Following a meeting of the Revenue Estimating Conference on Wednesday, Iowa state-government workers and legislative leaders are bracing for what they predict will be at least a 3-percent across-the-board budget cut.
"I can't imagine a scenario that there's not going to be an across-the-board cut," said House Minority Leader Kraig Paulsen (R-Hiawatha). "I think it's going to be higher than 1 percent. I don't anticipate the governor is going to call us into special session."
State revenues in the current fiscal year, which began July 1, continue to fall.
A report released by the Legislative Services Agency (LSA) showed year-to-date Fiscal Year 2010 total net receipts decreased $141.1 million (9.1 percent) compared to the first quarter of fiscal 2009. Key to the decline was a $26.5-million (27.5-percent) drop in receipts from the corporate tax.
Jeff Robinson, a senior legislative analyst with the LSA's fiscal division, explained why September numbers were down. Tax refunds issued in September alone totaled $70.3 million, an increase of $40.6 million (136.7 percent) compared to September 2008. Corporate-tax refunds accounted for $29.1 million of the increase of tax refunds in September.
"They didn't pay refunds in July and August. They paid 'em in September," Robinson said. "There's a humongous number of refunds in what is already a bad month."
Senate Minority Whip Steve Kettering (R-Lake View) said most Iowans have recognized and reacted to the changing economy, while Governor Chet Culver continues to wait for the October 7 meeting of the Revenue Estimating Conference.
"That will leave the governor no choice but to call for a special session or, more likely, issue a massive across-the board-reduction," Kettering said, "a reduction that could have been avoided had the governor acted earlier in a more decisive manner by reducing state expenditures in his FY2010 budget."
Any official action will be taken after the three-member Revenue Estimating Conference meets to officially lower revenue projections.
Culver has indicated that budget cuts for fiscal years 2010 and 2011 are expected, saying there's "no question" the state will have to do more belt-tightening. He recently told reporters that an across-the-board cut is "something I would seriously consider doing," and his actions "will be a combination of using some of that reserve in all likelihood and additional cuts."
Culver is required by law to balance the state budget, and an across-the-board cut is the only action he can take without calling a special session of the legislature. A 1-percent cut translates into about $60 million of the $6 billion budget, and most expect Culver to make a cut that would also leave the state some cushion for additional drops in revenue.
Santorum Urges Audience to Turn Emotion Into Action
Former U.S. Senator Rick Santorum (R-Pennsylvania) urged conservatives to take their anger about the direction Democrats are leading the nation and turn it into a political movement.
Santorum spoke to more than 100 people in Dubuque as part of the American Future Fund's conservative lecture series.
Santorum noted the strong emotions displayed during recent health-care town-hall meetings and at the anti-big-government "tea parties" in recent months.
"We can take this movement, these voices out there across America, and turn it into a political movement," Santorum said.
Taking aim at the Obama administration's leadership on domestic affairs and foreign policy, Santorum said this is a "very critical time in our nation's history." He especially was critical of the health-care legislation, noting that it would be difficult to undo.
"If the health-care bill passes the United States Senate, I would argue America may be forever changed," said Santorum, sounding an alarm of government intrusion on individual rights.
Santorum urged those in attendance to use the model of GOP welfare-reform efforts from the early 1990s as inspiration for battling proposed health-care legislation. He noted that after initial skepticism, welfare reform was approved as part of the Republicans' 1994 Contract with America movement.
Republicans were also scrutinized by Santorum. He was critical of former President George W. Bush and congressional Republicans' support of TARP legislation, saying the GOP cannot be "me-too liberals" or "cheap Democrats."
Santorum, who is viewed as a potential 2012 Republican presidential candidate, acknowledged his visit to Iowa has attracted a lot of attention.
"I'll set aside the speculation," Santorum said. "I came because I was asked by the American Future Fund to come and give a speech."
Leaders Concerned About Rising Cost of State's Insurance Premiums
The Iowa Executive Council expressed concern that Wellmark intended to raise its health-insurance premiums by 23 percent in 2010 -- a figure the state has negotiated down to 11 percent -- one year after the council voted 3-2 to drop United Healthcare and make Wellmark the only provider for state workers.
"We made the decision to take the competition away, and now we get 23 percent," said Iowa Secretary of Agriculture Bill Northey, a Republican, who last year said he was concerned that the move to eliminate Wellmark's competition would create phantom savings. "That's a phenomenal number."
An 11-percent increase in Wellmark's health-insurance premiums would cost Iowa about $27.4 million, increasing the state's cost from an estimated $306.5 million this year to $333.9 million next year, said Ed Holland, risk and benefits administrator for the Iowa Department of Administrative Services.
The state would pick up the full increase in the first six months of 2010 because of a clause negotiated in collective bargaining. State workers who are part of a union would begin paying the increased premiums on July 1, 2010.
About 28,000 Iowa contract and non-contract state workers would be affected. The increase in premiums would not affect employees who have health maintenance organizations (HMOs), which the state provides them for free, but it would affect those with family plans who have higher-cost indemnity and preferred-provider-organization (PPO) plans.
Iowa Secretary of State Michael Mauro, a Democrat, said he hopes the state will once again allow other companies to bid on providing health insurance to state workers. "There's too many unanswered questions," Mauro said of the proposed increase. "I need to know why. A red flag jumps out at me immediately."
The increase comes after a 1- to 2-percent increase in premiums last year. Culver last year pushed for eliminating United Healthcare and making Wellmark the state's only health-insurance provider, saying it was an opportunity for the state to find cost savings. Iowa became only the eighth state in the nation to only offer one health-insurance provider to its employees.
Culver, who participated in the recent meeting by telephone, said little about Wellmark's proposed increase. The Iowa Executive Council tabled approving the matter, despite a desire to get rates into the system so that state workers can begin enrolling October 23.
Committee Moves Toward Action on "Puppy Mills"
The so-called "puppy mill" issue that held up adjournment during the final hours of the 2009 legislative session took a possible step toward resolution, as lawmakers voted 9-0 to make a series of general recommendations for the 2010 legislative session.
Senator Joe Seng, a Davenport Democrat, veterinarian, and co-chair of the committee, made a series of suggestions to the committee that were agreed upon, including allowing state inspectors in USDA-licensed dog-breeding facilities.
"We actually think the state should be able to come in on complaints and inspect some of these facilities, rather than just pass it on to the USDA," Seng said.
He also called for courses for breeders and kennels that are in violation of the Animal Welfare Act, an increase in state-licensure fees to cover increased costs, and a crackdown on unlicensed facilities.
All of those suggestions were agreed upon, as well as possibly requiring veterinarians to report suspected abuse of animals they treat.
Another element suggested by Senator Merlin Bartz (R-Grafton) was tacked on to the recommendations. Bartz suggested writing a letter to Iowa's congressional delegation regarding discrepancies in USDA inspections in the state.
Before the vote, there were signs of compromise between animal-care groups and pet breeders, as a member of the Iowa Pet Breeders Association said his group would be open to state inspectors as long as they use USDA regulations.
Joe Gerst, who breeds Yorkshire terriers at his farm in Amana, said breeders want complaints to be based on eyewitness accounts, and violators should be required to receive continuing education. "We want to do something about bad actors, as well, probably as much as anybody in this room," he said. "They're a blight on our industry."
Mary LaHay, director of Iowa Voters for Companion Animals, said she appreciated Gerst's willingness to let in state inspectors but that complaints based on eyewitness accounts are not realistic. "It's not possible except through the USDA reports, and the USDA reports, based on that one inspector's information, we can't entirely rely on those," she said.
Spotlight Turns to Harkin as Senate Committees Look to Merge Health Bills
With the finance panel of the U.S. Senate wrapping up work on its health-care-reform bill, attention is turning to the merger process with legislation previously passed out of the Senate's Health, Education, Labor, & Pensions (HELP) Committee -- where the fate of the government-run insurance option could be decided once and for all.
Turning the page on the Senate Finance Committee's role in health-care reform could also shift the spotlight from U.S. Senator Chuck Grassley, the ranking Republican on Finance, to U.S. Senator Tom Harkin, the newly installed chairman of the HELP Committee and a staunch advocate of the government-run insurance option.
Harkin said recently that a comprehensive health-care-reform bill would land on the president's desk no later than Christmas Day, and he came close to guaranteeing that the legislation would include a government-run insurance option.
"I caution you, reports of the public option's death are greatly exaggerated," Harkin said, noting how four of the five health-care-reform bills have a public option in them.
The Senate Finance Committee's $900-billion package does not include a government-run insurance option, but rather would implement not-for-profit medical cooperatives in states where there is not enough market competition among private insurance companies.
Two amendments to add a government-run insurance option to the Finance bill failed during the committee's work on the bill. The proposals were opposed by both Democrats and Republicans.
Finance Committee Chair Max Baucus (D-Montana) has continued to insist that any bill with a government option will not be able to pass the Senate. In the Senate, it takes 60 votes to break a filibuster and pass major legislation.
But the HELP bill includes a robust, national public option that would be run by the government as an alternative, low-priced insurance company available to anyone who wants to access its services. Government-option supporters such as Harkin are looking to the forthcoming Finance/HELP merger as a means to insert the measure into the bill that is debated on the Senate floor.
This weekly summary comes from IowaPolitics.com, an online government and politics news service. IowaPolitics.com staff contributed to this report.
