The 2010 legislative session will be dominated by budget cuts, government consolidation, and reorganization when state lawmakers return in January with what some say is a $1-billion shortfall and a midterm election just 10 months away.
Rather than a 100-day session, lawmakers will aim to have an 80-day session to do their part to cut spending. Shortening the session will save about $40,000 a day.
During a recent IowaPolitics.com legislative forum, Senate Majority Leader Mike Gronstal (D-Council Bluffs) warned that it will be a painful session as lawmakers work to realign state government with revenues. House and Senate Democratic leaders have vowed not to increase taxes in 2010 but have repeated that everything is on the table for cuts.
House Majority Leader Kevin McCarthy (D-Des Moines) said lawmakers will approve a "good, healthy" government-reorganization package that will save the state at least another $100 million.
Part of the look at the state budget will include a review of the more than 30 tax credits the state offers. That got underway this week with an initial analysis by state-agency directors and two public hearings.
Representative Dave Deyoe (R-Nevada) said that money for tax credits is intended for economic development, and any money saved by discontinuing tax credits should instead be used for property-tax relief.
And Senate Minority Leader Paul McKinley (R-Chariton) urged Democrats to not just look at whether tax credits are producing a return on investment, but also to explore whether state-government programs are producing results. "We do need to look at everything if there is genuine cost savings -- what programs we can eliminate that haven't reached their promise," he said.
Democrats insist that they do have their eye on economic development. "We've got to make sure that the cuts we do don't impact our ability to help encourage high-wage, high-skill jobs in the state," Gronstal said.
Culver Signs Cost-Saving Measure
Governor Chet Culver this week signed an executive order with 40 measures that he said will save the state $128.1 million next year and $713.7 million over five years. He encouraged lawmakers to consider another 50 recommendations offered by consultant Public Works of Philadelphia.
"We primarily incarcerate, educate, and medicate. That's what we do. That's where most of our budget goes to," Culver said. "And we're still trying to do a really good job in those three areas, but we're going to have to either change the way we deliver those services and find efficiencies or make additional cuts, and I think we've gone pretty far in the cuts."
The 50 other recommendations made in the report would either need legislative approval, or are under further consideration.
"I think we're going to get this done next session," Culver said. "I really think that I will sign an efficiency bill that will save taxpayer money and allow us at the same time to deliver these essential services."
Some of the efficiency measures put into place already include consolidating information-technology, mail, and e-mail services; consolidating purchasing and service contracts; reducing the size of the state motor-vehicle fleet; and making state buildings more energy-efficient.
"For the most part we really believe this is a great opportunity to more efficiently deliver important services, and one big opportunity is around the area of information technology," Culver said. "We have 223 data centers, for example, and we can start to move quickly on consolidating them and reducing that number."
Senate Republicans questioned Culver's numbers for cost savings implemented by executive order; they also sent out their own spreadsheet showing that nearly half of the options identified by Public Works were revenue enhancements instead of savings.
In the spreadsheet distributed by Peter Matthes, staff director of the Iowa Senate Republican caucus, the savings or increased revenues to the general fund would be $62.2 million the first year and $308.5 million over five years.
"The focus of the Culver administration has been spending taxpayer money," McKinley said. "That being said, it should come as no surprise that nearly half of the savings Governor Culver identified are not actual savings but increased revenue."
McKinley called Culver's actions "short-term and based largely on finding more revenue to continue the spending problems that put us into the billion-dollar hole we are in today."
Businesses Back Tax Credits as Some Call for Transparency and Limits
The potential liability of Iowa tax credits has increased almost 150 percent, from $213 million in Fiscal Year 2007 to an expected $524 million by Fiscal Year 2011, according to a new report from the Iowa Department of Revenue.
There has been tremendous growth in the amount of credits awarded since fiscal year 2001, although awards have dropped in the last two years due to the recession and the depressed market for biofuels, according to the December 2009 Iowa Tax Credits Contingent Liabilities Report.
The amount of tax credit awards grew from just over $100 million in fiscal year 2001 to nearly $350 million in fiscal year 2007. However, there was a decrease in Fiscal Year 2008, with just over $210 million; that decreased again to just under $160 million in Fiscal Year 2009.
Charles Bruner, executive director of the nonpartisan Child & Family Policy Center, said one reason for decreased state revenues is the explosion of tax credits, which he said benefit corporate bottom lines without a requirement that they benefit Iowans. "Showing a public benefit for the use of public money is an essential test for this kind of spending through the tax code to continue," he said.
But Iowa business groups are defending the tax credits, saying they are key for the state's economic development.
"Now is not the time to make job creation in our state more difficult," said David Maahs, executive vice president of the Greater Des Moines Partnership. "Having effective incentives in the state's economic-development toolbox is critical for creating and retaining high-quality jobs in Iowa."
Dave Roederer, executive director of the Iowa Chamber Alliance, said putting caps on tax credits would limit growth and investment.
"These programs are doing exactly what they were intended to do, to help businesses remain in Iowa and grow in this state," Roederer said. "Some have advocated capping the amount of the credits. For these programs, we think it would be a mistake."
Department of Management Director Dick Oshlo, chair of the state's new Tax Credit Review Panel, said transparency was a key point for groups speaking this week about the state's tax credits, and would be for the panel as well.
"Many of them talked about the need for greater transparency," he said. "I think the devil is in the detail there what the definition is. I think there's a general recognition that transparency is important."
Oshlo said that while information about state appropriations is available for the public to scrutinize, information on tax credits is not.
But Mike Ralston, president of the Iowa Association of Business & Industry, said he "believes in the sanctity of the Iowa tax return" and the confidentiality it affords businesses.
"I'm comfortable with information in the aggregate," Ralston said. "The question is how much money is being claimed. We know that. The question is: What is the resulting investment? We know that. I don't know that we need to know the specific company."
State Considers Closure of Mental-Health Institute
Iowa Human Services Director Charlie Krogmeier says closing the Mount Pleasant mental-health institute would amount to only a small cost savings.
"It doesn't save much money. There's a slight savings, but it's not very much," Krogmeier said in a conference call with reporters. "What we'll be doing is providing the legislature with background information. If you're going to seriously close one, here are the kinds of things you should look at."
The proposal is in response to a mandate approved by the legislature in the spring requiring Krogmeier to recommend closing one of the four institutes without loss of services.
"The quality of service at the MHI in Mount Pleasant is beyond question and I want everyone to know that this recommendation is no reflection whatsoever on the dedication and expertise of our staff, which is outstanding," Krogmeier said.
Given the legislative requirement, Krogmeier said he decided to recommend a closure that would cause the least economic fallout for staff and the community, the least disruption for families of patients, and the most opportunities for improving the mental-health system.
The report shows cost savings from fiscal year 2010 to 2012 would be only $1.7 million. A mental-health-institute task force recommended that no state facilities be closed at this time.
Krogmeier urged lawmakers to look at Iowa's overall mental-health delivery system, rather than at the more narrow issue of whether to close one institute. "That's where we'd like to see the policymakers go," he said. "Whether we have three or four MHIs is a relatively small part of that discussion."
Closure of the Mount Pleasant mental-health institute would mean a loss of more than 100 jobs in that community and would be ill-advised and short-sighted, said AFSCME Iowa Council 61 President Danny Homan, who was a member of the mental-health task force.
"Overwhelmingly, we found that the residents of these communities and the clients served by the mental-health institutes depend on those services and the jobs that are provided to these areas," Homan said. "At a time that our economy is struggling to recover, closing a facility in Mount Pleasant -- or any of the MHIs for that matter -- would be unwise economic and mental-health policy for Iowa."
Mount Pleasant has 108 employees compared to 100 at Clarinda, 201 at Cherokee, and 267 at Independence. Mount Pleasant has an operational budget of $8.8 million, the second-smallest of the four. Clarinda's budget is $8.6 million, while the institutes at Independence and Cherokee have budgets of $21.1 million and $16.1 million. All four are more than a century old.
Eichhorn Announces Run for Secretary of State
Former state Representative George Eichhorn (R-Stratford) on Wednesday made his campaign for secretary of state official.
In making his announcement, Eichhorn cited a recent federal audit that found the secretary of state did not account for and expend Help America Vote Act funds in accordance with requirements.
While the audit mostly involved the time when Culver was secretary of state, Eichhorn said that current Secretary of State Michael Mauro bears some responsibility.
"The United States Election Assistance Commission's recent audit showed funds were misspent," Eichhorn said. "Only after the audit was released was the public made aware. The current secretary either ignored the problem or swept it under the rug for years."
Parties Debate Use of Illinois Prison for Terror Suspects
Iowa Democrats are emphasizing the economic impact of President Barack Obama's decision to acquire the Thomson Correctional Center in Illinois, just across the border from Iowa, to house federal terrorism suspects now being held in Guantanamo Bay.
"Throughout this entire process, my primary concern has been ensuring the safety and security of Iowa's families," said U.S. Representative Bruce Braley (D-Waterloo). "The economic impact of this decision cannot be overstated, creating more than 3,000 jobs and bringing more than $1 billion to the communities surrounding Clinton."
U.S. Senator Tom Harkin (D-Iowa) voiced similar sentiments.
But Iowa Republicans were critical of the White House decision.
U.S. Senator Chuck Grassley (R-Iowa) said he doesn't agree with bringing terrorists anywhere in the United States, let alone a stone's throw from Iowa.
"There are a number of serious concerns with moving these terrorists to United States soil, including the legal, immigration, and constitutional rights they will be afforded, along with a host of national-security concerns and risks that would obviously come with moving people to the heartland who wish to kill Americans," Grassley said.
"I'm gravely disappointed that the White House seems to have turned a deaf ear to the concerns of most Americans and decided to move ahead on this proposal," said U.S. Representative Tom Latham (R-Ames). "Iowans want to know how bringing dangerous terrorists to their backyard will make their communities and our country any safer."
This weekly summary comes from IowaPolitics.com, an online government and politics news service. Reporter Andrew Duffelmeyer and other correspondents contributed to this report.
