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Iowa Press Governor Debate

posted on July 28, 2014

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State Fair showdown. Republican Governor Terry Branstad seeking a sixth term as Iowa's chief executive. Democratic state lawmaker Jack Hatch challenging the legacy. Meeting at the iconic Iowa State Fair in a special one hour debate edition of Iowa Press. 

Borg: Welcome to the Penningroth Media Center inside the Iowa State Fairgrounds cattle barn for the first debate of Iowa’s 2014 gubernatorial campaign. I'm Dean Borg. We are outside our usual studio setting. Iowa Press now among the sights and smells of the Iowa State Fair and more importantly, among the people of Iowa and the two men campaigning to be their governor. Republican nominee, Terry Branstad, first elected Governor in 1982, serving four consecutive terms, and ten years later re-elected, now seeking a sixth term. Democratic nominee, State Senator Jack Hatch, serving in the Iowa legislature and as a Des Moines real estate developer. Gentlemen, welcome to this special Iowa State Fair edition of Iowa Press.

Branstad: Thank you, Dean. Good to be with you.

Borg: And I’m certain that both of you agree that the informality of our setting that you can see here in the cattle barn, even our dress, for that matter, in no way diminishes the issues and the ideas about Iowa's future we will be debating here today. You are both familiar with our traditional format but we’re in a different setting here at the State Fairgrounds with a live audience in addition to our television viewers. As they’re watching and listening, they have agreed not to cheer during this one hour debate. And much like our regular Iowa Press format there are no preset rules, opening or closing statements, just ideas and issues. I will be moderating and questions will be coming from political journalists, Radio Iowa News Director Kay Henderson, Des Moines Register Political Columnist Kathie Obradovich, and the Gazette's James Lynch. Kay?

Henderson: Governor, first question, what do you plan to do in the next four years that you haven't accomplished in the last 20? For example, do you plan to follow through on your 1994 campaign promise to reinstitute the death penalty in Iowa?

Branstad: Well, for one thing, since you asked what we want to do the next four years. As you know, this year we tried to pass a broadband bill to connect every Iowan. I want to expand that to connect every acre because it is so important to agriculture. Right now we have a gulf between what happens in our cities. They have high speed Internet, many of the rural areas don't. I want to not only connect every Iowan, I want to connect farmers because technology is so important to the future of agriculture. So these agriculture machines can communicate with each other and put us in a competitive position for the world. So tonight, I'm announcing our new initiative to connect every acre. We'll put the details out on our website. I'm very excited about this. It expands on the bill we pushed for this year, which unfortunately died in the legislature but we’ll be working for that and also for the anti-bullying bill that passed both houses but unfortunately the Senate leaders didn’t take it up in the last few days of the session. Those will be a couple of the new things focusing on next year building on the success we have had getting the state's financial house in order, reducing property taxes and reforming education.

Henderson: What about the death penalty?


Branstad: I don't think there's the support in the Iowa legislature for that. I believe on focusing on things that have a realistic chance of passing.

Henderson: Senator Hatch, our old friend David Yepsen used to say that Iowans like to keep the help around. Look at Senator Grassley, Senator Harkin. Polls show that people generally approve of the job Terry Branstad has done. Iowans are happy with the economy. What do they have wrong?

Hatch: Well, the economy is going well. It’s going well nationally too. So we’re very proud of the work that Iowans are doing. But what is happening is that there is stale leadership in the Statehouse. We have had – we’ve got to focus more on accountability, responsibility and transparency. With that administration that has created, on his own, the most scandal-ridden administration in the history of this state. Whether or not it’s secret settlements, hush money, it’s a no hire list that they have been creating, this is something that is not in the Iowa value tradition. So, I think people feel that we need a fresh start. And the fresh start to me means that we’re going to focus on education. We want to be a world leader in education. Being the best in Iowa doesn’t go far enough. We also want to focus on jobs where we have jobs that are created in small towns and small neighborhoods in this state, not giving big tax credits to big corporations that create very few jobs. And lastly, what we want to do is also focus on our roads and bridges. They’re crumbling and we have to get to the content of this state that rural Iowa needs help and we can’t hide from the political winds anymore, we need to be able to repair those bridges and those roads for farmers and for families.

Borg: Senator Hatch, we’re going to be getting to those issues I’m sure. But, Governor Branstad, I heard two contrasting descriptive adjectives there. One was stale and the other was fresh. You’re stale? You couldn’t get broadband passed. You couldn’t get bullying passed?

Branstad: Well, we got a lot done this last session of the legislature with a split legislature. Unlike in the United States Congress where the President controls the Senate and he can’t get anything done and it’s all accusations. I instead work with both parties. We got this year –

Borg: But what is going to be different?

Branstad: Well, the difference is this year we passed Home Base Iowa to bring people that come out of the military back to Iowa. That was passed by overwhelming majority. All these wild accusations he makes, Iowans know better. They know me well. I go to every county every year. They know that they’re not true. These are just crazy accusations made by somebody who has never really represented the whole state of Iowa, just represents a safe democratic district here in the largest city of this state.

Obradovich: Senator Hatch, let me ask you, you are up against a man who has never lost an election, who has broken fundraising records in this campaign and who leads you by 8 to 15 points, depending on which polls you look at in July. So, why should Iowans invest in your campaign and believe that you have a chance to win?

Hatch: Well, I think the important difference in this campaign is leadership. We have been campaigning throughout this state. I may be from Des Moines but I have lived in Iowa my whole adult life and this state is important to me. And when you find out what is going on today when our limited agenda by the Governor this last year is not reaching to every corner of the state and we find out that there needs to be new leadership and there needs to be a fresh start in education and job development and in taking care of rural Iowa, quite frankly. I think people feel that the governor has been there too long, that the governor is not in charge of his administration. That he didn't know about all these scandals that are coming on. It’s nothing that I’m making up. I'm not the one that has secret settlements with fired employees. I'm not the one that had my Director of Administrative Services have hush money to the employees. I'm not the one that had the no hire list, which Governor Branstad created in his second

term. These are not things made up. These are now real. And he's been told by the courts twice that his actions have been unconstitutional. When you have a governor who acts unconstitutionally, he's acting above the law, he’s acting without the respect of the legislature. People realize they want something fresh and new.

Obradovich: Governor Branstad, Senator Hatch says you've been in office too long. But when I talk to people around Iowa, the two questions they ask me relate to whether you have another whole four years in you.

Branstad: I do. I have only just begun.

Obradovich: Let me ask the question. They want to know if you're healthy enough to serve four more years.

Branstad: You bet.

Obradovich: You might decide to leave early to give your lieutenant governor a running start if she should run for governor. Can you pledge today that if you’re elected you will serve four more years?

Branstad: I'm a life-long Iowan. I grew up on a farm. I love this state. I have the energy. I signed that Home Base Iowa bill in my uniform at Camp Dodge in the Gold Star Museum. I have the energy and enthusiasm to serve the state. I’ve got a great Lieutenant Governor, Kim Reynolds, she's my partner and we’re both very competitive and we work very hard and I'm committed to serve the entire term and do everything I can -- . We have only just begun. We have a lot more to accomplish. Iowans know me well enough because I go to every county that these crazy accusations are not true. When I find a problem, when I discover a problem, I deal with it, the same thing with this question about confidentiality clauses. As soon as I found out about it, I told the staff, I want to find out how many of them and where they were done and I want to stop it and I signed an executive order to do it. I asked the legislature to eliminate the confidentiality provisions for the state employee actions. And the House passed it. For some reason the Senate democrats wouldn't take that up and open up those records to the public. Those personnel records should be available to the taxpayers that pay for these state employees.

Borg: James?

Hatch: If I could just add to that.

Borg: Jack, go ahead.

Hatch: The question goes to leadership. The governor has taken over 300 merit employees, these are employees that are qualified and are hired on their qualification, and moved it over to political appointments. He's done that. He's fired those people.

They've come back and had settlements. What he did just last week with the administrative law judge, took a judge that was supposed to be hired from merit positions and moved it over like a political appointee, meaning he can be fired for any reason. And now you have the judiciary responsibility in the executive branch that now can be controlled from the governor's office. That's unacceptable. And it's about leadership. Not whether or not he found it out earlier or not, but whether or not he should have allowed it to begin with.

Branstad: I want the people to know the facts. The facts are that the Department of Administrative Services recommended these changes in positions. They were all approved by the legislative council. Plus just yesterday, the attorney general said that the reassignment of this position to the new at-will position was

correct, and that was a correct interpretation. That's the attorney general of

your party that just said that yesterday in a -- in an e-mail to a reporter from the Des Moines Register. So the facts are the facts. And you might want to create all these kinds of accusations, but the truth is that all of this was done appropriately. It was approved by the legislative council and the attorney general has said this particular assignment is correct.

Borg: I think you have made your point, governor. James Lynch.

Lynch: You both talked about your vision for Iowa and multiple priorities. The one single most important problem to deal with as governor, Senator Hatch?

Hatch: I think there are several. We talk about the integrity of state government, we have to talk about how we perform as a partner in creating an environment and an economy that works for everybody. So the first thing I would be looking at and I would be doing would be raising the minimum wage from $7.25 to $10.10 an hour.

Secondly, I would reverse the strategy –

Lynch: Just one problem to address.

Hatch: The problem that addresses is bringing low income people up to a point where they can get out of poverty. We have 216,000 Iowans living on the minimum wage. By bringing it up to $10.10, you create thousands of new opportunities for people, and they no longer have to depend on public assistance. Right now a woman working on minimum wage with two children earns $4,000 below poverty. We're going to correct that. That's what Iowa expects.

Lynch: Governor, one problem.


Well, the federal government is the biggest problem we have facing our state and country. A good example of that, one year ago at the Iowa State Fair, the lieutenant governor and I invited Gina McCarthy, the new director of -- the new director of the EPA to come here. And we were really pleased because she said I support renewable fuel and I want to improve the relations with farmers.

And look what's happened since that time. That time, the price of corn was

over $6 a bushel, farmers were making money. And what did she do? Instead the EPA recommended -- for the first time in history -- a reduction in the renewable fuel

standard. We have gotten bipartisan support, democrats and republicans throughout the Midwest, including every Senator and every Representative in the Iowa legislature saying we to want to reverse that, we want to restore that, the robust renewable fuel standards and it still hasn't been done. And now the price of corn in this agricultural state where we produce more corn than anyone else, it's way below the cost of production.

It's going to drive the income for Iowa farmers down to a loss. This is a huge threat to our state.

Borg: But you can't get rid of the federal government.

Branstad: We need to change the leadership in Washington. We need to change the leadership

in Washington. We need to have an EPA administrator who promised me three times a decision would be made before the end of June. And I could tell you even Congressman Braley and all the democrats in our congressional delegation support my position, believe we need to have the robust renewable fuel standard. This administration has refused to do it. That's a threat to Iowa's economy and to the growth of our state. We have been successful. But agriculture has helped lead the growth in Iowa's economy, and now dramatically hurt because of what the EPA is doing to us.

Henderson: Senator Hatch, governor Branstad brought up the subject of broadband. Decades ago, politicians decided that electricity and telephone service were worthy of

regulation. Is it time for government to step in and regulate broadband?

Hatch: One of the problems that the legislature and the governor's office ran into in trying to establish broadband for the state and it's a proposal that both republicans and democrats in the Senate had proposed earlier as well. There was some agreement that we needed to do something. The special interests got involved and wanted to prevent it from happening. So the difference between the house and Senate version, first, it was terribly minimized. And it was the decision of the Senate to start again. So starting again, next year we will have a fresh start, and whether or not we will have a minimum approach. We're going to work with the industry and force the industry to understand that every -- every town, every home needs to

be connected in this state. That's a proposal that has been batted around. It's going to be a commitment that I make. And what we want to do is if the industry doesn't support it, if they don't work for it, if they try to prevent it, the big guys try to stop the little guys from getting broadband around the state, take a look at what we have to do to regulate the industry.

Branstad: We need to go beyond every acre. Because it's important, not only for rural Iowa, it's important for the farmers.

Henderson: How do you do that?

Branstad: I have a proposal. We’re putting it out tonight. This is a comprehensive proposal to make it available to every citizen in Iowa, small and large town, and the farmers which is critical for the competitiveness in the world economy.

Henderson: Are you having the state government do that? Are you having the private sector do that or a quasi – some sort of --

Branstad: It's a combination of things. It’s a complicated issue. I am committed. It will be a top priority just as Home Base Iowa was a priority this year, and property tax relief and education reform were. I am tenacious enough to work it get it done.

Obradovich: Governor, rural schools in Iowa continue to struggle with declining enrollment, and if they consolidate, there's issues that are part of that, including transportation issues. You started in the education reform to talk about distance learning.

And as you expand broadband that may be technologically possible in more places.

But to what extent do you believe online learning can address the problems facing

rural schools in Iowa, and are you confident that the state can make sure that distance learning is accountable so the people don't run into problems with

having an education that's not of good value?

Branstad: Well, having -- and, you know, it's related to we just talked about broadband. We have high-speed broadband available everywhere, it makes distance learning easier and more accessible in all parts of the state. I want to augment that with

community colleges. They are working with local school districts in offering

courses, higher level math and science and vocational courses and they’re doing it in conjunction -- I was watching eight school districts doing that with the community college in that part of the state, Monticello. And it has really made a difference. And we have something called where you can dual enroll and get college credit in high school.

These are the kind of innovative thing. And economic development with the ethanol plants and diesel plants bring good jobs to rural Iowa and help us stabilized the population for the rural schools.

Obradovich: Senator Hatch, what's your prescription to give students a good learning experience and distance learning is that a part of that?

Hatch: Distance learning is important, but we have to fund education.

When governor Branstad came into office in January, 2011, he tried for two years to eliminate early childhood education. I'm a product of a mother, an educator, who helped me with my -- with my challenge as a -- as a young kid. I was reading first grade books in third grade. She called it perceptionally handicapped. Struggled with reading through high school and

college. But it was dyslexia. And I could not have been a businessman in Des Moines or a State Senator or even a candidate for governor if I didn't have somebody intervene early in my life, an educator, to make sure I overcame those challenges.

It is essential that we fund universal early childhood education. We can't give up on our 16, 17, 18 year olds. They are allowed to quit school. Why do we allow them to do that? They don't conform, to go into a pool where they are automatically going to be less ready for the jobs.

Obradovich: The money follows where students are, and you have rural schools where the students are fewer and fewer. How do you make them quality –

Hatch: Back to the first answer. Fund education. Governor Branstad is the only governor that never recommended additional funding for public schools. When you have a rural school and competing for the technology that makes learning better, you can't do it if you don't have the funds. And you're putting more burden on the property taxes of the local school districts. So distance learning is important, it's necessary, it's critical.

Borg: Governor – the albatross in your legacy, that is underfunding education.

Branstad: We have just passed a major education reform called teacher leadership.

We just had a seminar on that. Over 500 teachers and administrators attended it.

It's a very exciting new development where we reward teachers for take on more

responsibility and improving student achievement. We also reward high achievers

into teaching with a $20 million stipend over five years. And we have provided not property tax, but state dollars to pay for -- we replaced allowable growth with supplemental state aid. We did that in addition to the three-year phase in of the educational leadership program. So first thing we had to do is straighten out the mess that my opponent and his friend Governor Culver got the state in using one-time money for expenses, and taking money out of the economic reserve account. We did that up front. Now the state is in a good position, we are cutting

property taxes, we are reforming and improving education, it is being phased in over a three year period and I have a five-year projection on the budget so we know it can be funded into the future

Borg: James.

Lynch: Talk about funding something else, and that is Iowa's transportation infrastructure system. A lot of people would be concerned about the roads and

bridges they were on. And for four years you have been talking about -- people have been asking you, you have deferred recommendations wanting to hear from the transportation director. It's a committee you appointed, business groups, trucking, agricultural groups, local governments have all called for a gas tax increase. What are your plans to repair the roads and bridges, and will it include a gas tax?

Branstad: I think we need a different and better system to fund the roads. I selected Paul Trombino as the Director of the DOT, he has done a phenomenal job. When we had the flood on the Missouri River, he got full federal reimbursement. He's cut administrative cost by $50 million. And the last two years we've had the biggest primary highway fund -- just a second, wait a minute, I'm not done yet. He did that -- so we saved $50 million in administrative costs, and he's put together options to replace the gas tax with other sources of revenue, including an excise tax on fuel that would

grow with inflation, including those who bring heavier loads across the state paying more for that. A whole series like that. But we have to build a bipartisan majority. The last time I did this, I was governor. And we did it by getting a

majority of Senate republicans and democrats, House republicans and democrats all to agree to support that. That's the kind of coalition I want to build. I have the experience of being able to do that. My opponent has no experience in

doing that. He wants to look to the gas tax, and that's going to continue to

decline as people get more and more fuel efficient vehicles and move to trucks that are – are fueled with either LP or with natural gas. And consequently, I think a funding formula for the future needs to be developed. That's what I'm going to work upon.

Borg: Senator Hatch.

Hatch: Thank you, Dean. I was listening to the Governor because I have been waiting for

four years as well. I embraced the task force he put together of all the stake

holders, suggesting we need a gas tax of 10 cents. My proposal was bringing that on over five years, 2 cents at a time. 20 to 25% paid by out of state motorists that come through. We have been waiting for four years for the governor to come up with a plan. I listened to it, I didn't understand it. I don't think it's something you can wish for. Part of being Governor is being a leader and telling people what we need and why we need it. We need to educate people on why a gas fee or gas tax needs to be improved. We have in Clinton County over 35 bridges were closed or their tonnage was reduced by the board of supervisors. That's being replicated in rural Iowa all over the state. And for the Governor to not acknowledge I'm from a small

urban district in Des Moines, maybe it takes an urban legislator to understand that we have to reach out to the rural districts and provide them the tools that are necessary.

Borg: What tools?

Hatch: The tools are we need to increase the gas tax to provide the services necessary to local communities to fix their bridges and expand their roads. We need to give them the authority and work more with the Department of Transportation so that they could have a greater say on where these expansions will happen. We have been waiting for 30 years for highway 20 to be expanded. I think governor Branstad at one time promised to expand and complete highway 20. That hasn't happened yet. When he talks about bringing people together and having all this experience, I'm not sure that's the experience we need in the next decade to provide the services we need to Iowa.

Branstad: Well, my predecessor, Governor Culver, threatened he would veto any increase in motor fuel taxes. And I'm looking at a better and newer way to do it. Not just the old-fashioned way it's been done in the past. Recognizing that fuel consumption goes down as people go to hybrid vehicles and electric vehicles and other vehicles.

So we need a new system. That's why I asked Paul Trombino to put these options together.

I think there's a lot of interest in that. I want to work with a bipartisan

group of legislators to get that done. Not just raise gas taxes on low

income people that have to commute to work.

Borg: When is it going to happen?

Branstad: Next year. I believe it can happen next year. You know, just like property tax relief, hasn't happened for 30 years, but we worked for it, and we got it done. And now people are seeing their commercial industrial taxes go down for the first time in 30 years. It can be done in the right leadership.

Hatch: You finally acknowledged that what we did was decrease commercial property taxes.

We did not reduce residential property taxes. The average Iowan will not see their reduction in property taxes as a result of governor Branstad's three-years of

trying to reduce property taxes.

Henderson: We're going to talk about --

Branstad: And I would also say, we put some limitations on residential and agriculture as well as part of that legislation.

Hatch: Not enough.

Branstad: And for residential that live in apartments, they have been treated as commercial over ten years. They are now going to be treated as residential. So we did get a lot done in that legislation. And it was a bipartisan


Henderson: Governor, I have been out on the campaign trail, and I have heard two republican candidates for the Iowa House say they want to get rid of Iowa's individual income tax. Do you support that, and what kind of a proposal do you have to present Iowans to cut their individual income taxes?

Branstad: Well, if you look at my record, I have reduced the individual income tax on a

number of occasions. But I want to do it in a fair way and reduce taxes for

everyone. I don't think it's realistic to eliminate the income tax. But it's still too high in Iowa. We have full federal deductibility, however, so the effective rate is much lower than it looks like in the charts. It was 13% when I became governor. It's now 8.98%, plus full federal deductibility. And when Obama got the federal taxes raised, the Iowa tax went down in 2013 while the federal tax went up.

Henderson: You have once before proposed getting rid of that deduction that you mentioned.

Will you propose that again?

Branstad: We haven't decided in terms of what to do on that. My opponent has proposed that because that -- the problem with that is, it raises taxes for a lot of people in all levels. Not just the high income people, but all levels. Because if you have paid a lot of federal taxes as a farmer because you had a good year, then a bad year that's going to come up thanks to the EPA, you want to be able to deduct the federal taxes, take that away from them, that could be a problem.

Henderson: Senator Hatch, is his criticism of your income tax cut appropriate?

Hatch: Certainly it's not thorough. My income tax proposal which I proposed last September was a tax cut for the middle class working families of this state. 90% of families receive a tax cut under my plan, some as high as $1,000. And we looked at two things. Dual income families. Iowa has one of the highest in the country, with the mother and father working. Some of them working two and three jobs. Why not reward dual income families, and be get a tax cut for that. And secondly, we looked at the child tax credit. We value children a lot in this state. That's one of the things we are proud of. But we only give them a $40 tax credit. I value children more than that. So we gave them a $500 tax credit. What that did was lower the taxes for everybody except the top 7%. And they have to pay higher taxes. And a progressive tax structure, this would be created, they're still pay lower taxes than the national average. 90% get a tax break while the others pay a little bit more.

Obradovich: Governor, following you have on tax cuts, Kansas cut taxes in anticipation of seeing revenue growth through business expansion. It didn't happen, and now they're in a serious economic crisis, including seeing their bonding rates being affected. How can you be sure if Iowa cuts taxes that we won't be making the same mistake?

Branstad: That's why you have to be very careful. That's why I'm cautious when I

look at this. You have to get your state's financial house in order. You have to reduce the size and cost of government. We have reduced the size of government by over 1450 employees. We have made state government more efficient and accountability and put together 2 year budget and 5 year projections so we can provide to pay for the property tax reduction, and for the additional money investing in education. And our budget balances out for the five years. That's the reason why when I saw revenue start dropping, I vetoed the $135 million of one-time spending, because I don't want to put the state in the jeopardy of not being able to meet its obligations in the future like happened under Governor Culver. And he panicked and did a 10% across the board cut which hurt businesses and a lot of people.

Obradovich: Let's talk about the budget surplus. You have a number of proposals that spend some of the money in the surplus which has been committed for education reform

and paying communities back for their property tax cuts. So I mean, how does your agenda fit economically into the reality of the picture in Iowa?

Hatch: One of the proudest things that I floor-managed and helped create was in 1992, the budget balancing act requiring the state to go on general accounting practices. And also required presenting -- or budgeting only 99% of the expected revenues and creating cash reserves. We did that. And over the next six or seven years, those cash reserves came up. One of the things I'm totally mystified in Governor Branstad's approach and how about how he came into Iowa in 2011, and, boy, Iowa state government was a mess. Now, let me set the record straight. When he came in in 2011, we had a balanced budget, we had $500 -- we had $550 million in surplus. We had $400 million in cash reserves. We had a triple A bond rating. And in year, Governing Magazine rated Iowa as the third-best managed state in the

country. What governor Branstad is talking about, now talking about one-time funding, was the bonding proposal that Governor Culver and the legislature agreed to fund after the 2008 flood of eastern Iowa, the largest natural disaster to hit Iowa. Decimated towns and cities all over eastern Iowa. Cedar Rapids, where my lieutenant governor candidate Monica Vernon is from, was 16 feet underwater. And anybody in eastern Iowa knew what went on. And we worked with local communities to bring it back because we bonded for recovery. The recovery that hit small towns and big cities up and down –

Borg: Are you saying that without your leadership eastern Iowa wouldn't have recovered?

Hatch: No, without the bonding proposal. The bonding proposal that governor Culver, which he's talking about of the mess –

Borg: All right --

Hatch: Let me just finish, I think this is important. The balance and the state budget of the balanced. We a reserve and ending balances. And Governor Culver cut 10% across the board because we were in the biggest recession since the Depression. We then appropriated bonding as an offer to reestablish and reengage and reinvest in Iowa. That's what he was talking about that was a decision. And right now that's being paid back by funds from the lottery, not the general funds.

Borg: Governor, you are on the edge of your chair.

Branstad: It's interesting, last time I ran against big debt Chet, and he's supporting the big debt. We are paying it back to the tune of $55 billion a year. That's right, we're paying it back out of the infrastructure money that could have gone for infrastructure projects instead is going to pay this debt. And I can tell you, most of the people in Iowa didn't like the state of Iowa going into debt. It wasn't well-thought out. And, frankly, the state is much better off under our economic approach, which is a pay as you go approach, where we balance the budget, and all of the money in the cash reserve in the economic emergency account wasn't still there. They had borrowed a significant share of it, and we restored all of that.

Hatch: I need to say one thing. This is important, this is about leadership, this election.

And for the Governor to just dismiss the $1.4 billion that was destroyed by that flood in 2008, what kind of aid are you going to give the people of Cedar Rapids, Iowa City, Oakville, Mason City decimated by this. Roads, schools, all those public buildings were decimated. If we don't have the cash, wait until next year. Ten years later, people of eastern Iowa understand what he's saying now.

Borg: One more statement before we move on.

Branstad: First of all, I have been the governor through a lot of disasters, and I've always

worked -- in fact this year already. This year already -- we have dealt with three national disasters, and I have worked with our state of people and we have asked and we have received presidential designation. A significant amount is federal dollars the state has to match, there's a local match as well. It needs to be a partnership. I know how to do that, we have done it effectively. And you don't have to borrow a bunch of money. There's going to be disasters. And this year we have already had three. And just about every year, you never know when you're going to have a hailstorm, a plane crash, tornado or something like that. You have to deal with it. I go to the scene and work with local people, and we have effectively dealt with it without dealing with the money.

Borg: And I need to deal with time.

Lynch: You have signaled you need to make changes in the public employee pension program, IPERs, and you suggested the fire fighters and police should pay more. What are you trying to fix? What's the problem you're trying to fix?

Branstad: Well, the problem is, first of all, Iowa retirement program for the public employees it in a lot better shape than 80% of the other states. We are next to Illinois, where the democrats control everything, the worst unfunded pension system in the country, the most debt per capita. And they raise taxes. I don't want to do that. Instead, and by the way, the IPERs system is healing because of changes that have been made. It's not back to fully 100% funded as it was when I was Governor before. I don't think it's fair that the police and fire system that all the increase falls on the cities. I think like IPERs, 60/40, that a similar system ought to be in

place for the police and fire system as well.

Lynch: Are you proposing any change or just leave it as it is?

Branstad: I think that kind of a change would make sense. I want to see a bipartisan group

of citizens look at it with representation from public employees and taxpayers to address it for the long-term. I don't want to become another Illinois or New Jersey or other states that have unfunded pensions or cities in California that have gone bankrupt because of it.

Lynch: IPERs is unfunded in the $6 billion, do you think you need to close the gap between debts and liabilities?

Hatch: We are stronger than in the past. We change that every two years, the legislature in a bipartisan way, works hard in trying to close that gap. It's one in which we work with the public unions as well with the state agencies. And the financial conditions of the world -- or of the state. But what's interesting is, we are talking about pensions, and, you know, we have -- we have the ability in this state to provide good pensions for good employees I think that when it comes to fire and police, they deserve what they get. They deserve those pensions. They are the first –

Borg: How would you do that? How would you do that?

Hatch: Well, what's going on now is that the burden relies mostly with the local governments.

Borg: Yes.

Hatch: And that we should maintain that. There are some changes we could do they look at every year to see how far we have to go.

Borg: Yes.

Hatch: We have to keep it strong, but to change it and make it into a 401K and private venture is dangerous --

Branstad: That's not what I advocated. Make the increases shared with the employees who get the benefits and the local governments and cities that are paying the costs.

I hear from cities all over Iowa, including your Mayor, I'm willing to address this, you aren't.

Borg: Let's move on.

Henderson: The city of Toledo, Ohio, the residents were unable to drink the water because of algae bloom, it was caused by fertilizer runoff. The Des Moines Water Works’ manager says rate payers in Des Moines are paying higher rates because of the extraordinary measures he has to take the to treat the drinking water here. Governor, at what point is it required to have mandatory rules in regards to fertilizer use versus the current voluntary system.

Branstad: I am proud of the fact we worked on a nutrient reduction system that's gotten national attention. And Iowa State University, the Department of Agriculture and Land Stewardship, and the Department of Land Resources and the Governor’s office. We just yesterday gave out 85 awards for environmental stewardship to farmers who are doing things to reduce pollution and making changes to protect our water and soil.

Henderson: Working --

Branstad: Yes, it's working. And we need to continue to perfect and improve on it.

We have increased funding by 26% since I have been Governor for these kind of projects. I believe that is the right approach. A mandatory approach that puts

agriculture at a disadvantage I don't think is the right way to do it.

Borg: Senator Hatch.

Henderson: Senator Hatch, farmers say that urban residents put a lot of fertilizer on their lawns. Would you favor restriction on urban fertilizer as well?

Hatch: The first thing I want to say, the problem of nitrates and phosphates is not just a farmer's issue, it's all of us. Anybody who puts fertilizer on your land, you're adding to the problem. Anybody, the golf courses and the municipalities, corporations, farmers aren't the only ones. But the problem is not so much with the reduction strategy, that was required by the federal government. And it's a good plan to start. We want to have it to be voluntary. If you don't fund it, then it's not going to be voluntary, and it ends up being nothing, and

the Governor vetoed $11.2 million of water quality money going to direct the attention to reduce the nitrates and the phosphates and the management of the very plan he said got national recognition. If you don't fund it, then you don't have a plan. And it's very telling that the legislature came up with a recommendations, bipartisan support, even the Secretary of Agriculture Bill Northey, was disappointed in the Governor's veto of that. We need better leadership and a fresh start to look at this in a bipartisan way.

Obradovich: Long list of topics, short time. Do you believe that Iowa should allow a pipeline across the state from the oil fields in North Dakota through to Illinois? And if so, what about taking private property through eminent domain?

Hatch: It was a big surprise to me when I read in the Des Moines register that the pipeline was going through 17 counties. They acted like they were going to build it within a year and a half, they had the permission. I don't know their relationship with the state agencies --

Obradovich: Yes or no.

Hatch: Well, it's -- in one regard, it's going to help the big oil to get oil down to Louisiana. In a bad way, it's going to -- without knowing the details of it, there's environmental degradation that could take place. We need information and transparency. We're not getting it from the oil company. We should be getting it from the Department of Natural Resources and the Utility Board.

Obradovich: That is like an I don't know.

Hatch: The question is nobody knows.

Obradovich: Okay. Do you know, Governor?

Branstad: Okay, I've had one meeting with the people proposing this. And the first thing I shared with them, they're from down in Texas. This is not Texas or Oklahoma.

We have some of the most valuable farmland in the world. They want to go diagonally

across the state. I grew up on a farm, I understand there's a lot of tile lines. They say they'll go two feet below the tile lines, repair them all. There's a lot of questions to be answered. The Utility Board has a lot to oversee this, they have one informational meeting. They need to have meetings by law in every county this is going to go through. And especially the land owners that are affected. I think it needs to be very carefully reviewed to see if this is something in the interest of our state.

Borg: Both people are saying we'll keep an eye on it. James?

Lynch: Governor, when you ran four years ago, you said you would do a better job of running state government. Your opponent is questioning that. He's been at the forefront of your management style. The stories out of the Department of Administrative Services, Iowa Veterans Home, your management style isn't working if their accurate. What will you change in the next four years?

Branstad: First of all, I always look for the very best people, and if we discover a problem, we change it. So when we have had a problem in the agencies, we've changed and

put new people in charge. We now have -- by the way, we have women in charge of those departments, new leadership. I think that Janet Phipps is doing a great job with the Department of Administrative Services, Jodi Tymeson, the retired general from the Iowa National Guard, is now commandant of the veteran’s home. I was with her with the veteran’s parade at the State Fair. We have made the adjustments and changes. And we have put good people in charge of departments and agencies. We have reduced the size of government. I have a press conference every week. We have opened a record now, so the big problem we have is these -- these individual employee records that when we do have a dismissal, the public is not given the information as to why. That personnel information should no longer be exempt from the open records law. And I'm advocating that. For some reason my opponent and his friends in the Senate blocked that even though the House passed it overwhelmingly.

Lynch: Senator Hatch, you have been at the forefront of criticizing the government on his management style, but what do Iowans need to know about you to take care of the $7 billion general fund budget and 50,000 employees. Do you have the qualifications and experience to manage that?

Hatch: My wife and I manage a small business. Monica Vernon is a small business owner.

And she for 26 years managed her company. We subscribe to management principle that understand you have to know what you're people are doing. You just can't pretend they're going on. You have to be hand on and involved. This Governor has not been

involved to the point that even one of his previous chief of staff said he has a governance problem. So when that happens, we know we have an issue in state

government, and you can't continue to blame employees, or somebody else, you can't

continue to say I don't know. You have to take responsibility and fix the problem.

But, really, what you want in a governor is somebody who finds the problem before it becomes an issue.

Borg: Senator Hatch, I'm going to end it there and go to Kay Henderson.

Henderson: You have been a critic of the state deal bringing an Iowa fertilizer plant to southeast Iowa. People there are grateful for the jobs. What do you say to them?

Hatch: I am not opposed to the fertilizer plant or any construction of fertilizer plants in the state. What I oppose is the negotiated deal with the company. Giving them $110 billion, negotiating with the local community to give them another $150. Iowa was the only state, not Illinois, that was able to get qualifications for disaster-related to flood aid. They got $3 million on that. In all, public taxpayers paid $3.2 million per job for that, and that is what I was referring to. Secondly, we have in that fertilizer plant the CEO that just bought the second-most

expensive condominium in New York City. $70 million. He paid cash for it. You were giving these incentives to corporations instead of the job growth in small towns and businesses? I'm not the only one that thinks it's a bad deal. The Iowa State economist said it's the dumbest deal in –

Borg: Governor Branstad.

Branstad: The site selection magazine said this was the second-best deal in the whole world last year. There's 1750 very good jobs. A lot of them union construction jobs going on there right now. And my opponent and his colleagues in the Senate would like to shut down that construction site. Plus the Iowa Farm Bureau estimates once completed, it will save Iowa farmers $740 million. $740 million each and every year. This was not a -- a check that was written to them. They're given a credit against future tax. The state and local governments are both going to get more tax revenue from them then if they had chosen to locate in another state or stayed overseas. Right now we're importing the fertilizer from overseas. This is coming home and creating jobs here.

Hatch: I would like to ask the governor if he would be willing to wit hold the last $25 million to them. Your that is right has not given it to them yet. Would you commit to withhold that money so this dumbest deal in the history of Iowa wouldn't be as bad?

Branstad: You want to shut down the site and put the people out of the work? That was renege on the deal at the beginning. And the deal was if the legislature didn't reduce the tax on corporations by so much, then this part would occur. Mr. Bolkcom, the biggest critic of this, and your buddy, is the one that's prevented us from reducing the property tax. The people complaining the loudest are the ones makes it necessary for us to complete the deal that was agreed upon.

Obradovich: Very quickly, a lot of communities in the state see gambling as a form of economic

development. This year the Racing and Gaming Commission said one in Cedar

Rapids would create too much competition in other states. Would you side with those that the market should pick the winners and losers?

Branstad: I believe the Racing and Gaming Commission should make that decision. I think it would be wrong for there to be political interference. They should follow the law and look at all the criteria in determining what's in the best interest of the people of Iowa. Protecting the integrity of the state and making sure it's safe

and fair is critically important.

Borg: I'm going to take that as an answer --

Hatch: As a small business person, I understand the market. I would let the market decide

that. We shouldn't be picking winners and losers. There's nothing saying we have

to protect the other casinos. There's no other industry where state government is protecting the profits of our casinos. We should have understood this, there is a problem there, and a former attorney now suing the commission because there's

something wrong going on.

Borg: This is the final question, Kay.

Henderson: We're at the Iowa State Fair. I'm wondering if you think there's a competition here you could enter and win. Senator Hatch?

Hatch: I like to think the pie-eating contest.

Henderson: Governor Branstad?

Branstad: Well, I've won the Governor’s Charity Steer Show at least three times, but this year Lieutenant Governor Reynolds beat me. We've raised $2.5 million for the Ronald McDonald houses, promoted the beef industry. Happens here, it's great. We started my first year as governor. The Governor's Charity Steer Show is one of the greatest things here.

Borg: I would like to ask, he said he'd like to eat a pie, would you bake it?

Branstad: My grandmother used to make the best apple pies. He probably wouldn't eat it if I made it.

Borg: Thank you very much for the comments.

Branstad: That's a great way to end it.

Borg: Thank you. This is the first of a series of Iowa Public Television special fall election programming, bringing you the candidates and the issues challenges us all as Iowans. It's the most extensive statewide debate series on Iowa Public Television as we travel the state coming up from Iowa City and Council Bluffs in the coming weeks and in appreciation to Senator Hatch and Governor Branstad, we are grateful to our production staff for the late night, into the early morning hours, involved in transforming this livestock pavilion into the forum used for the transformational ideas for Iowa's future. So for the entire Iowa Public Television crew, live from the Iowa State Fairgrounds in Des Moines, I'm Dean Borg and thanks for joining us today.

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