Iowa Public Television

Borg: AT THE IOWA STATEHOUSE, POLITICAL ACRIMONY AS LEGISLATORS AND THE GOVERNOR TAKE HARD-LINE POSITIONS ON SPENDING PRIORITIES AND TAXES TO PAY FOR THEM. WE'LL QUESTION SENATE PRESIDENT JEFF LAMBERTI 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 13 EDITION OF "IOWA PRESS." HERE IS DEAN BORG.

Borg: THIRTY-THREE DAYS, A LITTLE MORE THAN A THIRD OF THE 2004 LEGISLATIVE SESSION, HAVE PASSED WITHOUT MUCH INDICATION OF THE STATE'S 2005 BUDGET. THERE'S BEEN A LOT OF POLITICAL POSTURING, THOUGH, ON HIGH-PROFILE ISSUES, SUCH AS THE TAX RESTRUCTURING FOR IOWA CASINOS AND RACETRACKS -- THAT'S BROUGHT ON BY A RECENT IOWA SUPREME COURT RULING -- AND SUCH AS GOVERNOR TOM VILSACK'S IDEAS FOR BROADENING THE SALES TAX TO COVER MORE SERVICE INDUSTRIES AND TO ADD 60 CENTS MORE TO THE TAX ON A PACK OF CIGARETTES. RHETORIC ESPECIALLY SHARP BETWEEN THE DEMOCRATIC GOVERNOR AND THE REPUBLICAN-LED LEGISLATURE. IT'S AN ELECTION YEAR AND THERE ISN'T ENOUGH TAX REVENUE TO PAY FOR EVERYONE'S PRIORITIES. THE IOWA SENATE'S NEW PRESIDENT, JEFF LAMBERTI -- HE'S A REPUBLICAN FROM ANKENY -- KNOWS THE ISSUES VERY WELL. BEFORE BEGINNING HIS NEW ROLE, HE CHAIRED THE POWERFUL SENATE APPROPRIATIONS COMMITTEE FOR THREE YEARS. SENATOR LAMBERTI, WELCOME BACK IN YOUR NEW ROLE.

Lamberti: THANK YOU.

Borg: AND WE'RE GOING TO TALK ABOUT THE OLD ROLE TOO.

Lamberti: ALL RIGHT.

Borg: AND ACROSS THE IOWA PRESS TABLE: "DES MOINES REGISTER" POLITICAL COLUMNIST DAVID YEPSEN AND "RADIO IOWA" NEWS DIRECTOR KAY HENDERSON.

Henderson: SENATOR LAMBERTI, SHOULD THE STATE OF IOWA EXPAND THE NUMBER OF GAMBLING LICENSES, (A) AND (B) IF SO, HOW?

Lamberti: WELL, I THINK IT'S GOING TO BE A VERY INTERESTING DEBATE TO SEE IF WE WILL EXPAND. I THINK RIGHT NOW THE HOUSE, AS YOU KNOW, THEY'VE BEEN HAVING OPEN MEETINGS, OPEN SUBCOMMITTEE MEETINGS. AND I THINK WITHIN THE NEXT COUPLE OF WEEKS, THEY'RE GOING TO BRING A BILL UP FOR DEBATE. I THINK THE PROPOSAL WILL NOT NECESSARILY INCLUDE LIFTING THE MORATORIUM ON NEW LICENSES, BUT THAT WILL BE UNDER DISCUSSION. I THINK WE'VE TOLD PEOPLE CONSISTENTLY THAT WE DON'T KNOW THE OUTCOME OF THAT DEBATE. IT'S NOT REALLY A REPUBLICAN/DEMOCRATIC ISSUE. IT'S NOT AN URBAN/RURAL ISSUE. IT REALLY IS REGIONAL, WHERE YOU LIVE: DO YOU HAVE CASINO GAMING NOW; ARE YOU LOOKING AT GETTING CASINO GAMING? SOME PEOPLE WOULD LIKE TO DO THINGS WITH CRUISING FOR BOATS AND SO FORTH, AND IT'S REALLY AN INTERESTING, DELICATE BALANCE, AND WE CAN'T PREDICT THE OUTCOME.

Yepsen: I WAS JUST -- GO AHEAD.

Henderson: HOW WILL YOU VOTE?

Lamberti: I HAVEN'T DECIDED AT THIS POINT. IT REALLY DEPENDS ON WHAT THE BILL LOOKS LIKE WHEN IT COMES OVER FROM THE HOUSE, IF IT COMES OVER -- AND I'M MUCH LIKE SOME OF THESE OTHER FOLKS; I'M FROM POLK COUNTY -- AND WHAT THE RESOLUTION IS BETWEEN THE VARIOUS INTERESTS IN POLK COUNTY. THE COUNTY IS THE OWNER OF THE FACILITY. OBVIOUSLY WE HAVE THE HORSE RACING HERE, WHICH STRETCHES ALL ACROSS THE STATE BUT IS FOCUSED AT PRAIRIE MEADOWS. ARE WE GOING TO GET INTO ISSUES OF TABLE GAMES AS PRAIRIE MEADOWS? AND SO I WANT TO SEE WHAT THE BILL LOOKS LIKE WHEN IT COMES OVER.

Yepsen: I WAS JUST GOING TO ASK YOU TO PREDICT HOW THIS WOULD ALL TURN OUT, AND YOU'RE SAYING NOW YOU CAN'T DO THAT.

Lamberti: I THINK IT'S A 50/50 PROPOSITION RIGHT NOW.

Yepsen: A LOT OF -- THIS IS A CONFUSING DEBATE FOR A LOT OF PEOPLE. THERE ARE OBVIOUSLY A LOT OF COMPONENTS TO IT AND A LOT OF TRADEOFFS. WALK US THROUGH SOME OF THOSE. WHAT ARE THE ISSUES THAT ARE OUT HERE? YOU'VE MENTIONED TABLE GAMES, BUT JUST WALK US DOWN THROUGH -- WHAT ARE THE FACTORS THAT ARE AT PLAY IN THE LEGISLATURE RIGHT NOW?

Lamberti: CLEARLY THE FIRST ONE IS THE TAX ISSUE. OF COURSE, WE GOT THE RULING FROM THE IOWA SUPREME COURT SAYING THE EXISTING TAX STRUCTURE WAS NOT CONSTITUTIONAL, SO THAT PUTS US BACK TO SQUARE ONE. IF YOU SIMPLY TRIED TO EQUALIZE THE RATE, WHICH WOULD MEAN LOWERING THE TRACKS AND RAISING THE BOATS, WELL, THEN YOU'RE GOING TO HAVE GREAT OPPOSITION FROM LEGISLATORS AND THE COMMUNITIES THAT REPRESENT BOATS. SO THAT'S A DIFFICULT ISSUE RIGHT AWAY. THE ISSUE OF TABLE GAMES AT THE THREE TRACKS IS CERTAINLY AN ISSUE, PROBABLY LESS SO IN POLK COUNTY BECAUSE THERE'S NOT ANOTHER FACILITY CLOSE BY; WHEREAS, WITH THE OTHER TWO, IN DUBUQUE AND IN COUNCIL BLUFFS, YOU HAVE BOATS RIGHT NEXT DOOR.

Borg: TABLE GAMES, EXPLAIN THAT.

Lamberti: THE TABLE GAMES WILL BE YOUR TRADITIONAL GAMES, YOUR BLACK JACK, CRAPS, THOSE KINDS OF THINGS, THAT RIGHT NOW ARE RESTRICTED TO THE RIVERBOATS. WE HAVE ISSUES ABOUT SHOULD THE BOATS CRUISE, SHOULD THEY BE ALLOWED TO BRING IN WHAT THEY CALL BARGES, WHICH WOULD ALLOW THEM TO PUT IN A BIGGER FACILITY BUT NOT BE A TRADITIONAL BOAT. OF COURSE, WE'VE SEEN, I BELIEVE, FOUR OR FIVE REFERENDUMS PASS THAT RAISE THE ISSUE OF MAN-MADE VERSUS A RIVER -- MAN-MADE LAKE VERSUS A RIVER. THAT HAS ISSUES. AND THEN WE'VE GOT A WHOLE HOST OF OTHER ISSUES, SUCH AS: GAMBLING TREATMENT DOLLARS; WHAT DO YOU DO WITH ATM MACHINES, CREDIT CARD MACHINES. I MENTIONED THE HORSES; THE ISSUE THERE IS DO YOU GUARANTEE PURSES FOR THEM TO GIVE STABILITY TO THAT INDUSTRY. AND I PROBABLY HAVE HIT ON --

Yepsen: NINE.

Lamberti: YEAH. AND I BET THERE'S TEN MORE OUT THERE THAT ARE OF SMALLER CONSEQUENCE.

Yepsen: SENATOR, DO YOU EXPECT ALL THOSE ISSUES TO GET RESOLVED? I DID KEEP TRACK. YOU MENTIONED NINE SPECIFIC ISSUES THAT ARE AT WORK IN THIS DEBATE, AND THERE ARE PROBABLY MORE. DO YOU EXPECT THEM ALL TO BE RESOLVED IN THIS DEBATE?

Lamberti: I THINK THEY WILL ALL BE PROPOSED IN THE BILL THAT THE HOUSE WILL BRING TO THE FLOOR, SO THEY WILL BE DEBATED. WILL THEY BE RESOLVED, I THINK THAT'S -- I KNOW, FOR EXAMPLE, THAT YOU WILL PROBABLY SEE SOME ADDITIONAL AMENDMENTS OFFERED ON ISSUES LIKE ATMs OR CREDIT CARDS. SOME WOULD JUST SAY GET THOSE OFF THE GAMING FLOOR. SOME WOULD SAY GET THEM OUT OF THE CASINO COMPLETELY. HOW THAT WOULD BE RESOLVED, I DON'T KNOW.

Yepsen: MANY LEGISLATORS HAVE NOT EVER -- ARE NEW AND HAVE NEVER VOTED ON A GAMBLING BILL DURING THEIR CAREER, SO IT'S KIND OF DIFFICULT FOR OBSERVERS LIKE ME TO HANDICAP THIS THING. WHAT'S THE MOOD INSIDE THE REPUBLICAN PARTY? I MEAN YEARS AGO YOU USED TO HAVE A LOT OF MEMBERS WHO HAD OBJECTIONS TO GAMBLING ON MORAL GROUNDS. DO YOU STILL HAVE THAT OR HAS THAT SORT OF DIMINISHED SOME?

Lamberti: OH, IT MAY HAVE BEEN DIMINISHED SOME, BUT CLEARLY THERE IS A GROUP OF LEGISLATORS WITHIN OUR PARTY WHO ARE JUST GOING TO SAY WE'RE NOT GOING TO GO THERE AND DON'T WANT TO SEE ANY EXPANSION, DON'T WANT TO ADDRESS THAT. I THINK THERE HAS BEEN SOME CHANGE. YOU KNOW, WE'VE HAD GAMING IN IOWA FOR QUITE A WHILE NOW. WE SAW THE OVERWHELMING SUPPORT FOR THE REFERENDUMS IN THE COUNTIES THAT ALREADY HAVE IT. WE'RE STARTING TO SEE, IN SOME AREAS, PRETTY GOOD SUPPORT IN BLACK HAWK COUNTY AND WORTH COUNTY, AND SO THAT HAS CHANGED ATTITUDES. I THINK YOU'RE RIGHT: WE HAVE NOT HAD A SERIOUS GAMING DEBATE IN THE TIME I'VE BEEN IN THE LEGISLATURE. THIS IS MY TENTH YEAR AND WE'VE JUST -- THE ISSUES WE'VE DEALT WITH HAVE BEEN RELATIVELY SMALL. THE LAST MAJOR DEBATE PREDATES THAT, AND WE'VE HAD A TURNOVER IN THE HOUSE OF WELL OVER 50 PERCENT AND IN THE SENATE AS WELL SINCE THAT TIME.

Borg: LAST WEEK ON THIS PROGRAM, GOVERNOR VILSACK SAID THAT PERHAPS THERE SHOULD BE A GOOD CHARGE FOR GETTING A GAMBLING LICENSE IN THE FUTURE. HOW DO YOU FEEL ABOUT THAT AND ALSO THE ISSUE OF LEVYING A PRETTY HEFTY PROPERTY TAX ON THESE CASINOS?

Lamberti: THERE'S A COUPLE ISSUES. ONE IS THE ISSUE -- AND THAT'S NOT WHAT I MENTIONED TO YOU, DAVID. THAT WOULD BE ANOTHER ONE TO ADD TO YOUR LIST, AND THAT IS THE ISSUE OF IF YOU GRANT ADDITIONAL LICENSES, SHOULD YOU CHARGE AN UP-FRONT FEE FOR THAT. THAT IS UNDER DISCUSSION. THE ISSUE ON THE PROPERTY TAX, WELL, WE'RE REALLY -- IT'S THE SECOND PLAN. WHAT WE WOULD REALLY LIKE TO DO ON THE TAX ISSUE IS WE WOULD LIKE TO TRY TO FIND AGREEMENT AMONG ALL OF THE INDUSTRY, THE BOATS AND THE TRACKS, AND WORK OUT A DEAL THAT WILL REVOLVE THE ISSUES IN THE COURT CASE. HOWEVER, IF WE'RE UNABLE TO DO THIS, IF THIS BILL DOES NOT PASS, THEN THE STATE IS IN A POSITION OF HAVING, WITH REPAYMENTS AND LOST REVENUE IN THE FUTURE, OF A BILL THAT COULD BE IN THE NEIGHBORHOOD OF $250 MILLION. WITH THE CRITICAL NEEDS WE HAVE WITH EDUCATION, WITH HEALTH CARE, WITH PUBLIC SAFETY, WE SIMPLY CANNOT ALLOW THAT TO HAPPEN. SO WE'RE GOING TO HAVE A FALLBACK PLAN THAT WOULD ESSENTIALLY PUT US AT THE STATUS QUO WHERE WE WERE UNDER THE OLD LAW. THAT'S WHERE THE PROPERTY TAX IDEA COMES IN.

Yepsen: SENATOR, WHAT'S THE THINKING OF A REPUBLICAN? YOU'RE TALKING ABOUT IMPOSING TAXES ON THIS INDUSTRY. WHETHER YOU LIKE GAMBLING OR NOT, IT IS INDUSTRY, IT IS HERE, IT DOES PROVIDE A LOT OF JOBS. AND REPUBLICANS ARE RESISTING TAXES ON EVERYBODY ELSE AND EVERYTHING ELSE, BUT ALL OF A SUDDEN YOU WANT TO TAX THIS INDUSTRY MORE. WHY?

Lamberti: DON'T REALLY WANT TO TAX IT MORE. AND MY GOAL OUT OF ANY OF THIS DEBATE ABOUT CREATING A FAIR BALANCE OR AN AGREEMENT BETWEEN ALL OF THE ENTITIES IS REALLY A STATUS QUO AGREEMENT. I SIMPLY WANT TO MAKE SURE THAT THE LEVEL OF TAXATION, ASSUMING NO MORE BOATS OR CASINOS, IS THAT THE STATE WILL RECEIVE APPROXIMATELY THE SAME AMOUNT OF MONEY THAT WE RECEIVED BEFORE. THAT'S A HARD BALANCE TO COME TO BECAUSE, AS I SAID BEFORE, IF YOU JUST SIMPLY BRING THEM ALL TO A COMMON RATE, THE BOATS ARE GOING TO GO UP DRAMATICALLY. LET'S LOOK OVER IN THE OMAHA/COUNCIL BLUFFS MARKET, WHERE NEBRASKA IS GETTING PRETTY SERIOUS ABOUT HAVING CASINOS IN OMAHA, WE DO HAVE TO BE VERY CAREFUL. AND I DON'T THINK MOVING RIVERBOATS UP TO, SAY, 26 PERCENT IS WISE.

Borg: IF YOU CHARGE A PRETTY HEFTY FEE FOR A GAMBLING LICENSE IN THE FUTURE, DOESN'T THAT SORT OF PRICE SOME OF THE RURAL COMMUNITIES OUT OF THE MARKET? THEY WOULDN'T BE ABLE TO RAISE, SAY, $6 MILLION FOR A GAMBLING LICENSE.

Lamberti: WE'RE GOING TO HAVE THOSE DISCUSSIONS, AND WE'VE TALKED ABOUT WHERE THAT FEE SHOULD BE SET. BUT BASED ON EVEN IN THE SMALLER MARKETS -- LET'S TAKE AN OSCEOLA -- THEY ARE GENERATING REVENUE THAT IS FAR IN EXCESS OF WHAT THEY PREDICTED WHEN THAT FACILITY WAS BUILT. WE DO BELIEVE THERE IS AN ABILITY TO PAY SOME FEE UP FRONT. THEY CAN RECOUP THAT ESSENTIALLY AS PART OF THEIR INVESTMENT OVER TWENTY YEARS. WE WANT TO BE CAREFUL. WE'RE NOT TRYING TO PRICE SOMEBODY OUT OF THE MARKET.

Henderson: WHAT ABOUT THE DEVELOPMENT OF SORT OF A COALITION OF THE UNWILLING AMONG LEGISLATORS? YOU KNOW, YOU HAVE GAMBLING OPPONENTS SORT OF ALLY WITH PEOPLE WHO ALREADY HAVE GAMBLING ENTERPRISES. I MEAN HOW REAL IS THAT POSSIBILITY?

Lamberti: WELL, I THINK YOU HAVE TO UNDERSTAND THAT THOSE THAT ALREADY HAVE FACILITIES, THERE'S SOME THINGS IN THERE FOR THEM AS WELL. AGAIN, GOING BACK TO THE TAX ISSUE, CLEARLY BOATS DON'T WANT TO BE AT 26 PERCENT, A 6-PERCENT INCREASE, AND SO THEY MAY BE WILLING TO GO ALONG WITH SOME OTHER CHANGES, AS LONG AS IT'S NOT A DIRECT IMPACT ON THEIR MARKET SHARE, TO GET SOMETHING PASSED. SO I DON'T THINK IT'S AS CLEAN CUT AS THAT.

Henderson: ANOTHER ONE OF THE BUGABOOS IS POLK COUNTY. YOU MENTIONED YOU'RE A POLK COUNTY LEGISLATOR, AND THERE ARE THOSE WHO FEAR THAT THERE WILL BE A GAMBLING ENTERPRISE, A BOAT SITUATED SOMEWHERE IN POLK COUNTY. AND THAT IS SORT OF PUTTING A GUM IN THE WORKS. HOW DOES THAT WORK ITSELF OUT? IS THERE MARKET SATURATION HERE THAT YOU NEED TO ADDRESS?

Lamberti: THERE'S PROBABLY NOT MARKET SATURATION AND I THINK THAT'S WHERE THE DISCUSSION GETS TO: IF THERE IS IN EXPANSION IN POLK COUNTY, WHERE SHOULD IT OCCUR; SHOULD IT OCCUR AT PRAIRIE MEADOWS WHERE YOU ALREADY HAVE, OR SHOULD YOU ALLOW A NEW LICENSE? THAT IS ANOTHER ISSUE. YOU CAN ADD ANOTHER ONE TO YOUR LIST. THE ISSUE IS SHOULD YOU RESTRICT ADDITIONAL LICENSES, IF YOU ISSUE ANY MORE AT ALL, IN COUNTIES THAT ALREADY HAVE ONE. THAT WOULD TAKE CARE OF THAT ISSUE.

Yepsen: IS THE PLAN, SENATOR, TO HAVE THE HOUSE START WORKING -- WORK UP A BILL AND THEN FOR THE SENATE TO REACT TO WHATEVER THE HOUSE APPROVES?

Lamberti: CLEARLY THE PLAN IS FOR THE HOUSE TO START THEM. I THINK THEY'VE HAD SOMETHING LIKE 20 SUBCOMMITTEE MEETINGS, VERY OPEN. EVERYBODY WHO'S WANTED TO BRING INPUT -- SOME OF OUR MEMBERS WHO ARE INTERESTED HAVE GONE OVER AND SAT THROUGH THOSE SO THAT THE PROCESS HAS BEEN OPEN. THIS IS A BILL THAT'S GOING TO HAVE TO PASS BOTH CHAMBERS IF IT'S GOING TO GET THROUGH, AND SO WE'VE AGREED TO LET THEM START. SOMEWHAT WE WOULD HAVE TO REACT, BUT WE HAVE HAD INPUT WITH THEM ALL THE WAY THROUGH.

Yepsen: YOU KNOW, USUALLY THE LEGISLATURE DOES GAMBLING BILLS AT MIDNIGHT. NOW, REPRESENTATIVE RAECKER HAS SAID HE WANTS TO DO THIS OUT IN THE OPEN. HE'S BEING VERY OPEN ABOUT THE PROCESS. CAN YOU ASSURE US THAT THE SENATE WILL DO THE SAME?

Lamberti: THAT WOULD BE OUR HOPE.

Yepsen: SO I'M NOT GOING TO BE UP THERE AT 2 A.M. COVERING A GAMBLING --

Lamberti: I WON'T PROMISE YOU THAT BUT WHAT I WILL PROMISE YOU IS THAT IT WILL NOT BE TAKEN UP LATE AT NIGHT WHEN PEOPLE ARE NOT PREPARED.

Yepsen: I WANT TO CHANGE SUBJECTS TO EDUCATION. THE EDUCATORS IN THIS STATE ARE HAMMERING LEGISLATORS FOR MORE MONEY. THEY SAY THERE'S A CRISIS. I'VE HEARD YOU SAY, NO, THERE ISN'T. WHY DO YOU BELIEVE THAT?

Lamberti: WELL, WHERE I START IS WHAT HAVE WE DONE AND WHAT ARE WE GOING TO DO. NEXT WEEK WE WILL PASS OUR ALLOWABLE GROWTH PORTION FOR THE NEXT BUDGET YEAR. LAST YEAR WE PROMISED 2-PERCENT GROWTH. WE'RE GOING TO MEET THAT FIGURE. WE'RE ALSO GOING TO ATTEMPT -- WE WILL BACKFILL THE 2.5-PERCENT CUT THAT THE GOVERNOR ISSUED IN THE FALL. TO PUT IT IN PERSPECTIVE, THOSE TWO NUMBERS COMBINED WILL BE ALMOST $1.9 BILLION. TO PUT THAT IN SOME CONTEXT, 1.9 BILLION IS ROUGHLY EQUIVALENT TO WHAT WE COLLECT IN PERSONAL INCOME TAX FOR THE STATE. LET'S TALK ABOUT OUR COMMITMENT TO EDUCATION. FIVE YEARS AGO EDUCATION -- K-12 EDUCATION WAS ROUGHLY 38 PERCENT OF OUR BUDGET. TODAY IT'S 43 PERCENT. WHY THAT NUMBER IS IMPORTANT IS NOT JUST THE RAW NUMBER, IT'S THE FACT THAT DURING THAT SAME PERIOD OF TIME WE WERE REDUCING SPENDING AT THE STATE LEVEL FROM 4.9 BILLION TO 4.4 BILLION. AGAIN, THAT'S A PRETTY SERIOUS COMMITMENT TO K-12 EDUCATION AT A TIME YOU'RE DRASTICALLY REDUCING SPENDING. THE LAST FIVE YEARS, $300 MILLION IN NEW MONEY FOR K-12 EDUCATION, 18,000 FEWER STUDENTS. THAT'S THE BACKGROUND ABOUT OUR COMMITMENT. THAT FUNDING DOES NOT EVEN INCLUDE THE EXTRAS THAT WE DO, THE CLASS-SIZE REDUCTION MONEY, THE TEACHER COMP MONEY. SO WE BELIEVE WE ARE MAKING A COMMITMENT TO EDUCATION; HOWEVER, LATELY WE'VE HEARD A CONSISTENT MESSAGE FROM TEACHERS, ADMINISTRATORS, PARENTS. AND THAT IS THEIR CONCERN ABOUT NOT BEING ABLE TO FUND THINGS LIKE TEXTBOOKS, SUPPLIES, TECHNOLOGY. SO WHAT WE ARE PROPOSING IS THAT $10 MILLION BE SET ASIDE OUT OF THE ALLOWABLE GROWTH MONEY, THE NEW MONEY FOR THE PURCHASE OF THOSE ITEMS: TEXTBOOKS, SUPPLIES, AND TECHNOLOGY. WE BELIEVE WE'VE LISTENED TO WHERE THEIR PROBLEMS ARE, AND WE'RE GOING TO TRY TO DO THAT. WE THINK OBVIOUSLY THAT'S A HIGH PRIORITY IN SCHOOLS AND PROBABLY HIGHER THAN MOST, SO WE'VE REACTED TO THAT.

Yepsen: BUT DOING THAT, SENATOR, WOULD EFFECTIVELY KEEP THAT MONEY FROM BEING AVAILABLE FOR COLLECTIVE BARGAINING PURPOSES. IN OTHER WORDS, THAT MONEY COULD NOT THEN GO FOR TEACHER PAY RAISES. IT WOULD HAVE TO ONLY BE USED FOR TEXTBOOKS.

Lamberti: IT WOULD ONLY BE USED FOR TEXTBOOKS. BUT THEY HAVE CONSISTENTLY TOLD US THAT'S WHERE THEIR CONCERN ARE -- IS, AND WE WANT TO MEET THAT CONCERN.

Yepsen: IS THE TEACHERS UNION GOING TO BE HAPPY WITH THAT?

Lamberti: WE'LL HAVE TO SEE.

Henderson: BUT AREN'T REPUBLICANS IN FAVOR OF LOCAL CONTROL, LETTING LOCAL SCHOOL BOARDS AND LOCAL ADMINISTRATORS MAKE THOSE KINDS OF SPENDING DECISIONS?

Lamberti: THEY ARE THE ONES WHO TOLD US WE DON'T HAVE MONEY FOR TEXTBOOKS, SUPPLIES. AND I GUESS, AS WE HEAR WHAT THOSE PEOPLE ARE TELLING US AND WHAT THE PARENTS ARE TELLING US, THAT IS TOO HIGH OF A PRIORITY TO SIMPLY SAY WE'RE GOING TO FUND EVERYTHING ELSE BUT WE DON'T HAVE MONEY FOR BOOKS. SO DON'T TELL US, ON ONE HAND, THAT YOU DON'T HAVE MONEY FOR IT AND THEN COMPLAIN WHEN WE GIVE YOU MONEY FOR IT.

Henderson: YOU KNOW, THIS COMING WEEK ON TUESDAY, LEGISLATORS FACE A LEGAL DEADLINE. YOU ARE SUPPOSED TO BE SETTING THE LEVEL OF STATE AID FOR THE 2006 BUDGETING YEAR, A COUPLE YEARS ON DOWN THE ROAD. WHY IS THAT TAKING SO LONG FOR REPUBLICAN LEGISLATORS WHO CONTROL THE DEBATE AGENDA TO SET THAT FIGURE?

Lamberti: A COUPLE OF REASONS WHY THAT IS DIFFICULT. NUMBER ONE, I'M BECOMING CONVINCED THAT US SETTING ALLOWABLE GROWTH OR THE INCREASE IN SPENDING FOR K-12 EDUCATION MORE THAN A YEAR IN ADVANCE IS PROBABLY NOT REAL WISE. WE DON'T KNOW WHAT KIND OF REVENUE WE'RE GOING TO HAVE. IT SEEMS TO ME YOU OUGHT TO KNOW WHAT MONEY YOU HAVE BEFORE YOU SPEND IT. SO WE'VE BEEN STRUGGLING WITH THAT ISSUE. NUMBER TWO, WE'VE YET TO SEE A BILL FROM THE GOVERNOR. NORMALLY THE GOVERNOR PROPOSES HIS ALLOWABLE GROWTH AND THEN WE REACT FROM THERE AND DRAFT OUR OWN PROPOSAL.

Henderson: AND HE HAS MADE A PROPOSAL.

Lamberti: BUT WE'VE NOT SEEN IT IN WRITING AT THIS POINT. AND WHAT WE WILL DO IN THE SENATE, ON TUESDAY WE INTEND TO TAKE UP A BILL AND WE WILL PASS IT.

Henderson: ANOTHER FACET OF EDUCATION, LEGISLATORS HAVE LONG TALKED ABOUT THE GOAL OF INCREASING TEACHER PAY, ENCOURAGING PEOPLE TO STAY IN THE PROFESSION RATHER THAN LEAVE FOR HIGHER PAID JOBS. IS THAT ON THE AGENDA THIS YEAR, OR IS THE STATE'S BUDGET CLIMATE JUST SUCH THAT YOU CAN'T MEET THAT GOAL WHICH YOU HAVE SET?

Lamberti: WELL, THERE'S TWO OTHER ITEMS THAT WE HAVEN'T TALKED ABOUT THAT WOULD BE IN ADDITION TO ALLOWABLE GROWTH, THE TWO BIGGER ITEMS. ONE IS CLASS-SIZE REDUCTION AND ONE IS TEACHER COMPENSATION. I KNOW THE GOVERNOR HAS ASKED FOR ADDITIONAL MONEY FOR TEACHER COMPENSATION. I THINK WE'RE COMMITTED TO TRYING TO AT LEAST FIND THE SAME LEVEL OF FUNDING THAT WE HAVE THIS YEAR. WE DON'T WANT TO CUT THAT. WE DO THINK THAT'S IMPORTANT. AND SOME PEOPLE WILL SAY, WELL, WHAT KIND OF SUCCESS HAVE YOU HAD. AGAIN, YOU'VE GOT TO GO BACK AND LOOK AT WHERE YOU WERE. WE WENT BACK AND LOOKED AT 1985-'86 AND TRIED TO PROJECT WHAT KIND OF GROWTH WE SAW IN TEACHER PAY. AND DURING THAT TIME TEACHER PAY WENT UP 78 PERCENT. INFLATION WENT UP BY 50 PERCENT, 52 PERCENT. NOW, INTERESTINGLY, SUPERINTENDENT PAY WENT UP BY 107 PERCENT. BUT I THINK THAT SHOWS THAT WE ARE GAINING GROUND ON THE TEACHER COMP. WE'RE CERTAINLY NOT GOING TO BE LOOKING TO CUT THAT FUNDING.

Borg: AS YOU LOOK FOR MONEY WITHIN STATE GOVERNMENT, THE LEGISLATURE THIS PAST WEEK PASSED A RESOLUTION ASKING THE STATE EMPLOYEES UNION, STATE EMPLOYEES, TO TAKE A PAY FREEZE RATHER THAN THEIR NEGOTIATED CONTRACT RAISE THIS NEXT FISCAL YEAR. ARE YOU WHISTLING IN THE DARK ON THAT? I MEAN HOW LIKELY IS SOMETHING LIKE THAT TO HAPPEN?

Lamberti: WELL, WHAT WE ACTUALLY ASKED IN THAT RESOLUTION WAS FOR THE UNIONS TO PUT IT TO A VOTE OF THEIR MEMBERS. WE WOULD LIKE TO KNOW WHERE THEIR MEMBERS ARE. AND HERE'S THE PROBLEM HERE. NEGOTIATED PAY INCREASES ARE PROJECTED TO COST $70 MILLION. WE DON'T HAVE THE MONEY. THE GOVERNOR HAS SAID HE'S NOT GOING TO FUND THAT IN HIS BUDGET AND THAT THEY SHOULD PLAN TO ABSORB THAT. CLEARLY IN SOME AREAS OF STATE GOVERNMENT, THEY CAN ABSORB THAT. IN OTHERS, I DON'T BELIEVE IT'S POSSIBLE. AND SO WE'RE FACING THE PROSPECT OF SOME PRETTY SIGNIFICANT LAYOFFS. WE WOULD LIKE TO PRESERVE THOSE JOBS, AND WE DON'T HAVE THE POWER TO DO THAT BECAUSE WE DON'T NEGOTIATE THOSE CONTRACTS. THE GOVERNOR DOES. BUT WE ARE CONCERNED ABOUT MASSIVE LAYOFFS IN STATE GOVERNMENT. THIS WOULD BE A WAY FOR US TO AVOID THAT. WE WOULD LIKE THEM TO PUT IT TO A VOTE OF THEIR MEMBERS.

Yepsen: SENATOR, I WANT TO ASK YOU ABOUT TAXES AND TAX POLICY. THE GOVERNOR HAS A TAX PLAN UP THERE. ONE OF THE THINGS IT DOES WOULD PLUG WHAT HE CALLED CORPORATE LOOPHOLES FOR OUT-OF-STATE CORPORATIONS. ANOTHER WOULD BE TO RAISE THE SALES TAX -- OR IMPOSE THE SALES TAX ON MORE THINGS. HOW DO REPUBLICANS REACT TO THAT?

Lamberti: WELL, WE DON'T BELIEVE THIS ECONOMY, WHICH IS STARTING TO RECOVER, NEEDS TAX INCREASES. NUMBER ONE, TAX INCREASES COST JOBS. WE CAN TALK ABOUT SOME OUT-OF-STATE COMPANY THAT MAYBE HAS A LOOPHOLE. WELL, THEN GIVE ME THE LIST OF CORPORATIONS YOU THINK ARE CHEATING ON TAXES. IS IT AN OUT-OF-STATE CORPORATION LIKE JOHN DEERE THAT EMPLOYS THOUSANDS OF PEOPLE IN IOWA? WE'RE STARTING TO HEAR BACK FROM THESE CORPORATIONS AND, YES, IT WILL HAVE AN IMPACT, SO WE THINK THAT'S BAD. THE GOVERNOR PROPOSES, ON HIS SALES TAX INCREASE, THAT FEW WILL PAY. THAT'S JUST NOT TRUE. IN FACT, WE BELIEVE IT WILL DISPROPORTIONATELY IMPACT SMALL BUSINESS AND INDIVIDUALS. SOME OF THE PROPOSALS THAT EXPANSION OF THE SALES TAX BASE WOULD INCLUDE THINGS LIKE ACCOUNTING SERVICES, CONSULTING SERVICES, ENGINEERING SERVICES. IF YOU'RE A LARGE CORPORATION, YOU HAVE THOSE SERVICES IN-HOUSE. YOU'RE NOT GOING TO PAY FOR THAT. WHO'S GOING TO PAY IT? WELL, FIRST OF ALL, IT'S GOING TO BE THE SMALL BUSINESS THAT OFFERS THAT SERVICE, WHO IS TYPICALLY GOING TO PASS IT ON TO THEIR CUSTOMER. THEY WILL BE AT A COMPETITIVE DISADVANTAGE IF THEY HAPPEN TO COMPETE IN THE BORDER COMMUNITIES. AND THEN THEY'RE GOING TO PASS IT ON TO INDIVIDUALS. SO IT'S A SIGNIFICANT TAX INCREASE, AND IT'S A TAX INCREASE THAT DISPROPORTIONATELY IMPACTS INDIVIDUALS AND SMALL BUSINESSES. THAT'S NOT GOOD FOR OUR ECONOMY.

Yepsen: HOW DO YOU RESPOND TO THE ARGUMENT THAT THE GOVERNOR AND MANY OTHER PEOPLE ARE MAKING THAT IF YOU DON'T RAISE THESE TAXES AND PROVIDE MORE MONEY FOR SCHOOLS, SCHOOLS ARE GOING TO DECLINE AND THERE GOES A QUALITY OF LIFE ISSUE THAT IOWA IS ITS EDUCATIONAL SYSTEM?

Lamberti: AT A MINIMUM, WE WILL BE PROVIDING $109 MILLION OF NEW MONEY TO K-12 EDUCATION.

Yepsen: BILLION.

Lamberti: MILLION, NEW MONEY. $1.9 BILLION OVERALL. BUT 109 MILLION IN NEW DOLLARS MINIMUM. WE HAVEN'T EVEN TALKED ABOUT CLASS SIZE AND SOME OF THOSE OTHER ISSUES. SO WE HAVE TO COME UP WITH THAT IN A BUDGET THAT'S GOT $10 MILLION OF NEW REVENUE. WE ARE GOING TO FUND THOSE PRIORITIES. THERE'S GOING TO BE A LOT OF PEOPLE WHO ARE GOING TO TALK ABOUT IT'S NOT ENOUGH MONEY. WELL, THERE'S A LOT OF GROUPS UP THERE. THERE'S NEVER ENOUGH MONEY. I THINK IN THE EDUCATION AREA -- MY VISION FOR IOWA, K-12 EDUCATION IN IOWA, IS NOT A FIGHT ABOUT WHETHER WE'RE GOING TO SPEND NEXT YEAR $109 MILLION MORE OR $150 MILLION MORE. WE HAVE TO GET THIS DEBATE BACK TO HOW WE'RE ALLOCATING OUR RESOURCES AND WHAT ARE WE DOING FOR THE CHILDREN, WHAT ARE WE DOING FOR THE KIDS. FOR EXAMPLE, IS IT ACCEPTABLE IN IOWA TO HAVE A CHILD WHO'S LEAVING FOURTH GRADE TO BE DEEMED TO BE PROFICIENT IN READING IN THEY READ EQUIVALENT TO SOMEBODY WHO JUST ENTERED THIRD GRADE? IS IT ACCEPTABLE FOR A HIGH SCHOOL SENIOR TO BE PROFICIENT WHEN THEY READ AT THE TENTH GRADE LEVEL? THAT'S THE STANDARDS WE HAVE. WE NEED TO HAVE THOSE KINDS OF DISCUSSIONS, BUT WE NEED TO HAVE A DISCUSSION ABOUT -- WE HAVE K-3 MONEY THAT GOES FOR TEACHER -- OF CLASSROOM SIZE -- TO REDUCE CLASSROOM SIZE AND TO HELP WITH READING. OUR AVERAGE CLASSROOM SIZE AROUND THE STATE OF IOWA IS 15. NOW, THAT'S NOT TRUE EVERYWHERE. BUT IF WE HAVE KIDS WHO CAN'T READ AT FOURTH GRADE, WE'RE GOING TO LOSE THEM. MAYBE WE OUGHT TO HAVE A DISCUSSION ABOUT WHAT DO WE NEED TO DO TO SAVE THOSE CHILDREN AND MAYBE ALLOCATE SOME OF THOSE RESOURCES. WE SPEND FAR TOO MUCH TIME TALKING ABOUT RAW DOLLARS. I WANT TO START TALKING ABOUT KIDS.

Henderson: ONE OF THE THINGS THAT THE GOVERNOR HAS TALKED ABOUT IS RAISING THE CIGARETTE TAX. AND AS I RECALL LAST YEAR, YOU TALKED ABOUT RAISING THE CIGARETTE TAX AS A MEANS OF BANKROLLING THE IOWA VALUES FUND, WHICH IS A FUND THE STATE HAS ESTABLISHED TO HAND TO BUSINESSES TO SORT OF LURE THEM TO EXPAND OR LOCATE HERE. DO YOU SUPPORT RAISING THE CIGARETTE TAX?

Lamberti: HERE'S WHAT I'VE SAID ABOUT CIGARETTE TAX. NUMBER ONE, IT IS CLEAR WE WERE LOOKING AT IT LAST YEAR AS A MECHANISM TO FUND AN ONGOING VALUES FUND. BUT WHEN I'M LOOKING AT THE BUDGET AS A WHOLE -- AND THIS IS MY REACTION TO ALL OF THE GOVERNOR'S TAX INCREASE PROPOSALS -- I FIRST BELIEVE IT'S MY DUTY TO THE PEOPLE OF IOWA TO SHOW THAT I CAN'T LIVE WITHIN MY MEANS BEFORE I GO AND RAISE A TAX. AND I DON'T BELIEVE THAT'S BEEN DEMONSTRATED. I BELIEVE WE CAN PUT TOGETHER A BUDGET THAT MEETS OUR FUNDING PRIORITIES, THAT LIVES WITHIN OUR MEANS, AND DOESN'T REQUIRE A TAX INCREASE. WE WERE TALKING ABOUT IT IN THE CONTEXT OF A SPECIFIC PROGRAM THAT WE FELT WE COULDN'T FUND ANY OTHER WAY. WELL, WE FOUND ANOTHER WAY SO WE DIDN'T HAVE TO DO THAT. AND I'VE HAD PEOPLE TELL ME WHY DON'T YOU JUST DO THE EASY THING AND RAISE TAXES. AND MY RESPONSE TO THEM IS -- OR DO THE HARD THING AND RAISE TAXES. I SAY THAT'S THE EASY THING, NOT THE HARD THING. MY DUTY FIRST TO THE PEOPLE OF IOWA IS TO TRY TO LIVE WITHIN OUR MEANS AND PUT TOGETHER A BUDGET THAT HITS OUR PRIORITIES, AND WE'LL DO THAT.

Henderson: DO YOU FEEL --

Borg: CAN I ASK, KAY, "LIVING WITHIN THE MEANS" MEANS, IN YOUR ESTIMATION, DOWNSIZING EVEN FURTHER STATE GOVERNMENT?

Lamberti: NOT NECESSARILY. WE'VE DONE A LOT OF DOWNSIZING. AS I MENTIONED, WE TOOK THE STATE GENERAL FUND FROM $4.9 BILLION TO $4.4 BILLION. WE'VE DONE A LOT OF GETTING OUT THE FAT. THERE MAY BE SOME FURTHER REDUCTIONS. I DON'T THINK ANYTHING ALONG THE SCALE THAT YOU'VE SEEN OVER THE LAST TWO OR THREE YEARS.

Henderson: IN REGARDS TO THE IOWA VALUES FUND, YOU'VE SET UP A MECHANISM FOR FINANCING THAT FOR TWO YEARS, BUT THE FUND IS TO LAST BEYOND THAT. ARE YOU GOING TO BITE THE BULLET AND COME UP WITH A CONTINUOUS COMMITMENT TO FUND THAT?

Lamberti: THE GENERAL CONSENSUS WITHIN MY CAUCUS RIGHT NOW IS THAT THEY WOULD PREFER TO WAIT TILL NEXT YEAR TO DO THAT. BUT I WON'T SIT HERE TODAY AND TELL YOU WE WON'T CONSIDER THAT. I'M NOT SURE IT'S NEAR AS CRITICAL AS PEOPLE WANT TO PROJECT IT TO BE. I GO BACK AND LOOK AT THE PRIOR EIGHT YEARS OR NINE YEARS I WAS IN THE LEGISLATURE, WE NEVER HAD MULTIPLE YEAR ECONOMIC DEVELOPMENT FUNDING. THAT'S NOT TO SAY THAT THAT'S NOT A GOOD THING. BUT TO TELL ME THE SKY IS FALLING ON ECONOMIC DEVELOPMENT IF I DON'T RIGHT NOW PUT IN PERMANENT FUNDING FOR EIGHT YEARS I THINK IS A LITTLE BIT OF AN EXAGGERATION. BUT WE'RE NOT GOING TO SAY WE'RE NOT GOING TO DO THAT, BUT THE CONSENSUS IS THEY DON'T WANT TO DO IT RIGHT NOW.

Yepsen: SENATOR, WE'VE ONLY GOT A COUPLE OF MINUTES LEFT. GAY MARRIAGE HAS EMERGED AS A VERY HOT ISSUE AROUND THE COUNTRY BECAUSE OF RULINGS BY VARIOUS SUPREME COURTS. IS THIS LEGISLATURE GOING TO DO ANYTHING ON THAT ISSUE?

Lamberti: I THINK IT'S A LITTLE EARLY TO KNOW. I THINK WHAT WE'RE SEEING RIGHT NOW -- THERE IS A BILL, I KNOW, IN THE HOUSE THAT'S PENDING. I THINK IT'S GOT 40 SPONSORS. THAT WOULD SHOW SOME PRETTY SIGNIFICANT STRENGTH, BUT I'M NOT SURE IT'S GOT THE 51 VOTES YET. WE'VE GOT SIMILAR PROPOSALS IN THE SENATE, AND WE'VE ASKED THE SPONSORS OF THOSE BILLS TO GO AROUND AND FIND OUT WHERE THEIR VOTES COUNTS ARE. I REALLY DON'T KNOW WHAT WE WILL DO ON THAT AT THIS POINT.

Henderson: WILL YOU REDO THE SEX OFFENDER LAW THAT FORBIDS THEM FROM LIVING WITHIN 2,000 FEET, WHICH A FEDERAL JUDGE HAS SAID VIOLATES THEIR RIGHTS?

Lamberti: FIRST, WE WANT TO FIND OUT WHETHER OR NOT THERE'S GOING TO BE AN APPEAL FILED TO THAT. IF SO, PROBABLY NOT THIS YEAR BECAUSE OF THE TIME WITH THE APPEAL RUNNING.

Henderson: WHAT ARE YOUR POLITICAL ASPIRATIONS? WHO DO YOU WANT TO BE?

Lamberti: WELL, RIGHT NOW I WANT TO BE PRESIDENT OF THE SENATE. I'VE BEEN ON THIS JOB LESS THAN FIVE WEEKS. I ENJOY IT. IT'S A BIG RESPONSIBILITY. IT'S OBVIOUSLY AN HONOR TO HAVE BEEN SELECTED.

Henderson: BUT LAST TIME AROUND YOU CONSIDERED RUNNING FOR GOVERNOR AND AT THE LAST MINUTE SAID, "OKAY, I'M NOT GOING TO DO IT." ARE YOU GOING TO RUN FOR GOVERNOR?

Lamberti: IT'S A LITTLE EARLY TO MAKE THAT DECISION, BUT I WOULD SAY I WOULDN'T RULE IT OUT.

Yepsen: WHAT ABOUT THE REPUBLICAN PROSPECTS FOR HOLDING CONTROL OF THE LEGISLATURE? DEMOCRATS ARE REALLY COMING AT YOU HARD. ARE YOU WORRIED AT ALL ABOUT THE REPUBLICANS LOSING CONTROL?

Lamberti: WELL, WE'RE ALWAYS NERVOUS WHEN WE GO INTO THESE CYCLES. ON THE SENATE SIDE, OUT OF THE 25 MEMBERS THAT ARE UP, WE HAVE 18 OF THEM THAT ARE REPUBLICANS. BUT, YOU KNOW, WE ALWAYS BELIEVE THAT THE BOTTOM LINE YOU WIN CAMPAIGNS ON THE CANDIDATES YOU CHOOSE, AND WE HAVE THE BEST CANDIDATES. WE BELIEVE WE WILL AGAIN HAVE THE BEST CANDIDATES. AND I PREDICT WHEN WE COME BACK AFTER NOVEMBER ELECTION, WE WILL STILL BE THE MAJORITY IN BOTH CHAMBERS.

Borg: DOES THE ENERGIZED DEMOCRATIC PARTY WORRY YOU?

Lamberti: YOU KNOW, ANYTIME YOU HAVE THAT KIND OF ATTENTION WITH THE CAUCUSES, THERE'S GOING TO BE A LOT OF ENERGY. BUT I WAS AT MY CAUCUS IN ANKENY, AND WE HAD A TURNOUT THAT WAS UNBELIEVABLE FOR AN OFF YEAR. WE'RE PRETTY ENERGIZED AS WELL.

Borg: THANKS FOR BEING WITH US TODAY.

Lamberti: THANK YOU.

Borg: ON OUR NEXT EDITION OF "IOWA PRESS," WE'LL CONCENTRATE ON ONE OF THE BIG ISSUES THAT WE'VE BEEN TALKING ABOUT TODAY, GAMBLING. LEGISLATORS DECIDING WHETHER TO EXPAND IT AND HOW TO TAX IT AND WHERE TO SPEND THE REVENUE THAT GAMBLING GENERATES. WE'LL QUESTION URBANDALE REPRESENTATIVE SCOTT RAECKER, WHO CHAIRS THE HOUSE SUBCOMMITTEE ON GAMBLING, AND ALSO STATE RACING AND GAMING COMMISSION CHAIR MIKE MAHAFFEY OF MONTEZUMA. RAECKER AND MAHAFFEY ON GAMBLING, NEXT WEEK ON "IOWA PRESS." 7:30 FRIDAY; SUNDAY AT NOON. I HOPE YOU'LL WATCH. I'M DEAN BORG. THANKS FOR JOINING US TODAY.

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