State business. Iowa legislators, some newly elected, preparing for a new General Assembly. We're questioning legislative leaders House Speaker Kraig Paulsen and Senator Majority Leader Mike Gronstal on this edition of Iowa Press.
Borg: During the past several months state issues facing Iowa's General Assembly were sometimes lost in the presidential and congressional campaign frenzy in Iowa. Well that is changing. Attention is now turning to Iowa's General Assembly that will be convening a new session in January. Many of the issues, education and tax reform to name a couple, are still waiting in the wings. And the balance of power remains the same -- republicans controlling the House of Representatives by a slimmer margin this time 53-46 and they have a special election to fill that last seat in the weeks ahead. In the Iowa Senate democrats still maintaining a narrow 26-23 advantage and they have their own special election race coming soon. Linn County's Kraig Paulsen is once again Speaker of the Iowa House of Representatives and the Senate democrats again have Mike Gronstal leading their majority and they're back again with us as you have been many times through various sessions. Welcome back to Iowa Press.
Paulsen: Thanks for having us.
Gronstal: Thank you.
Borg: And across the table, two veteran statehouse journalists who will be covering the new session. Jim Lynch writes for the Gazette published in Cedar Rapids and Radio Iowa News Director Kay Henderson.
Henderson: Gentlemen, everyone is talking about this fiscal cliff at the national level. Mr. Paulsen, does this have implications for budget writing at the state level? Do you have to wait for some decisions to be made at the federal level before you can make spending decisions in Des Moines?
Paulsen: Well, the answer to that is kind of a qualified yes in that yes, we need to know the outcome but my hope and my expectation is they will have resolved their decisions that they have to make before we have to do ours just because of the way the timelines fall out. The two pieces of that, of course, are the tax side and the expiration of the tax cuts. That has already been accounted for in the revenue estimates coming into the state. And then there's the sequestration portion which appears, we don't know yet because they've got to make their decision, but it appears right now if that would go through untouched that will be about $50, $60 million lost revenue to the state of Iowa.
Henderson: Mr. Gronstal, how do you plan with this sort of limbo going on with federal aid to the states?
Gronstal: Well, I'd say we're always subject to a certain level of limbo with the federal government. We don't know what they're going to do in next October's budget. We don’t' have a budget really for next year. We've got this fiscal cliff. Those uncertainties are always there. But the size of the problem is fairly easy to identify, kind of worst case scenario. So we can assemble things based kind of a worst case scenario, make adjustments as that maybe turns out not to be the worst case. But I also think we're hopeful that both sides will recognize that the election is over and it's time -- I've always said even numbered years are years that involve elections and both sides end up engaging in partisan activity but that the odd numbered years are supposed to be years that we govern and try and govern well and people of good faith take the results of the election and translate that as best they can into policy for the state. So I'm hopeful that both at the national level and at the state level we'll set aside our little partisan slings and arrows and get to work on doing things that Iowans care about.
Lynch: Senator, what does that worst case scenario look like for Iowa though?
Gronstal: I think the Speaker has identified -- there are pieces of it on the revenue side that we'll lose revenue if federal taxes go up. With federal deductibility state revenues go down because they are able to deduct more federal taxes. So that is an identifiable number. And it is the spending cuts that are implicit in the sequestration. Those are pretty easily identifiable as well. So biggest area will be human services and Medicaid.
Lynch: While the folks at the federal level are trying to reach a grand bargain to avoid that fiscal cliff is it going to take something of a grand bargain here to throw all the property tax relief, the corporate tax relief, income tax, gas tax, earned income tax credit into one pot and come up with something that both parties can live with?
Gronstal: I think there are times when assembling big packages results in a solution that works and there are other times that the more pieces you add into the package the less ability you get to be able to pass it because somebody has an objection to a piece of that package. So I think that remains to be seen. I think it's probably better to not have it all in one package. That's kind of my built in bias that you take the pieces. That doesn't mean that leaders can't agree we're going to do these three pieces but do them as separate pieces. So we'll see how that plays out.
Lynch: Mr. Speaker, do you want a big package or do you want individual items?
Paulsen: I think you put all those pieces on the table and you talk through them and they kind of move at a similar time period. If you're talking about rolling them all into one bill I don't think legislative history says that that's a particularly good way to move big ideas.
Borg: Let's pick one apart then. Property tax reform. Last Condition of the State address Governor Branstad outlined a big comprehensive property tax reform package, a lot of it commercial property tax rollbacks. Not much got accomplished last session. Maybe that is because it was an odd number coming up to an election, Senator Gronstal, but Senator Gronstal says now we're in an odd numbered after the election session. Are you likely -- and I'll ask Senator Gronstal too -- are you likely to do meaningful property tax revisions this session?
Paulsen: Well, I sure hope so. And I can tell you I've surveyed my caucus, I know this is apriority of theirs. We'll have to see. I don't know a whole lot about the Senate campaigns but I can tell you that a good I bet 70 plus members, meaning elected members, incoming members for this January campaigned on property tax relief in the Iowa House. That is different than 2010. I don't remember that being a particularly strong message for the Iowa House democrats in the past. It was this last cycle. So maybe that provides a new opportunity, maybe that sparks something different. But absolutely when you're sitting here with the third highest commercial property taxes in the nations, the 16th highest residential property taxes in the nation I think those are unacceptable positions to be in.
Borg: Senator Gronstal, you were the one just a few minutes ago who said we need to compromise, find common ground and move forward in this session. It was last session that democrats weren't willing to go along with the comprehensive property tax --
Gronstal: Actually it was that the House republicans weren't willing to go along with what we said was a plan that targeted small businesses. I don't want to replay the election. We've been through the election. I think there is a nagging problem with commercial property taxes in this state. I'm hopeful we can get something done about that. The details are important because if you're not careful, if I push your taxes down and I don't do something about the fact that yours are then going to go up that's not much of a solution. So we had very serious concerns about a mechanism that would lower commercial property taxes but result directly in residential property taxes going up.
Borg: Are you saying you're coming back with that same argument again then?
Gronstal: We are not for residential property tax increases, okay. That is kind of one of our leading principles and I think people of good faith -- and I don't really think the republicans like that idea but I think the Governor's proposal in particular was really a direct equation, local residential property taxes would go up under the Governor's original proposal. The House did some things to deal with that, not all of them as effective as I think they should be but --
Henderson: Speaking of the Governor, Mr. Paulsen, has he sort of put a gun to legislator's heads? He and his Department of Economic Development, which goes by a different name now, I can't recall, struck a deal with an Egyptian company that is going to put an Iowa fertilizer plant in southeast Iowa and he promised them millions of dollars in state, direct state aid if the legislature doesn't reduce corporate property taxes. Is he creating an atmosphere in which you have to do something?
Paulsen: I think obviously the legislature will go back and review that plan and I would assume both chambers will address that issue. But if we're going to talk history here I want to be clear on this property tax. It was the House that passed four proposals over to the Senate. Not a single one of them was called up for debate. They sent us one. We called it up for debate. We amended it and sent it back. They refused to debate that. And I think in the end what I understood was I thought we had a deal between the Governor's office, the House and the Senate which is what we sent over to the Senate and that also did not get debated. Any maybe I misunderstood that that wasn't the deal but let's be clear on who moved property tax --
Borg: I'm not going to replay the last session and I don't think we need to. Jim?
Lynch: Will either of you come up with a new proposal? We've just rehashed the last two years. Will there be any new proposals on the table this year or in 2013?
Gronstal: Here's the principle for us -- you've got to guarantee that there will be reimbursement for lost revenues that local governments encounter. If you don't guarantee that then it's a direct property tax increase for homeowners. That is the most important principle we have in this equation. A lot of the rest of it is certainly, we're certainly open to negotiating on but we're not going to negotiate on something that we think results directly in residential property tax increases guaranteed.
Henderson: Do you agree -- Mr. Paulsen, do you agree that that is a tenet that both sides agree on?
Paulsen: It depends on what he means. If he means that they need to have all their projected revenue growth projected or protected then no, probably not because we think local governments have a role in this as well. But if it is protecting them from having to go backwards then I think that's clearly something we can work with and I think the boundaries that House republicans have laid out are also broad in scope and achievable and it needs to be meaningful, it needs to be something that an employer can count on and the homeowners need to be protected which is the proposals we did, we think that happened.
Henderson: Let's talk about another tax, the gas tax. Mr. Gronstal, the makeup of the Senate has changed. Do you think there are enough votes to pass a gas tax increase in the newly constituted Iowa Senate?
Gronstal: I think that's a little difficult to predict at this moment in time. There are how many new members? 38 new members, 37 new members, something like that. So there's a bunch of new people that are going to come to the table and have their voices heard and their districts represented. So we've got to go through that process. But I have always believed that if it is done in a broadly, deeply, bipartisan way then it is certainly possible for the legislature to consider that. So I think that is a real possibility. We've tried to keep that option open in the Senate, tried to keep that option open. I talked with Branstad about it in 2010, in November of 2010 shortly after he was elected. So I think there is some concern about transportation infrastructure in this state. But it's going to have to be done as it has always been done, broadly and deeply in a bipartisan way and I think if people of good faith sit down and say, what can we do on this, I think we can probably find half the votes from the democrats, half the votes from the republicans and probably get that done.
Henderson: Mr. Paulsen, as the legislature's leading republican, what are your thoughts on a gas tax increase?
Paulsen: I don't know the answer to that. This is what I know is I think there is general support among the 150 legislators that horizontal infrastructure needs a continued investment. I don't think that's a problem there. The question always is, how? I know that there were, it is my understanding there were three different races in the state just a month ago where the gas tax came up where the person who supported the gas tax increase, two out of the three lost. I don't know how that translates to the members and how that impacts them. And also very important to my caucus that we're not looking for ways to collect more money from Iowans, we're looking for ways to give them more of the money back that they send to us right now.
Borg: Well, let's get away from taxes then and go into education. We're about halfway through our program and we've talked a lot about raising money. And now education reform was a big part of the Governor's message last time and on the agenda of the legislature. I think everybody agreed there was a lot of tinkering, if we can use that word, with education reform. Some things got done but not the major things including teacher pay. Do you expect, Speaker Paulsen, that we're going to see education, K-12, public school massive changes in this session?
Paulsen: I don't know what you mean by massive but yes, I think from my perspective we do some level of K-12 education reform every single session. I also think the bill we passed while arguably and many would argue that they would have liked to have seen more and we all have our own ideas on what should be done there. I do think the competency based assessments in there, we were really disappointed. I think if those don't prove to be very successful in years down the road -- that has the potential to be a game changer. It was done on a strong bipartisan fashion. Obviously every bill that went to the Governor was bipartisan. But I'm expecting a proposal from the Governor. I'm expecting that House republicans will have a proposal. I expect the Senate democrats will have a proposal.
Henderson: Do you expect teacher pay increases to be part of that proposal?
Paulsen: I am -- the Governor's office has indicated he's going to include that, yes.
Henderson: Do you think teacher pay hikes are doable in the 2013 legislature, Mr. Gronstal?
Gronstal: I certainly think that there's a strong interest in getting that done. I'd also say we want to make sure this is -- we don't want this to be okay, we’re going to get rid of preschool and we're going to take the money we spent on preschool and use that for teacher pay or we're going to do class size reduction -- we don't want to take money away from things we think are being successfully done now and I think the signals we'll get -- I think the Governor since the election has been talking in a way that recognizes we had an election, it's time to move forward, people of good faith sit down and work together. So I think he has been signaling that all of us should be willing to compromise and try and do things that are good for Iowa. I'd also say there was -- we had an education summit a year ago in the summer of '11 and all of the states that came in and talked about being national leaders in education, all of them said it's not a silver bullet, it's not a one year deal where you do something dramatic and then it's over. It's a 20 year effort --
Borg: So you're not apologizing for tinkering last time?
Gronstal: Yeah, I'm saying you've got to start somewhere and you've got to start moving forward and take ideas and see what works and walk away from the pieces that don't work and keep on moving and keep your eye on that ball, not just for one year, but for a decade or two decades.
Lynch: How do you sell this to the public when they're reading news stories about Iowa having the highest graduation rates in the country? People are fairly satisfied that their K-12 schools are adequate or more than adequate. So how do you sell them on the idea you need to make massive change and it's going to cost them, it may cost them more?
Gronstal: I think you talk about making improvements in education. I think you talk about having world class education. So I think that's part of the game is going out and selling this idea to Iowans so that they will go along with it. But some of it may mean we're not quite as dramatic as some people would like us to be and that's because you move along over time.
Lynch: But it looks like things are sailing along pretty smoothly now.
Gronstal: I'd say on that front Iowa does a phenomenal job and it is an important job and it's something other states should be jealous of. We do a phenomenal job of graduating students and the vast, vast majority of them can read and write. We do a great job at that. We may not, we may not be doing enough to have, I mean, today's jobs require more skills than the jobs when I graduated from high school. And so we need to be doing a better job on that front. I think we need to be raising those standards.
Lynch: Mr. Paulsen, are you hearing a clamor for massive education reform?
Paulsen: Clamor? No, probably not. I think people are interested in seeing the bar raised consistently. I think the one area -- if we're spending money for the sake of spending money whether it's on education or anything else does not, it's not an end, it's a means to get somewhere. And I think when you look at growing jobs in the state of Iowa one of the pieces where we have the potential to fall behind if we don't address it and we have addressed it the last several years but we need to do better is in the STEM areas, science, technology, engineering and mathematics. That's a place where our teacher population is getting older and we need to make sure we have enough to backfill them and we need to make sure we have enough kids that are going into those particular professions so that we have the knowledge base there to continue to grow the state's economy.
Gronstal: And I think you make a great point about this is about building our economy. And if there's anything we've all heard for the last several years is that there's a skill shortage in Iowa, that we have people that would like to work but they don't have the skills for the jobs that are out there. Georgetown study released last year said we're going to need to create a half million jobs, over a half million jobs in the next six years and of those half million jobs 60% of them will require more than a high school diploma but less than a four year degree. We've got to -- I think we've got to build a much better system of skill training in this state and that's what I heard on the campaign trail, let's help get Iowans back to work in good jobs.
Borg: That moves us into higher education. Kay?
Henderson: To that end, Mr. Paulsen, what will be the state's commitment to community colleges and Regents institutions? And how much of a commitment will the state make to ensure that students who enroll don't see sizeable increases in their tuition?
Paulsen: Well, I think that in particular with the community colleges I think that they have got some great workforce training programs whether it's certificate programs, whether it's their degree programs. We have increased their funding in years past. I think -- the Governor laid out a goal of creating 200,000 jobs in the state of Iowa. I think who better to train for many of those jobs than the community colleges? It just makes sense to me. The Regents -- they put forth a proposal that would include zero percent tuition growth. It appears to me that's a very thoughtful proposal and we're going to give that due consideration. I really appreciate them actually putting that on the table.
Henderson: In an environment in which everyone is competing for scarce resources, Mr. Gronstal, do you see education getting a higher share, higher education getting a higher share of state support in the coming years?
Gronstal: Yes I do. And I've been out over the last few days visiting community colleges across the state, community colleges along with business people in those communities and students in those communities and we've had some kind of town hall meetings in Sioux City and Mason City and Fort Dodge and Newton and we're doing more of those and it's just phenomenal -- I knocked on 13,000 doors and just about everybody I talked to they talked about getting Iowans back to work. And we created a program last year called GAP where there are degree programs and then there's non-degree programs. I met two guys in Sioux City that went through I think it's a four week program to get a CDL, commercial driver's license. One of them had just gotten hired and he could not have done it without the assistance, the GAP tuition assistance because it's not a program --
Borg: I'm going to interrupt your story just to say what I hear both of you lobbying, you're not lobbyists of course, but really telegraphing that community colleges are going to get increased support in this session?
Gronstal: Let me say a couple of things on that. First of all, I think we need a comprehensive thing. I think part of it is as much as just local adult basic education I think we're the only state in the union that doesn't provide any state support for that. So just the basic reading and writing skills that maybe somebody missed out on that in high school or whatever or had problems, to make sure -- so adult basic education is important, skill training is important, some of them non-degree programs like commercial driver's licenses, then those kind of middle level skills that are certificate programs or bachelor, all the way up to -- I think we need a system that says, I'd like to see Iowa in the next five years be able to say to any business looking at our state or in our state we'll provide the mechanisms to help train whatever it is you need, to train them for new jobs, to train people that are in existing jobs --
Borg: Let me just ask Speaker Paulsen and we've got to go. Yes or no to what he just said?
Paulsen: Actually I didn't hear every word that he said, which occasionally happens when we're together. But anyway, I think back to your original question yeah, I think you're going to see additional funding for the community colleges. I think higher education and specifically to your question with regard to community colleges I think they're part of making this a more rigorous education state and some of the programs that the Senator was talking about and I also think that higher education and, again, the community colleges specifically are a part of making K-12, in particular that junior, senior year more rigorous.
Lynch: Speaker Paulsen, a year ago the Senate passed online gaming legislation and I'm wondering if this is the year with all the demand for resources you might look at that as a source of revenue, if the House will take up that bill and pass it and send it on to the Governor?
Paulsen: House republicans aren't looking for a way to raise revenue and I have no idea whether that bill has the support or not.
Henderson: Have the stakes changed in the Iowa Senate? Would the newly constituted Iowa Senate embrace online gaming?
Gronstal: First of all, let's be clear. Online gaming is already going on in the state of Iowa, unregulated, nobody paying any attention to it, nobody putting up any kind of security. Online gaming is already going on in this state. And so the proposals that have been out there have been about creating a legal mechanism so we can make sure that kids aren't engaged in this, so that we can make sure that it's safe and secure, do it through the existing gaming establishments in the state of Iowa and so that the state would get the same revenue we get off of the existing operations. So that has been the proposal. It hasn't been to start online gaming. Online gaming has been going on for a heck of a long time in Iowa and this is about coming up with a mechanism to regulate it and have it not kind of unfairly compete with the existing operations in Iowa.
Lynch: When you put it that way are House republicans in favor of protecting Iowans from unscrupulous online gaming?
Paulsen: Well, obviously we're in favor of that but I don't know whether the bill has support or not. It's not anything we've talked about.
Henderson: The director of the Department of Natural Resources this past week outlined a proposal for hiring eleven new inspectors that would help regulate large livestock confinement facilities in the state. Mr. Gronstal, will legislators forward more money to the department to beef up inspections so that the Environmental Protection Agency, the feds won't come in and do these things?
Gronstal: Well, obviously the threat of the feds coming in is a pretty real threat and pretty concerning to Iowans. They don't want to have to go to Kansas City or to Washington, D.C. to get answers to their questions about what they can appropriately do. So I think we're very interested in taking a look at that. I'd also say the new director, Chuck Gipp, is somebody many legislators know and he'll be a good guy to be able to communicate to legislators why some of these things are important.
Henderson: Mr. Paulsen, will the House embrace that proposal?
Paulsen: I listened to what he said this time and actually I don't disagree with any of that. I think that's part of the budget process, we'll work through it.
Henderson: The Secretary of State has proposed signature verification for absentee ballots. Mr. Gronstal, is that something you think should be done?
Gronstal: I'm well confident that my ballot would have been thrown out. That's the challenge with that legislation -- anybody whose signature changes over time. I wish the Secretary of State was working on things that would help more Iowans vote rather than discourage more Iowans to vote. In particular that proposal would make it exceedingly difficult for senior citizens.
Borg: Speaker Paulsen, there's some question about where Iowa stands on the health insurance exchange being set up under the Obama Affordable Health Care Act. Where will the legislature weigh in on whether or not it's a state run exchange, a federal exchange or a cooperative shared venture?
Paulsen: Well, what the legislature has done so far is provide the executive branch some authority to do what, for lack of a better explanation we'll call them mini exchange right now. So we have some authority there. We're waiting for a proposal to come back from the insurance commissioner and through the Governor, however they're going to do that, proposal to come to us from the executive branch and we'll take a look at that. It cuts a lot of different directions.
Henderson: It sounds like a wait and see answer there. I don't want a wait and see answer here. Mr. Gronstal, will you run for governor in 2014?
Gronstal: I'm going to work this session on getting as many Iowans back to work as I can. I'm going to try and help businesses in this state get the skilled workers they need so that we can grow Iowa's economy. That's what I'm going to focus on. That's what we should focus on in odd numbered years.
Henderson: So that was a yes, no or maybe?
Gronstal: In even numbered years we'll have that discussion.
Henderson: Mr. Paulsen, what do you want to do in 2014?
Paulsen: In 2014? I'll make that decision at some point in time in the future.
Borg: We'll have you back. We're out of time right now. We'll be back with another edition of Iowa Press next weekend at the usual times, 7:30 Friday night and a second chance to see the show Sunday at noon. I'm Dean Borg. Thanks for joining us today.