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Condition of the State 2003

posted on January 14, 2003

Borg: It's been a year in which the state faced a fiscal deficit, dipped into the reserve fund, enacted budget cuts, laid off employees, and offered incentives for others to retire early. What else is in store for Iowa and how Governor Tom Vilsack intends to deal with the issues facing the state may be revealed today.

From the Iowa capitol in Des Moines, the "Condition of the State Address," presented to a joint session of the Iowa General Assembly. Here is Dean Borg.

Borg: Good evening. Earlier today Governor Tom Vilsack presented his fourth Condition of the State address to a joint session of the Iowa General Assembly. He came before the 150 representatives and state Senators at a time that's very fiscally challenging for the state. He presented his vision and his priorities for the state of Iowa. Following the governor's speech, we'll have a response from the Republican Speaker of the Iowa House of representatives Christopher Rants of Sioux City.

Here now is Governor Tom Vilsack. This is a committee that was appointed in a protocol here to go down one floor to the governor's office and escort him here. It's Senators Gaskill from Hancock, Putney from Tama, Holveck from Polk County, Jenkins from the House of Representatives in Waterloo, Oldson from Des Moines, and Lukan from Dubuque. The governor now ascending to the podium. He will be introduced by Mary Kramer, who is the president of the Iowa Senate. She's from Des Moines. This is President of the Senate Mary Kramer.

Kramer: I always respond to requests from the Governor. [laughter ] it is my pleasure to welcome all of you and all of you guests to the Iowa legislature, to the beautiful chambers, the historic tradition that precedes us, the wisdom of our predecessors always upon us. And it is my honor, my privilege, and my pleasure to present the governor of Iowa, Governor Tom Vilsack for his state of the state message to the legislature. Governor Vilsack. [ applause ]

Vilsack: Thank you, Madam President. Thank you, Mr. Speaker, and members of the General Assembly, our Supreme Court, distinguished guests, and my fellow Iowans. We are blessed, in troubled times and in a troubled world, to live in a special place: a special place of shared values; a place where we celebrate family and community; where we cherish learning and good health; where we value hard work and self-reliance; and where we love our land, our air, and our water.

To remain in that special place, we must nurture hope and opportunity. If we remain content with the Iowa of today, we will surely compromise the Iowa of tomorrow. With our strong values, no Iowan should be satisfied that bright Iowans leave our state, believing that there is no meaningful opportunity here; or Iowans seeking quality healthcare cannot find it or afford it; or Iowans who want to enjoy our great outdoors cannot do so and are prevented from doing so because our rivers and streams are polluted. Sadly, this is happening in our state today.

My fellow Iowans, we can and we should and we must do better. To accept this challenge, we must embrace change and direct it. I'm confident we're up to this challenge; but state government should not approach it alone. The primary responsibility for effecting change in our society rightfully belongs with the private and the nonprofit sectors. State government's role is to act as a catalyst for change and to remove barriers to progress. To fulfill that responsibility, we must act now and we must act boldly.

Now, the state budget complicates our task. The work begun two years ago to align revenues with expenditures must continue. Our law requires a balanced budget, and we will have a balanced budget. But while complicated, our task is not impossible. I want to acknowledge the hard work of the previous legislature. Tough choices, sometimes unpopular choices, were made, but they extended options to this state that few states enjoy. Today few states enjoy surpluses from last year or could do so this year. Fewer still were able to reduce the size of government with a dedicated state workforce while still increasing the commitment to K-12 schools, expanding access to healthcare for children and seniors, and starting a new venture capital fund. These accomplishments and many more share more than just having been accomplished during difficult economic times. They share, more importantly, having been done in a bipartisan effort. [ applause ]

Let me today identify the four cornerstones to our future progress that will preserve our values, nurture and expand hope and opportunity: they are a transformed Iowa economy, continuous improvement in Iowa education, expanded access to healthcare services and community services for Iowans, and a renewed commitment to our Iowa environment.

The economy of Iowa, grounded in the production of ever increasing volumes of low priced ag commodities and the creation of well-intended but still lower paying manufacturing and service sector jobs is no longer adequate to support the values that we cherish, nor will it expand hope and opportunity in the future. For the benefit of ourselves and future generations of Iowans, we must transform our economy to one rooted in the development and growth of high priced, value-added, ag ingredients that feed and fuel and heal, and the creation of wealth through higher paying jobs held by a highly educated Iowa workforce. [ applause ]

This new Iowa economy will preserve and enhance our values, better support our families and communities, and allow for continued investment in our quality of life. In the Iowa economy of today, less than 30 percent of our workforce has college experience. The truth simply put is that an Iowan who learns more will earn more. Our goal in the Iowa economy of tomorrow, a high-tech, bio-based economy, should be to double the number of employed Iowans with college experience. Immediate progress towards this goal should be the standard by which our work here is judged.

Now, to reach that ambitious goal requires a new, focused effort on economic development, one that is keyed to life sciences, value-added agriculture, advanced manufacturing, insurance, and other information solutions. Vision Iowa and its success taught us the power of using state resources to leverage more private investment and public sector investment. We must apply this valuable lesson to economic development.

A companion fund, the Iowa Values Fund, should be created and dedicated to partnering with private investment to transform our economy. Administered and managed as a public/private partnership, this fund's investments should promote regional economic development so that no part of Iowa is left behind. [ applause ]

This fund should work more closely with the Regents universities, community colleges, independent colleges, and other institutions of higher learning so that we can double the number of college experienced workers in our workforce. Over the next five years, we should commit $500 million to this fund. It is that important.

The initial investment from the Iowa Values Fund should be addressed to making Iowa a national leader in life sciences in protein production and development. Building the physical infrastructure and creating the regulatory structure should for this industry should be a top economic development priority. It should allow us to reach the goal of inviting 100 new life science companies into our state in the next five years. [ applause ]

Initial resources from this fund should also spur the development of more renewable fuels and energy of all kinds. The benefits to our economy and our environment from ethanol and biodiesel fuels are well known. Similar benefits will operate from an expansion of renewable energy production in our state. Today Iowa annually produces around 200 megawatts of electricity from renewable sources: solar, biomass, and wind. By the end of the decade, our goal should be to annually produce at least a minimum of 1,000 megawatts of such power committed to the goal of making Iowa a net exporter of energy. [ applause ]

Barriers to a new Iowa economy must also be removed. Regulatory approval for new business and expansion needs to be timely, for progress delayed is progress denied. A complex income tax system with loopholes places Iowa in a noncompetitive position. Simplifying that system, closing the loopholes will remove a barrier to progress. No Iowan -- no Iowan should have to use a form larger than a postcard to report their state income and pay their state tax. [ applause ]

At the same time, the property tax system pays for services not related to property ownership; extends credits, exemptions, and benefits in a haphazard fashion; encourages inefficiencies in government; and discriminates among and between property class owners. Members of the general assembly, the time has come. Sunset this system that doesn't work and replace it with one that does. Remove the barrier. [ applause ]

Now, as our investments result in a new economy, our values demand that we not forget those struggling in the old economy. Today in our state there are over 100,000 Iowans working at or near the minimum wage. Many support families. Most qualify for public assistance. All work hard. Let us honor their work and all of work by raising the minimum wage. [ applause ]

Each generation of Iowans carries a special responsibility to support the education of all of our children. The members of the last legislature understood that value in supporting change and continued investment notwithstanding tough economic times. Their commitment to lower class sizes, reading initiatives, and improving teacher quality is already paying positive results in higher test scores and better professional development. We cannot and we should not abandon those efforts, but more is needed to keep faith with our values and to maximize hope and opportunity.

A transformed Iowa economy requires continuous improvement in education. If we are to double the number of college experienced workers in the workforce, more children have to go to college. To achieve success in school, children must be ready to learn before they enter school. Bold goals precede and encourage bold action. Let us work together to meet the challenge to create an Iowa in which virtually all, over 90 percent, of our children have access to quality preschool and where virtually all, at least 90 percent of them, complete their formal education with at least two years of college experience and training. [ applause ]

I need not remind the General Assembly that achievement gaps and dropout rates carry a heavy price for failure. Just a generation ago, the thought of all-day kindergarten for all of our children seemed like an impossible dream. Today over 90 percent of our children have access to all-day kindergarten. Our 90/90 goal embodies our values. This is a goal that can be reached. This is a goal that must be reached. And this is a goal that will be reached. [ applause ]

The creation of an Iowa Learns council, with representatives from all levels of education, and statewide leaders will help to develop the strategies and policy recommendations to guide your work in accomplishing this goal. This goal will also need resources. As investments from the Iowa values fund are made and opportunities are expanded and profits are realized, a portion of new revenues generated from these investments should be dedicated to achieving our 90/90 goal.

In the meantime, college tuitions continue to go up and some students may be discouraged from attending. That's why this legislature should restore funding to the important work study program that will empower students to earn their way through college.

Now, barriers to reaching our 90/90 goal must also be removed. Today a disparity exists in educational opportunity in our state. Very small school districts with high school students of less than 100 students find it increasingly difficult to provide the range of opportunities necessary for success. Now, this barrier can be removed through collaboration or consolidation. The creation of a virtual academy allowing access for students to courses online and the development of regional academies enabling schools to combine their course opportunities to expand it to all students must be approached and must be used to help reduce the disparity. For those districts where consolidation provides the only answer, we should provide financial incentives to encourage such consolidation. [applause]

Some believe that a financial disparity also exists and represents a barrier. For more than a generation, based on a study of school finances, Iowans have operated under the belief that our school funding formulae promotes equity. We know much has changed since that study. The times call for a new study of school finances. If inequities exist, they must be addressed. Our values require it. Hope and opportunity will depend upon it.

Now, Iowans also have a right to expect quality healthcare. We've worked hard to extend that right to all of our children. Today we protect almost 95 percent of our youngsters by providing access to healthcare through a variety of programs like Medicaid; Hawk-I, our children's health insurance program; and other private insurance. We take pride in also knowing that close to 90 percent of our adults are also covered. However, access to quality healthcare, even our state, remains threatened. An unfair Medicare reimbursement system, the rising costs of prescription drugs, and the exploding expense associated with Medicaid all will test our commitment to the value of quality healthcare. Now, let me be clear: we will fight wherever, whenever, for as long as it takes to get a fair Medicare reimbursement in this state. [applause]

Let me also be clear: we'll negotiate whenever, wherever, for as long as it takes to secure lower prescription drug costs for Iowans, particularly our older Iowans. [ applause ] And we will look whenever, wherever, for as long as it takes to secure strategies to control Medicaid costs without limiting access to quality healthcare. I want to thank Senator Kramer, in particular, for her efforts in already looking in these areas, and I want to pledge my willingness to work with the president of the Senate and to you, the members of the Assembly, to develop programs that will guarantee quality healthcare for our citizens.

Now, to remain true to our values and to extend hope and opportunity to all, we must protect those vulnerable Iowans who cannot protect themselves. Thousands suffering from mental illness, vulnerable Iowans don't have access to the treatment they need. The fact is that one out of every four Iowa families has a family member touched by mental illness. Barriers exist to the quality care they need. Let us stop the needless suffering. Iowa should lead the nation with the highest percentage of residents with mental health and substance abuse coverage. Let us make the enactment of mental health parity a landmark for which this general assembly will be long remembered and celebrated for years to come. [applause]

People with mental illness, mental retardation, or other disabilities need more than just access to quality medical care. They also need access to basic community resources, the ones that we sometimes take for granted, like housing, transportation, and job opportunities, so that they, too, can participate in the American dream. This goal has been a personal passion of Lt. Governor Sally Pederson. That's why I've asked her to lead our effort to transform our system of services in this state to respond more effectively to the needs of those with disabilities. Changes in the system will be directed by a commission of stakeholders created through bipartisan legislation passed last year. The Lt. Governor will continue to work with the stakeholders and with members of this General Assembly, both Republican and Democrat, to create a system that supports self-determination, self-sufficiency, and independence.

It is our goal to increase substantially over the next four years residential housing and workplace opportunities through public/private partnerships and leveraging funds in new and innovative ways. I promise you this: we will make the largest investment in housing for people with disabilities in Iowa's history. [applause] And we will ask you for legislation to give the Department of Inspections and Appeals the authority to regulate adult day-care facilities for dependent adults and seniors so that their families can feel secure about the quality of care their loved ones are receiving.

In a land -- in a special land where stewardship is not only a value but also a virtue, knowing that there are over 150 rivers and streams, a number likely to grow, impaired by pollution, should be a call to action for all of us. A new Iowa economy should support resources necessary to clean up our rivers and streams. By 2010 there should be no - I repeat, "no" impaired waters list in our state. [applause]

By that year Iowans should be free to swim and fish and use this great natural resource as god intended. Now, to those who doubt that such a goal is obtainable, I simply ask you stand aside. [applause]

I know this about us, that Iowans working together to achieve a common goal will succeed. But to succeed, there must be consensus. One hundred years ago Theodore Roosevelt brought interested parties together in this nation to a summit dedicated to conservation. The time is right for a statewide summit on water quality to eliminate that impaired waters list.

So today I'm asking representatives from the Department of Natural Resources, the Iowa Farm Bureau, the Association of Business and Industry, the Environmental Council, and other groups to designate representatives to work with me and the General Assembly and cities and counties to plan and hold such a summit so that we can develop a consensus plan to restore our waters.

Earlier I mentioned the role of the nonprofit sector to effect change. The vital role of nonprofit organizations in our state must be clearly understood and actively supported. Nonprofit organizations are often small and may be in need of technical assistance and help. All of us need to help them so they in turn can help us. So I'm asking Willard "Sandy" Boyd, President Emeritus of the University of Iowa, the director of the Iowa Nonprofit Resource Center, and a great Iowan, to chair a task force appointed for this purpose, to lay out strategies for how we can help and strengthen nonprofit organizations in our state.

My time with you is limited today. I really don't want to give Speaker Rants the opportunity I gave Speaker Seigrist to count the hairs on the back of my head, so I cannot share all of the thoughts, all of the important aspects of Iowa life, from public safety to support for arts and culture. Please know that all of these efforts are important in our effort to build a better Iowa. All will be needed in this effort. Great values, great needs, great goals mandate from all of us, inside and outside of state government, great action.

Many may question if all of this can be done. And to those, I leave you with a paraphrased quote from Teddy Roosevelt. "It's not the critic who counts, not the person who points out where the strong person stumbled or where the doer of deeds could have done them better. The credit belongs to the person who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs and comes short again and again; who knows the great enthusiasms, the great devotions, and spends a life in a worthy cause; who, at the best, in the end knows the triumph of high achievement; and who, at the worst, if he or she fails, at least fails while daring greatly so that their place shall never be with those cold and timid souls who knew neither victory nor defeat."

Ladies and gentlemen of the General Assembly, let that be said of you and me and of this generation of Iowans who risked embracing change, who fought to preserve our values and nurtured hope and opportunity for all. God bless you. God bless our great state and our great country. Thank you very much. [applause]

Borg: And with that, Governor Tom Vilsack concludes this condition of the state address. Members of the Iowa General Assembly on their feet applauding, which was a very well accepted speech. The members of the Iowa General Assembly gave him five standing ovations. The governor making his way among members of the Iowa Supreme Court, the Iowa Executive Council, State Treasurer, and others. There he's coming to Lieutenant Governor Sally Pederson and his wife, Christie Vilsack.

The governor had four main categories in his speech. One was transforming Iowa's economy, in an earlier briefing in which I was a part of. The governor said we don't have an economy in Iowa that supports Iowa's values, and we have to change that. One of the ways that he proposed changing that is an overhaul of the tax system. One of the standing ovations came on sun-setting the Iowa property tax. He also proposes overhauling the income tax. He would like to have it as small as a postcard to file income tax in Iowa. He wants to eliminate federal deductability and raise the minimum wage.

Another of the four main categories -- the first was transforming Iowa's economy. Another was continuous improvement in education. There he wants to, among other things, create a virtual academy, if you will, using the Internet to provide instruction for high school students in some of Iowa's smallest high schools. The third, expanded access to health care, with an emphasis on mental health. And enhancing the environment is another one of his goals. So transforming the economy; continuous improvement in education; expanded access to health care, with an emphasis on mental health improvement; and enhancing the environment.

In fact, one of the standing ovations that he got, if you remember, was to improve the waterway system in Iowa; that is, the contamination so that Iowa, by the year 2010, has no waterways on the impaired waterways list. The governor was quite emphatic in that. He said that those who don't think that's possible -- and he admitted to us earlier in the briefing that it was a very, very lofty, strenuous goal. But to members of the Iowa General Assembly here today, he said, "If you don't think it can be done, stand aside."

Right now we're going to find out how all of these things are going to fare in the Republican controlled Iowa legislature. Governor Vilsack, of course, is a Democrat. And the man who's moved up from being majority leader to Speaker of the Iowa House of Representatives is Christopher Rants of Sioux City. What did you hear in that speech that you thought was visionary and exciting for Iowa?

Rants: I think the governor is really focused on a fairly narrow agenda, and I think that's good. That certainly enhances his ability and, frankly, my ability to get some of those things done. It's always a good thing as a Republican to hear a Democratic governor quoting Republican presidents.

The thing that is, I think, perhaps most exciting and perhaps the biggest challenge that is laid before us is this notion of just sun-setting the existing formula -- or the existing code on the property tax system and creating a new formula by which we would fund local governments and schools and things of that nature. That's a fairly tall order, but it is one that literally could transform how our tax system in Iowa operates, perhaps make it more competitive, and create a better business climate. So I was very excited to hear that from Governor Vilsack today.

Borg: So you don't think that's so much of a stretch even in hard economic times?

Rants: No. We've actually been talking about some making changes from -- one of the things we've been talking about as Republicans is breaking this tie between automatic increases in your property taxes with a change in your valuation. We were taking some of these steps to eventually lead up to this. The governor has thrown down the gauntlet now to do it all at once, and I think you'll find Republicans willing to pick up that challenge and run with it.

Borg: Will it be done in this session? Is that conceivable?

Rants: Those are some differences we're going to have to work out. The governor was good on laying out the challenge. We still have to find out the details of how he wants to do that. I sort of see this as putting the proverbial gun to the head and saying by such and such a date, the property tax code will be replaced. That then makes the legislature go to work to replace it with something.

Borg: What about the income tax? He also talked about revamping the income tax and making it as easy to file as filling out a postcard.

Rants: Well, that also -- that was a good applause line for Republicans as well. Easier said than done. But a lot of legislators -- Senator Mckibben and Representative Van Fossen have already spent some time over the interim working on just such an idea. I think the governor embraces some of these ideas that Republicans have been articulating. It was a good step forward to moving the rest of his agenda along.

Borg: About the standing ovation, I didn't see, the Republican side of the aisle, very many people standing on raising the minimum wage.

Rants: Well, that's a debate that we've continually had. It will be a debate that we continue to discuss this coming session.

Borg: What was there in the speech that wasn't there thatyou would have liked to have heard?

Rants: You know, it's the governor's prerogative to articulate his vision for the state. I thought it was a fairly somber one. Again, he's focused on a relatively narrow list of priorities. I think that's a good thing for Governor Vilsack to do. We've got a narrow window of time to really make some systemic changes. If we focus on a few things and we do them well, we can have good results, rather than having a hundred priorities. There's no such thing as having a hundred priorities. You have to have three or four.

Borg: I think that you are among those who say the Vision Iowa fund for economic development was good in getting money out to Iowa communities for that. What about this economic development fund to develop the economy throughout Iowa? $500 million the governor wants.

Rants: I'd like to see the governor flush out the details on this Iowa fund. Ideally, in discussions we've had with him leading up to today, he's been talking about some regional councils and approaching economic development on a regional basis. I'm supportive of that. I think that will make a lot of our rural members feel very comfortable that all parts of Iowa will be included in our vision of growth for this state. We need to flush out exactly where he sees getting $500 million, but I think this is an opportunity to involve the private sector, involve more private investment in this state. I would hope that we would take what we've done with venture capital and spread that out more across the state and see lots of venture capital funds develop so that we have Iowans investing in the future of Iowa.

Borg: You're delineating the same question that was raised to Governor Vilsack, and that is where does the $500 million come from. It could come from bonds. It could come from several other sources. Where do you think is the most likely source?

Rants: Bonding will be a concern to the legislature, but I would think that we'd be able to get some private investment involved to create some various funds. And we also have, probably, some infrastructure money we might be able to divert toward that. But before we go too far down that path and decide where the money is coming from, let's really see just exactly his proposal on how the money is to be spent.

Borg: As far as tenor, do you like what you heard? Do you like the atmosphere here?

Rants: I thought it was a very good speech today. Again, I think it's a sober assessment of what we need to do as the state to move forward. And I think you've got a legislature that's ready to go to work with this governor and see if we can't get it accomplished. We're going to have our differences. The one thing that wasn't really discussed today -- and we know that that's going to be coming at the end of the month -- is how we deal with our immediate budget problem, how we deal with Medicaid, how we're going to deal with collective bargaining and some other things like that. That's going to occupy a lot of our time. Hopefully, if we can find some consensus on some of these other issues the governor has talked about, perhaps that will pave the way to have a good resolution on our budget.

Borg: Thank you, Speaker Rants.

Rants: Thank you.


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