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Michael Blouin,
Director of the Iowa Department of Economic Development

(#3044)
June 20, 2003

IOWA PRESS #3044 >>

Yepsen: WITH THE NATIONAL ECONOMY IN A CONTINUING SLUMP, IOWA'S ECONOMIC FUTURE REMAINS UNCERTAIN. WE GET A STATUS REPORT AND ASSESS IOWA'S PROSPECTS WITH MICHAEL BLOUIN, DIRECTOR OF THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, 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, JUNE 20 EDITION OF "IOWA PRESS." HERE IS DAVID YEPSEN.

Yepsen: FOR THE TIME BEING, AT LEAST, GOVERNOR TOM VILSACK TOOK SOME OF THE SUSPENSE OUT OF THE POLICY CONFRONTATION BETWEEN THE EXECUTIVE AND LEGISLATIVE BRANCHES OF IOWA GOVERNMENT. THREE WEEKS AFTER THE SPECIAL LEGISLATIVE SESSION, THE DEMOCRATIC GOVERNOR USED HIS LINE-ITEM VETO POWERS TO STRIKE DOWN SOME OF THE ADD-ON MEASURES FORWARD TO HIM BY THE REPUBLICAN-CONTROLLED IOWA GENERAL ASSEMBLY. NOW, THIS IS SETTING UP WHAT MANY SEE AS A LENGTHY LEGAL SHOWDOWN IN THE COURTS BETWEEN THE TWO BRANCHES. SURVIVING, THOUGH, IS THE GOVERNOR'S TOP ECONOMIC DEVELOPMENT PRIORITY, THE IOWA VALUES FUND, AND MILLIONS OF DOLLARS ARE GOING INTO THAT FUND OVER THE NEXT FEW YEARS. TODAY ON "IOWA PRESS," WE TAKE A BREAK FROM THE POLICY AND THE POLITICS OF THE PROCESS BEHIND US TO SEEK A STATUS REPORT ON THE STATE'S ECONOMY, AND WE LOOK TO THE FUTURE AS WELL. MICHAEL BLOUIN IS THE DIRECTOR OF THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, AND HE'S MOVED IN HIS CAREER FROM THE PUBLIC SECTOR TO THE PRIVATE SECTOR AND BACK AGAIN. MR. BLOUIN SERVED IN BOTH THE IOWA SENATE AND THE IOWA HOUSE OF REPRESENTATIVES, AND HE REPRESENTED NORTHEAST IOWA IN THE UNITED STATES CONGRESS. AFTER LEAVING ELECTIVE OFFICE, MR. BLOUIN SERVED AS PRESIDENT OF THE CEDAR RAPIDS AREA CHAMBER OF COMMERCE AND THEN AS CEO AND PRESIDENT OF THE GREATER DES MOINES PARTNERSHIP. MR. BLOUIN, GOOD TO HAVE YOU BACK WITH US.

Blouin: GLAD TO BE BACK. VERY GOOD TO BE HERE.

Yepsen: THANKS FOR BEING HERE.

Blouin: THANK YOU.

Yepsen: ALSO WITH US AT THE "IOWA PRESS" TABLE ARE KATHIE OBRADOVICH, THE DES MOINES BUREAU CHIEF WITH "THE LEE NEWSPAPERS," AND MIKE GLOVER, SENIOR LEGISLATIVE AND POLITICAL REPORTER WITH THE "ASSOCIATED PRESS."

Glover: MR. BLOUIN, AS DAVID MENTIONED, THE GOVERNOR USED HIS ITEM VETO POWER TO KNOCK DOWN SOME SECTIONS OF THE STIMULUS PACKAGE. NOW REPUBLICANS QUICKLY SAID THEY'RE GOING TO TAKE HIM TO COURT AND FILE SUIT, CHARGING HE EXCEEDED HIS AUTHORITY. WHAT'S THE DANGER THAT THE STATE'S ECONOMIC DEVELOPMENT EFFORT IS GOING TO BE UNDER A LEGAL CLOUD FOR THE NEXT YEAR OR SO?

Blouin: I DON'T THINK THERE'S MUCH DANGER AT ALL, MIKE. NOTHING WAS DONE OF ANY CONSEQUENCE AT ALL TO THE IOWA VALUES FUND PORTIONS OF EITHER BILL. AND I'VE BEEN TOLD THAT IN ORDER TO SERVE ANY KIND OF AN INJUNCTION OR STAYING ORDER ON A PROGRAM OF THAT NATURE, YOU HAVE TO BE ABLE TO DEMONSTRATE THAT SOME HARM HAS BEEN DONE TO IT THAT WOULD BE RESTORED IF THE CASE WENT AGAINST THE GOVERNOR. AND SINCE NOTHING HAS BEEN TOUCHED, I THINK IT'S RATHER DIFFICULT TO CONJURE UP A SUCCESSFUL INJUNCTION. EITHER WAY, WE'RE LEAVING ALL OF THAT UP TO THE LAWYERS. OUR JOB NOW IS TO TAKE WHAT THE LEGISLATURE GAVE US, WHAT THE GOVERNOR HAD BEEN TALKING ABOUT FOR FIVE MONTHS, AND MAKE IT WORK.

Glover: WELL, THE PROBLEM YOU FACE IS GOING TO BUSINESSES AND SAYING, HERE'S WHAT I HAVE TO OFFER YOU, MAYBE.

Blouin: OH, I DON'T THINK THERE'S ANY MAYBE ABOUT IT. THIS IS WHAT WE HAVE TO OFFER. IF THERE'S AN INJUNCTION, THE COURT WILL KNOW IT RATHER QUICKLY. WE'LL KNOW IT QUICKLY. BUT IN THE MEANTIME, IT'S GOING TO BE A MONTH OR TWO, PROBABLY TWO MONTHS BEFORE WE ARE ADMINISTRATIVELY IN A POSITION WITH A NEW BOARD, REGULATIONS IN PLACE AND SO ON, TO BE ABLE TO MAKE ANY KIND OF COMMITMENTS AT ALL ANYWAY. AND THAT'S PLENTY OF TIME FOR SOME OF THIS TO SHAKE OUT.

Obradovich: WELL, LET'S TALK A LITTLE BIT ABOUT --

Blouin: SURE.

Obradovich: -- WHAT THE LEGISLATURE ACTUALLY GAVE YOU. WE'VE BEEN TALKING ABOUT A $503-MILLION IOWA VALUES FUND, BUT THERE'S SOME ASSUMPTIONS BUILT IN THAT AFFECT HOW MUCH MONEY IS ACTUALLY THERE, RIGHT? I MEAN THE OUTYEARS HAVE TO BE APPROPRIATED. FOR EXAMPLE, IN THE LEGISLATURE, THEY DIDN'T ACTUALLY APPROPRIATE THE MONEY FOR YEARS, I THINK, THREE, FOUR, AND FIVE. YOU KNOW, WHAT IS YOUR VIEW OF WHAT YOU ACTUALLY HAVE TO WORK WITH?

Blouin: WELL, IT'S A SEVEN-YEAR PROGRAM. MONEY IS APPROPRIATED FOR SEVEN YEARS. IT'S ALLOCATED FOR THE FIRST FOUR, WITH THE DIRECTIVE THAT THE REVIEW COMMISSION, WHICH IS APPOINTED AND ESTABLISHED THROUGH THIS LAW, REPORT TO THE LEGISLATURE ON THE PROGRESS MADE ABOUT THE FIRST OF JANUARY IN 2007. AND THEN THE LEGISLATURE HAS TO TAKE ACTION ON LEGISLATION THAT WOULD EITHER SUNSET THE PROGRAM OR FUND IT OUT FOR THE LAST THREE YEARS. I DON'T HAVE A PROBLEM WITH THAT. I'VE SAID SINCE MY FIRST COMMITTEE MEETING IN EARLY JANUARY THAT WE OUGHT TO BE HELD ACCOUNTABLE, THAT THERE SHOULD BE A DATE CERTAIN, AND THAT IF IT DOESN'T WORK, IT SHOULD BE TERMINATED. SO THAT PART DOESN'T BOTHER ME AT ALL. AS A MATTER OF FACT, I LIKE ACCOUNTABILITY. THE MONEY SIDE IS PRETTY SOLID FOR THE FIRST FOUR YEARS: $64 MILLION EACH OF THE FIRST TWO YEARS AND 75 THE NEXT TWO YEARS. AND THAT IS MORE MONEY THAN THE DEPARTMENT HAS HAD EVER TO DO ECONOMIC DEVELOPMENT AND MORE THAN ANYBODY EVER DREAMED WAS POSSIBLE.

Obradovich: WHAT ABOUT THE ASSUMPTIONS, THOUGH, ABOUT THE SOURCE OF FUNDING? YOUR FIRST TWO YEARS THE MONEY COMES FROM THE FEDERAL GOVERNMENT; YOU KNOW YOU'RE GOING TO HAVE THAT MONEY. BUT WHAT ABOUT THE OTHER TWO YEARS ON THE STREAMLINE SALES TAX? ISN'T THERE SOME POSSIBILITY THAT THAT MONEY MAY NOT BE THERE, AND IS THERE SOME FURTHER LEGISLATIVE ACTION THAT NEEDS TO BE TAKEN TO ENSURE THAT?

Blouin: WELL, RIGHT NOW I WOULD SAY LEAVE IT ALONE. LET'S SEE HOW IT WORKS. THE REVENUE DEPARTMENT HAS SAID THAT THE STREAMLINED SALES TAX, REMOTE SALE INCOME WILL GENERATE SUFFICIENT MONEYS ONCE IT'S FULLY IMPLEMENTED TO ALLOW US TO FUNCTION. AND WE'LL KNOW IN THE SECOND YEAR HOW THAT'S WORKING. AND IF THE LEGISLATURE IS CONCERNED, THEY CAN MAKE SOME ADJUSTMENTS. BUT RIGHT NOW I THINK WE'RE OKAY.

Glover: THIS IS NOT REALLY A QUESTION FOR YOU, IT'S A QUESTION FOR THE LAWYERS, BUT YOU HAVE TO DEAL WITH IT AS A POLICYMAKER. WHAT HAPPENS IF THE GOVERNOR LOSES THIS LAWSUIT?

Blouin: WELL, AGAIN, IT DOESN'T AFFECT THE VALUES FUND. EVERYTHING IS THE SAME IN THE VALUES FUND WHETHER HE WINS OR LOSES. HE WAS VERY CAREFUL TO NOT VETO ANYTHING OUT OF THE VALUES FUND. AND THE POLICY IMPLICATIONS ON THAT QUESTION GO BEYOND ME. I WOULD JUST SAY, FROM OUR PERSPECTIVE, WE'LL CONTINUE TO WORK.

Yepsen: BUT, MR. BLOUIN, WHAT WE'VE BEEN TALKING ABOUT HERE IS WHAT WE EXPECT TO BE A LAWSUIT FROM REPUBLICANS IN THE LEGISLATURE CHALLENGING HIS ITEM-VETO AUTHORITY.

Blouin: SURE.

Yepsen: THERE IS ANOTHER WAY LAWYERS MAY GET AT THIS, AND THAT IS THAT THE TITLE OF THE BILL AS PASSED BY THE LEGISLATURE WAS TOO BROAD, IT DID TOO MANY THINGS. OUR STATE CONSTITUTION SAYS ONE THING AT A TIME, BOYS. SO ARE YOU WORRIED AT ALL ABOUT A SECOND LEGAL ATTACK ON THIS WHOLE THING, WHICH WOULD BE AN ATTACK BY THE TRIAL LAWYERS ASSOCIATION OR OTHER LAWYERS WHO ARE SAYING THIS THING IS TOO BROAD, IN WHICH CASE THE COURT SHOULD STRIKE DOWN THE WHOLE LAW?

Blouin: WELL, AGAIN, IT'S OUTSIDE OF MY AREA. BUT IT SEEMS TO ME THAT TITLES HAVE BEEN LONG FOR MANY, MANY YEARS, AND COURTS HAVE CONTINUALLY UPHELD THAT AS A WAY OF DEALING WITH SINGLE ISSUES. AS LONG AS IT'S MENTIONED IN THE TITLE, THE CONTENT MATCHES UP AND YOU'RE OKAY.

Yepsen: AND YOU ALSO -- YOU MENTIONED TO KATHIE YOU WERE COMFORTABLE WITH THIS PROCESS. BUT IT DOES SEEM TO A LOT OF PEOPLE THAT IT'S BUREAUCRATIC, THAT THE SYSTEM YOU HAVE TO USE TO ACTUALLY MAKE GRANTS -- YOU'RE NOT WORRIED ABOUT THAT BEING TOO CUMBERSOME AND TOO BUREAUCRATIC?

Blouin: OH, IT IS BUREAUCRATIC, VERY BUREAUCRATIC, VERY CUMBERSOME, LADEN WITH BOARDS AND COMMITTEES AND REPORTS AND REQUIREMENTS. MY GOAL, DAVID, IS TO ABSORB THAT BUREAUCRACY INTERNALLY SO THAT IT'S SEAMLESS FOR THE COMPANY SO THAT THEY DON'T SEE THE BUREAUCRACY.

Yepsen: AND ARE YOU WORRIED THAT COMPANIES COMING INTO IOWA, NOW THAT THEY SEE THIS POT OF MONEY, THAT ALL OF A SUDDEN EVERYBODY IS GOING TO JACK UP THEIR PRICE? YOU'VE GOT EVERYTHING COMING TO YOU, "YEAH, MIKE BLOUIN, I'LL COME THERE BUT YOU'VE GOT TO GIVE ME A PIECE OF THE ACTION."

Blouin: YEAH, THAT'S ALREADY STARTED. YOU SAW THAT DURING THE DEBATE THROUGH THE LAST FEW MONTHS WHEN COMPANIES WHO MIGHT NORMALLY ASK FOR HALF A MILLION ARE NOW SAYING WE NEED ANOTHER ZERO ON THAT. WHY, I DON'T KNOW BUT ALL OF A SUDDEN WE NEED ANOTHER ZERO. THAT'S WHERE A BOARD COMES IN. THAT'S WHERE PRIVATE SECTOR INPUT TENDS TO EQUALIZE THOSE THINGS OUT. THAT ISN'T JUST THERE FOR WINDOW DRESSING. THIS IS GOING TO BE A WORKING BOARD FILLED WITH PEOPLE ACTIVELY EMPLOYED IN THE PRIVATE SECTOR FROM DIFFERENT TYPES OF EXPERTISE, AND WE'LL FIND A WAY TO KEEP THAT FROM HAPPENING. THERE MAY BE SOME LARGE ONES BUT THE BULK OF THEM AREN'T GOING TO BE THAT BIG.

Glover: MR. BLOUIN, LET'S TAKE A FEW CONCRETE STEPS FROM HERE. THE GOVERNOR HAS TAKEN HIS ACTION LAST WEEK. WALK ME THROUGH THE NEXT COUPLE OF MONTHS. WHAT HAPPENS FROM HERE WITH THIS THING?

Blouin: WELL, WE'RE ALREADY BEGINNING THE PROCESS OF TRYING TO PUT A BOARD TOGETHER. WE'RE GETTING RECOMMENDATIONS FROM ALL OVER THE STATE, FROM EVERY INTEREST GROUP AND INDIVIDUAL CITIZENS, ON WHAT TYPE OF PEOPLE AND SPECIFICALLY WHO SHOULD BE ON THAT BOARD. THE BILL IS FILLED WITH REQUIREMENTS. MOST OF THE BOARD MEMBERS WILL HAVE TO WEAR TWO HATS. AN 11-MEMBER BOARD: 2 WILL BE OFFICERS; 5 WILL BE -- DO DILIGENCE COMMITTEE... WE CURRENTLY CALL THAT THE FINANCE COMMITTEE, BUT IT'S THE SAME THING; AND 2 MORE WILL BE PART OF THE 7-MEMBER MARKETING BOARD. SO 9 OF THE 11 WILL HAVE TWO HATS, WHICH MEANS THE WORKLOAD IS GOING TO BE SUBSTANTIALLY GREATER THAN ALMOST ANY BOARD IN STATE GOVERNMENT. AND IT'S GOING TO BE DIFFICULT TO FIND THOSE FOLKS THAT FILL ALL OF THE NITCHES REQUIRED BY LAW TO SERVE IN THAT ROLE AND GIVE THE TIME NECESSARY, BUT WE HOPE TO DO IT RATHER QUICKLY, THE NEXT FEW WEEKS AT TOPS. AT THE SAME TIME, WE'RE MOVING AHEAD IN THE DEPARTMENT WITH WHAT I CALL FAST-TRACK REGULATIONS THAT WE CAN IDEALLY PUT IN FRONT OF A NEW BOARD MID AUGUST SO THAT WE'RE IN BUSINESS WHILE PERMANENT REGULATIONS ARE BEING WRITTEN, AND THAT'S GOING TO TAKE A LOT LONGER. ONCE THE FULL BOARD IS IN PLACE, WE'LL START TO FILL OUT THE OTHER BOARDS THAT ARE MANDATED BY THE LAW. WE'LL START TO ESTABLISH WAYS OF MEASURING THE RETURN ON INVESTMENT; BEGIN TO REFINE OUR CURRENT PROGRAM REGULATIONS SO THAT THEY MATCH UP; COME IN WITH A SINGLE APPLICATION PROCESS SO, AGAIN, IT'S SEAMLESS FROM A COMPANY'S PERSPECTIVE; AND HOPEFULLY BE IN BUSINESS SOMETIME IN THE SECOND HALF OF AUGUST. WE'RE GOING TO BEGIN MARKETING ALMOST IMMEDIATELY, BUT IT'S GOING TO TAKE US A COUPLE OF MONTHS TO GET FUNCTIONAL.

Glover: AND WALK ME THROUGH WHAT YOU HAVE TO OFFER TO A COMPANY. LET'S SAY COMPANY "A" IS THINKING ABOUT RELOCATING TO IOWA, OPENING A FACILITY IN IOWA, EXPANDING A FACILITY IN IOWA. WHAT IS IT THAT THIS BILL SPECIFICALLY AND CONCRETELY GIVES YOU TO OFFER THEM?

Blouin: WELL, IT'S THIS BILL COUPLED WITH CURRENT LAW. THIS BILL ALLOWS US TO PUT LARGER CHUNKS OF MONEY IN BOTH FORGIVABLE LOANS AND REPAYABLE LOANS, UP-FRONT GRANTS, CONVERTIBLE GRANTS, IN LARGER QUANTITIES AND IN LARGER QUALITY THAN WE'VE EVER BEEN ABLE TO DO BEFORE; RETRAINING MONEY TO HELP MODERNIZE OUR CURRENT MANUFACTURING BASE IN QUANTITIES THAT HAVE NEVER EXISTED BEFORE, MATCHED UP WITH TAX CREDITS UNDER CURRENT LAW; LOCAL JOB TRAINING PROGRAMS THROUGH THE COMMUNITY COLLEGES THAT HAVE BEEN AMONG THE BEST IN THE NATION SINCE THE EARLY '80S; AND TOOLS THAT THE LOCAL GOVERNMENTS CAN PUT ON THE TABLE AS WELL. SO WHAT WE HAVE ESSENTIALLY DONE IS ADDED TO THE TOOLBOX THAT THE STATE HAS HAD THAT HAS BEEN PRETTY EMPTY AND GIVEN US SOME REAL ABILITY TO LEVERAGE MEANINGFUL PROJECTS.

Obradovich: ONE OF THE BIGGEST CRITICISMS YOU HEAR OF THIS TYPE OF PROCESS, WHERE IT'S THE STATE AND YOU HAVE THE STATE MONEY AND THE STATE IS DECIDING WHO GETS THE MONEY, IS THAT THE STATE HISTORICALLY, PEOPLE SAY, DOESN'T HAVE A VERY GOOD TRACK RECORD OF PICKING WINNERS AND LOSERS. HOW DO YOU ANSWER THAT AND HOW DO YOU SHOW THAT YOU ARE GOING TO BE DOING A GOOD JOB OF PICKING THE WINNERS?

Blouin: WELL, FIRST OF ALL, WE'RE NOT IN A VENTURE CAPITAL GAME HERE. THIS WILL NOT BE A WINNER/LOSER SELECTION PROCESS LIKE AN EQUITY INVESTOR WOULD GO THROUGH. THERE ARE VENTURE CAPITAL LAWS THAT HAVE BEEN PUT INTO EFFECT IN THE LAST COUPLE OF YEARS IN THIS STATE, AND WE'LL WORK WITH THEM. THERE ARE RESEARCH AND DEVELOPMENT CAPABILITIES IN THE STATE AT THE UNIVERSITIES AND IN PRIVATE SETTINGS, AND WE'LL WORK WITH THEM TOO. THIS WILL BE TRYING TO ATTRACT EXISTING SUCCESSFUL COMPANIES FROM AROUND THE WORLD AND AROUND THE COUNTRY, HELPING EXISTING BUSINESSES WHO HAVE HAD A TRACK RECORD HERE GROW, FINDING WAYS TO START NEW COMPANIES THAT SPIN OFF THE TECHNOLOGY THAT WE'RE DEVELOPING. AND OUR TRACK RECORD HAS BEEN PRETTY GOOD, KATHIE. IN THE LAST FOUR YEARS, 90 PERCENT OF THE OVER 650 PROJECTS THAT THE STATE HAS PUT MONEY INTO ARE STILL IN BUSINESS MEETING THEIR GOAL. AND OF THE 10 PERCENT THAT HAVE FAILED, WE'VE RECOVERED 25 PERCENT OF THE INVESTMENT THAT HAS GONE TO THOSE COMPANIES. THAT'S NOT A BAD TRACK RECORD.

Glover: LET'S TAKE YOUR RATHER OPTIMISTIC ASSUMPTION AS FACT AND THINGS ARE GOING TO GO FROM HERE WITH THIS IOWA VALUES FUND.

Blouin: YEAH.

Glover: WHAT DO YOU NEED ON TOP OF THAT? WHAT'S YOUR NEXT AGENDA ITEM?

Blouin: WELL, WE HAVE A COUPLE OF PIECES IN THIS BILL THAT ARE SEPARATE FROM THE VALUES FUND THAT I THINK WILL HAVE A VERY BIG IMPACT ON BUSINESSES AND ON THE ABILITY TO ATTRACT THEM. ONE DEALS WITH REGULATORY CLIMATE. THERE'S A SHOVEL-READY SECTION IN THE BILL THAT ALLOWS LOCAL AREAS OF THE STATE WHO SET ASIDE LAND FOR AN OFFICE PARK, RESEARCH AND DEVELOPMENT PARK, A WHOLE LIST OF PURPOSES, TO PREPARE AND CLEAR ALL OF THE PERMITTING REQUIREMENTS THAT A COMPANY WOULD NORMALLY GO THROUGH AHEAD OF TIME SO THAT WHEN A COMPANY SAYS, "I WANT TO LOCATE HERE, HOW LONG WILL IT TAKE ME TO TURN A SHOVEL," WE CAN SAY TOMORROW. YOU'LL STILL HAVE TO GET YOUR DNR PERMITS OR WHATEVER THOSE MIGHT BE, BUT IN TERMS OF ALL THE PERMITTING THAT'S REQUIRED TO BREAK GROUND, YOU CAN DO IT TOMORROW. COMPLEMENTARY TO THAT IS AN ON-LINE AND A MENTORING PROGRAM TO FAST-TRACK REGULATORY APPLICATIONS, LICENSES, AND PERMITS. WE'RE GOING TO COMPUTERIZE THAT WHOLE SYSTEM. WE'RE GOING TO SET UP A PROCESS THAT WE'VE ALREADY BEGUN WHERE WE HAVE A COORDINATIVE ROLE WITHIN THE DEPARTMENT WORKING WITH EVERY REGULATORY DEPARTMENT IN STATE GOVERNMENT WHO WILL HAVE A COUNTERPOINT ASSIGNED TO WORK WITH US THAT TOGETHER WILL BRING COMPANIES THROUGH THE PERMITTING PROCESS A WHOLE LOT FASTER, REDUCING THEIR FRUSTRATION. THAT'S THE REGULATORY SIDE. THE RESEARCH AND DEVELOPMENT COMPONENT OF THIS THROUGH THE UNIVERSITIES IS GOING TO BE TRICKIER, BUT THERE ARE CASH TAX CREDIT KINDS OF INCENTIVES PUT ON THE PLATE FOR THE COMPANIES WHO DEVELOP THE TECHNOLOGY IN CONJUNCTION WITH THE RESEARCHER AT THE UNIVERSITY WHO COLLABORATED WITH THEM AND THE UNIVERSITY ITSELF TO HELP MOVE BREAKTHROUGHS OFF THE CAMPUS INTO THE REAL WORLD OF BUSINESS. AND THAT FALLS INTO OUR DOMAIN TO IMPLEMENT AND COORDINATE AS WELL. AND FIGURING OUT HOW TO DO ALL OF THAT IS GOING TO TAKE A LITTLE TIME, BUT IT'S CRITICAL TO THIS START-UP IDEA.

Obradovich: THE GOVERNOR VETOED SOME MAJOR SECTIONS OUT OF THIS BILL, INCLUDING AN INCOME TAX CUT, EVEN THOUGH HE SAYS THAT HE THINKS THERE'S MORE ROOM FOR INCOME TAX REFORM. HE ALSO VETOED A REGULATORY SECTION, WHICH THE BUSINESS CLIMATE IN IOWA, ACCORDING TO THE LARGEST BUSINESS ASSOCIATION IN THE STATE, NEEDS IMPROVEMENT. DO YOU GO BACK TO THE LEGISLATURE NEXT YEAR AND ASK THEM FOR THINGS LIKE THAT? DO YOU ASK THEM FOR OTHER THINGS TO MAKE THIS VALUES FUND PROGRAM A BIGGER SUCCESS?

Blouin: WELL, I THINK THE GOVERNOR, THURSDAY, MADE THAT PRETTY CLEAR. THE ANSWER IS YES. IF YOU WANT TO WORK WITH ME, I'LL FIND WAY TO COMPROMISE. YES, WE NEED TO IMPROVE OUR INCOME TAX SYSTEM. THE GOVERNOR SAID SO IN HIS STATE OF THE STATE -- IN HIS INAUGURAL ADDRESS: LET'S SIMPLIFY IT; LET'S BRING THE RATES DOWN; LET'S GET RID OF FEDERAL DEDUCTIBILITY, BUT LET'S DO IT IN A REVENUE NEUTRAL FASHION. LET'S FIND WAYS TO SIMPLIFY THE REGULATORY PROCESS IN IOWA, AND I THINK HE'S OPEN TO TALKING ABOUT THAT. BUT IF TAXES AND REGULATION WERE THE PRIMARY REASON COMPANIES LOCATED IN THIS COUNTRY, CALIFORNIA, NEW YORK, MINNESOTA WOULD BE EMPTY AND SOUTH DAKOTA AND NEW HAMPSHIRE WOULD HAVE TEN OR FIFTEEN MILLION PEOPLE EACH IN THEM. THERE ARE OTHER FACTORS THAT MOTIVATE COMPANIES AND PEOPLE IN DETERMINING WHERE THEY WANT TO LIVE, WHERE THEY WANT TO DO BUSINESS: QUALITY OF LIFE, INFRASTRUCTURE, ATMOSPHERE, LOCATION. ALL OF THOSE PLAY A PART OF IT, AND WE DO REAL WELL THERE.

Obradovich: ARE THERE OTHER THINGS THAT YOU ABSOLUTELY NEED FROM NEXT YEAR'S LEGISLATURE?

Blouin: I DON'T THINK SO. IT WOULD BE NICE TO HAVE SOME TAX RELIEF COMING ON THE INCOME TAX SIDE. IT WOULD BE NICE TO BE ABLE TO POINT TO A CONTINUING IMPROVEMENT IN THE REGULATORY CLIMATE, EVEN THOUGH THE U.S. CHAMBER OF COMMERCE, THE LARGEST BUSINESS ORGANIZATION IN AMERICA, SAYS WE'RE IN THE TOP TWO OR THREE IN THE NATION IN THAT RESPECT. BUT YOU'VE GOT TO TAKE THESE THINGS IN STEPS, AND RIGHT NOW WE HAVE A MAJOR TOOL THAT WE'VE NEVER HAD BEFORE THAT I THINK WILL WORK VERY, VERY WELL.

Yepsen: IF THE U.S. CHAMBER OF COMMERCE THINKS WE'RE SO HUNKY-DORY, THEN WHY DON'T THE IOWANS THINK WE'RE SO HUNKY-DORY? WHY DOES IOWA'S LEADING BUSINESS ASSOCIATION SAY, NO, WE'RE NOT SO HUNKY-DORY?

Blouin: WELL, BECAUSE THERE'S ALWAYS ROOM FOR IMPROVEMENT, DAVID. AND I DON'T THINK ANYBODY WOULD DENY THAT. WE'RE A LONG WAY FROM PERFECT. IN THE PERFECT WORLD, YOU HAVE NO UNEMPLOYMENT, NO TAXES, AND EVERYBODY IS HAPPY. BUT WE'RE LIVING IN A HUMAN WORLD, AND IT REQUIRES SOME REVENUE TO DO THINGS AND SOME REGULATION TO MAKE SURE WE LIVE TOGETHER WITHOUT POISONING EACH OTHER. AND SOMEWHERE BETWEEN A NECESSARY TENSION -- AND I DO THINK IT'S NECESSARY -- SOMEWHERE BETWEEN THE TENSION OF THOSE WHO WANT THINGS ELIMINATED AND THOSE WHO WANT THEM TO STAY THE SAME IS PROBABLY A COMPROMISE THAT WE'LL ULTIMATELY FIND.

Glover: SPEAKING OF POISONED, THIS WAS SUPPOSED TO BE THE YEAR THAT EVERYTHING WORKED AT THE STATEHOUSE. THERE HAD JUST BEEN AN ELECTION. THE GOVERNOR WON ANOTHER TERM IN OFFICE. REPUBLICANS REGAINED CONTROL OF THE LEGISLATURE. THERE WAS A LOT OF TALK COMING FROM THE STATEHOUSE THAT THIS IS THE YEAR WE'RE GOING TO SIT DOWN AND WORK THINGS OUT AND ACTUALLY GET STUFF DONE. THAT DIDN'T HAPPEN. HOW DO WE MOVE FORWARD FROM HERE, GIVEN THE ATMOSPHERE?

Blouin: WELL, I WAS ONE OF THOSE WHO TALKED ABOUT THAT A GREAT AMOUNT ALL OVER THE STATE, AND IT WORKED INCREDIBLY WELL ON THE HOUSE SIDE. AND THE RELATIONSHIP THE HOUSE REPUBLICANS HAD WITH THE GOVERNOR WAS SOMETHING I'VE NEVER SEEN IN THIRTY-FIVE YEARS OF BEING A STUDENT OF STATE GOVERNMENT IN IOWA. IT BROKE DOWN IN LATE APRIL, NOT BETWEEN THE GOVERNOR AND THE REPUBLICANS, IT BROKE DOWN WITHIN THE REPUBLICAN PARTY HOUSE AND SENATE. THE COMMUNICATION THERE WASN'T AS GOOD AS IT SHOULD HAVE BEEN, AND THERE WERE CLEARLY VERY DIFFERENT AGENDAS WORKING THAT CREATED STRAINS THAT THEY COULDN'T DEAL WITH THEMSELVES. IN THE END, THOUGH, THEY CAME BACK INTO A SPECIAL SESSION, SEPARATED BY A WEEKEND, AND FOUND A WAY TO PUT A PACKAGE IN FRONT OF THE GOVERNOR GOVERNOR. BUT THEY CUT HIM OUT OF THE PROCESS OF THE COMPROMISE, OUT OF THE DISCUSSIONS, AND WENT A LITTLE BEYOND WHAT HE SAID HE WOULD ACCEPT, AND THAT'S WHAT BROKE DOWN. COMMUNICATION ALWAYS BREAKS THESE THINGS DOWN.

Glover: AND THERE ARE OTHER QUESTIONS THAT HAVE BEEN RAISED, AND I'D LIKE YOU TO ADDRESS THEM. EVERYBODY TALKS ABOUT THE ATMOSPHERE AT THE STATEHOUSE BEING POISONED, PEOPLE BEING ANGRY WITH EACH OTHER. AT WHAT POINT DO THESE PEOPLE NEED TO GET OFF THE PLAYGROUND AND STOP BEING ADOLESCENTS AND START ACTING LIKE ADULTS AND MAKING DEALS? I MEAN IT'S THE ECONOMY OF THE STATE THAT'S AT STAKE.

Blouin: SURE. THIRTY-FIVE SESSIONS I'VE WATCHED VERY CLOSELY OVER THE YEARS, AND IT ALWAYS ENDS THAT WAY. NEARLY EVERY SESSION IN THE HISTORY OF IOWA HAS ENDED WITH PEOPLE NOT LIKING EACH OTHER. THAT'S WHY THEY GET AWAY FOR SIX MONTHS, TRY NOT TO TALK TO EACH OTHER, AND COME BACK IN JANUARY AS FRIENDS AGAIN. THERE MAY BE SOME CARRYOVER. THERE MAY BE SOME RESIDUALS NEXT YEAR AS AN ELECTION YEAR, AND IT'S NOT A GUBERNATORIAL ELECTION YEAR. IT'S A LEGISLATIVE ELECTION YEAR AND THINGS WILL BE A LITTLE MORE TENSE THERE THAN NORMAL. BUT THAT'S PART OF THE PROCESS. WE LIVE WITH IT. YOU GUYS LOVE IT AND WE LIVE WITH IT.

Obradovich: WELL, FINALLY WHEN ALL THE DUST SETTLES, YOU'LL HAVE SOMETHING TO WORK WITH. HOW ARE YOU GOING TO SHOW RESULTS? HOW ARE WE GOING TO KNOW IF THIS PROGRAM IS A SUCCESS? ACCOUNTABILITY WAS A BIG CATCH PHRASE.

Blouin: RETURN ON INVESTMENT, ABSOLUTELY. WE PLAN TO COUNT AND WE PLAN TO PUT CONSTANT REPORTS OUT IN FRONT OF THE LEGISLATURE, THE PUBLIC, AND SO ON. OUR GOAL IS 50,000 GOOD-PAYING JOBS. WE'RE GOING TO FIND THOSE AS COMPARABLE TO WHAT A TWO-YEAR DEGREE WILL ATTRACT IN OUR CLUSTERED AREAS. HOW SUCCESSFUL ARE WE GOING TO BE IN BUILDING A LIFE SCIENCE INDUSTRY? HOW SUCCESSFUL ARE WE GOING TO BE IN CONVERTING OUR MANUFACTURING BASE TO TWENTY-FIRST-CENTURY CAPABILITIES, THE SAME WAY WITH INFORMATION SOLUTIONS? HOW ARE WE DOING ON CREATING THESE JOBS DIRECTLY, NO INDIRECTS, NO MULTIPLIERS? HOW DIRECTLY CAN WE MEASURE THIS? WE'LL COUNT THEM. WE'LL PUT THEM OUT. WE'LL STAND THE HEAT IF WE CAN'T MAKE IT. WE'LL BE THE FIRST TO RECOMMEND IT'S NOT WORKING IF IT DOESN'T.

Obradovich: HOW SOON DO YOU HAVE TO START SHOWING THOSE RESULTS, THOUGH? I MEAN THIS IS A SEVEN-YEAR PROGRAM.

Blouin: WELL, BY JANUARY WE'LL SHOW YOU WHERE WE'RE AT. I THINK THE FIRST YEAR, OBVIOUSLY, YOU'RE LOOKING AT FOUR, FIVE MONTHS OF IMPLEMENTATION BEFORE THIS COMING JANUARY. BUT I THINK THERE WILL BE SOME QUANTIFIABLE PROGRESS IN THE NEXT FOUR OR FIVE MONTHS. BY THE END OF '04, IF THIS IS GOING TO WORK, THERE OUGHT TO BE SOME VISIBLE SIGN OF GOING UP THAT HILL. AND IF BY THE TIME THE LEGISLATURE'S DEADLINE HAS BEEN SET WE HAVEN'T MADE MEASURABLE, APPRECIABLE PROGRESS TOWARD THAT GOAL, WE OUGHT TO SERIOUSLY LOOK AT CHANGING IT OR DUMPING IT.

Yepsen: MR. BLOUIN, THE LAST TIME YOU WERE ON THIS PROGRAM, I ASKED YOU ABOUT WHAT LOCAL COMMUNITIES SHOULD DO. I MEAN MUCH OF ECONOMIC DEVELOPMENT ACTIVITY IS AT THE LOCAL LEVEL. YOU SAID THEY SHOULD START THEIR OWN ECONOMIC GROWTH FUND. WHAT ELSE SHOULD THEY DO? NOW YOU'VE GOT THIS TOOL IN YOUR TOOLBOX. IF SOMEONE SITTING OUT THERE IN ANY SMALL TOWN IN IOWA IS WORRIED ABOUT ECONOMIC DEVELOPMENT, ECONOMIC GROWTH IN THEIR COMMUNITY, WHAT DO YOU WANT THEM TO DO TOMORROW?

Blouin: I WANT THEM TO COME TOGETHER AND WORK TOGETHER AS A TEAM. INDIVIDUAL COMMUNITIES HAVE MISSION IMPOSSIBLE. THERE'S NO WAY THAT THEY CAN SELL THEIR COMMUNITY UNLESS THEY HAVE THE SYNERGIES OF AN URBAN CENTER.

Yepsen: SO THEY GET TOGETHER --

Blouin: THEY'VE GOT TO GET TOGETHER --

Yepsen: AND CREATE A GROWTH FUND.

Blouin: COMBINE THEIR RESOURCES, CREATE SOME KIND OF GROWTH FUND OF THEIR CHOOSING CONTROLLED BY THEMSELVES, AND THEN COOPERATE COLLECTIVELY AND WITH US, NOT BY FOLLOWING WHAT WE SAY BUT BY GIVING INPUT SO THAT TOGETHER WE CAN TEAM UP AND MAKE THIS THING WORK.

Yepsen: LET'S LOOK AT THE BIG PICTURE IN THE FEW MINUTES WE HAVE LEFT.

Blouin: SURE.

Yepsen: WHAT'S THE CONDITION OF IOWA'S ECONOMY TODAY?

Blouin: IT'S -- IT'S NOT HEALTHY. IT'S HEALTHIER THAN GOOD PARTS OF THE COUNTRY, A GOOD SECTION OF THE COUNTRY. YOU SAW IN THURSDAY'S UNEMPLOYMENT FIGURES, THE HIGHEST UNEMPLOYMENT RATE IN IOWA SINCE 1992. IT'S NOT THAT WAY IN CENTRAL IOWA. IT'S NOT THAT WAY IN URBAN CENTERS. THE UNEMPLOYMENT RATE ACTUALLY DROPPED DOWN A LITTLE BIT IN MOST OF THE MSAs IN IOWA, WHICH MEANS RURAL IOWA IS REALLY GETTING CREAMED. WE'VE GOT TO FIND A WAY TO STOP THAT BLEEDING. THAT'S THE REASON FOR THE VALUES FUND. OUR ECONOMY HAS BEEN GRADUALLY GOING DOWNHILL BECAUSE WE ARE IN AN ANTIQUATED STATE OF MIND, IF YOU WILL, IN TERMS OF WHAT KINDS OF BUSINESS SECTORS WILL CREATE WHAT KINDS OF JOBS. WE'RE GOING TO TRY TO CHANGE THAT. CAN WE CHANGE IT SINGLE-HANDEDLY? FIFTY THOUSAND JOBS OUT OF A MILLION AND A HALF IN THE STATE ISN'T GOING TO INCREASE OVERALL INCOME BY 10 PERCENT, BUT IT'S A START. AND IT'S THE KIND OF START THAT WILL LEAD TO A HEALTHIER ECONOMY DOWN THE LINE.

Glover: AND WHERE ARE WE HEADED? WHAT'S THE DIRECTION -- WHAT'S THE IMPACT OF THE FEDERAL ECONOMIC STIMULUS PACKAGE?

Blouin: IT'S HARD TO TELL. WHEN YOU SPREAD THAT MONEY OUT, IT'S PRETTY SMALL. I'M AN OLD BELIEVER IN CAPITAL FORMATION KINDS OF INCENTIVES, GIVE COMPANIES THE KINDS OF DOLLARS AND CENTS REASONS TO INVEST AND REINVEST AND EXPAND, GIVEN THE KINDS OF TAX INCENTIVES NECESSARY TO TAKE GAMBLES IN THEIR OWN BUSINESSES, TO REACH OUT TO NEW MARKETS AND TRY NEW PRODUCTS AND SO ON. AND JUST CUTTING PERSONAL INCOME TAX RATES -- ALTHOUGH I'M A PERSONAL BENEFICIARY OF THAT, AS WE ALL ARE -- ISN'T IN ITSELF ENOUGH. BUT IT WILL, DOWN THE ROAD, HELP. PROBLEMATICALLY, WE ARE A GLOBAL ECONOMY. NOTHING IS GOING TO CHANGE THAT, IN MY OPINION, NOR SHOULD ANYTHING CHANGE THAT UNTIL THE WHOLE WORLD'S ECONOMY GETS HEALTHIER. THE U.S. CAN ONLY DO SO MUCH, AND THE STATE CAN DO ALMOST NOTHING BEYOND WHAT WE'RE TRYING TO DO.

Yepsen: SO WHY ARE YOU OPTIMISTIC AT ALL, MR. BLOUIN? I MEAN THE OUTLOOK -- AS YOU MENTIONED, THE UNEMPLOYMENT RATE HAS GONE UP. YOU'VE GOT MAYTAG, FOR EXAMPLE, OVER IN GALESBURG SHIPPING JOBS TO MEXICO. THAT SEEMS TO BE A GROWING TREND. WHAT'S THE OUTLOOK?

Blouin: WELL, I'M A PAID PROFESSIONAL OPTIMIST, DAVID. MY GOAL -- MY GOAL IS TO BE OPTIMISTIC. IT'S PART OF MY -- IT'S PART OF MY UPBRINGING AND PART OF MY BACKGROUND. YEAH, THINGS ARE DIFFICULT BUT THEY'RE NOT IMPOSSIBLE. WE'RE NOT IN A TANK. AS DIFFICULT AS IOWA'S UNEMPLOYMENT RATE IS AT 4.5 PERCENT, IT'S SUBSTANTIALLY LESS THAN THE NATIONAL UNEMPLOYMENT RATE BY OVER A POINT AND A HALF. WE HAVE AN OPPORTUNITY TO TAKE ADVANTAGE OF GROWTH INDUSTRIES IN THOSE THREE CLUSTERS OF BUSINESSES I'VE MENTIONED THAT FIT IOWA, NOT UNIQUELY BUT IDEALLY, AND TAKE ADVANTAGE OF GROWING THEM INTO THE TWENTY-FIRST CENTURY IN A WAY THAT WILL HOPEFULLY RESTRUCTURE THE ECONOMY SUFFICIENTLY ENOUGH FOR US TO NOT BE AS SUBJECT TO THE DECLINES WE'VE BEEN THROUGH. THAT'S REASON FOR OPTIMISM.

Obradovich: WE HAVE JUST A FEW SECONDS LEFT AND WE HAVE TO MAKE IT AN OFFICIAL "IOWA PRESS" SHOW. WHAT'S THE OUTLOOK FOR MIKE BLOUIN? WHAT'S YOUR POLITICAL FUTURE?

Blouin: OH, I DON'T HAVE ONE.

Obradovich: OH, COME ON.

Blouin: I'VE BEEN OUT OF ELECTIVE POLITICS SO LONG, KATHIE, AND I'VE SAID SO MANY THINGS AS A NONOFFICE HOLDER OVER THE YEARS. I DON'T THINK IT'S AN OPTION.

Yepsen: VERY SPECIFICALLY, A LOT OF DEMOCRATS ARE TALKING ABOUT YOU RUNNING FOR GOVERNOR.

Blouin: ARE THEY REALLY?

Yepsen: ARE YOU GOING TO RUN FOR GOVERNOR?

Blouin: NO. I HAVE NO INTENTION TO RUN FOR ANYTHING AGAIN. I HAD A MARVELOUS TEN YEARS OF ELECTIVE LIFE BACK IN THE LATE '60S AND '70S, AND I WAS A HAS-BEEN BY THE TIME I WAS 33.

Yepsen: WE'LL HAVE TO LEAVE IT THERE, MR. BLOUIN.

Blouin: OKAY.

Yepsen: WE'RE OUT OF TIME.

Blouin: THANK YOU VERY MUCH.

Yepsen: THANK YOU VERY MUCH FOR BEING WITH US TODAY. WE APPRECIATE IT.

Blouin: IT'S GREAT TO BE HERE.

Yepsen: AND THAT'S IT FOR THIS WEEKEND'S EDITION OF "IOWA PRESS." WE RETURN NEXT WEEKEND AT THIS SAME TIME: FRIDAY AT 6:30 AND SUNDAY AT NOON. AND I HOPE YOU'LL BE JOINING US HERE ON STATEWIDE IOWA PUBLIC TELEVISION.

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.