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Senator Jeff Lamberti, Chairman of the Appropriations Committee in the Iowa Senate, and Representative Pat Murphy, Ranking Democrat on the Appropriations Committee in the Iowa House (#3025)
February 7, 2003

Borg: AT THE IOWA STATEHOUSE, NEGOTIATIONS ARE UNDERWAY TO CRAFT THE 2004 STATE BUDGET. WE'LL GET ASSESSMENTS FROM THE SENATE'S APPROPRIATIONS COMMITTEE CHAIR JEFF LAMBERTI AND RANKING DEMOCRAT ON THE HOUSE APPROPRIATIONS COMMITTEE PAT MURPHY ON THIS EDITION OF "IOWA PRESS."

FUNDING FOR THIS PROGRAM WAS PROVIDED BY "FRIENDS," THE IOWA PUBLIC TELEVISION FOUNDATION... GENERATIONS OF FAMILIES AND FRIENDS WHO FEEL PASSIONATE ABOUT THE PROGRAMS THEY WATCH ON IOWA PUBLIC TELEVISION; AND BY THE IOWA BANKERS ASSOCIATION... FOR PERSONAL, BUSINESS, AND COMMERCIAL NEEDS, IOWA BANKS HELP IOWANS REACH THEIR FINANCIAL GOALS; AND BY THE ASSOCIATED GENERAL CONTRACTORS OF IOWA... THE PUBLIC'S PARTNER IN BUILDING IOWA'S HIGHWAY, BRIDGE, AND MUNICIPAL UTILITY INFRASTRUCTURE.

ON STATEWIDE IOWA PUBLIC TELEVISION, THIS IS THE FRIDAY, FEBRUARY 7 EDITION OF "IOWA PRESS." HERE IS DEAN BORG.

Borg: DEVELOPING THE STATE BUDGET HAS BEEN CONTENTIOUS DURING THE LAST TWO BUDGET CYCLES. IT'S BEEN TOUGH TO GET AGREEMENT BETWEEN REPUBLICANS AND DEMOCRATS AND BETWEEN THE LEGISLATIVE AND EXECUTIVE BRANCHES. A SOFT ECONOMY AND DECLINING STATE REVENUES MADE CHOICES DIFFICULT. THIS TIME THINGS MIGHT BE DIFFERENT. ON FRIDAY OF LAST WEEK, GOVERNOR TOM VILSACK DELIVERED HIS PROPOSALS FOR THE NEW BUDGET. AND GENERALLY SPEAKING, THOSE PROPOSALS GOT A GUARDED BUT SOMEWHAT RECEPTIVE RESPONSE FROM BOTH REPUBLICANS AND DEMOCRATS. THE GOVERNOR'S PROPOSALS COUNT ON A SLIGHT INCREASE IN STATE TAX REVENUES IN 2004, AND HIS PLANS CALL FOR A MODEST 1.8-PERCENT INCREASE IN STATE SPENDING, BUT THAT'S BEFORE RAISES FOR STATE WORKERS ARE DETERMINED. BUT AS USUAL, AS MANY PEOPLE SAY, THE DEVIL IS IN THE DETAILS. WITH US TODAY ARE TWO BUDGET INSIDERS. JEFF LAMBERTI IS A REPUBLICAN FROM ANKENY. HE CHAIRS THE SENATE'S APPROPRIATIONS COMMITTEE. AND DUBUQUE DEMOCRAT PAT MURPHY IS THE RANKING MEMBER OF THE HOUSE APPROPRIATIONS COMMITTEE. GENTLEMEN, WELCOME BACK TO IOWA PUBLIC TELEVISION. WE'RE GOING TO TALK MONEY TODAY. NOT ENOUGH OF IT AROUND THESE DAYS, IS THERE? THAT'S CORRECT.

Borg: AND ACROSS THE "IOWA PRESS" TABLE, "DES MOINES REGISTER" POLITICAL COLUMNIST DAVID YEPSEN AND "ASSOCIATED PRESS" SENIOR LEGISLATIVE REPORTER MIKE GLOVER.

Glover: SENATOR LAMBERTI, LET'S START WITH YOU. YOU'VE BEEN HOLDING YOUR FIRE FOR A LONG TIME SAYING YOU WANT TO SEE WHAT THE GOVERNOR IS GOING TO PROPOSE IN A NEW BUDGET. HE'S NOW MADE HIS BUDGET PROPOSAL. CAN YOU POINT TO THINGS IN THAT BUDGET PROPOSAL? AND WE'LL TALK ABOUT DETAILS LATER. CAN YOU POINT TO THINGS THAT JUST AREN'T GOING TO HAPPEN?

Lamberti: I THINK THERE'S SOME CONCERN ABOUT A COUPLE OF HIS PROPOSED REVENUE ENHANCEMENTS, A COUPLE OF IDEAS TO GENERATE SOME MORE MONEY THAT I THINK WE NEED MORE INFORMATION ON. ONE IS GOING TO A SALES -- STREAMLINE SALES TAX WHERE WE START COLLECTING SALES TAX ON INTERNET SALES. IT'S NOT THAT WE'RE NECESSARILY OPPOSED TO LOOKING AT THAT IDEA, WE'RE JUST NOT SURE WE CAN IMPLEMENT IT WITHIN THE 2004 BUDGET YEAR. BUT IN GENERAL, I THINK WHAT I WOULD SAY ABOUT THIS BUDGET IS WITHIN THE LAST TWO YEARS, WE STARTED SO FAR APART THAT TRYING TO FIND A COMPROMISE WAS VIRTUALLY IMPOSSIBLE, AND YOU WITNESSED THAT THE LAST COUPLE OF YEARS. WE'RE STARTING MUCH CLOSER TOGETHER THIS YEAR, AND I FEEL PRETTY CONFIDENT THAT WE'LL WORK IT OUT.

Glover: REPRESENTATIVE MURPHY, FROM A DEMOCRATIC PERSPECTIVE, ARE THERE THINGS IN THIS BUDGET YOU'RE DISAPPOINTED IN, THINGS IN THIS BUDGET YOU HOPE DON'T HAPPEN?

Murphy: WELL, TO BE HONEST WITH YOU, I THINK IT'S SOMETHING THAT, IF YOU TALK TO DEMOCRATS, THEY'D ALWAYS LIKE TO SEE SOME MORE MONEY IN THERE FOR EDUCATION OR HEALTH CARE. BUT I THINK THE GOVERNOR SAID IT BEST WHEN HE SAID THERE'S A LOT OF THINGS NOT TO LIKE IN THIS BUDGET, BUT THE BOTTOM LINE IS HE'S DOING THE BEST HE CAN WITH THE BUDGET THAT'S THERE. WITH 3/10 PERCENT GROWTH WE'RE EXPERIENCING -- I MEAN THAT'S 3/10, IT'S NOT 3 PERCENT -- THAT MAKES IT VERY DIFFICULT TO DO A LOT OF THE THINGS THAT IOWANS WOULD LIKE US TO DO. SO I THINK THE BIG PART THAT HE'S DOING IS HE'S OPERATING A STATUS QUO BUDGET WHERE HE HAS SLIGHT INCREASES FOR EDUCATION AT ALL LEVELS, BUT THEN HE ALSO TURNS AROUND AND TRIES TO REVITALIZE THE ECONOMY THROUGH HIS IOWA VALUES PROGRAM.

Yepsen: MR. MURPHY, GIVE US SOME IDEA OF THE SCOPE OF THE STATE'S CURRENT BUDGET PROBLEMS. WE'VE BEEN IN THIS MESS IN THIS STATE FOR A COUPLE YEARS NOW. WHAT'S THE SCOPE OF THE PROBLEM, AND IS THIS THE YEAR YOU GUYS FINALLY GET IT FIXED?

Murphy: WELL, IF YOU -- IF YOU WANT TO TALK ABOUT THE SCOPE OF THE PROBLEM, IOWA IS ACTUALLY IN A VERY GOOD SITUATION COMPARED TO MOST OTHER STATES. I'M ON A BORDER COMMUNITY WITH ILLINOIS AND WISCONSIN, AND THEY'RE LOOKING AT HUGE BUDGET DEFICITS IN SOME INSTANCES. THEY'RE LOOKING AT BILLIONS OF DOLLARS, AND A THIRD OF THEIR STATE BUDGET IS IN DEFICIT. IN OTHER WORDS, BEFORE THEY EVEN START, THE BUDGET THAT THEY CURRENTLY HAVE IS ONE-THIRD --

Yepsen: OKAY, SO I'M SUPPOSED TO FEEL BETTER THAT SOMEBODY HAS GOT IT WORSE, RIGHT?

Murphy: WELL, THAT'S THE FIRST PART YOU HAVE TO LOOK AT. BUT I THINK THE OTHER PART THAT YOU HAVE TO TAKE A LOOK AT ALONG WITH THAT IS, FIRST OF ALL, WE STILL HAVE MONEY IN RESERVE FUNDS. YOU LOOK AT OTHER STATES, RIGHT NOW MOST STATES AVERAGE ABOUT 2.5, 2.6 PERCENT IN THEIR RESERVE FUNDS. IOWA HAS A FULL 5 PERCENT IN THEIR RESERVE FUNDS RIGHT NOW. AND THE OTHER THING THE GOVERNOR DID HERE THIS TIME AROUND WAS -- ONE OF THE BIG CRITICISMS LAST YEAR WAS IT WAS TOO MUCH ONE-TIME MONEY. THERE WAS $211 MILLION IN THE CURRENT FISCAL YEAR WE'RE IN. FOR THE NEXT FISCAL YEAR, STARTING JULY 1, THE GOVERNOR ONLY HAS $64 MILLION OF ONE-TIME MONEY. SO HE REALLY DID MAKE A CONSCIOUS EFFORT TO REDUCE THAT ONE-TIME MONEY.

Yepsen: SENATOR LAMBERTI, WHAT DO YOU MAKE OF THE SCOPE OF THE BUDGET PROBLEMS THIS YEAR? IS THIS THE YEAR YOU GUYS FIX IT?

Lamberti: WELL, IN ROUND NUMBERS, $400 MILLION. THAT'S THE NUMBER WE'VE BEEN TALKING ABOUT, AND I THINK THAT'S A REAL NUMBER. MY GOAL IS A COUPLE THINGS THAT I THINK WE NEED TO ACHIEVE. FIRST, I WOULD AGREE WITH PAT THAT WE ARE IN MUCH BETTER SHAPE, BUT THAT'S NOT ENOUGH TO JUST SAY, HEY, WE'RE IN BETTER SHAPE THAN OTHER STATES, SO WE DON'T HAVE SOME HEAVY LIFTING TO DO. WHAT I WANT TO ACHIEVE AT THE END OF THE DAY WHEN WE GO HOME AT THE END OF THIS SESSION IS I WANT TO HAVE A BUDGET THAT'S IN BETTER SHAPE THAN THE ONE I HAVE RIGHT NOW, THAT TRIES TO ABIDE BY BUDGET PRINCIPLES, TRYING TO ALIGN OUR REVENUES WITH OUR SPENDING, RELIES LESS ON ONE-TIME MONEY. AND I'M CONFIDENT WE WILL HAVE A BETTER BUDGET THAN WE HAVE NOW. WILL WE SOLVE ALL OF THE PROBLEMS? I DOUBT IT IN ONE YEAR, BUT WE'RE GOING TO MAKE SOME SIGNIFICANT PROGRESS. THE OTHER THING I THINK THAT IS IMPORTANT IS IF AT THE END OF THE DAY ALL THIS LEGISLATURE IS KNOWN FOR IS FIGHTING OVER THE BUDGET LIKE WE DID THE LAST COUPLE YEARS, THEN WE WILL HAVE FAILED. WE HAVE ISSUES THAT ARE MUCH MORE IMPORTANT.

Borg: I'M INTERESTED -- YOU SAY WHEN YOU GO HOME YOU WANT A BETTER BUDGET THAN THE ONE WE HAVE RIGHT NOW. IOWANS FELT SOME PAIN IN THE CURRENT BUDGET. WHAT DO YOU PREDICT FOR THE AVERAGE PERSON? HOW ARE THEY GOING TO FEEL? THE PAIN THAT YOU'RE GOING THROUGH RIGHT NOW IS ACTUALLY TRANSFERRED TO THEM.

Lamberti: I THINK FOR THE MOST PART, AS PAT INDICATED, WE'RE LOOKING AT A STATUS QUO BUDGET. THERE WILL BE, IN ALL LIKELIHOOD, SOME SLIGHT INCREASES FOR OUR PRIORITY ITEMS LIKE EDUCATION. BUT I THINK GENERALLY THROUGHOUT THE REST OF THE BUDGET, THERE'S NOT GOING TO BE A LOT MORE PAIN THAN WE'VE SEEN OVER THE LAST COUPLE OF YEARS. WE'RE STILL GOING TO DO SOME CUTTING, AND THE GOVERNOR HAS PROPOSED SOME CUTTING. BUT IT'S HOPEFULLY DESIGNED AROUND TRYING TO MAINTAIN OUR SERVICES BY DOING IT IN A BETTER WAY.

Borg: WHERE DO YOU SEE THAT CUTTING AFFECTING IOWANS, REPRESENTATIVE MURPHY?

Murphy: WELL, I DON'T KNOW IF IT'S CUTTING, BECAUSE I THINK THE BIG PART THAT THE GOVERNOR DID IN HIS BUDGET IS HE'S TALKING ABOUT REINVENTING GOVERNMENT. AND THEY'VE MET WITH LEGISLATIVE LEADERS HERE THIS PAST WEEK IN REGARDS TO THEY HAVE A GROUP, PUBLIC STRATEGY GROUP, WHICH BASICALLY IS LOOKING AT HOW WE CAN MAKE GOVERNMENT WORK MORE EFFECTIVE WITH THE DOLLARS WE HAVE, INCREASE CUSTOMER SERVICE, AND HAVE SAVINGS. SO I THINK WHEN WE TALK ABOUT THAT, I THINK ONE OF THE THINGS WE'RE LOOKING AT AND I THINK THIS GOVERNOR IS LOOKING AT IS HE WANTS TO FIND WAYS WHERE WE CAN MAKE GOVERNMENT WORK MORE EFFECTIVE WITH THE SAME AMOUNT OF DOLLARS OR LESS WITHOUT PEOPLE NOTICING THAT THE SERVICE OR THE DELIVERY SYSTEM HAS CHANGED AT ALL.

Glover: SENATOR LAMBERTI, ONE OF THE BIG THINGS YOU'RE GOING TO HAVE TO GRAPPLE WITH THIS YEAR IS THE STATE'S GAMBLING INDUSTRY, AND IT PRODUCES A LOT OF MONEY THAT YOU USE, AN APPROPRIATIONS CHAIR CAN SPEND. THERE'S A BIG DISPUTE -- A LEGAL DISPUTE OVER HOW MUCH TO TAX THE GAMBLING INDUSTRY. CAN WE PRESUME FROM A STARTING POINT THAT YOU NEED EVERY BIT AS MUCH MONEY OUT OF THE GAMBLING INDUSTRY NEXT YEAR AS YOU'RE GOING TO GET THIS YEAR, THAT ALLOWING A BIG CUT IN GAMBLING REVENUES IS NOT AN OPTION?

Lamberti: I THINK IT WOULD BE VERY DIFFICULT TO BALANCE THE BUDGET IF WE CONTINUE TO LOSE THE ROUGHLY $35- TO $40 MILLION THAT WE'RE EXPECTED TO LOSE THIS YEAR, SO I THINK WE HAVE TO FIND A SOLUTION. I KNOW THAT'S DIFFICULT, PARTICULARLY WHEN YOU HAVE A COURT CASE PENDING AND PEOPLE WANT TO TAKE SIDES AND KIND OF DIG THEIR HEELS IN. WE ARE CONTINUING TO HAVE DISCUSSIONS TRYING TO FIND A WAY TO SOLVE THIS PROBLEM. I'M HOPEFUL THAT WE WILL.

Glover: IS IT YOUR ASSUMPTION THAT YOU HAVE TO DO SOMETHING THIS YEAR? THERE'S A DISAGREEMENT ABOUT THAT.

Lamberti: NO, I DON'T THINK WE HAVE TO. ALTHOUGH I SUSPECT WHAT THAT WOULD MEAN IS WHEN THE UNITED STATES SUPREME COURT FINALLY DECIDES THEIR CASE, WHICH WILL BE AFTER WE ADJOURN, WE WOULD PROBABLY HAVE TO COME BACK AND DEAL WITH IT AT THAT POINT.

Glover: MR. MURPHY, YOU COME FROM A TOWN WHERE GAMBLING IS A BIG DEAL. WHAT'S YOUR VIEW ON THIS? DO WE NEED, AS A STATE, AS MUCH OUT OF THE GAMBLING INDUSTRY NEXT YEAR AS WE'RE GETTING THIS YEAR?

Murphy: WELL, I THINK -- THE WAY THE GOVERNOR PUT IT IN HIS BUDGET, WE'RE ACTING AS IF IT'S REVENUE NEUTRAL. AND I THINK WHATEVER THE LEGISLATURE DOES -- AND I DON'T THINK IT MATTERS IF YOU TALK TO DEMOCRATS OR REPUBLICANS, THEY UNDERSTAND IT NEEDS TO BE REVENUE NEUTRAL. BUT I THINK -- I THINK IT BODES WELL FOR THE STATE IN REGARDS TO THIS WEEK THE SOLICITOR GENERAL IS NOW SUPPORTING THE SIDE OF IOWA -- OR AT LEAST WANTS TO FOLLOW THE CASE. THE FACT THAT THEY'LL BE WRITING A BRIEF THAT WILL BENEFIT THE STATE I THINK BODES WELL FOR US.

Glover: SHOULDN'T IT -- ISN'T THIS A SITUATION WHERE IT'S IN THE INTEREST OF EVERYBODY TO SOLVE THIS NOW RATHER THAN WAIT UNTIL YOU SEE WHO WINS AND WHO LOSES?

Murphy: WELL, I KNOW THAT SOME GROUPS OUT THERE ARE CONCERNED ABOUT WHERE THAT TAX WOULD BE. BUT I THINK WITH A PENDING COURT CASE, I THINK WE SHOULDN'T GET INTO DISCUSSING IT. I THINK WE SHOULD LET THE COURT MAKE THEIR DECISION. PLUS WE NEED TO BE CAREFUL WHAT WE SAY BECAUSE WHO KNOWS WHAT MIGHT APPEAR, YEAH. SO I THINK PROBABLY THE MOST IMPORTANT PART TO DO IS LET THE COURT -- LET THE JUDICIAL PROCESS TAKE ITS COURSE. ONCE IT TAKES ITS COURSE, I THINK IF WE NEED TO TAKE ACTION, THEN WE ACT THEN BUT NOT ANY SOONER.

Yepsen: SENATOR LAMBERTI, ISN'T IS TRUE, THOUGH, YOU COULD ACTUALLY USE SOME MORE MONEY OUT OF THE GAMBLING INDUSTRY THAN YOU'RE GETTING NOW. I MEAN, ISN'T IT AN OPTION THAT'S BEING TALKED ABOUT TO EXPAND SOME OF THE GAMBLING IN THIS STATE? EITHER THERE ARE MORE BOATS, TABLE GAMES?

Lamberti: I THINK ALL OF THOSE ISSUES SHOULD BE AT LEAST CONSIDERED. AND WHERE I COME FROM IN THAT POSITION IS WE'VE BEEN TALKING SIMPLY ABOUT TAX STRUCTURES BETWEEN THE BOATS AND THE TRACKS, AND THE EASY SOLUTION APPEARED TO BE TO FIND SOME RATE THAT WOULD EQUALIZE THE TAX. WELL, ULTIMATELY WHAT THAT WOULD MEAN IS RAISING THE TAX ON THE BOATS. AND I SAT BACK AND I GOT TO THINKING ABOUT WHAT IS THE OVERALL IMPACT ON THE INDUSTRY, PARTICULARLY AS YOU LOOK AT THE COUNCIL BLUFFS AREA WITH, I THINK, NEBRASKA LIKELY TO APPROVE SOME KIND OF GAMBLING THIS YEAR. SO I THINK WE NEED TO TAKE A LARGER VIEW OF THIS WHOLE INDUSTRY AND WHERE WE WANT TO GO WITH IT. AND I DON'T KNOW OF ANY OTHER INDUSTRY THAT THE LEGISLATURE ATTEMPTS TO INTENTIONALLY HARM. AND SO IF WE'RE GOING TO BE OUT THERE TALKING ABOUT GAMBLING, EVERYTHING OUGHT TO BE ON THE TABLE.

Yepsen: SENATOR, I WANT TO GET IN UNDER THE HOOD, AS ROSS PEROT WOULD SAY, AND LOOK AT SOME OF THE ELEMENTS OF THIS BUDGET. THE GOVERNOR BUILDS INTO THIS THING $88 MILLION OF UNSPECIFIED CUTS. MR. MURPHY MENTIONED THIS PUBLIC STRATEGY GROUP IS GOING TO KIND OF LOOK AROUND THE $4.7 BILLION YOU GUYS SPEND AND COME UP WITH $88 MILLION. HOW REALISTIC IS THAT? YOU HAVE ALREADY BEEN IN A PERIOD OF CUTS. THAT'S ALMOST 2 PERCENT OF THE BUDGET. IS IT WISE TO BUILD INTO YOUR BUDGET UNSPECIFIED CUTS LIKE THIS?

Lamberti: WELL, I THINK BY THE TIME WE PUT THE BUDGET TO REST AT THE END OF THE SESSION, WE WILL HAVE HAD TO IDENTIFY SPECIFIC CUTS OR A MECHANISM TO ALLOW THE GOVERNOR TO GET THOSE CUTS DURING THE COURSE OF THE FISCAL YEAR. $88 MILLION, I THINK THAT'S REASONABLE. I THINK THAT'S A NUMBER THAT'S ACHIEVABLE AND, IN FACT, WE MAY FIND WAYS TO EXCEED THAT A LITTLE BIT. OF COURSE THAT DOESN'T -- SHOULD NOT INCLUDE ANY OF THE RECOMMENDATIONS THAT WE MAY GET OUT OF THE PROGRAM ELIMINATION COMMISSION, SO WE MIGHT ADD THAT ONTO THE $88 MILLION.

Yepsen: DO YOU AGREE WITH THAT, MR. MURPHY?

Murphy: WELL, THE PART I THINK EVERYBODY, WHEN THEY HEAR ABOUT THIS, THE FIRST THING THEY SAY IS WE'RE CUTTING. I THINK THE GOVERNOR -- AND ONE OF THE PROBLEMS WE HAD THE LAST TWO YEARS WAS WE WENT IN AND WE DID CUTS. AND I THINK THE WAY THE GOVERNOR WANTS TO LOOK AT THIS -- IF YOU LISTEN TO HIS REMARKS LAST YEAR AND IF YOU LISTEN TO THEM AGAIN THIS YEAR, HE'S TALKING ABOUT TRYING TO FIND AREAS WHERE THEY CAN DO COST SAVINGS AND MAKE GOVERNMENT WORK BETTER. AND I'LL GIVE YOU A SPECIFIC EXAMPLE. THE ONE THEY'RE TALKING ABOUT AND EVERYBODY -- I KNOW THAT WHEN YOU HEAR ABOUT THIS $88 MILLION, EVERYBODY GETS SKEPTICAL. BUT THE ONE THING THAT HE IS TALKING ABOUT IS -- AND THIS IS THE EXAMPLE THEY USE -- IS IF THEY CAN SAVE MONEY ON HEALTH CARE. ONE OF THE BEST WAYS TO MAKE PEOPLE SAVE MONEY ON HEALTH CARE IS TO TALK ABOUT A FORM OF PROFIT SHARING THAT WHATEVER THEY SAVE THAT IT'S SPLIT EVENLY WITH THE EMPLOYEES. NOW, I DON'T KNOW IF WE'LL BE ABLE TO SAVE MONEY IN HEALTH INSURANCE, BUT IF WE'RE ABLE TO, THE BEST WAY TO EDUCATE PEOPLE ABOUT THEIR HEALTH CARE AND TO MAKE THEM USE PREVENTIVE MEASURES IS TO GUARANTEE THEM SOME MONEY AT THE END OF THE TRAIL IF THERE IS ANY COST SAVINGS.

Glover: SENATOR LAMBERTI, THERE ARE A COUPLE OF REVENUE ENHANCERS BUILT INTO THIS BUDGET. YOU TOUCHED ON THEM EARLIER. LET'S LOOK AT THOSE A LITTLE BIT. THERE'S ABOUT $25 MILLION THAT SOMEHOW IS GOING TO GET COLLECTED IN CORPORATE INCOME TAXES THAT WERE NOT COLLECTED CURRENTLY. WE'RE A LITTLE VAGUE ABOUT JUST HOW THAT'S GOING TO HAPPEN. AND THERE'S $80 MILLION THAT WE'RE GOING TO COLLECT IN INTERNET SALES SOMEHOW. WE'RE NOT TOLD QUITE HOW IT'S GOING TO HAPPEN. DO YOU UNDERSTAND HOW THIS IS GOING TO WORK, AND ARE THOSE ACHIEVABLE THIS YEAR?

Lamberti: WELL, AS I MENTIONED ON THE SALES TAX, ACTUALLY THEY HAVE ABOUT 25 THE FIRST YEAR, 80 THEREAFTER. WE'VE HAD A GROUP THAT'S BEEN WORKING WITH STATES ALL OVER THE COUNTRY ABOUT TRYING TO IMPLEMENT THIS STREAMLINE SALES TAX SYSTEM. AGAIN, I THINK SOME OF OUR PEOPLE ARE A LITTLE SKEPTICAL AS TO WHETHER OR NOT IT CAN OCCUR IN '04, AND I'M NOT SURE FROM A POLICY STANDPOINT THAT THE LEGISLATURE HAS DECIDED THAT'S WHERE WE WANT TO GO. SO THAT IS SOMETHING WE HAVE TO TAKE A LOOK AT. THE OTHER ONE IS WHAT'S REFERRED TO AS COMBINED REPORTING FOR CORPORATE INCOME TAX PURPOSES. I HAVE SOME CONCERNS THAT THAT IS ESSENTIALLY A TAX INCREASE, NOT JUST ON OUT-OF-STATE CORPORATIONS BUT IOWA CORPORATIONS AS WELL. SO AS I LOOK AT THAT, WE'VE POTENTIALLY GOT A $50-MILLION SHORTFALL IN HIS PROJECTED REVENUE IF WE DECIDE WE'RE NOT GOING TO DO EITHER ONE OF THOSE. COMPARED TO WHERE I'VE BEEN THE LAST COUPLE OF YEARS, $50 MILLION IS A PROBLEM WE CAN SOLVE.

Glover: WELL, LET'S BACK UP TO THAT INTERNET SALES TAX ISSUE. THE GOVERNOR ARGUES THAT THAT IS CURRENT LAW, THAT UNDER CURRENT LAW, THOSE TRANSACTIONS ARE SUBJECT TO SALES TAX. YOU SOUND LIKE YOU HAVE QUESTIONS ABOUT WHETHER THAT'S THE CASE AND ABOUT WHETHER YOU WANT TO ENFORCE IT.

Lamberti: UNTIL A SYSTEM IS IMPLEMENTED STATE -- OR COUNTRYWIDE THAT ALLOWS FOR THE COLLECTION OF THOSE TAXES, THERE'S NO EASY WAY TO ENFORCE THAT. TECHNICALLY I THINK HE'S CORRECT. THOSE ARE TO BE COLLECTED BUT YOU HAVE TO HAVE THE MECHANISMS IN PLACE TO DO THAT. THAT MAY OCCUR BUT THE FOLKS I'VE TALKED TO WHO ARE FAMILIAR ARE JUST UNSURE THAT WE COULD IMPLEMENT IT IN TIME TO GET $25 MILLION IN '04.

Glover: REPRESENTATIVE MURPHY, YOU'RE FROM A BORDER COUNTY. THIS WHOLE IDEA OF REVISING THE CORPORATE INCOME TAX STRUCTURE, TOUCHING OUT-OF-STATE COMPANIES, IS THAT POPULAR IN DUBUQUE?

Murphy: WELL, LISTEN, I THINK THE PART YOU HAVE TO REMEMBER IS IT'S A FORM OF TAX AVOIDANCE, AND THE PART THAT ISN'T FAIR IS YOU HAVE ALL THE PEOPLE IN IOWA THAT DO PAY THEIR TAXES AND THEN YOU HAVE WHETHER IT'S A -- WHICH BASICALLY IT'S A SHELL GAME WHERE YOU HAVE AN OUT-OF-STATE CORPORATION THAT'S CLAIMING OUT-OF-STATE SO THAT THEY CAN GET AWAY FROM PAYING TAXES IN THIS STATE. I THINK IT'S ONLY FAIR THAT THEY PAY THEIR FAIR SHARE. NOW, ON THE INTERNET ISSUE, I THINK THE WAY YOU GET THIS DONE -- AND THIS IS THE WAY THE GOVERNOR IS TALKING -- IS YOU GET A COMPACT OF STATES. AND JUST TO SHOW YOU -- AS SENATOR LAMBERTI TALKED, THE BIG PART IS COMPANIES DON'T WANT TO BE AUDITED BY ALL 50 STATES. SO THE GOAL IS IF THEY ONLY GET AUDITED ONCE OR HAVE TO DO THAT ONCE, THEN YOU WON'T HAVE -- THEY WON'T HAVE -- ONE, THEY WIN IN THAT SITUATION. SECONDLY, THE OTHER PART TOO IS EVERY STATE IS LOOKING AT IT FOR THE SAME REASON WE DISCUSSED EARLIER: EVERY STATE HAS A BUDGET CRISIS. AND INSTEAD OF RAISING TAXES ON THEIR CITIZENS, THEY WANT TO LOOK AT MAKING SURE THEY DO THE BEST JOB OF COLLECTING THE TAXES THAT THEY'RE CURRENTLY OWED. AND YOU ALSO HAVE FEDERATION GROUPS THAT ARE NOW AGREEING TO DO THIS NATIONWIDE. THERE WAS JUST A STORY ON THE WIRE SERVICE YESTERDAY SAYING THAT SOME GROUPS ARE GOING TO START SUPPORTING THIS. SO I THINK IT WILL HAPPEN.

Yepsen: SENATOR LAMBERTI, I WANT TO GO BACK TO THIS CORPORATE TAX ISSUE THAT MR. MURPHY JUST MENTIONED. YOU KNOW, I REALIZE REPUBLICANS GET A LOT OF CAMPAIGN MONEY FROM BUSINESSES AND FROM CORPORATIONS, BUT IT'S ALSO TRUE IOWA GIVES PRETTY FAVORABLE TREATMENT TO CORPORATIONS AND SINGLE FACTOR -- IN A SINGLE-FACTORED CORPORATE INCOME TAX. THE DEPARTMENT OF REVENUE TELLS ME THAT 90 PERCENT OF THESE CORPORATIONS AREN'T EVEN HEADQUARTERED IN IOWA. NOW, WHY SHOULD WE ALLOW SOME OUT-OF-STATE BUSINESS TO COME IN HERE AND DO BUSINESS BUT SET UP A SHELL CORPORATION OUTSIDE OF IOWA TO AVOID PAYING THEIR FAIR SHARE OF THE INCOME TAX?

Lamberti: THOSE ARE EXACTLY THE TYPES OF QUESTIONS WE WANT TO ASK FROM DEPARTMENT OF REVENUE: WHO WILL BE IMPACTED; WHAT IOWA COMPANIES WILL BE IMPACTED BEFORE WE DECIDE WHETHER OR NOT THAT'S FEASIBLE. WE JUST DON'T KNOW AT THIS POINT.

Yepsen: ANOTHER ISSUE IS CAN YOU KEEP EDUCATION OFF THE TABLE. EDUCATION SPENDING ACCOUNTS FOR 60 PERCENT OF THE STATE BUDGET. WHEN YOU TRY TO HOLD HARMLESS K-12 OR THE STATE UNIVERSITIES, YOU'RE TAKING OFF THE TABLE A BIG CHUNK OF CHANGE. IS THAT REALISTIC?

Lamberti: I THINK IT IS WHEN YOU LOOK AT THE LEVELS OF INCREASE THAT THE GOVERNOR HAS PROPOSED, PARTICULARLY K-12. WE'RE TALKING ABOUT A 2-PERCENT ALLOWABLE GROWTH, WHICH IS EXTREMELY LOW BY HISTORIC STANDARDS. NOT A LOT OF ADDITIONAL ADD-ONS FOR THEM. AND I THINK, PRIMARILY, THE OTHER AREAS OF EDUCATION ARE GOING TO SEE VERY SMALL INCREASES OR NO INCREASES.

Yepsen: MR. MURPHY, DO YOU AGREE WITH THAT? CAN EDUCATION BE KEPT OFF THE TABLE? AND MORE IMPORTANT --

Murphy: NO, GO AHEAD.

Yepsen: MORE IMPORTANTLY, SO THERE ARE NO INEFFICIENCIES IN EDUCATION THAT YOU CAN SQUEEZE OUT.

Murphy: WELL, I THINK THE CATCH THERE IS WITH EDUCATION. THAT IS THE ONE THING THAT WE HAVE THAT IS A STRONG SUIT FOR THIS STATE. AND I THINK WHEN WE TALK ABOUT -- WE SHOULDN'T JUST BE TALKING ABOUT COMMUNITY COLLEGES, THEIR $1-MILLION INCREASE WITH THE REGENTS. I THINK FULL FUNDING THE SALARIES IS THEIR BIGGEST ISSUE. ALONG WITH THAT, THE PRIVATE COLLEGES AND WHAT WE'RE DOING WITH K-12. YOU ALSO HAVE TO LOOK AT TWO OTHER PLACES, AND THAT'S THAT CLASS SIZE REDUCTION AND ALSO THE TEACHER QUALITY. AND I THINK THOSE TWO PIECES -- HE DOES HAVE AN INCREASE IN THERE FROM $40 MILLION TO $44.7 MILLION. SO I DO THINK THAT THOSE WILL BE A PRIORITY THAT WE WON'T TOUCH. BUT THE OTHER PART TOO IS THEY MAY BE PART OF WHAT -- WHAT WE'RE LOOKING AT IN REGARDS TO WHEN WE TALK ABOUT -- LIKE, WHEN WE TALK ABOUT THE HEALTH INSURANCE. IT WAS BROUGHT UP AS A DISCUSSION IN A SMALL GROUP YESTERDAY. MAYBE TO SAVE MONEY FOR THE STATE, MAYBE WE NEED TO LOOK AT COMBINING ALL FORM OF PUBLIC EMPLOYEES, WHETHER THEY'RE TEACHERS, CITIES AND COUNTIES, AS WELL AS STATE WORKERS, TO SEE IF WE CAN GET A CHEAPER -- OR LOWER COST ON OUR HEALTH INSURANCE.

Yepsen: DEAN MENTIONS, YOU KNOW, ASKED HOW WILL THIS BUDGET AFFECT PEOPLE. MR. MURPHY, SPECIFICALLY TO THAT EDUCATION ISSUE, IF YOU FOLKS PASS THE GOVERNOR'S PROPOSED BUDGET FOR STATE UNIVERSITIES, WILL THEY HAVE TO KEEP RAISING TUITIONS?

Murphy: WELL, I THINK THAT TUITION -- I THINK THAT THAT'S ONE. FIRST OF ALL, IT'S A BOARD OF REGENTS DECISION. BUT I THINK, SECONDLY, WE'LL SEE A MUCH -- INSTEAD OF SEEING THE 18-PERCENT INCREASE THAT YOU'VE SEEN OVER THE LAST THREE YEARS, WHERE IT'S ALMOST RISEN 50 PERCENT, I THINK THAT YOU'LL SEE MUCH MODEST INCREASES, IF THERE IS.

Yepsen: DO YOU AGREE WITH THAT, SENATOR?

Lamberti: I THINK WHAT'S PROPOSED IN THE BUDGET, IF THEY GET FULL FUNDING FOR THEIR SALARIES, BASED UPON WHAT THEY'VE DONE WITH TUITION OVER THE LAST COUPLE OF YEARS, NO, I DON'T THINK THEY NEED TO RAISE IT. I THINK THEY NEED TO MANAGE THE SITUATION A LITTLE BETTER.

Glover: SENATOR LAMBERTI, IF WE COULD STEP BACK AND LOOK AT THE GENERAL TENOR OF THE RHETORIC WE HEAR AROUND THE STATEHOUSE, THE GENERAL TENOR SEEMS TO BE WE'VE BEEN THROUGH SOME TOUGH TIMES BUT THINGS ARE KIND OF STARTING TO TURN AROUND NOW, STARTING TO LOOK UP A LITTLE BIT. THERE'S A LITTLE BIT OF OPTIMISM, MAYBE, IN THE AIR. I'D LIKE TO LOOK AT THE SOURCE OF THAT OPTIMISM. WE'RE ABOUT TO GO TO WAR WITH IRAQ. THE MARKET IS TANKED. WE'RE GOING TO GET ANOTHER BUDGET -- OR TAX CUT DUMPED ON US. WHY DO YOU THINK YOU'RE GOING TO GET HELP BY THE FEDERAL GOVERNMENT? AREN'T YOU ABOUT TO GET WHACKED AGAIN?

Lamberti: I'M NOT COUNTING ON HELP FROM THE FEDERAL GOVERNMENT, AND I'M NOT SURE WE NEED IT.

Glover: BUT AREN'T THEY ABOUT TO STICK IT TO YOU AGAIN?

Lamberti: I DON'T THINK SO. I'M NOT WORRIED ABOUT WHAT THE FEDERAL GOVERNMENT IS GOING TO DO. I THINK WE CAN SOLVE MOST OF OUR PROBLEMS ON OUR OWN. THE REASON FOR THE OPTIMISM IS BECAUSE I THINK WE HAVE A COMMON UNDERSTANDING THAT WHAT WE NEED TO DO IS GROW OUR ECONOMY. I'VE NOT SEEN THIS KIND OF ATTITUDE IN MY NINE YEARS, AND I'M OPTIMISTIC THAT WE'RE GOING TO SEE SOME BIG THINGS HAPPEN THAT WE HAVEN'T ACHIEVED FOR A LONG TIME.

Glover: REPRESENTATIVE MURPHY, THE CORE PROBLEM THAT YOU'VE FACED FOR THE LAST COUPLE OF YEARS IS THE ECONOMY IS TANKED. IS THERE SOME REASON TO THINK THAT THAT'S GOING TO TURN AROUND? IF SO, FILL ME IN.

Lamberti: WELL, I THINK FIRST OF ALL, I THINK THE BEST EXAMPLE WE CAN USE THAT HAS BEEN A BUDGET SITUATION FOR US HAS BEEN MEDICAID, PLUS YOU TAKE A LOOK AT THE STATE GENERAL RECEIPTS. WE'VE HAD NEGATIVE NUMBERS THE LAST TWO YEARS. AND THE R.E.C. NOW, THE REVENUE ESTIMATING CONFERENCE, HAS THAT NUMBER AT A POSITIVE NUMBER. NOW, GRANTED IT'S .3 PERCENT. BUT IF YOU TAKE A LOOK AT THE ESTIMATES RIGHT NOW, THEY'RE RUNNING BETWEEN 1 AND 2 PERCENT. THE ECONOMY IS LOOKING UP FOR THE STATE OF IOWA. I THINK ON MEDICAID, THOUGH, WHEN YOU TAKE A LOOK AT THAT, THE NUMBERS -- HISTORICALLY WHEN THE ECONOMY IS GOOD, WE END UP WITH A SURPLUS OF MONEY COMING BACK FROM MEDICAID. WHEN THE ECONOMY IS BAD, WE CAN'T PUT ENOUGH MONEY INTO IT. IF YOU LOOK OVER THE LAST THREE YEARS, WE'VE ENDED UP WITH 30,000 PEOPLE ON MEDICAID THAT WEREN'T THERE THREE YEARS AGO. AND IF THAT NUMBER STABILIZES OR GOES DOWN, I THINK WE HAVE A VERY MANAGEABLE BUDGET AND I THINK THINGS ARE IMPROVING IN IOWA.

Yepsen: SENATOR LAMBERTI, I WANT TO ASK YOU ABOUT TAXES. I REALIZE YOU DON'T HAVE -- YOU DON'T WRITE TAXES; YOU JUST SPEND THE MONEY IT RAISES. BUT GIVEN THE BUDGET SITUATION THAT THE STATE FACES AND THE UNCERTAINTY THAT MIKE JUST MENTIONED, IS IT REALISTIC FOR THIS LEGISLATURE TO DO MAJOR REWRITES OF THE INCOME TAX LAW AND THE PROPERTY TAX LAW? I KNOW YOU FOLKS WOULD LIKE TO DO THOSE THINGS, BUT DO YOU THINK THAT'S A REALISTIC THING TO DO?

Lamberti: WELL, I THINK THERE'S THREE MAJOR COMPONENTS TO GROWTH -- TO GROWING OUR ECONOMY, AND NUMBER ONE IS THE TAX STRUCTURE. I'M NOT SURE WE'RE GOING TO DO AS MUCH IN TERMS OF REDUCING INCOME TAXES AS I WOULD LIKE TO SEE, BUT I THINK WE'RE GOING TO START THE PROCESS AND I'M HOPEFUL WE'LL HAVE A MAJOR OVERHAUL IN TERMS OF SIMPLIFICATION. I THINK WE COULD DO SOME THINGS ON PROPERTY TAXES AS WELL. YEAH, I THINK WE CAN AND I THINK THE TIME IS NOW WHEN WE HAVE TO BE A LITTLE BOLD AND A LITTLE AGGRESSIVE AND BE WILLING TO TAKE SOME RISKS. BUT I THINK WE HAVE TO DO THAT, BECAUSE THAT IS THE MOST IMPORTANT COMPONENT IN GROWTH. YOU HAVE REGULATORY AND THEN YOU HAVE, WHAT, STATE ASSISTANCE, AND THOSE ARE GOING TO BE IMPORTANT. AND I THINK WE'RE GOING TO MAKE SIGNIFICANT PROGRESS THERE, BUT TAXES ARE WHAT DRIVE ECONOMIC GROWTH.

Yepsen: MR. MURPHY, IS IT REALISTIC TO BE TINKERING AROUND WITH YOUR TAX SOURCES AT A TIME WHEN YOU HAVE VERY LIMITED REVENUE?

Murphy: WELL, I THINK WHEN YOU LOOK AT THAT, I THINK ONE OF THE THINGS THAT NEEDS TO BE ADDRESSED IS THE WAY THAT WE HAVE OUR TAX STRUCTURE SET UP. AND WE HAVEN'T HAD CHANGES TO IT. AND IF YOU LISTEN TO THE GOVERNOR'S ADDRESS AND IF YOU LISTEN TO ESPECIALLY LEGISLATORS IN A RURAL AREA, THE FIRST THING -- THE FIRST THINGS THEY'LL BRING UP IS WE'VE GOT TO CHANGE OUR TAX STRUCTURE. AND THE GOVERNOR'S BIGGEST APPLAUSE ON THE DAY THAT HE SPOKE TO THE LEGISLATURE PROBABLY, IF IT WASN'T REWRITING OUR TAX STRUCTURE, IT HAD TO BE ONE OF THE TOP TWO OR THREE APPLAUSES. I THINK THAT'S ONE AREA WHERE I THINK YOU WILL GET SOME COMMON GROUND, BECAUSE PEOPLE, ONE, FEEL LIKE WE NEED TO CHANGE HOW WE DEAL WITH OUR PROPERTY TAX STRUCTURE. SO I THINK IT'S POSSIBLE THAT WE WILL CHANGE IT.

Glover: SENATOR LAMBERTI, I KNOW THAT THE STATE IS IN NEGOTIATION WITH THE MAJOR STATE EMPLOYEE UNIONS FOR A NEW PAY PACKAGE AND YOU'RE RELUCTANT TO TALK ABOUT DETAILS. BUT TELL ME IN GENERAL TERMS HOW MUCH DO YOU THINK THE STATE CAN AFFORD FOR A PAY INCREASE BEFORE SOME PRETTY DRACONIAN THINGS HAVE TO START HAPPENING TO STATE WORKERS.

Lamberti: MY INITIAL READING OF THE BUDGET IS -- I KIND OF TIE THAT CLOSELY TO THAT FIGURE OF THE CUTS THAT WE CAN ACHIEVE, THE $88 MILLION THAT THE GOVERNOR HAS PROPOSED. I DON'T THINK IT NEEDS TO BE THAT HIGH, BUT THAT KIND OF SETS MY PARAMETERS FOR WHAT I THINK I CAN DO, AS OPPOSED TO THE ENDING BALANCE, BECAUSE I THINK WE HAVE SOME OTHER PROBLEMS WITHIN THE BUDGET AND WE MAY NEED SOME FLEXIBILITY. SO I'M LOOKING TO TIE THAT TO THE NUMBER OF CUTS THAT WE CAN ACHIEVE.

Glover: SO THE AMOUNT THAT YOU CAN CUT OUT OF THE STATE BUDGET IN STREAMLINING IS HOW MUCH YOU CAN AFFORD IN PAY INCREASES.

Lamberti: I THINK THEY'RE GOING TO BE CLOSELY RELATED.

Glover: REPRESENTATIVE MURPHY, WHAT'S YOUR VIEW OF THAT? THE STATE EMPLOYEE UNION IS A BIG DEMOCRATIC INTEREST GROUP. HOW MUCH CAN YOU AFFORD TO GIVE THEM THIS YEAR?

Murphy: WELL, FIRST OF ALL, I THINK WE NEED TO TAKE A LOOK AT WHERE COLLECTIVE BARGAINING IS GOING TO BE. AND WE DON'T KNOW WHERE THE BIGGEST GROUP IS; AFSCME STILL IS NEGOTIATING THEIR CONTRACT. BUT IN THE GOVERNOR'S BUDGET WITH WHAT HE SUBMITTED, THAT'S WITH THE $88 MILLION IN THE REINVENTION OF GOVERNMENT AND WITH THE STREAMLINING OF THE SALES TAX, HE HAS $128-MILLION ENDING BALANCE. NOW, WE NEED 1 PERCENT OF THAT TO ROLL INTO THE CASH RESERVE FUND. THAT STILL LEAVES ABOUT ROUGHLY $80 MILLION OUT THERE TO DEAL WITH THE ISSUE OF SALARIES AND WAGES. SO I THINK WE HAVE TO WAIT AND SEE WHAT THEY DO WITH COLLECTIVE BARGAINING. BUT IF YOU LOOK AT WHAT THE STATE POLICE OFFICERS' COUNCIL AND SOME OF THE OTHER GROUPS HAVE ALREADY AGREED TO, I THINK THAT WE'LL BE ABLE TO WORK THAT OUT, BECAUSE IT TALKS ABOUT 1- TO 2-PERCENT INCREASES.

Glover: SO YOU BOTH ARE TALKING ABOUT AROUND $80 MILLION FOR STATE EMPLOYEE PAY INCREASES. HE'S GOING TO GET IT FROM CUTTING, YOU'RE GETTING IT FROM THE ENDING BALANCE, BUT THE AMOUNT IS ABOUT THE SAME.

Murphy: WELL, I WOULDN'T -- LET'S JUST WAIT AND SEE WHAT THEY AGREE TO FIRST. THAT'S WHAT I WOULD SAY.

Yepsen: SENATOR LAMBERTI, WHAT ABOUT LAYOFFS? WILL THIS BUDGET -- AT THE END OF THE DAY, WILL YOU STILL BE HAVING TO LAYOFF OR FURLOUGH STATE WORKERS?

Lamberti: IF THERE WOULD BE ANY, I THINK THEY WOULD BE VERY LIMITED.

Borg: SENATOR LAMBERTI, TALKING ABOUT SALARIES, MICHAEL BLOUIN'S SALARY, AS NEW HEAD OF THE ECONOMIC DEVELOPMENT DEPARTMENT, IS AUGMENTED FROM A PRIVATE SOURCE. DOES THAT CONCERN YOU AS A STATE LEGISLATOR AND AS AN ATTORNEY TO HAVE PRIVATE SOURCES BEGIN TO AUGMENT STATE SALARIES? AND MAYBE THESE COMPANIES THAT ARE CONTRIBUTING HAVE A VESTED INTEREST.

Lamberti: WELL, I'M GOING TO LET THE SPECIFICS OF THAT CASE KIND OF COME OUT BECAUSE I REALLY CAN'T COMMENT NOT KNOWING ALL THE DETAILS. BUT, YEAH, I HAVE SOME CONCERNS ABOUT HOW WE STRUCTURE THAT. AND I THINK IN THAT CASE, IT'S PROBABLY IMPORTANT FOR US TO START TO CONSIDER WHAT WE PAY SOME OF OUR TOP LEVEL ADMINISTRATORS. OF COURSE, IN TIGHT BUDGET TIMES, I DON'T THINK WE'RE GOING TO BE OUT THERE RECOMMENDING RAISES. BUT IT IS SOMEWHAT BOTHERING TO HAVE PRIVATE SOURCES HAVING TO AUGMENT OUR STATE SALARIES.

Glover: REPRESENTATIVE MURPHY, DO YOU HAVE CONCERNS ABOUT THAT?

Murphy: WELL, I'VE TALKED TO THE GOVERNOR'S OFFICE, AND THE WORD I'VE BEEN TOLD IS THAT THE PAYMENT FOR THAT IS COMING OUT OF THE GENERAL FUND. SO I ASSUME THAT -- I THINK WE HAVE TO WAIT AND SEE WHERE IT LEADS. BUT FROM WHAT I'M HEARING, IT WILL BE FROM THE GENERAL FUND.

Glover: ONE ISSUE IN THE NEXT BUDGET IS MEDICAID. BY THE TIME YOU FACTOR IN SUPPLEMENTALS, THE GOVERNOR IS SPENDING LESS NEXT YEAR ON MEDICAID THAN THIS YEAR. IS THAT REALISTIC?

Murphy: WELL, I THINK IT ALL GOES BACK TO WHETHER OR NOT WE CAN GET, ONE, COST SAVINGS. YOU HAVE A LEGISLATIVE GROUP THAT'S -- IN THE HOUSE SIDE, I'M NOT SURE WHO THE SENATORS ARE, BUT YOU HAVE REPRESENTATIVE FOEGE AND YOU HAVE REPRESENTATIVE DANNY CARROLL --

Borg: I HAVE TO INTERRUPT. I'M SORRY.

Murphy: OKAY, I'M SORRY.

Borg: WE'RE OUT OF TIME AND I APOLOGIZE. THANK YOU VERY MUCH. ON OUR NEXT EDITION OF "IOWA PRESS," WE'RE QUESTIONING ONE OF THE VILSACK ADMINISTRATION'S HIGH-PROFILE NEWCOMERS. HE JUST MENTIONED HIS NAME A MOMENT AGO: MIKE BLOUIN, THE NEW DIRECTOR OF THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT. HE'S A FORMER CONGRESSMAN, CHAMBER OF COMMERCE EXECUTIVE, AND COMMUNITY COLLEGE ADMINISTRATOR. WE'LL DISCUSS ECONOMIC DEVELOPMENT WITH MIKE BLOUIN NEXT FRIDAY AT 6.30 AND SUNDAY AT NOON. AND THAT'S THIS WEEK'S EDITION OF "IOWA PRESS." I'M DEAN BORG. THANKS FOR JOINING US TODAY.

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