Maybe next year. This year's legislative session is finished. But Governor Terry Branstad continues pressing for big changes in property tax and schools. A conversation with Governor Branstad on this edition of Iowa Press.
Borg: Governor Terry Branstad's two major goals for this year's legislative session -- revising Iowa's property taxes and strengthening K-12 public schools -- are still goals. There was a lot of talking -- negotiating the preferred term I guess -- but no agreement on reducing commercial property taxes and only minor changes for Iowa's K-12 schools. In fact, Representative Mary Masher -- herself an Iowa City teacher -- describes what was accomplished as tinkering. As legislators were closing the session and heading home, Governor Branstad himself said this general assembly will be remembered more for what wasn't accomplished. We'll let him elaborate on that. Governor, welcome back to Iowa Press.
Governor Branstad: Thank you, Dean. Great to be back with you.
Borg: And across the Iowa Press table, Radio Iowa News Director Kay Henderson and Des Moines Register Political Columnist Kathie Obradovich.
Henderson: Governor, let's do a little status check. You went out and campaigned in 2010 making a series of promises to Iowans. One of them was to create 200,000 more jobs in five years. You have said you are more than far enough along on that goal ...
Governor Branstad: Well, we're making progress.
Henderson: Are you calculating it strangely though by only counting new jobs?
Governor Branstad: Well, the great thing is -- and today the new numbers just came out -- unemployment dropped again to 5.1%. Also this week I was up for the groundbreaking at CJ, a new Korean company that is investing a lot of money, creating 180 new jobs in Fort Dodge. We have a lot of those things all over the state. John Deere is expanding in Waterloo, in Dubuque, here in Ankeny as well as in Ottumwa. Of course, we just had the groundbreaking for the operation that the aluminum company Alcoa has got in Davenport. So I'm feeling really good not only about the number of jobs but the quality of the jobs. The new job creation since I've been Governor is six times the pace it was in the previous twelve years. Am I satisfied? No. I work with this every day and we're going to continue to work aggressively to bring more business and jobs to the state. Getting -- reducing the property tax for machinery and equipment helped us back in the 80s, now I want to reduce the commercial and industrial property tax. We didn't get that done this year but I'm very persistent. I'll be back with an even stronger and better effort next year. And those people that are afraid of change, sorry about that. You know, if we're going to have progress we've got to be willing to try things different and do things better.
Henderson: I hear republicans repeatedly saying that government doesn't create jobs.
Governor Branstad: Exactly.
Henderson: Why are you claiming then credit for 200,000 jobs?
Governor Branstad: I'm the first to say the government doesn't create the jobs. The government often times is the impediment to creating jobs. It is one of the first things I did is sign an executive order requiring all new regulations to have a jobs impact statement. We're scrutinizing and reducing some of those impediments and reducing some of the tax burdens that prevent people from investing and creating jobs. There are times, however, when an incentive like the quality jobs incentive program can make the difference when we're competing with other states and we're as competitive as we can be. We also want to be able to add that little frosting on the cake to get them to make the decision to come to Iowa.
Obradovich: Going back to Kay's question, though, accountability is really important in those programs. And are you really being accountable to voters if you are only counting the jobs being created instead of also factoring in jobs lost over that same period?
Governor Branstad: We know there are always going to be jobs lost. That is the reason why we have such an ambitious goal of 200,000. Remember, when I ran for Governor there was 106,000 people out of work. We now have that down below 85,000 so we're moving in the right direction and getting -- but we also have to upgrade the skills of those unemployed because many of them don't have the skill sets we need. That is why the focus on STEM, science, technology, engineering and math because there's a lot of good jobs that are available today that can't be filled. Vermeer has 100 welding jobs they can't fill right now and I hear companies all over the state saying, we don't have enough people with the right technical skills. Community colleges can help us do that. But we also need to make sure we retrain the displaced workforce to have the skill sets needed.
Obradovich: If Iowa creates 200,000 jobs though at the end of five years but has lost a quarter million do you still get credit for your goal?
Governor Branstad: Well, first of all, you've got to look at is the unemployment rate going up or down? When I became Governor the first time we had 8.5% unemployment. When I left office it was down to 2.5%. This time I took office, the unemployment rate was 6.1%. It is now down to 5.1%. So we're going the right direction. We're making progress. It is not just the number, it is also the quality. And we're seeing manufacturing jobs, we're seeing jobs in biosciences. Those are good jobs. Companies like CJ and Cargill and Valent BioSciences and John Deere and Vermeer and companies like that are the kind we want. The other thing we could have done and the House passed it but the Senate didn't was extend the benefits of this Iowa single factory corporate income tax to companies in the supply chain. When we were at Rockwell-Collins the other day in Cedar Rapids they said they have 800 suppliers. Imagine if we could get more of those who co-locate closer to them in Iowa. Those are good jobs in manufacturing as well. And yet our corporate income tax is an impediment to them locating here. We want to extend the same benefits we give John Deere and Rockwell to those suppliers.
Obradovich: We're going to get to income tax in a second. But you also had a goal of cutting government 15% over five years. The general fund budget did rise a little bit this year, about 3%. What kind of progress are you making on that goal?
Governor Branstad: Well, if you look at the size and cost of government we shrunk it significantly, especially last year. Well, first of all, we had a projected 15% deficit going forward and for many years the legislature gives one-time money for ongoing expenses. Compare us to say Illinois or California. I inherited a projected $900 million deficit. This year we not only balanced the budget, we only spent 99 -- 97% of projected revenue and we are filling the cash reserve, the economic emergency account and so we're in the position to reduce the tax burden and we have fewer employees working for state government than we had when I took office.
Henderson: But it seems like fuzzy math. If you tell people you're going to cut government by 15% and the budget goes up that doesn't compute to most people.
Governor Branstad: Well, I think what you have to do is you have to look at the trends and one of the things we're going -- you had a government out of control, spending more than it was taking in, like California and Illinois. Do you see what happened this week in California? California's deficit went from $9 billion to $16 billion. Iowa has gone from a deficit to -- you can't spend all of this because it is in the cash reserve and economic emergency account but those accounts are now full and the state is in a solid financial condition.
Borg: Back to Kay's question there -- the cost of government, you said reducing the cost of government is a goal and yet the budget keeps going up.
Governor Branstad: Right. Well, part of it we couldn't prevent because my predecessor gave the unions this big sweetheart deal. He accepted their first demand without any negotiations and we had to pay for those salary increases. But how did we pay for it? We made the agencies eat it out of their budget by not replacing people as they retired or left. And so we have reduced the size and cost of government even though the cost went up thanks to Governor Culver's big gift to the unions. We also think there is even more we can do if we can get state employees to pay their health insurance -- pay part of their health insurance. Most people, you know, if you're self-employed you're paying 100%. A lot of people in the private sector are paying 50% or 35%. I'm saying we in government ought to pay at least 20% of our health costs. Most state employees, 96% pay zero. That is wrong.
Borg: A lot of people who know government though say, good luck with that, Governor.
Governor Branstad: Well, that's the difference -- they don't know what I'm like. I'm very persistent and I think if they look at my track record over the year you see that I don't give up, I keep coming back and I keep working hard. And this is one of the people are on our side and I believe that it is a matter of just common sense that if we're going to become the healthiest state in the nation, if we're going to control healthcare costs people have to have some skin in the game, they need to have to contribute to their health insurance and 20% is a very modest request and I intend to lead by example on this issue.
Borg: I want to get back to commercial property taxes. That was one of your major goals beginning this session. But it was unaccomplished during past session and reducing commercial property taxes still just a goal. But on this program last week, the Senate Democratic Majority Leader Mike Gronstal said he tried to compromise with you.
Governor Branstad: Well, actually we reached agreement between he and I and Speaker Paulsen on basically a framework and the House passed it with 71 votes. Now, let me finish. With 71 votes. It included his priority which was the earned income tax credit along with the commercial property tax reduction we wanted. But what he wouldn't do is include the permanent property tax reduction. The House passed that. They passed their bill. They passed the compromised bill. Then the Senate tried their own bill. Two of his own democrats voted against it. In fact, you've got Hatch and Hogg bragging about killing property tax relief. And the result is going to be not only commercial and industrial taxes are too high but residential and agriculture are going to go up four percent again next year. That could have been prevented. The House bill would have limited it to 2% and the Senate failed to pass it.
Henderson: On this program last week, Senator Gronstal alleged that you wouldn't give in negotiation on a key point ...
Governor Branstad: I've seen it, I've seen it ... let me tell you ...
Borg: Let me show the viewers though what he said.
Governor Branstad: Go ahead.
Senator Gronstal (Iowa Press - May 11, 2012): The last meeting we had what I asked the Governor for was a guarantee on the commercial property tax that the reimbursement of $140 million would continue forever.
Borg (Iowa Press - May 11, 2012): That is to cities and towns?
Senator Gronstal (Iowa Press - May 11, 2012): And he made, and he said, no thank you, basically, that he would not guarantee that. And what that means is that $140 million ends up being picked up by homeowners. We thought that was a mistake. You can talk about property tax relief but over time the mechanism he proposed was a massive tax increase for homeowners in the state of Iowa and we were not going to go along with that. That was the last piece I said to him. Governor, we've got room to talk if you'll commit to ongoing funding of what we're going to take away from local governments so that doesn't get shifted to homeowners.
Borg: Now, he seems to be saying, you're overlooking collateral damage.
Governor Branstad: No. That's not true. In fact, the House bill, which I supported, put the two percent limitation in there. What he wanted to say is, no, we're going to take away the property tax relief in future years by making the credit not a permanent tax reduction. I said from the very beginning it has to be a permanent property tax reduction. We were willing to compromise with him and have some of it be a credit but the other part of it had to be a permanent reduction. And I have the money in the budget for five years and in fact we're picking up another $27.5 million of property tax credits they haven't funded for years in the homestead and ag land in this year's budget. And we're intending -- and I have it projected out to increase it $50 million every year for the next several years. The problem we had was he wanted to assure local governments that they are going to get all this additional money. Now, the truth is they're going to get a four percent increase on residential. Our proposal would have limited that to two percent. So we are the ones that are -- and the Senate never passed any protection for residential property tax holders. So the point is this, the taxpayers can take the judgment, look at the House having passed the property tax bills, the Senate having defeated their own and we did offer, the republicans in the Senate offered our bill, the voters will have a chance to vote on this. I believe we need a Senate that will work with us. He has been in control there for at least six years, they have failed to take any action to protect residential homeowners as well as commercial and industrial. It is time for new leadership.
Henderson: The Senate also did not take action on legislation which would have allowed dove hunters to use lead shot. You said that was just an oversight and they had intended to do it. Senator Gronstal on the show said he didn't have the votes to pass it. You went ahead and used your executive authority in this area to make a decision that allows hunters to use lead shot.
Governor Branstad: We promised that it would be taken up. And if it had been taken up it would have passed because I know republicans were going to vote for it and I know several democratic senators have told me they were going to vote for it. The votes were there to pass it. I know he's got some liberals in his caucus that didn't like it but the fact of the matter is he failed to do what he should have done and that is give the Senate a chance to vote on this. It's not the only issue that he failed to give the people a chance to vote on. There are many, many others. I think that is the reason why I'm going to be working to get a new Senate that will work with me to help us create jobs and do the right thing. And I'm very proud to have done what I have the authority as Governor to do and that is to veto a rule that goes beyond the authority of the commission.
Henderson: But I'm wondering about whether Iowans are going to be wanting to serve on your commissions because the commission share called you and asked if that action was okay --
Governor Branstad: No, no, that's not true. It wasn't the commission chair. It was Conrad Clement who is a brand new member of the commission. He did not know that the House had voted down --
Henderson: But you said it's okay and so they didn't --
Governor Branstad: Wait a minute, wait a minute, wait a minute here. He called me and I'm at the governor's conference in Salt Lake City in the morning right before this came up. I did not know the legislative history at that time. And he said, well all the staff is telling, all these people are saying that this is something we have to do and whatever. And I didn't, first of all, it's the first time I heard they were going to try to do this and I did not know that the House had voted it down. So specifically the House of Representatives had voted it down. The responsibility given to the commission was to set the season, not to determine whether you could use traditional lead shot or not. So they clearly went beyond their authority and responsibility. The Legislative Rules Review Committee voted in a bipartisan 9-1 vote saying we're going to delay this rule, it's wrong and so they delayed it for the session. The House passed the revision, Senator Gronstal never brought it up in the Senate even though the votes were there to pass it. And so I took the appropriate action that I have to veto that rule and I can tell you the hundreds of Iowans appreciate having a Governor that understands that the legislature has the right to oversee laws that they pass and commissions do not have the right to just go out and do anything they want to do that is beyond the scope of the legislature.
Obradovich: Governor, earlier this year the Supreme Court said you overstepped your authority when it comes to the money for workforce development after your line item veto. Are you trying to expand the authority of the Governor's office here in your fifth term after all your experience in office?
Governor Branstad: Actually the truth is I'm protecting the legislature's right to control the bureaucracy and this is the thing that I hear from businesses and citizens all the time --
Obradovich: I don't think that was -- workforce office --
Governor Branstad: Hear me out, hear me out. Here is what happens. The legislature passes some law and then some agency or some commission decides to go on and do way beyond what the legislature authorized. Now, we require all of those rules to come to be reviewed by the Governor's office. In addition, the Rules and Review Committee. And we have been working closely with the Rules and Review Committee to stop this bureaucratic -- this bureaucratic legislation by executive action. So in this case, me as the chief executive in defending the legislature's right to control the bureaucracy.
Henderson: But it was a flip side in the case that Kathie just mentioned. The agency overrode what the legislature told them to do.
Governor Branstad: Well, in that case -- and that case has been decided and frankly all the court did is they knocked out, it was a technical decision on the item veto authority and they basically knocked out all of the appropriations for the entire agency. We have restored that. But the truth of the matter is we don’t have any choice. With federal funding going down dramatically for workforce development we've got to find more innovative ways to deliver those services and we're doing that.
Borg: I want to move on to another subject here and that is the education tinkering, as Mary Masher said. You didn't get much of what you were striving for in this legislative --
Governor Branstad: Well, of all people Mary Masher is the one that fought the effort to do a bold reform of the education system.
Borg: But what are you going to do differently now in order to try to achieve -- you said you aren't going to give up, you said earlier in the program, on other topics. Are you going to give up on education?
Governor Branstad: No, absolutely not.
Borg: What are you going to do differently in order to get what you want?
Governor Branstad: Well, first of all, I understand how complicated and difficult it is and how much resistance there is to change. People are afraid of change, especially the education establishment. But the truth is we used to be best in America in education achievement and now we're middle of the pack. We have got to shake off this entitlement mentality and this idea that everything is just fine. We have got to get serious about setting ambitious standards and having effective assessments aligned with those standards. We've got to have accountability. We've got to do annual assessments. They need to be meaningful. We need to determine what we can do better to improve the achievement of our students. I'm absolutely committed to that. That's why I appointed Jason Glass as Director of Education. That's why we had the Education Summit. That is why the Lieutenant Governor and I went all over the state to do these town hall meetings. The problem --
Borg: Who do you have to change?
Governor Branstad: The Senate. We need to control the Senate.
Borg: But the Senate is controlled by democrats right now.
Governor Branstad: Exactly, but that's going to change in the next election. There are six seats that we intend to pick up. We are going to control the Senate and we're going to pass meaningful reform because the people are with us and we got the record roll call votes --
Borg: Do you have the Teacher's Union with you?
Governor Branstad: No, we don't but the truth is we have treated them fairly and we have included them and worked with them and I love teachers but the union is afraid of change. But they have to recognize that we are not achieving what we should be and we need to change.
Obradovich: Governor, your plan for the next cycle was to take care of the teacher pay issue and that was going to require an outlay of money. If you have an all republican legislature I get the feeling that they're going to be more interested in spending some of that money on tax cuts instead of adding to education spending. How are you going to take care of that tug of war?
Governor Branstad: We're not just going to throw money at it like they did in the past. It's going to be very focused on student achievement and things that are going to improve outcomes and results for students.
Obradovich: Does that mean you're not going to deal with the teacher pay issue?
Governor Branstad: Well, I think teacher pay can be an important part of that. And what you do is you change from a seniority based system which rewards people that have been around forever regardless of their ability to assist them, that rewards good teachers and gives them a chance to move up the ladder and I think that is critically important. You also have to have a system where you can get rid of people that aren't getting the job done, where year after year the assessments show that they are failing the students. Those are the kind of fundamental changes that other states have passed that we need to do in Iowa. I'm committed to doing it. Jason Glass is committed to it. We think it is absolutely essential for Iowa to be competitive and create the kind of education system that is going to give our students the skills they need for the jobs of the future.
Henderson: Let's talk about potholes. The director of the Department of Transportation redirected money within the agency to spend on the state's road system. How long can you put off raising the gas tax?
Governor Branstad: Well, first of all, I say that he did a phenomenal job. Paul Trombino, my new director of Department of Transpiration, has been able to redirect -- well, between administrative savings over $50 million, getting the flood damage in western Iowa from the flood along the Missouri River, getting all the repairs done very timely on that. We've got $128 million more we're spending that is coming here. Now, in the future I think we need to look at a user fee that is on a pay-as-you-go basis to do this. And I think it needs to be done over a period of time. I've always said that. I don't believe it ought to be done with borrowed money because you can only build half as many roads and you have to pay it back with interest.
Henderson: How long are you going to delay raising the user fee?
Governor Branstad: Well, I think next year is the year to do it. Now, already since the legislature adjourned we have seen the price of gas drop significantly. The biggest problem with doing it this year was extremely high price of gas. But I tell you, I saw in Bondurant the other day on the way back from Marshalltown gas at $3.279. So, they've got more -- they have discovered oil now in North Dakota. In fact, Iowa ranks second only to North Dakota in personal income growth last year. That is because of agriculture. But they have got oil and agriculture.
Borg: Governor, we're running out of time. Kathie?
Obradovich: Governor, do you think you can get approval from an all republican legislature to raise the gas tax?
Governor Branstad: Listen, along with comprehensive tax reductions I think we can. I want to add one other thing. I just got an invitation to go to China and Xi Jinping was here in February -- we're going to have a reunion in China with the people that came with him in 1985. He has invited the old friends he met here in '85 and myself and Debbie Durham to come over there. We'll be there the 29th of May through the 5th of June. Very excited about this -- this is where the future is and where we have great opportunity to market our products.
Henderson: Let's talk about the future. We've got a 2012 election looming here. Why is Iowa again a swing state in the presidential election? What is it about Iowa's electorate?
Governor Branstad: Well, I think Iowans are very independent and I think even though Obama carried this state a lot of people are really upset with -- he ran as somebody that was going to unite the country, instead he has been the most divisive President we have ever had. He attacks the very people we need to invest in great jobs. The deficit has gone up $1 trillion every year he has been President. And now he tries to switch the subject to focus on gay marriage when people want fiscal responsibility and jobs. Those are the number one and number two issues in this state and in this country. That is the reason why I think he is going to lose in Iowa even tough he won it last time by a big margin.
Borg: Going back to this election -- one of the things that is going to be on the ballot other than candidates is whether or not to retain David Wiggins who was in on the Supreme Court decision on same-sex marriage. Iowans voted off, voted not to retain three last time. What would you advise David Wiggins this time? He said, I'm going to actively campaign. Do you think that is wise? And how are you going to vote?
Governor Branstad: Well, first of all, I don't think that is -- it's never been done before. Candidates have generally -- when we change the system from electing judges to appointing judges we gave the citizens the right of retention every so many years. And so the citizens have the right to make that decision. I have always taken the position that is a decision to be made by the citizens. I have not tried to influence that. I think they'll have to make their own judgment. If he decides to campaign I think they'll have to decide is that something they like or don't like and his record is something that they're going to have to decide on.
Obradovich: We're running out of time here. I want to ask you about the health of the Republican Party in Iowa. There has been some turmoil because of the influx of new people, in particular Ron Paul supporters. What do you think should be done to make sure that the party is unified?
Governor Branstad: Well, first of all, I embrace and support all new people coming into the party. I think it's good. We've gone from being down 112,000 in registration to being up 8,000. And when these primaries are over for Congress and the legislature I predict we're going to be up 25,000, maybe 30,000 in registration. I believe we need to embrace the new people and the new people need to keep the people that have been working hard that are dedicated, loyal party people involved as well. And I think we do that together and we have a common goal and that is we need to change the direction of this country, we need to restore fiscal responsibility and focus on jobs.
Borg: In fifteen seconds, that's all we have -- Ron Paul supporters taking over the Republican Party, can they affect the change you that you want?
Governor Branstad: I had breakfast with Ron Paul the other day and I think he agrees with me that the new people need to also keep those people that have been loyal over the time involved as well. We need to embrace the new people as well. They bring a lot of youth and energy and I think that is -- I think that is good.
Borg: Thank you. Thank you very much for being with us. And we'll be back next week another edition of Iowa Press, 7:30 Friday night and again at noon on Sunday. I'm Dean Borg. Thanks for joining us today.