For a new Governor taking the reins of a republican-controlled state government controversial issues are everywhere. We sit down with Governor Kim Reynolds on this edition of Iowa Press.

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For decades, Iowa Press has brought you politicians and newsmakers from across Iowa and beyond. Now celebrating more than 40 years of broadcast excellence on statewide Iowa Public Television, this is the Friday, December 1 edition of Iowa Press. Here is David Yepsen.     

Yepsen: New governors often take the reins of state government on the cusp of a fresh legislative session with their own agenda to promote. But Kim Reynolds was handed the baton mid-year after a turbulent 2017 session. Here to join us for her first time on Iowa Press is Governor Kim Reynolds. Governor, thank you for being with us today.

Reynolds: Thank you for giving me the opportunity. I'm happy to be here.

Yepsen: Across the table, Kathie Obradovich is Political Columnist for the Des Moines Register and Kay Henderson is News Director at Radio Iowa.

Henderson: Governor, water quality, tax cuts, staying the course on Medicaid managed care, those were all Branstad agenda items. When will the Kim Reynolds unique agenda items be revealed?

Reynolds: Well, when I was sworn in on May 24th I laid out my top four priorities. And of course the first one is I travel the state of Iowa and meet with business and industry and I'm in communities all across the state, the number one topic that I hear about is workforce. And businesses are optimistic, they see good growth in their projections and really the biggest barrier right now is a skilled workforce. And so one of my top priorities will be workforce and education. I just completed a year of the Future Ready Iowa Alliance, they have given us the recommendations and I look forward to laying those out and really helping Iowans get the skills to fill the jobs that are available today and really have a better quality of life. Tax reform, that's the next step I think we need to take to make Iowa competitive. Water quality, I hope that's one of the first bills that I get to sign as the Governor of the state of Iowa. And we want to maintain our leadership in low cost of energy which means maintaining our leadership in renewable energy.

Obradovich: One of the big challenges you're facing right now, and this carried over from the last administration, is health care. Right now we've got a situation where you have said Obamacare is imploding because Iowa only has one insurer left in its exchange. But by that same standard isn't managed Medicaid also imploding because we now are down to basically one provider?

Reynolds: Well, no it's not imploding. We're just into our second year. This is a big shift from what we did before. We need to modernize the way that we deliver quality care to some of the most vulnerable Iowans in our state. And the problem with fee for service is it wasn't sustainable. We had seen growth on an average of 10.7% over the last ten years, that's not sustainable. 39 other states are providing managed care, over 52 million Iowans across this nation are receiving or are participating in managed care.

Obradovich: But one of the big selling points was people would have a choice, they would have a choice of providers and they don't have a choice now.

Reynolds: Well, it's temporary. They will have a choice and we have indicated that. I'm really proud of the work that Director Foxhoven with the Department of Human Services has done in putting together him and his team, putting together a transition plan, they're monitoring it very, very closely, they're working with our managed care providers. United has done a really good job of really stepping up. I'm very appreciative of that. AmericGroup has indicated right now they don't have the capacity but they're working to get the capacity so this is a temporary shift. It's not unusual, we're not the only state that has had providers step out, Kentucky, Minnesota have had that happen. It's kind of part of the process. But we're focused on really providing continuity of care, to really minimizing the disruption that some of our most vulnerable Iowans are experiencing and that's what we're focused on and that’s what we're going to do. We have issued an RFP, we're in the process of bringing another provider in and we are working with AmeriGroup to help get them the capacity to help meet the needs of Iowans.

Obradovich: Can you say with confidence that the state is going to save money through this process?

Reynolds: Well, that's the goal, yes. I can tell you that just the increase over last year, so let's just give the contract negotiations that we just finished with the two companies that we were able to renew the contract with, it was a 3.3% increase versus a 10.7%. That is a savings. The other thing that we've been able to stop is there was about, a little over $300 million in fraudulent payments that were going out, it's really hard to claw those back once those payments have gone out and so right there is a savings because they're doing accountability on the front end and they are maintaining the standards. Now, look, I can look at every one of you and I can look at Iowans and say is this perfect? No. But I am committed as well as Director Foxhoven, as well as the managed care providers, are committed to make sure that our most vulnerable Iowans receive not only quality care but they have the access that they deserve and we're working every day to build that out. We have a new director for Medicaid starting next week and I think that will be a real benefit as well.

Yepsen: Governor, another issue on the Statehouse plate is the sexual harassment case in the Iowa Senate. Will republicans pay a price for this lawsuit settlement? What do you say to Senator Dix about this?

Reynolds: Well, first of all, what I would say is this is not a partisan issue. I would say this is not an Iowa issue. This is a national issue. We are seeing it play out every single day. What I will say is what I've said from the very beginning, we have a zero tolerance policy. Nobody should be able to use their title or their power as a way to manipulate, control, harass, bully women. I agree with Mary Kramer, Ambassador Kramer, I believe this is a watershed moment and I believe we have to continue to change the culture and I've been working on that as Lieutenant Governor, as a country treasurer, as a state senator, to really encourage more women to step into C suites, to serve on boards and commissions, to run for office. We need to change the dynamics as well as just say no, it's not going to happen anymore.

Obradovich: This is not just an Iowa problem either, we're seeing this play out in Congress and one of the things they're talking about there is having members pay the price if money is shelled out instead of the taxpayers. There has been some suggestions that maybe Iowa should look at something like that. What do you say about that?

Reynolds: Well, I think we need to look at everything. I'm really looking forward to seeing what Ambassador Kramer, she's going to go in and do an evaluation, she's going to make recommendations. It's my understanding that Mary said I'm willing to do this but if I'm going to do this you're going to get serious about what my recommendations are. I know Mary well enough to know she's not going to, she's going to take this seriously. It's time that this stops. This is, it is a watershed moment and we need to take a look at what her recommendations are. We need to make sure that the training, it's like I said to you, Kay, zero tolerance seems pretty self-explanatory but evidently we need to take every precaution that we can and make sure that people understand that.

Obradovich: Have you ever personally experienced harassment?

Reynolds: Not to the point that I would say it was sexual harassment, I haven't. But that doesn't mean that, it's quite obvious to the extent that women have experienced this. I personally have not.

Yepsen: Governor, I want to ask about the politics of it. I talk to republican legislators and they're worried about this. This did happen in the republican caucus, the taxpayers are on the hook now for over $1 million. Are you worried about a political fallout from this, from either Iowans upset about the payment, or Iowans upset that this was not handled very well by Senator Dix and the republican majority in the Senate?

Reynolds: Well, again, I'm going to reiterate, this is not a partisan issue. Let's focus on what has happened and let's change the --

Yepsen: I wasn't asking about it being a partisan issue, I'm asking about the political fallout.

Reynolds: But you are making it a partisan issue by asking if the republicans are going to pay a price for this. I think if we look at the national level it's unconscionable what is happening and I think it's time for this, it wasn't handled accurately. I said I think the review should be made public. He made the review public. I said you need to bring somebody in and we need to do an evaluation. They're bringing Mary Kramer in to do that. I think both parties need to be looking at what we need to do. They're going to work with Speaker Upmeyer and they're going to hire an HR professional. I think that's a step in the right direction. We need to make sure that training is adequate. So one thing that I can be very clear about and have is we're not going to tolerate it, we have a zero tolerance policy and we need to be serious about it.

Henderson: Republicans in the Iowa House have endorsed in previous years the concept of a simple postcard tax return, a flat rate on income taxes. Is that something that you would sign into law?

Reynolds: Well, I'd have to see the details, Kay, and you know that I can be consistent in saying I want to see what the legislation looks like before I commit to it. What I can say is it's too complicated. We need to make it simpler. We need to make it fair. We need to make it flatter. That's all things we can take a look at. We're watching very closely what is happening in Washington, D.C. because of federal deductibility, we're tied to that. So that will have an impact on what we're able to do. Next week or the week after I get the December Revenue Estimating Conference and that is the revenue that I build my budget from and so that will have an impact. So while we're still working on the details there's a lot of significant factors that are still unresolved that we're taking a look at.

Henderson: Do you want to cut taxes or do you want to simplify taxes?

Reynolds: I want to do both. I hope to do both.

Yepsen: That Revenue Estimating Conference hasn't had a real great record here in recent months. What are you doing differently to get better estimates?

Reynolds: We actually have worked with an outside source and we hope to make that proposal moving forward that is working with the three universities. It is my understanding that this used to be done and I don't know why the procedure stopped, just as kind of a reference to see what to kind of bring that up against what the Revenue Estimating Conference is projecting. And so we are actually looking at a procedure that we can have kind of an outside source working with the universities that we can use also as a resource with the Revenue Estimating Conference.

Yepsen: This is not a new problem. Governor Vilsack had it, Governor Branstad had it, these estimates are off and they have real consequences for public policy.

Reynolds: Yeah and I think that's one of the things that they're looking at more real-time. But we have seen so much volatility and I saw that right up until the end of the fiscal year, I saw that through the accrual period. It was just unbelievable the amount of volatility. We're also seeing it's not the only factor but the commodity prices are having impact on the revenue, that whenever ag stumbles it has a rippling effect on all other sectors. But so does, they're making decisions based on anticipating tax reform at the federal level too and that impacts capital gains, depreciation and online sales is having an impact on our budget not only in Iowa but in states all across this country.

Henderson: You've used the word we, does that mean that you will be making a tax plan proposal in concert with republicans in the legislature or do you plan to advance your own proposal?

Reynolds: I think the closer that we can be united in what we move forward, I think that's kind of what they have done at the federal level, they have laid out some broad parameters and the House has their plan, the Senate has their plan, hopefully it will go to conference committee and we'll get to pan out the details. But we are working with leadership in the House and the Senate and we have been over the interim and so I think when you can see alignment there or have some consensus that makes it easier moving forward.

Obradovich: I hope you have a more transparent process than they're following in Congress.

Reynolds: Well, we hope to. I can't speak to what they're doing at the federal level except that I am optimistic that they are moving it forward and we can get something done. We need to get something done. This is a global economy and we need to be more competitive from a global perspective and it will have an impact on Iowans.

Obradovich: You mentioned workforce as the biggest limiting factor on economic growth in Iowa. But you're also talking about tax cuts, which presumably would perhaps reduce some of the resources that you would have for education and other sorts of workforce development training because you're just going to have less revenue coming in.

Reynolds: The thought is it should spur revenue. But I've always said whenever I talk about any type of a tax reform and making Iowa more competitive so we have a better climate for job creation that we have to make sure that we can sustain the level for priorities, which is education, Medicaid and I was really happy with the report that just came out, we have invested in education. I'm proud of what we have been able to do with our K-12, with the teacher leadership and compensation reform, with STEM. We really have laid a very good foundation I think that really will allow us to come in with the Future Ready Iowa Initiative and really skill up.

Obradovich: If you had to choose a priority that would be best for businesses in Iowa, workforce development or tax cuts?

Reynolds: I refuse to except that you can't do both. I think that there is a way. We're still working through that. But there is a way that we can both simplify and make Iowa more competitive by tax reform as well as looking, the biggest thing that I can do to grow the economy is help these businesses and industries grow and expand. And when they look me in the eye and they say, we are growing, we are ready to explode, double digit growth, there's so much that we can do, I need workers, I need workers. And so if I can help Iowans, and this is about opportunity for Iowans, if I can help them get the skills to fill these jobs, these are careers. I'm talking $60,000, $70,000, $80,000. Can I give you one example? There is a partnership with DMACC and Shazam, it's a two year program, it's an apprenticeship. The second year they're working at Shazam. Two years, very little debt, they're starting at $85,000. That is an example of programs that we can scale and implement all across the state. We can do that with pre-apprenticeship programs in our high schools. We can expose these students to the opportunities that exist in the skilled trades. So if we start to expose them sooner rather than later to the opportunities that exist then they get to find what they're passionate about, they get to make a career choice based on what they're interested in, based on the quality of life that they want, these are good jobs.

Obradovich: How much of that workforce shortage though is about Iowa being low wage state? Isn't that part of the mix there?

Reynolds: Well, this is what is going to drive that. If I can get Iowans the skills, especially with our unemployed, underemployed, our minority community, while unemployment is 3% theirs are double digit, that is unconscionable, we are not going to stand for that. So we're going to put a program in place that helps adult learners come back into the system and complete or get them a skill and match them up --

Yepsen: Governor, do you tell businesses when they tell you I can't find workers why don't you pay them more? Do you ever tell them that? There is a school of thought that said if you raise salaries you're going to attract people, you're going to keep Iowa kids in state when they graduate instead of leaving because they are leaving for better jobs.

Reynolds: I think it's both. I think we'll see both. I think the demand is going to drive that. They need workforce right now. We're seeing that happening. So if I can provide them a skilled workforce in the area that they need these are not minimum wage jobs, these are jobs that are $50,000, $60,000, $70,000, $80,000 a year jobs that have benefits that come with them. The other thing that we need to work on that is part of the Future Ready Iowa is putting in place a support system and looking at things that are barriers to that, the cliff which just drives me crazy. So when an individual tries to ascend up the ladder, better their employment, if they make $1 more, $5 more they lose so much on the back end and the first thing that they lose is childcare and that is ridiculous. We need to find a way to phase that out.

Henderson: One last question on taxes. Simplifying meant at the federal level getting rid of a lot of deductions. There has been debate about too many tax credits at the state level. Are you going to get rid of them?

Reynolds: Well, I think we need to look at them. So when I say almost everything is on the table and so we're taking a look at that, we're doing the due diligence. Sometimes there are ways that you can adjust the existing ones. But I think that has to be part of the conversation, Kay, when we're moving forward is we're looking to simplify things. The reason they're using the credits right now is because we're not competitive when it comes to our tax rates. So if we can become more competitive that really reduces the need for some of the tax credits. But we'll go through that process and we'll see what the, how we can maybe reduce the rates and then eliminate some of the tax credits.

Yepsen: Governor, I want to go back to the budget for a moment. You've had to take money out of the cash reserve to make up for a shortfall. Concerned about how this looks as a manager that Iowa can't seem to manage its money, that you wind up having to cut programs, you can't get on top of this? Are you concerned about having to constantly drain the cash reserves to balance your budget?

Reynolds: Well, every day, first of all, let me just make the point that our revenue is still growing so Iowa is still seeing growth in the revenue, it's just not as robust as what was projected. As I indicated, the commodity prices have had an impact on our revenue. But Iowa is not alone. You look at Kentucky, you look at Nebraska, you look at Oklahoma, it's reflective in states all across this country. So we're still seeing revenue growth, it's not just as robust. And so I'm focused every day on looking for opportunities to grow the economy, to get Iowans the skills to fill the jobs, to look to bring people back to our state and to bring investment into our state.

Yepsen: Will you get the cash reserve repaid in this coming session?

Reynolds: Yes and some of it will come out of the ending balance. There were a lot of people that were calling for me to call a special session and transfer or borrow money at the tune of about $100 million and we saw the volatility that was taking place and I said no, we're going to wait, we're going to see what happens, we're going to see where we're at, at the end of the accrual period. The statute is fairly clear and so if I need to call a special session at that time we'll do that and we didn't and I didn't have to borrow or transfer the money that had been anticipated early on. But the best thing we can do is figure out ways to grow the economy and we're focused on that every single day.

Henderson: House Republican Leader Chris Hagenow this week said water quality is a generational challenge. If that's true and beyond what bill may emerge from the legislature do you plan to spend more money to monitor the projects to find out what works? And how do you do that?

Reynolds: And actually the nutrient reduction strategy that was just a partnership between the DNR, the Department of Agriculture and Iowa State University science based, they do have an accountability factor in the nutrient reduction strategy. So we want to check with the Department of Agriculture to see what those are. But I know that they do have an accountability piece in place and they're able, sometimes it's hard to manage, Mother Nature is Mother Nature, but they do have an accountability in place. But we should always be looking for opportunity to demonstrate the facts because that's how we're going to tell our story. The world is watching and we need to lead on this. I believe that this is the right strategy. Technology and innovation is changing every day how we protect our soil and water quality. And so we'll be able to identify best practices and then look for opportunities to scale that while providing data that shows that we're making a difference.

Henderson: Governor Branstad suggested using taxes that had been used on school improvement projects to improve the water. Do you suggest that that's the path the state should take?

Reynolds: With the SAVE funding? We tried that, we said here's an idea, if you've got a better idea we're open to it and so we worked with the legislature and actually it was the House with various committees that came up with a different proposal, a different way of funding that. We supported that. That passed the House. That was when it was a split legislature. I don't believe the Senate ever took the bill up. I don't believe it ever went to the floor for a discussion or for a vote. Since then the Senate has passed that bill out of the Senate and it has been sent to the House. So I think we've got a great example of a bill in place that we could build from or pass and send up as we continue to look for ways to enhance water quality and find different ways to fund it.

Obradovich: There is a growing conversation in Iowa, especially this fall, around the issue of mental health in Iowa and especially major gaps in Iowa's services. The state went through the redesign. But there are services that just really aren't available in Iowa and the Register is going to be having a forum next week, unfortunately you aren't able to be there. But what is your plan? What is your priority when it comes to mental health?

Reynolds: Well, first of all, I think we have made progress over the last several years. If you look at, we did have 99 counties, it was a very disparate service, it really depended on where you lived, what kind of access you had to even core services. So to change that from 99 counties to 14 was a step in the right direction. Now, every single Iowan no matter where they live have access to the same core services. The other thing that we've seen happening is that not only do they have the core services but they're really implementing core plus services, jail diversion programs, a 24/7 hotline and we've seen it has tripled and quadrupled the number of counties that offer that and we want to continue to build on that. We have 150,000 Iowans today that have coverage that didn't have it before. So they have access to mental health care. There's still areas and gaps and working with Director Foxhoven --

Obradovich: So what is the priority for those gaps?

Reynolds: So we're working, there is a task force that is going to report to us in December, especially with child mental health issues. I think coordinating the system better. We still need to move in that direction. We are dead last in psychiatrists. We put funding, $4 million, into a psychiatrist residency program. We're actually going to have three of the hospitals start that next year and that will be an average of ten residency programs --

Obradovich: Do you anticipate the need to put more state resources, money, into this program?

Reynolds: Actually a lot of the regions have a balance right now and so they're making those local decisions because the barrier or the gaps are different depending sometimes on where you live and what they're doing when it comes to the core plus services. So I'm hoping --

Obradovich: We're running really short on time.

Reynolds: Well, preventative, awareness, coordinating, making sure that we have a connected mental health program in place for Iowans. And we're working on it every single day and we owe them that.

Yepsen: We have just about a minute left. I want you to quickly comment about the state's opioid crisis and what will be in your plan to deal with that.

Reynolds: Yep and actually we did opioid awareness week so we want to look at enhancing the prescription drug monitoring program. We need to have more providers utilizing that. Reducing the number of pills prescribed is something I think we can look at. A Good Samaritan Act is something that the legislature could look at. Preventative, we did a standing order for naloxone, we should look for ways to expand that. And again, it is about community, coordinated access and working with communities across the state. That's addiction and mental health are two areas that go hand-in-hand and the more that we can educate, talk about and have the services locally the better off we'll be. Did I make my minute?

Yepsen: You did. I appreciate that. Always too many questions and never enough time. But thank you for being with us today, we appreciate that.

Reynolds: You bet, you bet. Thank you.

Yepsen: And thank you for joining our latest edition of Iowa Press. We'll be back next week with another edition at our regular times, Friday night at 7:30 and Sunday at noon on our main IPTV channel with a rebroadcast on our .3 World channel Saturday morning at 8:30. For all of us here at Iowa Public Television, I'm David Yepsen. Thanks for joining us today.

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Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. I'm a dad. I am a mom. I'm a kid. I'm a kid at heart. I'm a banker. I'm an Iowa banker. No matter who you are there is an Iowa banker who is ready to help you get where you want to go. Iowa Bankers, allowing you to discover the genuine difference of Iowa banks.