Iowa must look toward consolidating state agencies, school districts, and counties as a way to help balance the state budget, a key legislator said at a recent IowaPolitics.com forum in Davenport.
"What we're going to have to do is consolidate," said Representative David Jacoby (D-Coralville), chair of the economic-development budget subcommittee. "We're going to look at consolidation, streamlining, and at the same time improving services."
Jacoby said legislators are working to consolidate the Department of Economic Development, Iowa Workforce Development, and the Department of Cultural Affairs. "It makes sense to me that we move these three agencies together under the same roof," he said. "It saves an administrative cost and it saves in rent that we're paying. That is a big leap I think we'll take at the state level."
Iowa's 99 counties should be consolidated into 16 regions, just like the community-college system, Jacoby said. He also said the state needs to look at consolidating some of its 361 school districts.
Governor Chet Culver says he'll reveal consolidation plans as the 2010 legislative session draws near.
"When the legislature convenes next month I will be asking members on both sides of the aisle to support our reorganization and efficiency plan," Culver said. "The stakes are high, and with your help we will save tens of millions, perhaps hundreds of millions of dollars, by making government more efficient, reorganizing government."
Culver said changes to state e-mail and information-technology systems, as well as the vehicle fleet, are among his proposals, some of which "should have been made decades ago."
On the revenue side of the budget equation, state Senator Joe Bolkcom (D-Iowa City) said lawmakers aren't likely to raise taxes in the 2010 election year but may have no choice but to do so in upcoming years to pay for education, health care, and public safety.
"I do not think we're going to see any tax increases in 2010," said Bolkcom, chair of the Senate Ways & Means Committee. "I don't see any way around some sort of revenue-enhancement initiative in 2012, or I should say 2011."
Bolkcom said he supports increasing the gas tax to pay for Iowa's roads. He also called for a more progressive state income tax, like the plan proposed by Democrats last year that would have also eliminated federal deductibility.
"It did ask people at higher incomes to contribute a greater percentage of their income ... -- in most cases, a few hundred dollars a year -- to try and help balance the budget," he said. But "I do not expect that we're going to see the proposal come back this year."
Other legislators called the plan a tax increase and said now isn't the time to raise taxes. "I think we have to get back to trying to find efficiencies in state government," said Representative Steve Lukan (R-New Vienna).
"Raising taxes is not a good idea right now," said Jacoby, who said he sponsored a bill that would have reduced commercial property taxes by 10 percent. "We're not going to raise taxes on the state level. ...The local entities do have a choice. The choice is whether to make cuts or to raise your local property-tax levy."
Hundreds of Layoffs Avoided by Union Concessions
By a vote of 59 percent to 41 percent, members of AFSCME Iowa Council 61 agreed to accept five furlough days to avoid 479 layoffs, union president Danny Homan announced this week.
"I'm still frustrated," Homan said at a news conference. "I'm frustrated that we were put into this position. I'm frustrated that our membership had to make a choice between laying off 479 of their brothers and sisters or to take five unpaid days."
Homan said those voting against the furloughs felt they shouldn't have to sacrifice to save someone else's job. But Homan said the union had to address the hand it was dealt.
A record 66 percent of approximately 9,000 union members voted between November 19 and 25, which Homan said he believes is the largest turnout the union has seen. He said additional people joined the union to vote on this issue. Due to the complexity of the issue, the votes have been recounted to assure accuracy.
The change does not affect the current salary freeze in base pay, the 2-percent across-the-board pay raise that AFSCME workers will receive July 1, or the 1-percent increase on January 1, 2011. Nor does it affect the step increases of up to 4.5 percent that roughly 40 percent of AFSCME workers qualify for because they're not at the top of their pay scale.
Homan called on the state to increase taxes, to reduce the number of supervisors in state government, and to approve an early-retirement program for the 2,700 state workers who qualify as ways to further deal with the state's budget shortfall.
"Either get rid of some tax exemptions ... or do a tax increase so that the only people balancing the state budget aren't state employees," Homan said. "Maybe we just ought to just raise taxes and make everybody pay for it instead of us. ... Why is it always us?"
Afterwards, Culver said the state would move forward with 109 layoffs -- 68 of which will come from corrections and three of which will come from public safety -- but said agreements with two state unions prevented hundreds more layoffs.
"Now we're saving nearly 600 jobs," Culver said. "That could mean nearly 600 mortgages that are going to continue to be paid and on and on. There would be a real domino effect, if you will, if we would have lost permanently those 600 state jobs."
Culver said part of the AFSCME agreement requires the state to address the number of managers per worker.
"We're actually going to be doing more because of this agreement on looking at the level of management and the quantity, the number of those managers, than we've done in a long time," Culver said.
Governor's Office Disputes Estimate of $1-Billion Budget Gap
Iowa has a projected budget gap of more than $1 billion for fiscal year 2011, the nonpartisan Legislative Services Agency said recently.
But Culver took issue with some of the methodology behind the estimate.
"They did not factor in the 10-percent across-the-board cut," Culver said. "So in the billion-dollar number that was used, that was not minus the $565 million that was a result of the 10-percent across-the-board" cut.
Culver said the 10 percent would not be backfilled in the budget he will propose by the end of January. He also said the report doesn't take into account across-the-board cuts made previously, and assumes a fully-funded salary bill.
"So they put a lot of assumptions into that report that are just not reality," Culver said.
Culver estimated the gap will be more like $400 million, and he said he does not foresee more layoffs.
Troy Price, a spokesperson for Culver, said the estimate was premature until this month's revenue estimates and the introduction of Culver's budget.
"The governor has said all along that Fiscal Year 2011 will be difficult," Price said. "But this estimate assumes that we will spend our way into this gap. The governor will not do it. He has made the tough decisions this year, and he is prepared to do it again. The bottom line is Governor Culver will submit and sign a balanced budget. Plain and simple."
Republican gubernatorial candidate Rod Roberts is calling for a constitutional amendment to limit state-government spending.
State law already limits state spending to 99 percent of projected revenue, but Roberts supports amending the Iowa Constitution to include that limit. Iowa voters considered amending the constitution in the late 1990s to adopt the spending limit, but Roberts believes the plan will receive more support this time around.
State Partially Lifts Suspension of Film Tax Credit
Iowa Attorney General Tom Miller announced that the state has lifted its suspension of the state's film-tax-credit program for projects already in the pipeline.
Culver suspended the program two months ago after alleged improprieties including the purchase of two luxury vehicles. The new announcement affects projects that had already been approved for tax credits. No new projects will be approved until the legislature and Culver have the chance to review and re-evaluate the program.
Culver has also ordered a comprehensive review of each of the state's 30 tax-credit programs. He said the review could be a money-saving opportunity. He mentioned the Power Fund as an example of a tax-credit program that has worked well for the state, but also said that program would not escape scrutiny.
Culver's lifting the suspension affects 28 film projects that have contracts but have yet to receive tax certificates, as well as 105 other projects that have been registered under the film program but do not have contracts.
"The attorney general has determined that the state is legally obligated to move forward with existing contracts and approved applications," Culver said. "However, no new applications for film tax credits will be accepted until the program is reviewed by the legislature."
The state auditor continues to review documents about the $32 million in tax credits already issued to 22 film projects. The attorney general's office continues to research the state's ability to "claw back" credits that were issued incorrectly.
"This appears to be difficult where the certificates have been transferred, and most certificates have been transferred," Miller said. "Several serious irregularities occurred in connection with most of these tax certificates. The law was ignored or misapplied in most situations."
Republican Gubernatorial Candidate Fong Drops Out
Cedar Rapids Republican Christian Fong told IowaPolitics.com he suspended his campaign for governor for "purely financial reasons," and he declined to endorse any candidate in the crowded primary field.
"I'm still confident that the message and vision that I presented in the campaign are the right ones for Iowa and the right combination for the Republican Party," Fong said. "But the reality of modern campaigns is it takes a heck of a lot of money to run, and I made the judgment that the financial hurdles were just too high to mount a winning campaign. And I sure wasn't going to run a mediocre campaign."
Fong also declined to say whether former Governor Terry Branstad's entrance into the Republican field influenced his decision, saying he would "leave that to the pundits to dissect the why and how."
Fong said he intends to continue to be active in politics, although he declined to comment on any future candidacies or a possible lieutenant-governor position. He also said there are expenses for a campaign even after it ends, and he will take care of those and then decide what to do with whatever campaign money is left.
In a statement reacting to the news, Branstad thanked Fong for his "youth, energy, and unique perspective."
Fellow GOP primary contender Bob Vander Plaats said Fong "represents everything that's good about the state. He's a tremendous talent who believes in being part of the solution -- and that makes him a great role model for young Iowans."
This weekly summary comes from IowaPolitics.com, an online government and politics news service. Reporter Andrew Duffelmeyer and other correspondents contributed to this report.
