Middle ground. Iowa's politically divided general assembly compromises on landmark legislation. We're examining the results with Democratic Senate Leader Mike Gronstal and Republican House Speaker Kraig Paulsen. Followed by a reporter's roundtable discussion. It's all on this edition of "Iowa Press."
Borg: Republicans and democrats are praising the just adjourned legislative session after going nearly three weeks beyond the 110-day session. The democratically controlled senate and the Republican House majority compromised on three key issues. Revising property taxes, changing public schools and providing help for those who can't otherwise afford healthcare. But there's an old saying, the devil is in the details and without carrying that devil metaphor any further, we are seeking inside now as to just what compromises mean for Iowans and how those compromises might be affecting the political prospects of those who will be seeking re-election. Hiawatha Republican Kraig Paulsen represents Linn County and is the speaker of the Iowa House of Representatives. Council Bluffs Democrat Mike Gronstal leads the Iowa Senate Majority Democrats. Welcome back to "Iowa Press." I won't go into that devil metaphor, I promise.
Gronstal: We're both -- we point fingers at each other.
Borg: Welcome back. Across the table, James Lynch who covers state government for the Gazette published in Cedar Rapids and Radio Iowa News Director Kay Henderson who covers the Statehouse.
Henderson: Mr. Paulsen, if I'm an Iowa taxpayer will I notice a difference in my taxes next year given the work product of the 2013 session?
Paulsen: Well, I think in particular you are going to notice one thing. That is when you file your income taxes there's going to be a tax credit on there. It's estimated to be at about $59 per taxpayer. So you'll see that. You know, by way of comparison that's roughly $20 more. Actually if you combine those, it would be $118 for a married couple filing together. That's $80 more than their regular exemption and $100 more than the child exemption. So you are going to see that. The other place we were able to fully fund the Homestead tax credit. My hope is they'll be able to see that and then as the property tax bill phases in over time, I think they are going to see some significant impact there as well. Of course we don't control local levy rates but the one thing we do know is they are going to see something on the Iowa income tax form.
Henderson: Mr. Gronstal, is this significant tax relief or incremental tax relief?
Gronstal: I'd say it is maybe half way between significant and incremental. It is the biggest tax cut in the history of the state to my knowledge. So, it is significant in that respect but are people going to, you know, file their income taxes and go, you know, wow, it's time to buy a new boat? No, probably not. So in that respect it's moderate, but we also have -- we built in an earned income tax credit for the working poor in the state of Iowa. Targeted tax cuts for commercial property for the state of Iowa. Commercial property taxes have been identified as a problem for the last 35 years and this legislature is the first one in 35 years that was actually able to do something about it and then there are elements that all three entities got. The governor got across the board reduction in the value; we created small business tax credit on commercial property. We have apartment taxes that are now going to match residential over time.
Henderson: Right. You created the multi-residential class of property and it will be taxed the same way that a home is taxed. Cities complain about that.
Gronstal: I understand cities complain about that and there's some legitimacy to their concerns about that. That said for the first two years we financed what that reduction with state dollars. In the first two years. Then in the next eight years, it phases out over time. When we talked with cities about this, they said let us digest these changes in small bites and we'll be age to do it. If you do it in one fell swoop it's hard for us to do. But I also say apartment taxes are already disappearing. I don't think there's a single building permit for market rate rental apartments in the city of Des Moines in the last two or three years. So they're able to escape by either building apartment buildings as condos or converting existing apartment buildings to condos or creating cooperatives. So they're able to escape the property tax now and that was migrating away from them.
Borg: Well, amplifying Kay's question just so I understand it, are you saying that people who own say condominiums creating this new class of property tax you say will be taxed now as residential rather than commercial property? That will be a tax break. People who own condominiums are going to notice a tax decrease?
Gronstal: No, condominiums already get it. If you build a brand new apartment building today, all you have to do to get the residential rate instead of commercial rate, commercial rate 100% of value and residential rate round numbers 50%. All you have to do is build it as condos. It is the same building, it is the same walls, the same electricity; it's just the ownership structure. And then you as the apartment owner, you now own all of the units in the condominiums and you rent them out individually. It's merely a structural change. That's what cities were losing over time. When we first talked of getting rid of the tax on apartments, making it match residential, when we first talked about that five or six years ago it was over $100 million to do it. This year it's down to$79 million to do it. There are cities and local governments that are already losing those revenues as those entities convert to a condo or convert to a cooperative or the new ones being built to replace old ones are not being built as apartment buildings. So it's a loss that the marketplace was already taking away from local government.
Lynch: Both of you referred to the session as a landmark session and as Dean mentioned you made some progress on healthcare, education reform and tax reform did you peak too soon? Are you going to be able to top that next year so you'll have something to take to the voters on the campaign trail?
Paulsen: Absolutely we didn't peak too soon. I think we took tough issues and in a serious fashion. And I said this at both the leadership level and at the caucus level and in particular the two majority caucuses, but at that level the decision was made. We're going to focus on good public policy on behalf of Iowans and see if we can get this done. When we didn't get achievement we would go back and we'd take another swing and hammer at the rock and we finally got it figured out to something where it met the objectives and the principles of House Republican, met the objectives and principles of the Democrats and we put something on the governor's desk and I think he is going to be pretty excited when he sign some of those things.
Gronstal: The voters last fall didn't elect Republicans and Democrats to the legislature, they elected policy makers and they said go do a job. We don't necessarily like the balance that they created. We don't necessarily enjoy that. I have said before we're all there with partners not of our open choosing. If it was our own choice we'd have a Democratic House and Democratic Governor, but the voters said -- they didn't say both continue to play partisan politics until you get the majority in all --. They said go govern. That's what we did.
Borg: Do you consider it an achievement that the legislature managed to adjourn without increasing the gas tax that many say is needed to improve our roads? Was that one of the achievements that we're going to be able to postpone a gas tax increase?
Paulsen: Well, I'm sure in some people's mind it was. Some people it wasn't. The key is I think we sat down and we're able to hammer through tough issues and make decisions that are moving the state forward. Unquestionably, we'll be back. We'll look at the -- Reform Bill again and go do we need to make an adjustment here or there? There are pieces that lie under those. For example, the investment we made in water quality and nutrient management, the skilled work initiative - the skilled worker and job initiative, they changed the name on me right at the end of session, but those are great things and would be capstones of a normal legislative session and this session they are actually one level below. I mean, I think that is remarkable. I also think there was also something in this entire general assembly where there were people east, looking to Washington D.C. and going, you know what? That's not working out there. We don't want to be them like. I think that once again pushed us back into the room together to figure the differences out.
Lynch: So next session just about coming back and tweaking a few things or are there some more bold initiatives to tackle, Mr. Gronstal?
Gronstal: Well, I certainly think we have taken a good step this year on a skilled work force here in the state of Iowa. Probably the best ever for upgrading Iowa workers' skills. I think we have to continue to keep our focus on growing Iowa's economy. We're blessed with a reasonably successful economy compared to most of the other states in the union. We have a great opportunity to capitalize on that strength. Some continued strategic investments and skilled workforce and a host of other issues as well.
Henderson: Mr. Paulsen, on the last day of the session, both the House and the Senate approved policy language that gives the governor essentially veto authority over taxpayer funded abortions for Medicaid patients in cases of rape and incest, to save the life of the mother or in cases of fetal deformity. Do you expect the governor to veto the abortions?
Paulsen: That's something he has to work through. It's not vetoing the abortions as you say. It's about whether or not the state will pay for those, you know, abortions. So basically it has to do with taxpayer funded abortions and that's something that, you know, the governors have to work through.
Henderson: Did he tell you he accepted that?
Paulsen: I have not spoken to the governor specifically on this question.
Henderson: If he signs that into law, Mr. Gronstal, do you expect there to be that legal challenge?
Gronstal: I think that's hard to tell. But let's repeat what the speaker just said. This doesn't change a woman's access to reproductive healthcare services. It's question after whether after those services are delivered whether an entity that provided them will be paid for that. There were 22 of these abortions last year in the state of Iowa. 15 of them for significant fetal abnormality. I believe five for rape and incest and two to preserve the life of the mother. In all of those cases and those continued to be legal under this standard. The question is whether the entities that provide those services will in fact get reimbursed.
Lynch: Part of one of the landmarks that you talked about was healthcare expansion. And the plan you approved it depended on a federal waiver to include the wellness and prevention benchmarks that the governor wanted in the plan. Medicaid expansion some call it or expanding - I think some people call it is the Iowa Health and Wellness Plan. How confident are you that you'll get a federal waiver so you can implement that or do we have to come back in a special session to address this before the year is out?
Gronstal: I think it's highly likely many of the elements of the plan will be approved, the waiver will be granted. There may be a few narrow exceptions and I wouldn't even project to say what those might be. But this plan is similar to the Arkansas plan. This is a plan that credibly meets most of the federal challenges. By the way wasn't just the governor that wanted cost saving mechanisms and wellness initiatives built into this. I think both the House and the Senate wanted those as well. And I think in all of our plans, we had those elements built into our plan. So that wasn't really the subject of dispute. I got -- I've got to say, Amanda Reagan and Linda Upmeyer did yeoman's work on this. An issue that could have driven us apart and we could have gotten stuck in the partisanship of it, but those two individuals sat down and worked together and really helped move us forward on this issue.
Henderson: And for viewers that may not know Linda Upmeyer is the Republican Leader in the House and Amanda Reagan is a Democratic Legislator from the Mason City area. Mr. Speaker, there's a case that's captured the public's heart here in Iowa. A young woman from Dayton was kidnapped by a gentleman who had been released early on a 41-yearsentence. Do you anticipate that legislators will examine mandatory sentencing for more than first degree kidnapping, but other degrees of kidnapping that was involved in this particular case?
Paulsen: There was in this kind of body of law in general dealing with children, protecting children that was something that got some discussion this year. I think, you know, my take away was it was preliminary discussion. Make sure we understand the issue and then deal with something next year. I fully expect to have a conversation on some of the matters next year.
Henderson: Mr. Gronstal, do you expect the senators to --
Gronstal: Absolutely. I think we'll have very serious discussions about how to deal with the heinous crimes and how-to deal with these kind of individuals, and a better job of assessing risk. You know, we have a system in place that if the courts can deem somebody a sexually violent predator; we can keep them in after they have discharged their sentence. So you got to ask the question, what did we miss here and why did we miss it?
Paulsen: And half a dozen years or so ago or so and he was convicted under the former laws. I'm not so sure he would have got out under the new law as I understand the fact. It is kind of the superficial knowledge of the facts right now, but my understanding is that the laws we passed half a dozen years ago might have addressed this exact situation.
Borg: Senator Gronstal the veteran's home of Marshalltown, late in the session got a little interest. I'm wondering if that interest will continue on the basis of legislative oversight. There had been some allegations of administrative bullying up there and Governor Branstad put a chief operating officer up there. A retired Brigadier Retired General Jodi Tymeson, a former legislator as well. Do you think that will take care of the undercurrent here? Or in the legislature, maintaining interest in that?
Gronstal: I think the legislature is still considering their options at this point in time. We have heard -- we've heard stories -- listen, I don't have evidence. We have heard stories that some of the residents have been involuntarily discharged which draws a serious question. A veteran that is thrown out of the veteran's home. I don't know how many that might be or even whether that's true. But I think -- but I think the issue isn't -- the issue for me is what kind of care are veterans getting and I think we'll continue to look at this. And consider ways at getting to the bottom of this.
Borg: Speaker Paulsen, is the issue passed or legislative interest continuing?
Paulsen: No, I think we'll continue to monitor this situation.
Lynch: Speaker Paulsen, you remarked earlier that the legislature wasn't like Washington, that you're able to work together and get things done. As soon as the session was over you said you wanted to go to Washington.
Paulsen: I didn't quite say that.
Lynch: But you're thinking about it?
Paulsen: I am.
Lynch: Why would you want to be part of Congress?
Paulsen: Congressman Braley made the announcement he'll run for the United States Senate. As soon as that happened I started having people, both of you in fact asked me what my intentions were, and I said Iowans expect me and my caucus has expected me to stay focused on the session and get good work done. That's what I stayed focused on. The session is now over. As I indicated several months ago once it was over, you know I'd go through the review process and that is what I am doing now and absolutely I'm seriously considering running for Iowa's First Congressional District.
Henderson: Senator Gronstal, you in the past considered running for governor. Might you run against Terry Branstad as he seeks a sixth unprecedented term as governor?
Gronstal: I'm not sure how to answer the question. I'm in the same boat as Speaker Paulsen. I said until the session is over I am not even going to think about this. I am going to do my job. I don't want everybody going, oh, he's doing this because he's running for governor. He's doing that because he's running --I said I'll finish this session, get done with this session and then seriously consider it.
Henderson: How long is your serious consideration going to be?
Gronstal: I will make a decision before the end of the summer.
Borg: And on next session what's on the agenda for the next session? Speaker Paulsen?
Paulsen: First of all, that has to develop. The members are now gone back home. They're going to have interactions with their constituents whether in a town hall meeting or a county fair. That will conversation will take place. Then next fall we'll start to assemble the caucus again.
Borg: I know the process. What do you think might be?
Paulsen: I think the one thing my caucus is interested in having come back is a conversation about the income taxes. That's something that has been part of the discussion for several years now. We did make a couple changes with the earned income tax credit and the taxpayer trust fund. But I think they'd like a conversation about making it simpler and bringing the rates down.
Borg: I saw you shake your head yes on income tax, Senator Gronstal.
Gronstal: That's what I expected him to say and I would tell you from my perspective we still see real challenges interims of workers in the state of Iowa and the skills they have for the 21st century jobs. We think that is a key element. We took major steps this year and we think that is good, but we think we have to come back to that next year. These are not one year deals. We have 300,000 workers in the state of Iowa who have no high school diploma or no GED. Those folks can't get their hand on the first rung of the economic ladder. If we don't help them figure out how to get past that and then get additional skills we will never grow the economy.
Borg: You are saying there's more work ahead?
Gronstal: That is correct.
Borg: Thank you both for being with us today. In just a moment, we'll be continuing "Iowa Press" with the reporter's roundtable. Continuing "Iowa Press," we're convening now the reporter's round table including State House Reporter Catherine Lucey. You just heard the two leaders and Iowa Legislature. The governor had a key role of course in these compromises. Does that mean all the legislation going now on to his desk might be a no idea that whether or not it might be vetoed?
Lucey: I think it is probably too quick to say it's all a done deal. Although I think the big pieces are largely agreed upon. One thing that was interesting, there were a lot of spending measures that came at the last minute, and there was a bill that included dumping quite a large amount of money into the police pension fund to try and shore it up. What you're seeing in other states typically when folks want to spend money on pensions, they want to add reforms to how that plan is as ministered. So that might be somewhere to look, if the governor wants changes to that or won't go along with that piece of a plan.
Borg: Adding reforms, does that mean that that was a part of the legislation, Jim?
Lynch: There weren't any reforms in that legislation. It was just the appropriation to bring that peace officer's retirement fund up to 80% of its -- what it is expected to pay out and that brings it up to the same level I believe as IPERS. So it was just shoring it up say making it safer and more secure.
Henderson: One of the things about this whole constellation of things that they have agreed to is that the governor has signaled he will sign education reform with some fanfare on Monday. It strikes me that kids may not notice much in the classroom as a result of this and teachers may not notice much if their school opts out. If they're given that permission to do so; their district may choose not to participate in the teacher improvement plan.
Borg: Who is going to notice?
Henderson: I mean they didn't choose to embrace year-long schools. They also gave far more liberty to home schoolers in Iowa. So more people may choose to teach their children in their own home or send them over to the neighbor's house because of the legislation also allows a home schooling parent to teach four unrelated children. So there may be significant changes as a result of this legislation outside of the public school as opposed to inside the public school.
Lucey: All that said, I agree it's not clear how it will go. I still think it's interesting that this is a state with republican governor who has pushed for and has gotten more money for public education and I think that is interesting when you look at Iowa compared to other states.
Lynch: One of the arguments that he makes is, schools can opt in or opt out. If they opt in, they get the money. If they don't voluntarily participate in the ed reform, they don't get the money. So there was a carrot out there.
Borg: What is this going to do, Kay, for the governor's maybe plans to run for re-election?
Henderson: Oh don't think there maybe. I think they're pretty certain he'll run for re-election and he can say to the voters and say I had the three goals and they were all met. I wanted to reform commercial property taxes and I wanted to make sure that if we extended health insurance to more uninsured low income Iowans there were some requirements they live a healthier lifestyle. He can say I accomplished all those goals. I'm not sure voters will remember though. We have short attention spans.
Borg: Well, speaking about the next gubernatorial race, we just heard Senator Gronstal sort of leave the door open there, Catherine.
Lucey: Yes, I mean it is certainly a possibility for him. He could claim a very successful session as can Speaker Paulsen if he decides to run for reelection. I think they can take victory laps around Iowa if they wanted to.
Borg: That governor's race is beginning to taking shape. Jack Hatch this past week told us - reminded us again he is thinking about it.
Lynch: Yes, Des Moines Senator Jack Hatch who is one of the more liberal members of the senate caucus toured the state to say that he's thinking about it and in a few months will make a decision one way or the other. He's exploring how much support he has out there and whether or not he can raise the money he expects it will take.
Henderson: And the fellow from Cedar Rapids who you cover intimately, Tyler Olson, a state representative, has also said he's seriously considering it as Chairman of the Iowa Democratic Party. He went around the state this week and chatted up folks about the accomplishments of the legislative session. So I think he's a serious contender if one of the bigger names folks don't sort of ante up and say I'm going to run. People like Tom Vilsack.
Borg: Catherine just in about a minute and a half we have left here, you have written a story just recently about women in politics. The next election do you see anything changing in women being elected to higher offices than just where they are right now?
Lucey: It is interesting, isn't it? Iowa is one of the two states that has never sent a woman to congress or elected a woman governor. The other one being Mississippi. The question now is will the 2014 cycle, will it change? A couple of high profile names have dropped out. Kim Reynolds the Lieutenant Governor notably is not going to run for senate, but there are still women talking about it. One example is State Senator Joni Ernst is talking about a bid for senate. There are some women up in the first congressional district where Jim is. So there certainly are some possibilities, but I would say it's pretty unclear if anyone can go the distance.
Borg: And Jim, in the first district, there are some on the democratic side.
Lynch: Right. Cedar Rapids Councilwoman Monica Vernon has indicated she is thinking about it. Former state Senator Swati Dandekar from Marion now on the Iowa Utilities Board is thinking about it. So there's a couple of possibilities there. Neither one has formally announced but I think it will be soon if they get in.
Borg: Well, we'll look at that in the weeks ahead. We're out of time. Thank you for your insights. We'll be back next week with another edition of "Iowa Press." We'll be talking with Governor Terry Branstad as our guest. Iowa Press the usual times next week 7:30 Friday night and a second chance to see the show Sunday at noon. I'm Dean Borg. Thanks for joining us today.