Iowa Public Television

Borg: IOWA'S GOVERNOR AND LEGISLATIVE LEADERS SCRAMBLE AS A NEW REVENUE SHORTFALL HITS IOWA. RED-INK INSIGHTS FROM HOUSE REPUBLICAN MAJORITY WHIP LIBBY JACOBS AND HOUSE DEMOCRATIC MINORITY LEADER PAT MURPHY ON THIS EDITION OF IOWA PRESS.

Borg: DEPENDING ON ONE'S PERSPECTIVE, EITHER THERE ISN'T ENOUGH TIME BEFORE MONDAY, JANUARY 12, OR IT CAN'T COME SOON ENOUGH. THAT'S THE DAY FOR CONVENING THE SECOND SESSION OF THE 80TH IOWA GENERAL ASSEMBLY. BETWEEN NOW AND THEN LEGISLATIVE LEADERS AND GOVERNOR TOM VILSACK HAVE TO COME UP WITH SOME $64 MILLION. THAT'S BECAUSE REVENUES FOR THE FISCAL YEAR THAT ENDED JUNE 30 FELL THAT MUCH SHORT OF EXPENDITURES. STATE LAW PROHIBITS A DEFICIT, SO THE HOLE NEEDS ALMOST IMMEDIATE PATCHING. GOVERNOR VILSACK ISN'T RULING OUT ANOTHER SPECIAL LEGISLATIVE SESSION TO DEAL WITH THE PROBLEM, SO WHEN THE REGULAR LEGISLATIVE SESSION DOES CONVENE IN JANUARY, LAWMAKERS MAY STILL BE FEELING THE EFFECTS OF PAYING LAST YEAR'S BILLS WHILE CRAFTING A BUDGET FOR THE NEW FISCAL YEAR. AND THE SITUATION CAN BE SUMMARIZED, I GUESS, LIKE THIS. TAX COLLECTIONS DURING THE LAST FISCAL YEARS WEREN'T WHAT HAD BEEN EXPECTED, AND NEXT YEAR DOESN'T LOOK GOOD EITHER. AND THEN ON THURSDAY GOVERNOR TOM VILSACK BRISTLED AT SUGGESTIONS THAT THE BUDGET DEFICIT IS A TECHNICAL VIOLATION OF STATE LAW. VILSACK CALLED THAT BOLOGNA AND HE SAID THE STATE HAS SUFFICIENT RESERVES TO COVER THAT DEFICIT. BUT THEN LATE IN THE WEEK, WORD CAME THAT IOWA'S IPERS RETIREMENT FUND ALSO HAS PROBLEMS. WELL, FOR COMMENTS ON THAT AND OTHER MATTERS, WE TURN TO OUR GUESTS. WEST DES MOINES REPRESENTATIVE LIBBY JACOBS IS THE REPUBLICAN MAJORITY WHIP IN THE IOWA HOUSE, AND DEMOCRATIC REPRESENTATIVE PAT MURPHY LEADS THE DEMOCRATIC MINORITY IN THE SAME CHAMBER. WELCOME TO "IOWA PRESS."

Murphy: THANK YOU FOR HAVING US.

Borg: I'M GOING TO BE INTERESTED IN YOUR COMMENTS ON WHAT I JUST SAID... AND I SUPPOSE YOU ARE TOO. [ LAUGHTER ] ALSO AT THE "IOWA PRESS" TABLE: "DES MOINES REGISTER" POLITICAL COLUMNIST DAVID YEPSEN AND "RADIO IOWA" NEWS DIRECTOR KAY HENDERSON.

Henderson: REPRESENTATIVE JACOBS, LET'S TALK ABOUT THIS IPERS PROBLEM WITH THE PENSION SYSTEM. CAN YOU TELL THOSE PENSIONERS OUT THERE WHO ARE COUNTING ON A CHECK WHAT THE PROBLEM IS AND WHAT THE PRESCRIPTION FOR FIXING IT IS?

Jacobs: WELL, I CAN AT LEAST TELL YOU WHAT THE PROBLEM IS. I THINK THE PRESCRIPTION STILL NEEDS TO BE WRITTEN AT THIS POINT. BUT THE PROBLEM IS THAT AS WE HAVE HAD DIMINISHING RETURNS DUE TO THE STOCK MARKET AND THE FLUCTUATIONS IN THOSE RETURNS OVER THE LAST SEVERAL YEARS, THE MONEY THAT HAS BEEN EXPECTED TO GROW IS NOT GROWING AND IT IS REDUCING. AT THE SAME TIME WE'RE HAVING MORE AND MORE OF OUR EMPLOYEES RETIRE AND STARTING TO UTILIZE THE BENEFITS OF IPERS. AS A RESULT, THEN YOU HAVE A SHRINKING AMOUNT OF THE ASSETS THAT ARE AVAILABLE. I KNOW THE IPERS BOARD IS VERY CONCERNED. IT'S A VERY GOOD BOARD. THEY'RE DOING A LOT OF HOMEWORK, A LOT OF RESEARCH AS TO WHAT NEEDS TO BE DONE TO WRITE THAT PRESCRIPTION YOU'RE TALKING ABOUT. AND WE'RE HOPEFUL THAT RECOMMENDATIONS WILL COME FROM THEM AS TO WHAT WE SHOULD BE DOING. THAT'S WHAT WE HAVE TO LOOK AT, AND IT'S TRADITIONALLY DONE IN THE EVEN YEARS OF THE LEGISLATIVE SESSIONS THAT WE LOOK AT THE PENSION SYSTEMS AS IT IS. SO THE TIMING, OBVIOUSLY, IS CRITICAL FOR US AS WELL. AND WE'LL BE LOOKING TO THE BOARD AND TO THE OUTSIDE CONSULTANTS WHO HELP WITH THE ASSET MANAGEMENT TO TELL US SOME SUGGESTIONS OF WHAT WE SHOULD DO TO TRY TO TAKE CARE OF THE PROBLEM.

Henderson: REPRESENTATIVE MURPHY, HOW BIG A PROBLEM HAVE LEGISLATORS AND THE GOVERNOR CREATED BY LETTING EMPLOYEES RETIRE EARLIER AND EARLIER AND PUTTING A GREATER STRAIN ON THAT SYSTEM?

Murphy: WELL, I DON'T THINK IT WAS A CASE OF LETTING PEOPLE RETIRE EARLIER AND EARLIER, BECAUSE I THINK THE BOTTOM LINE WAS WE'VE ACTUALLY REDUCED OUR NUMBER OF STATE EMPLOYEES. IN FACT, WE REDUCED THE NUMBER OF STATE EMPLOYEES BY ALMOST 10 PERCENT OVER THE LAST TWO YEARS, SO I DON'T THINK THAT WAS THE ISSUE. I THINK THIS WAS AN ISSUE THAT WE KNEW LAST YEAR. BOTH REPRESENTATIVE JACOBS AND MYSELF SERVE ON THE LEGISLATIVE FISCAL COMMITTEE. AND MOLLY ANDERSON FROM THE DEPARTMENT OF PERSONNEL, WHO IS THE DIRECTOR, POINTED OUT THAT WE ADDRESS THIS EVERY OTHER YEAR AND IT'S USUALLY IN THE ELECTION YEAR THAT WE ADDRESS THESE ISSUES, THAT THE POSSIBILITY OF THIS ISSUE COMING UP WAS PROBABLY MORE THAN LIKELY. AND IT IS GOING TO OCCUR, SO I THINK IT'S SOMETHING THAT WE'VE GOT TO ADDRESS.

Yepsen: MR. MURPHY, IS ONE OPTION JUST NOT TO DO ANYTHING AND HOPE THE STOCK MARKET GETS BETTER?

Murphy: NO, I DON'T THINK -- WE HAVE A COMMITMENT TO OUR STATE EMPLOYEES. WE HAVE -- WE SHOULD NOT DO WHAT OCCURRED BACK IN THE 1970S WHEN THE IPERS SYSTEM WASN'T CONSIDERED A GOOD SYSTEM AND THEN LEGISLATORS MADE DECISIONS IN THE '70S AND '80S TO MAKE DECISIONS TO MAKE THAT FUND SOUND. I THINK WE NEED TO MAKE SURE THAT WE DO WHAT'S IN THE BEST INTEREST OF PEOPLE THAT ARE -- TO MAKE SURE WE GET GOOD LONG-TERM EMPLOYEES, WE NEED TO MAKE SURE WE HAVE A GOOD RETIREMENT SYSTEM.

Yepsen:IS THE SOLUTION HERE, THOUGH, GOING TO BE THE EMPLOYEES HAVE TO PUT MORE INTO THE SYSTEM OR THE TAXPAYERS HAVE TO PUT MORE INTO THE SYSTEM OR BOTH?

Murphy: I THINK THE WAY THAT DIRECTOR MOLLY ANDERSON PRESENTED IT TO US LAST YEAR, I THINK WE'RE LOOKING AT EMPLOYEES BECAUSE THE BOTTOM LINE WAS THE STATE DOES COME IN WITH A MATCH OF THOSE FUNDS. SO I THINK THE CATCH IS WE WILL CONTINUE OUR MATCH BUT, IN ORDER FOR US TO MAKE SURE THAT WE TAKE CARE OF THAT FUND, WE'RE GOING TO HAVE TO ASK EMPLOYEES TO BE INVOLVED IN MAKING THOSE DECISIONS FINANCIALLY.

Yepsen:AND, REPRESENTATIVE JACOBS, YOU SAID THE IPERS BOARD IS A GOOD BOARD. HOW CAN YOU MAKE THE STATEMENT IT IS A GOOD BOARD WHEN THEY'VE JUST HANDED YOU A PROBLEM LIKE THIS? WERE THEY NOT OVERLY EXPOSED TO THE STOCK MARKET? I MEAN FOR YEARS THE IPERS SYSTEM WAS EFFECTIVELY PUTTING MONEY IN A MATTRESS. THEY WERE NOT IN THE STOCK MARKET, AND THEY WERE CRITICIZED FOR BEING TOO CONSERVATIVE. NOW I WONDER IF THE OPPOSITE CRITICISM CAN'T BE MADE, THAT THEY'VE BEEN TOO LIBERAL, THAT THEY WERE TOO OVEREXPOSED TO A STOCK MARKET THAT WENT BUST.

Jacobs: DAVID, I STILL BELIEVE VERY STRONGLY THAT THEY ARE A GOOD BOARD. THEY'RE VERY KNOWLEDGEABLE IN THE FINANCIAL ISSUES, AND THEY UNDERSTAND HOW THAT WORKS. YES, THEY SHIFTED MONEY, LIKE THEY WERE ASKED TO, INTO MORE OF THE EQUITIES TO TRY TO BUILD SOME LONGER TERM RETURNS. AND ANYONE WHO HAS WORKED WITH THE STOCK MARKET IN THE LAST TWO TO THREE YEARS HAS HAD THE SAME KIND OF SITUATION HAPPEN. I DON'T THINK THEY WERE PLAYING OR BEING OVERZEALOUS WITH THE EMPLOYEES' MONEY. I THINK THEY DID A VERY GOOD JOB. NOW THEY'RE LOOKING AT WAYS OF WHAT ELSE THEY CAN DO TO TRY TO GROW THOSE. THEY DID NOT INVEST IN HIGH-RISK STOCKS. IT WAS STILL VERY STRONG, BLUE-CHIP, GOOD CONSERVATIVE INVESTMENTS. UNFORTUNATELY, THE MARKET JUST DID NOT FAVOR ANY STOCK IN THE LAST COUPLE OF YEARS.

Borg: REPRESENTATIVE MURPHY, YOU EARLIER SAID THAT THE STATE HAS AN OBLIGATION TO ITS EMPLOYEES WHO RETIRE. DOES THAT OBLIGATION -- I KNOW THAT IN CERTAIN ASSOCIATIONS AND PRIVATE BUSINESS, THEY HAVE TO TRANSFER OPERATING FUNDS INTO THAT PENSION FUND, WHICH HAS BEEN DEPLETED, IN ORDER TO COVER POSSIBLE FUTURE OBLIGATIONS. IS THERE A CHANCE THAT THE STATE WILL HAVE TO TRANSFER FROM THE GENERAL FUND INTO IPERS?

Murphy: I DON'T THINK SO. I THINK THIS IS ONE OF THOSE ISSUES THAT WE'LL ADDRESS ON A LONG-TERM BASIS. THAT'S THE WAY WE'VE ADDRESSED IPERS FOR YEARS, SO I DON'T EXPECT THAT TO CHANGE. I DON'T EXPECT US TO USE ANY MONEY OUT OF THE GENERAL FUND NOW TO TAKE CARE OF THE RETIREMENT SYSTEM. I DO THINK THE ONE THING, THOUGH, THAT WE NEED TO PAY ATTENTION TO IS THE STATE OF IOWA HAS DONE A VERY GOOD JOB WITH THEIR INVESTMENT POLICIES. WHEN YOU TAKE A LOOK AT THE STOCK MARKET, WHAT OCCURRED WITH ENRON AND SOME OF THE OTHER CORPORATIONS THAT DID GO BANKRUPT, WE WERE NOT INVESTED IN ALL OF THOSE. NOW, SOME OF THEM WE WERE BUT WE DIDN'T HAVE THE HIGH INVESTMENTS THAT NEIGHBORING STATES DO. BEING FROM DUBUQUE, I KNOW WISCONSIN LAST YEAR ADDRESSED THAT ISSUE, AND THEY MAY HAVE TO ADDRESS IT AGAIN. SO WITHOUT A DOUBT, I THINK WE'VE DONE A VERY CONSERVATIVE APPROACH TO HOW WE DEAL WITH THE STATE'S MONEY AND THE EMPLOYEES' MONEY IN REGARDS TO THEIR RETIREMENT SYSTEM.

Henderson: AS DEAN MENTIONED EARLIER, THE STATE HAS MORE THAN $60 MILLION WORTH OF RED INK IN THE STATE BUDGET THAT ENDED ON JUNE 30 OF THIS PAST YEAR. THERE'S BEEN SOME DISCUSSION OF WHETHER LEGISLATORS SHOULD COME BACK TO FIX THAT OR WHETHER THERE WAS ANY NEED. REPRESENTATIVE JACOBS, ARE YOU COMFORTABLE WITH WAITING UNTIL JANUARY TO FIX THIS PROBLEM AND NOT HAVING A SPECIAL SESSION THIS FALL?

Jacobs: I AM COMFORTABLE. WE ASKED THE STATE AUDITOR, DAVE VAUDT, TO MAKE AN ASSESSMENT OF THE SITUATION. HE HAS BEEN A CPA ALL OF HIS PROFESSIONAL LIFE, NOT BEEN INVOLVED POLITICALLY IN THINGS, AND HE CAME BACK WITH HIS WELL-INFORMED DECISION LAST WEEK THAT HE FELT THAT REGARDLESS OF WHAT HAPPENED, THEY WOULD STILL HAVE TO HAVE THE FOOTNOTES THAT THERE WAS A DEFICIT AND SO THAT WE COULD WAIT UNTIL JANUARY. THE GOVERNOR HAS THE ABILITY TO TRANSFER $50 MILLION IN RIGHT NOW TO FILL THAT HOLE, AND THEN WE CAN ADDRESS THAT THE VERY FIRST WEEK IN JANUARY. AND SO I AM COMFORTABLE WAITING UNTIL JANUARY TO WORK THROUGH THAT SITUATION.

Henderson: REPRESENTATIVE MURPHY, ARE YOU COMFORTABLE WITH THE SITUATION?

Murphy: WELL, I THINK THE MOST IMPORTANT PART AT THIS POINT IS WE HAVE TO MAKE SURE THAT OUR CREDIT RATING ON THE BOND MARKET IS THE MOST IMPORTANT THING AT THIS POINT, TO MAKE SURE THAT WE MAINTAIN THE GOOD BOND RATING WE'VE HAD. I THINK THE GOVERNOR IS STILL IN THE PROCESS OF MAKING THAT DECISION. I THINK WE NEED TO WAIT AND SEE WHAT THE REACTION IS GOING TO BE. IF THAT MEANS OUR BOND RATING GOES DOWN AND THAT MEANS WE PAY HIGHER INTEREST RATES AS A STATE, THEN I DON'T THINK -- I THINK WE SHOULD COME BACK AND ADDRESS IT RIGHT AWAY. MAYBE THAT'S NOT NECESSARY BUT I THINK WE NEED TO WAIT AND SEE.

Yepsen:WELL, MR. MURPHY, WHY SHOULD THE STATE GET A GOOD BOND RATING IF IT CAN'T KEEP ITS BOOKS ANY BETTER THAN THIS?

Murphy: WELL, WE ARE KEEP -- DAVID, WE ARE DOING A GOOD JOB. FIRST OF ALL, I MEAN WE HAVE $232 MILLION IN RESERVE ACCOUNTS. MOST OTHER STATES DON'T HAVE THAT. THE STATE HAS NOT RAISED ANY SIGNIFICANT REVENUES. AND ALONG WITH THAT, WE HAVE CUT THE BUDGET. WE HAVE TAKEN -- IF YOU LOOK -- IF YOU LOOK AT SOME OF THE OLD TAPES OF THIS PROGRAM, WE WERE TALKING $4.8-, $4.9 BILLION IN GENERAL FUND SPENDING, AND WE'RE ONLY SPENDING $4.5 BILLION NOW. SO WE HAVE DONE A GOOD JOB OF KEEPING OUR BOOKS IN ORDER. IT'S JUST BEEN THAT THE ECONOMY HAS BEEN IN A PROLONGED SLUMP THAT NOBODY EXPECTED.

Henderson: WELL, THE AUDITOR DISAGREES. HE SAYS YOU'RE PRONE TO SPEND EVERY DOLLAR THAT COMES INTO THE DOOR. YOU LEFT ONLY A MILLION DOLLARS WORTH OF CUSHION IN THIS BUDGET THAT YOU DRAFTED FOR THE JUST CONCLUDED FISCAL YEAR, AND HE SAYS THAT YOU ARE TO BLAME FOR PUTTING THE STATE IN THIS SITUATION.

Murphy: WELL, I WOULDN'T -- I WOULDN'T AGREE WITH THAT BECAUSE THE BOTTOM LINE IS WE'VE HAD A 99-PERCENT SPENDING LIMITATION LAW AND WE HAVE MADE DECISIONS AND CUTS. NOW, I KNOW THAT AUDITOR VAUDT IS NEW TO THE JOB AND HAS ONLY BEEN THERE A YEAR, BUT FOR THE TWO PRIOR YEARS BEFORE HE SHOWED UP, WE ACTUALLY LOOKED AT BUDGET NUMBERS THAT WEREN'T INCREASES. WE WERE LOOKING AT NEGATIVE GROWTH WHERE WE HAD MINUS 2-PERCENT GROWTH COMING IN FOR ONE YEAR, AND WE MADE TOUGH DECISIONS. I THINK IT'S THE CATCH THAT ALONG WITH THAT, WE HAVE TO MAKE SURE THAT WE MAINTAIN OUR COMMITMENTS TO MEDICAID, WHICH IS A FEDERALLY REQUIRED PROGRAM, AND MAKE SURE WE HAVE OUR COMMITMENTS TO EDUCATION.

Yepsen:REPRESENTATIVE JACOBS, I WANT TO GO THROUGH SOME OPTIONS THAT ARE BEING DISCUSSED UP THERE THAT I'VE HEARD PEOPLE TALKING ABOUT TO TRY TO KEEP THIS FROM HAPPENING AGAIN. ONE THING THE GOVERNOR SAID WAS THAT THE REPUBLICANS IN THE LEGISLATURE REFUSED TO GIVE HIS ADMINISTRATION THE TOOLS IT NEEDED TO MAKE GOOD REVENUE FORECASTS, THAT THE DEPARTMENT OF REVENUE AND FINANCE NEEDED SOFTWARE, THEY NEED PEOPLE. I'M TOLD THERE'S ONLY ONE PERSON WHO WORKS A THIRD OF THE TIME FIGURING BUDGET ESTIMATES. NO CORPORATION OPERATES THAT WAY THAT I KNOW OF.

Jacobs: YOU'RE ABSOLUTELY RIGHT.

Yepsen:WILL YOU GIVE THE GOVERNOR AND HIS PEOPLE THE STAFF AND THE SOFTWARE THEY NEED TO MAKE BETTER REVENUE ESTIMATES?

Jacobs: DAVID, FIRST, THE HOUSE DID PASS THAT BILL. IT DID NOT GET PAST THE SENATE, BUT THE HOUSE DID PASS THAT BILL THAT WOULD PROVIDE FOR ADDITIONAL POLICY, AND WE HAVE TO LOOK AT DIFFERENT WAYS OF FUNDING THAT. AND SO, YES, I'M FIRMLY COMMITTED. WHAT WE'RE USING NOW FOR REVENUE ESTIMATING IS NOT WORKING. WE HAVE TO FIND A NEW SYSTEM. WE ALSO HAVE TO REMIND PEOPLE, THOUGH, THAT EVEN IF THAT BILL HAD PASSED BOTH CHAMBERS AND BEEN SIGNED BY THE GOVERNOR, IT WOULD NOT HAVE IMPACTED THE FISCAL YEAR THAT WE JUST CAME OUT OF. IT WOULD BE STARTING FOR FISCAL YEAR '04. SO IT WOULD NOT HAVE IMPACTED THE ACCRUALS AND ALL THOSE THINGS THAT WE'VE JUST DEALT WITH. BUT WE HAVE TO LOOK FORWARD AND FIGURE OUT WHAT ELSE WE CAN DO. WE NEED TO LOOK AT WHAT OTHER STATES DO AS WELL. WE'VE HAD A GOOD TRACK RECORD UNTIL THE LAST COUPLE OF YEARS. NOW WE NEED TO FIGURE OUT A NEW SYSTEM AND HOW TO MAKE IT WORK SO THAT WE DON'T GET INTO THIS SITUATION EACH SESSION.

Yepsen:AND WHAT ABOUT THIS BUSINESS THAT THE AUDITOR SAYS YOU'RE SIMPLY SPENDING RIGHT DOWN TO THE LAST DIME? I MEAN MOST BUSINESSES, WHEN THEIR AUDITOR SAYS YOU'RE DOING SOMETHING WRONG, THEY DON'T SAY THEY'VE JUST BEEN THERE A YEAR, THEY PAY ATTENTION TO WHAT THEY SAY.

Jacobs: WE OBVIOUSLY HAVE THE 99-PERCENT SPENDING LIMITATION, BUT WHEN YOU PUT IN SUPPLEMENTAL SPENDING AND SOME OF THE OTHER POTS, IT GETS MUCH CLOSER TO THE 100 PERCENT. WE NEED TO BE -- WE NEED TO MAKE MORE CUTS. WE NEED TO LOOK AT THE AMOUNT OF MONEY WE HAVE, UTILIZING WHAT WE'D SEE AS THE TOP PRIORITIES -- MEDICAID, EDUCATION, CORRECTIONS -- AND FIGURE OUT A WAY TO DELIVER THOSE SERVICES WITH THE POT OF MONEY WE HAVE. WE CAN'T KEEP SPENDING THE WAY WE HAVE.

Yepsen:TWO QUICK OPTIONS: LAYOFFS, ARE THOSE GOING TO HAPPEN AS A RESULT OF THIS; AND SECONDLY, SHOULD THIS 99 PERCENT BECOME 98 PERCENT, THAT YOU ONLY SPEND 98 PERCENT OF YOUR ESTIMATES? I MEAN IF THE MARGIN OF ERROR --

Jacobs: SURE.

Yepsen:-- IN YOUR ESTIMATES IS 1.5 PERCENT --

Jacobs: ABSOLUTELY.

Yepsen:-- THEN 1 PERCENT OF RESERVE ISN'T GOING TO GIVE YOU ANY MARGIN FOR ERROR.

Jacobs: AND I'M VERY COMFORTABLE MAKING THAT MARGIN A BIGGER MARGIN, WITH GOING TO 2 PERCENT OR 3 PERCENT. AS FAR AS LAYOFFS, I THINK IT'S TOO EARLY TO TELL WHAT WILL HAPPEN. YOU KNOW, WE TRIED TO DO FURLOUGHS SO PEOPLE COULD KEEP THEIR JOBS AND NOT BE LAID OFF. THAT DID NOT MEET WITH MUCH FAVOR. SO WE HAVE TO LOOK AT THE NUMBER OF EMPLOYEES -- THAT'S YOUR BIGGEST PIECE OF THE BUDGET -- AND WHAT CAN WE DO THROUGH THAT.

Yepsen:AND, MR. MURPHY, HOW DO DEMOCRATS FEEL ABOUT THOSE TWO ISSUES: 98 PERCENT; LAYOFFS?

Murphy: THE BOTTOM LINE IS IT COMES DOWN TO THIS, AND IT REALLY DOES. WE NEED TO MAINTAIN OUR COMMITMENTS TO EDUCATION AND TO HEALTH CARE, AND WE NEED TO SEE IF WE CAN GROW THE ECONOMY. AND WE HAVE TO DO THOSE THREE THINGS. YOU HAVE TO GROW THE ECONOMY WHEN TIMES ARE DOWN. AND I THINK THE IOWA VALUES FUND WAS A START, BUT I THINK WE NEED TO IMPROVE IT. WE NEED TO MAKE SURE WE MAINTAIN OUR COMMITMENT TO EDUCATION, AND THE REASON WHY IS, IF YOU LOOK AT WHAT WE'VE DONE IN THE LAST TWO OR THREE YEARS, WE CREATED A GRADE SCHOOL TECHNOLOGY BILL IN THE LATE '90S THAT EVERY SCHOOL DISTRICT LOVES. THAT DOESN'T EXIST ANYMORE. AND IF IT DOES, THERE'S VERY FEW DOLLARS IN IT. THERE'S TALK ABOUT THE TEACHER QUALITY BILL. NOW, I KNOW THE HOUSE REPUBLICANS DIDN'T TALK ABOUT IT, BUT IN THE SENATE, THEY'RE TALKING ABOUT ELIMINATING A PROGRAM THAT WAS JUST STARTED TWO YEARS AGO. SO THERE'S NO QUESTION IN MY MIND THAT WE HAVE TO -- WE HAVE TO BE FISCALLY PRUDENT, BUT WE NEED TO MAKE SURE THAT WE MAINTAIN OUR COMMITMENTS FIRST TO THE PROGRAMS THAT EXIST. AND WE HAVE $230 MILLION SITTING IN THE BANK THAT THERE IS RESERVE FUNDS AVAILABLE TO DO THAT.

Yepsen:EXCUSE ME, MR. MURPHY. THAT DOESN'T ANSWER MY QUESTION. MY QUESTION IS ARE LAYOFFS IN ORDER AND SHOULD THE STATE ONLY SPEND 98 PERCENT OF ITS PROJECTED REVENUES.

Murphy: RIGHT NOW I DON'T THINK IT CAN SPEND 98 PERCENT BECAUSE THEN YOU'RE GOING TO AFFECT THE COMMITMENTS WE HAVE TO THE ISSUES I JUST ADDRESSED. SECONDLY -- WHAT WAS THE SECOND PART OF THE QUESTION?

Yepsen:LAYOFFS. ARE LAYOFFS OF STATE WORKERS IN ORDER HERE?

Murphy: OKAY. LAYOFFS OF STATE WORKERS. THE BOTTOM LINE IS WE'VE REDUCED THE NUMBER OF STATE EMPLOYEES IN THIS STATE BY ALMOST 10 PERCENT OVER THE LAST THREE YEARS. I'M NOT GOING TO ADDRESS PUBLIC SAFETY ISSUES WHERE WE'RE GOING TO HAVE NOT ENOUGH GUARDS IN OUR PRISON SYSTEM. WE'VE HAD AN ESCAPE IN THE LAST YEAR. WE NEED TO MAINTAIN PUBLIC SAFETY, AND WE NEED TO GUARANTEE CERTAIN LEVELS OF SERVICE THERE. SO I WOULD -- WE'D HAVE TO LOOK AT THE DETAILS, BUT I'M SAYING WE'VE DONE A LOT IN THE LAST TWO YEARS AND PEOPLE DON'T SEEM -- OR AT LEAST I'D SAY RECOMMEND TO ME, DAVID, OR RECOMMEND TO ME, KAY, WHERE SHOULD WE CUT IN THIS CURRENT BUDGET, BECAUSE I JUST DON'T SEE WHERE WE CAN DO IT.

Henderson: REPUBLICAN STATE AUDITOR DAVE VAUDT THIS WEEK ALSO FIRMLY CRITICIZED BOTH REPUBLICANS AND DEMOCRATS FOR BEING TOO SPEND HAPPY. HE SAID IN THE PAST FIVE YEARS, YOU'VE ACTUALLY SPENT $1.4 BILLION OUT OF SPECIAL FUNDS AND CASH RESERVES WITHOUT A PLAN TO PAY IT BACK. REPRESENTATIVE JACOBS, WHY HAVE YOU BEEN SO SPEND HAPPY, (A); AND (B) WILL YOU PAY THOSE FUNDS BACK? WHAT'S THE REPAYMENT SCHEDULE?

Jacobs: WELL, IN SOME OF THE BILLS, WE DO HAVE A PROCESS FOR PAYING -- PAYING SOME OF THE FUNDS BACK. PART OF IT WILL BE WE HOPE AS WE GROW THE ECONOMY THAT SOME OF THE MONEY WILL COME IN THAT WE CAN ALSO REPAY. WE HAVE BEEN VERY GENEROUS IN THINGS OUTSIDE THE OPERATING BUDGET FOR THE STATE AS WELL. AND WE HAVE TO -- WE'RE GOING TO HAVE TO CUT BACK ON SOME OF THAT. I THINK IT GETS BACK TO A MUCH DEEPER ISSUE, THOUGH. IT'S REALLY A SYSTEMIC WAY OF WHAT SERVICES THE GOVERNOR -- THE GOVERNMENT IS SUPPOSED TO PROVIDE. WE'RE LOOKING AT A WHOLE NEW REDESIGN FOR THE DEPARTMENT OF HUMAN SERVICES. RIGHT NOW THAT DELIVERY SERVICE IS BASED ON A SYSTEM THAT WAS BUILT IN 1937. IT DOESN'T MAKE SENSE THAT WE DELIVER SOMETHING IN THE 21ST CENTURY WHEN THE NEEDS ARE SO DIFFERENT. I THINK WE REALLY HAVE TO REALLY SIT DOWN AND LOOK AT ALL THE SERVICES WE PROVIDE, WHAT IS THE BEST DELIVERY, WHAT IS IT WE NEED TO DO, AND HOW DO WE DO THAT. I'M LOOKING AT THE POOL OF MONEY WE SPEND: WE'RE NOT ALWAYS EFFECTIVE WITH THAT MONEY; AND ARE THERE BETTER THINGS WE CAN DO WITH THAT SAME AMOUNT OF MONEY OR LESS MONEY. AND WE HAVE TO STOP SPENDING THE WAY WE HAVE. WE WILL HAVE TO MAKE VERY DIFFICULT DECISIONS IN 2004 TO REDUCE THE BUDGET TO MATCH THE REVENUES THAT ARE COMING IN. WE ABSOLUTELY HAVE TO, KAY.

Henderson: I CAN'T TELL YOU HOW MANY TIMES I'VE HEARD REPUBLICANS AND DEMOCRATS GIVE ME THAT SAME SPEECH. CAN YOU NAME A PROGRAM IN THE PAST FIVE YEARS THAT THE REPUBLICAN-LED LEGISLATURE HAS SHUT DOWN? I MEAN, WHERE IS THE POLITICAL WILL TO DO WHAT YOU'RE SAYING NEEDS TO BE DONE?

Jacobs: IT'S VERY DIFFICULT. IT IS HARD TO GET PEOPLE TO CUT EVEN $500,000 OR A MILLION DOLLARS OFF OF SOMETHING. WHAT WE HAVE TO LOOK AT IS: HOW DO YOU REDESIGN THE SYSTEM THAT THEN FREES UP SOME MONEY; ARE THERE THINGS WE CAN DO DIFFERENTLY; HOW MANY WAIVERS CAN WE GET FROM THE FEDERAL GOVERNMENT SO WE DON'T HAVE SO MANY STAFF SPENDING THEIR TIME WRITING REPORTS. THOSE ARE THE KINDS OF THINGS THAT WE HAVE TO LOOK AT, AND WE HAVE TO BE CREATIVE. WE ALSO HAVE TO PUT INCENTIVES IN FOR OTHER GOVERNMENT ENTITIES TO START SHARING AND DOING THINGS DIFFERENTLY SO WE DON'T HAVE DUPLICATE OF SERVICES. THAT IS VERY DIFFICULT. IT'S VERY EMOTIONAL. IT'S A CULTURE CHANGE BUT THAT'S WHERE I THINK WE ABSOLUTELY HAVE TO BE.

Yepsen:MR. MURPHY, YOU'RE THE NEW DEMOCRATIC LEADER IN THE IOWA HOUSE. YOUR PREDECESSOR, RICHARD MYERS OF IOWA CITY, ONCE SUGGESTED AN IDEA THAT I WONDER IF IT ISN'T ON THE TABLE: RAISE THE CIGARETTE TAX AND TAKE THE REVENUES FROM THAT AND USE IT FOR THE MEDICAID PROGRAM. DO DEMOCRATS WANT TO RAISE TAXES IN THE COMING SESSION OF THE LEGISLATURE, SPECIFICALLY THE CIGARETTE TAX?

Murphy: WELL, I WOULDN'T -- I CAN'T SPEAK FOR OUR WHOLE CAUCUS AT THIS POINT. WHEN REPRESENTATIVE MYERS SPOKE OF THAT AS THE MINORITY LEADER, I REMEMBER HE SPECIFICALLY SAID, ME, AS THE MINORITY LEADER, SUPPORTS A CIGARETTE TAX INCREASE. UNDER THE CIRCUMSTANCES, ESPECIALLY MAKING SURE THAT WE MAKE OUR OBLIGATIONS TO THE MEDICAID BUDGET AND GUARANTEEING SERVICES TO SENIORS AND TO POOR PEOPLE, I WOULD SUPPORT A FORM OF A CIGARETTE TAX. BUT THAT'S NOT TO SAY THAT MY MAJORITY OF MY CAUCUS WOULD. I STILL THINK THAT THAT'S SOMETHING THAT WE WOULD HAVE TO DISCUSS. AND WHEN WE DO CAUCUS, WE WILL DISCUSS THIS.

Yepsen:HOW ABOUT OTHER TAXES: INCOME TAXES, SALES TAX, OTHER TAX INCREASES?

Murphy: NOT AT THIS TIME. I THINK THE CATCH IS I THINK WE NEED TO MAKE SURE THAT WE TAKE CARE OF OUR OBLIGATIONS THAT WE HAVE FIRST AND SEE WHERE WE CAN GET THE FUNDS TO DO THAT.

Yepsen:AND, REPRESENTATIVE JACOBS, HOW DO THE -- HOW DOES THE REPUBLICAN MAJORITY FEEL ABOUT RAISING TAXES TO MEET SOME OF THESE PROBLEMS, SPECIFICALLY THE IDEA OF RAISING THE CIGARETTE TAX?

Jacobs: WELL, FIRST OF ALL, I'VE NOT HEARD VERY MANY REPUBLICANS TALK ABOUT A TAX INCREASE. THAT DOESN'T SEEM TO FIT VERY WELL PHILOSOPHICALLY WITH THE CAUCUS. WE'VE NOT HAD SPECIFIC DISCUSSIONS ON THE CIGARETTE TAX. I KNOW THERE ARE A HANDFUL OF PEOPLE WHO BELIEVE THAT MAY BE THE THING THEY'D LIKE TO DO, BUT WE DON'T -- I CAN'T SPEAK FOR THE WHOLE CAUCUS EITHER. I'M NOT REAL COMFORTABLE WITH KEEP RAISING TAXES AS THE ANSWER. IT GOES BACK TO MY PREVIOUS COMMENTS. I THINK WE HAVE TO LOOK AT HOW WE'RE DELIVERING SERVICES AND WHAT THOSE ARE AND TRY TO FIGURE OUT THAT SYSTEM FIRST, INSTEAD OF JUST TRYING TO INCREASE REVENUE BY A TAX INCREASE. THAT JUST DOES NOT MAKE SENSE TO ME AT ALL.

Henderson: REPRESENTATIVE MURPHY, THREE YEARS AGO, LEGISLATORS INSTALLED A NEW TEACHER COMPENSATION SYSTEM, WHEREBY PAY WOULD BE LINKED WITH PERFORMANCE IN THE CLASSROOM, THERE WOULD BE MENTORING, AND THEY PROMISED TO PUT A LOT OF MONEY INTO IT. I HAVEN'T SEEN THE MONEY AND A LOT OF TEACHERS HAVEN'T SEEN IT EITHER. IT'S WIDELY AGREED THAT THERE IS NOT GOING TO BE A HUGE INFLUX OF MONEY FOR THAT THIS YEAR. WILL YOU REMOVE THE IMPETUS FOR LINKING PAY TO PERFORMANCE OR MAKE SOME CONCESSION TO TEACHERS WHO ARE COMPLAINING ABOUT THAT NEW SYSTEM?

Murphy: I DON'T -- I DON'T KNOW IF -- THE BOTTOM LINE IS THAT THIS WAS A PROGRAM THAT WE STARTED TO HELP ATTRACT TEACHERS, KEEP TEACHERS IN THE STATE, AND TO BRING IN NEW TEACHERS BECAUSE OF THE NUMBER OF TEACHERS THAT ARE RETIRING. I THINK WE DO NEED TO KEEP -- I DO THINK WE NEED TO KEEP BOTH COMPONENTS THERE. THIS COMES BACK DOWN TO US KEEPING OUR COMMITMENTS AGAIN. WE'VE MADE A COMMITMENT, WHAT WAS IT, TWO OR THREE YEARS AGO? I'M NOT SURE WHICH YEAR IT WAS. BUT APPROXIMATELY TWO AND A HALF, THREE YEARS AGO WE MAY THE COMMITMENT THAT WE'RE GOING TO DO SOMETHING BIG IN EDUCATION, AND NOW THERE'S TALK OF BACKING AWAY FROM IT. I MEAN THIS SEEMS TO BE A SYSTEMIC PROBLEM TOO BECAUSE OF THE TIGHT BUDGET WE'RE IN. YOU SEE WHAT'S HAPPENING WITH THE DHS BUDGET, WHERE THEY'RE TALKING ABOUT BEING SHORT $99 MILLION, THE ISSUE OF MEDICAID, AND THEN YOU SEE DIFFERENT EDUCATION PROGRAMS THAT ARE FALLING BY THE SIDE WHILE AT THE SAME TIME SEEING DOUBLE-DIGIT INCREASES AT THE REGENT UNIVERSITIES. WE NEED TO MAKE SURE THAT WE TAKE CARE OF OUR COMMITMENTS THAT WE CURRENTLY HAVE IN THE STATE THAT WE JUST HAVEN'T DEALT WITH IN THE LAST COUPLE YEARS.

Borg: REPRESENTATIVE JACOBS, AS YOU AND OTHERS IN THE REPUBLICAN MAJORITY OF THE LEGISLATURE PLAN FOR THE NEW SESSION, WHAT'S TOP ON THE AGENDA?

Jacobs: OBVIOUSLY THE BUDGET AND THE ECONOMY ARE TOP, THE BUDGET FROM THE PIECE OF HOW DO YOU MANAGE THE COSTS AND THE REVENUE, BUT THE MOST IMPORTANT PIECE IS THE LONG-TERM GROWTH FOR THE STATE: GROWTH IN TERMS OF POPULATION, GROWTH IN TERMS OF JOB OPPORTUNITY, GROWTH IN TERMS OF A WELL-EDUCATED WORK FORCE, AND WHAT CAN WE DO. AND THAT'S WHAT WE HAVE TO LOOK AT. WE STARTED LAST YEAR WITH THE IOWA VALUES PROGRAM. IT HAD GREAT BIPARTISAN EFFORT IN THE HOUSE AND WITH THE EXECUTIVE BRANCH. WE NEED TO BUILD ON THAT AND MAKE SURE THAT THAT CONTINUES TO BE NURTURED ALONG. BUT IF WE DON'T GROW THE ECONOMY AND GROW THE ECONOMIC OPPORTUNITIES FOR IOWANS OR PEOPLE WHO WANT TO BE IOWANS, WE'RE JUST GOING TO HAVE THIS SAME PROBLEM YEAR IN AND YEAR OUT.

Borg: AND THAT'S PHILOSOPHICALLY. NOW, WHAT ARE THE MECHANICS IN GETTING THAT DONE?

Jacobs: WELL, I THINK THE MECHANICS ARE SEVERAL. ONE IS WE WILL HAVE TO LOOK AT HOW WE REDUCE THE STATE BUDGET. IF WE HAVE A DEFICIT AGAIN AND WE'RE LOOKING AT SOMEWHERE IN THE RANGE OF WELL OVER $100 MILLION, WHAT IS IT WE'RE GOING TO HAVE TO CUT? WILL IT BE ACROSS THE BOARD? WILL IT BE THAT WE'RE GOING TO EXEMPT SOMETHING? THOSE ARE THE DISCUSSIONS WE'RE HAVING, AND WE'RE TRYING TO FIGURE THOSE OUT. AS FAR AS THE ECONOMY, I THINK WE HAVE TO REVISIT THE IOWA VALUES FUND: WHAT'S WORKING; WHAT DO WE NEED TO CHANGE? IT DOESN'T MAKE SENSE JUST TO THROW ONE PROGRAM OUT AND START NEW WITH SOMETHING ELSE. WE'RE FIRMLY COMMITTED WITH THE IOWA VALUES PROGRAM. WE HAVE TO GIVE IT SOME TIME TO WORK. IT WAS A MAJOR SHIFT, A MAJOR CHANGE IN THINKING. WE ALSO HAVE TO LOOK AT ALL THE WORK THAT'S BEING DONE ON PROPERTY TAX REWRITE AND THE OTHER WAY WE'RE LOOKING AT TAXES AS WELL. THOSE ARE PIECES THAT WERE PUT IN THAT ARE MORE LONG TERM, HAVE TO BE DONE OVER TWO TO THREE YEARS. SO THOSE ARE THE PIECES, AS WE LOOK AT THE OVERALL ECONOMIC VITALITY OF THE STATE, AS REPUBLICANS WE'LL BE FOCUSING ON IN THE 2004 SESSION.

Yepsen:MR. MURPHY, SAME SORT OF QUESTION. WHAT'S THE DEMOCRATIC AGENDA IN THE COMING SESSION?

Murphy: WELL, I THINK THE THREE MAIN ISSUES WE'RE GOING TO HAVE IS, FIRST OF ALL, WE HAVE TO REVISIT THE IOWA VALUES FUND, AS REPRESENTATIVE JACOBS BROUGHT UP. I THINK, FIRST OF ALL, WE'VE HAD SOME GREAT OPPORTUNITIES, BUT D.E.D. IS CONCERNED ABOUT THE ABILITY OF -- THE WORK ABILITY OF THE PIECE OF LEGISLATION WE PASSED LAST YEAR. AS REPRESENTATIVE JACOBS POINTED OUT, IN THE HOUSE IT WASN'T A PROBLEM. IT WAS A VERY BIPARTISAN EFFORT TO CREATE AN IOWA VALUES FUND BILL. THEN IT WENT OVER TO THE SENATE. AND I KNOW THAT THERE WERE SEVERAL LEGISLATORS THAT BASICALLY REWROTE THE BILL, AND THAT'S WHEN WE CAME BACK INTO SPECIAL SESSION. I THINK WE NEED TO REVISIT THAT ISSUE. WHEN YOU LOOK AT WELLS FARGO, YOU LOOK AT TRANS OVA, YOU CAN LOOK AT ALL THESE DIFFERENT PROGRAMS -- OR DIFFERENT -- THAT WE'RE LURING INTO THE STATE, I THINK WE HAVE AN EXCELLENT OPPORTUNITY DURING A TOUGH ECONOMIC TIME TO BRING NEW BUSINESS INTO THE STATE AND CREATE OPPORTUNITIES FOR OUR YOUNG PEOPLE. THE OTHER TWO ISSUES, THOUGH, THAT GO BACK TO SAME THING, IT GOES BACK TO EDUCATION AND IT GOES BACK TO THE HEALTH CARE ISSUES. THERE'S THE ISSUE WITH HAWKEYE WHERE WE MIGHT BE SHORT AS MUCH AS $5 MILLION FOR WHAT WE NEED FOR THAT PROGRAM.

Yepsen:THAT'S THE CHILDREN'S INSURANCE COMPANY PROGRAM.

Murphy: RIGHT, THAT'S THE CHILDREN'S INSURANCE PROGRAM. WE NEED TO MAKE SURE -- AND THESE ARE FOR WORKING PARENTS THAT DON'T HAVE INSURANCE WITH THEIR REGULAR EMPLOYER. SO I THINK WE NEED TO MAKE A COMMITMENT TO THEM IN THAT PROGRAM, AND WE NEED TO MAKE SURE THAT WE MAINTAIN OUR COMMITMENTS THAT WE CURRENTLY HAVE TO EDUCATION.

Henderson: THE STATE RACING AND GAMING COMMISSION IS CONSIDERING LIFTING THE MORATORIUM ON NEW LICENSES. REPRESENTATIVE JACOBS, WILL THE LEGISLATURE WADE INTO THIS FIGHT?

Jacobs: I ASSUME THERE WILL BE SOME DISCUSSION ON GAMBLING. ONE, IT WOULDN'T BE A LEGISLATIVE SESSION WITHOUT IT, KAY, AS YOU KNOW. I THINK WE WILL BE LOOKING AT WHAT RACING AND GAMING HAS DONE. THE CHAIR OF RACING AND GAMING, MIKE MAHAFFEY, HAS SAID THAT THE DECISION ON HOW MANY LICENSES SHOULD GO OUT THERE AND SHOULD THEY BE CHARGED FOR THEM MAY BE A GREATER POLICY DECISION THAN THAT COMMISSION SHOULD HANDLE ITSELF, AND THEY WILL WANT TO TURN TO THE LEGISLATURE. THEY ARE IN THE STUDY PROCESS NOW. WE'VE WAITING TO SEE WHAT THE STUDY SHOWS AS FAR AS THE ECONOMIC IMPACT. I FULLY ANTICIPATE THAT WE'LL HAVE GAMBLING BILLS AND WE WILL HAVE TO ADDRESS THAT ISSUE SOMEWHERE IN THE 2004 SESSION.

Yepsen:DOES THE STATE'S LOUSY FINANCIAL CONDITION FORCE YOU TO EXPAND GAMBLING IN IOWA TO COME UP WITH MORE TAX REVENUE?

Jacobs: I THINK THE STATE'S BUDGET SITUATION, DAVID, REQUIRES THE LEGISLATURE TO LOOK AT IT. I WOULDN'T SAY THAT IT FORCES ANYONE TO MAKE ANY CHANGES.

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

Murphy: I WOULD AGREE WITH THAT. I THINK THE BOTTOM LINE IS, YEAH, WE HAVE GAMBLING DEBATES. IT SEEMS AS IF IT COMES UP EVEN WHEN THE MORATORIUM WAS IN EFFECT. BUT THE BOTTOM LINE IS, AT THIS POINT IN TIME I THINK WE HAVE A LOT OF GAMBLING IN IOWA. I DON'T KNOW IF THERE'S A BIG PUSH TO HAVE MORE --

Henderson: BUT YOU REPRESENT --

Murphy: -- ALTHOUGH I KNOW SOME COMMUNITIES ARE PUSHING IT.

Henderson: AND YOU REPRESENT A COMMUNITY WHICH HAS A --

Murphy: I DON'T HAVE JUST ONE; I HAVE TWO. I HAVE A BOAT AND A TRACK, SO FOR ME IT'S A LOT EASIER TO SAY THAT.

Yepsen:REPRESENTATIVE JACOBS, WE HAVE JUST MINUTE OR SO LEFT. A COUPLE QUESTIONS. ONE ISSUE THAT IS ON THE MINDS OF A LOT OF IOWANS IS THE SCHOOL START DATE. SCHOOL STARTED AUGUST 21. KIDS WERE BAKING IN THE HEAT. WILL THE LEGISLATURE DO SOMETHING TO TOUGHEN UP THE LAW THAT SAYS YOU CAN'T START SCHOOL UNTIL AFTER -- IN THE WEEK OF LABOR DAY?

Jacobs: I KNOW THERE WILL BE BILLS INTRODUCED TO DEAL WITH THAT. I THINK IT COMES DOWN TO A PHILOSOPHICAL ISSUE. IT'S LOCAL CONTROL. WE ALSO HAVE TO REMEMBER THAT SOME OF THESE DISTRICTS START EARLY BECAUSE THE PARENTS WANT TEN DAYS AT SPRING BREAK. THEY WANT TWO WEEKS AROUND THE DECEMBER HOLIDAYS. HOW DO YOU WEIGH ALL OF THAT? SO IT IS DIFFICULT. BUT DO WE STICK CLOSER TO THE SEPTEMBER 1 START DATE? I THINK THAT'S A DISCUSSION THAT THE LEGISLATURE WILL HAVE.

Henderson: REPRESENTATIVE MURPHY, GOVERNOR VILSACK SAYS HE WANTS TO EXPLORE THE IDEA OF BUYING PRESCRIPTION DRUGS FOR STATE EMPLOYEES AND FOR GOVERNMENT PAID -- PEOPLE WHO ARE ON GOVERNMENT AND -- MEDICAID AND MEDICARE FROM CANADA. IS THAT A GOOD IDEA?

Murphy: AS LONG AS IT'S LEGAL AND IT'S SAFE AND IT LOWERS THE COST OF PRESCRIPTION DRUGS TO OUR SENIORS, I THINK WE SHOULD LOOK AT IT. ANYTHING THAT WILL HELP ALLEVIATE THIS PROBLEM. THE PROBLEM WE'RE HAVING IS THE FEDERAL GOVERNMENT -- THIS WAS A CAMPAIGN ISSUE IN 2000. BOTH PRESIDENTIAL CANDIDATES SAID THEY WERE GOING TO DO SOMETHING ABOUT PRESCRIPTION DRUGS, AND WE'RE STILL WAITING. SO I THINK THE BOTTOM LINE IS WE NEED TO DO WHAT WE CAN DO TO LOWER PRESCRIPTION DRUG COSTS FOR SENIORS, AND IF THAT MEANS THAT WE START LOOKING AT CANADA, WE MIGHT.

Yepsen:REPRESENTATIVE JACOBS, WE'VE GOT ABOUT FIFTEEN SECONDS LEFT. WHAT'S THE ATMOSPHERE GOING TO BE LIKE UP THERE? ARE YOU GUYS GOING TO GET ALONG, OR IS IT GOING TO BE ANOTHER FIGHT?

Jacobs: I THINK ON BOTH SIDES OF THE AISLE, IN THE HOUSE WE'LL TRY OUR BEST TO GET ALONG. THERE WILL BE SOME FRICTION BETWEEN THE LEGISLATIVE AND THE EXECUTIVE BRANCHES. THERE'S ABSOLUTELY NO DOUBT. THE TENSION IS GOING TO BE THERE.

Borg: WITH THAT PREDICTION, THANK YOU VERY MUCH FOR SHARING YOUR INSIGHTS, AND THAT PARTICULAR ONE, REPRESENTATIVE JACOBS. AND THAT'S THIS WEEKEND'S EDITION OF "IOWA PRESS." WE HOPE YOU'LL WATCH NEXT WEEK, SAME TIME: 7:30 FRIDAY, SUNDAY AT NOON. I'M DEAN BORG. THANKS FOR JOINING US TODAY.