
Glover: Senator McKinley, I'd like to go to the politics of this session. It strikes me that politics drove a lot of what happened in this session and this is going to be a reapportionment election and traditionally, if you look at history, power is changed often after reapportionment. Tell me about the politics this.
McKinley: I think the politics of this you have to look back to the 2010 election. The electorate very clearly sent the message government is too big, too out of touch, increasingly out of control, we need property tax relief, government is growing too large and we want you to cut more. I think that if we are authentic and honest with people we have to go back and talk to them and recognize we've got much more to do.
Glover: Senator Gronstal, are you at all worried about that? If you look historically over the last three censuses and reapportionments power changed fairly quickly at the statehouse. Are you worried about that?
Gronstal: I don't really think it changed that quickly. In 1992 we retained control, I came to the legislature in 1982, we picked up a bunch of seats then, we picked up --
Glover: And power changed.
Gronstal: We kept control in 1992 and '94, the two elections right after in the Iowa Senate. In 2002 redistricting set the stage for us taking control. I'm not afraid of that. The challenge to doing good campaigns is finding good candidates. We've got people highly motivated, coming to us, we don't have to go searching for candidates, we've got people volunteering, coming to us saying they want to be a part of building a better future for Iowans. So, I'm excited about the next set of elections.
Glover: So, what were the politics of this session? It strikes me that the dominant things I heard from people were A, they were not paying attention to what was going on at the Statehouse, or B, they were irritated because you were there for six months.
Gronstal: No more irritated than we were for being there that long. I'd say we tried to keep our focus on job creation in this state and we ended up spending significant time, energy and political capital defending things like our community colleges and our local schools.
Borg: Senator McKinley, how helpful was the Governor in resolving and getting this legislative session closed?
McKinley: I think the Governor was very helpful. But somebody asked me if I would give a grade to this legislature, and I would, it would be one that was incomplete and you handed your work in too late. We could have had this done two months ago and we didn't because there was too much stalling.
Borg: Could the Governor have changed that?
McKinley: I think the Governor did all he could. I think the Governor finally went around the state to listen to the people, I think that helped move things forward because people of the state brought pressure.
Henderson: There are a few high profile issues that got left on the table, we've talked about a few of them. One of them was a bill that dealt with nuclear energy and the prospect of the construction of a nuclear power plant in Iowa. That languished and never passed. Senator Gronstal, is that still a live round for 2012?
Gronstal: I continue to believe that it makes sense to explore that possibility as to whether that makes sense in the state of Iowa. That's what that legislation would have done. I think to some degree the tsunami and earthquake in Japan kind of cast a pall over that discussion and I think you can make a case any new plants that are going to be built -- the next generation nuclear plants are going to be a lot safer. So, I think that's still there, I think that's still possible but this session of the legislature maybe overshadowed by other events found it difficult to ...
Glover: We're running out of time here. You dealt with this Governor in his previous tenure as Governor. You have dealt with him in his new tenure as Governor. Is the new sheriff in town the same as you dealt with before? Are you finding it easy to negotiate with him?
Gronstal: You know, all I have said since November 2nd at about 11:00 when the lay of the land was pretty well established, I've not once said, there's my line in the sand on this or that and I think the Governor in way too many cases said, there's my line in the sand, I will not budge from that. That made it hard to convince folks in our party to negotiate or to bargain.
Glover: So he's a different governor?
Gronstal: I think he was -- yeah.
Glover: And it was all about who is in charge at the statehouse right?
Gronstal: No, for me this was all about issues.
Glover: What about the Governor?
Gronstal: Well, you'd have to ask the Governor what it was all about for him.
Borg: And we may have him back on a future program and we'll ask just that. Thank you, gentlemen, for taking time to be with us today. Have a good summer. Well, this is the final edition of our current broadcast season. It is our 40th consecutive year on the air. But we're only breaking now for 11 weeks intending to take up our new season on Friday, September 9th. All of us bringing you this weekly Iowa Press program deeply appreciate your viewing loyalty and kind comments along the way. I'm Dean Borg. Thanks for joining us today and best wishes for a pleasant summer.