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Capitol Review 4/24/15

The Politics of School Funding

I often get asked to speak at schools about the governmental process and politics. I usually start out with this analogy; I ask a random student if they have any money. Usually someone has a couple of bucks. I then ask them to trust me with their few dollars to go to the closest convenience store and bring them back something “good” to eat. I then ask them, what are the important variables in our transaction we have just set up? Think about it?

Those variables are money and goodness. That is what government and politics is all about.  How much money are we talking about, and what is good?

Let’s apply this to the “politics of school funding.”

How much money are we talking about? Much debate has been discussed on this issue contesting the numbers of each argument. It’s ironic that even with raw numbers; the outcomes can be disputed in politics. Let’s just make this simple and say the Republicans take a more conservative approach with your money and do not want to spend the savings account. The Democrats take a more liberal approach and do want to spend the savings. Can we at least agree to that?

This premise then leads us to the second variable; what is good? You have to decide what is good in this day and age, a conservative approach to money or a liberal one. One undeniable fact is this; Iowa is spending 55% of its entire budget on education. Regardless of which party controls the outcome, that number will not change much. So, I think what we can agree on is that with Iowa spending a majority of its money on education, we all want to spend it in a good way and we all care deeply about the kids we are educating.

This brings me to my last point I want to make. I was disturbed the past few weeks to see Iowa students, as young as 5 and 6, being paraded throughout the Capitol outfitted in “I’m Worth Less” t-shirts, carrying controversial signs and being used as props. I saw one local TV reporter put a camera in the face of a 6 year old and ask her why she was holding a 4% sign. She repeated an obvious rehearsed line about supplemental state aid funding. One of my colleagues was asked by a child, “Are you a Democrat or a Republican?” When my colleague said “Republican,” he was scolded by the child. I saw “WANTED” posters directed toward fellow Republicans on Facebook and in other conspicuous places. I would hope that most parents would agree that it’s wrong to use students as political pawns in this debate.

I hope in the next week, we can come to a conclusion about the budget and funding issue so both Republicans and Democrats can move on to concentrating on what is “good.”

Capitol Review 4/17/15

House Memorial Resolution for Marv Diemer

MarvDiemerMonday, I moved the adoption of House Memorial Resolution 103, commemorating the life, character, and service to the state by the Honorable Marvin Diemer, of Black Hawk County.  He served as a member of the sixty-eighth through the seventy-fourth general assembly. 

Mr. Diemer served in the United States Marines during WWII and earned his BA from Drake University in 1950. He was a public accountant until his retirement in 1978. He served in the Iowa Legislature as a state representative from 1978 to 1992. He was a proud member of the Rotary Reserves, Nazareth Lutheran Church, AMVETS, and the American Legion.

Anyone who had ever met Marv knew that his hand shake was as strong and true as his heart. Marv's extensive volunteer work served the community well. His favorite being the Rotary Prairie Park where he spent numerous hours enjoying the seasons as well as the battles with sweet clover and Chinese elm. His love of volunteering was matched by his passion for the New York Yankees. 

We honored his service to the state at the April 14th memorial service.  

Facts on Budget Numbers

  • Projected Ending Balance at the end of FY 2015 on June 30: $420 million *This was reduced $227 million after a poor revenue year in FY 2015*
  • Current Cash Reserve: $522.2 million  *Republicans and Democrats agree to leave untouched, this is used to pay bills throughout the year*
  • Current Economic Emergency Fund: $174.1 million  *Republicans and Democrats agree to leave untouched*
  • FY 2015 Revenue Estimate: $6.767 billion  *original FY 2015 Estimate was $6.995 billion*                                 
  • FY 2015 Actual Spending Amount: $6.994 billion               
  • FY 2016 On-Going Revenue Estimate: $7.175 billion *The amount we will budget for*
  • FY 2016 New Revenue: $180.9 million (2.6%) *This is the amount of new money we have*

Fighting Income Tax-Related Identity Theft

Most people today associate April 15 with filing their income tax returns.  But a growing number of Americans are associating this process with becoming a victim of identity theft.  House Republicans have put forth an aggressive proposal to help Iowans fight back.  I am running the bill and hope to have it passed soon. 

For the fifth consecutive year, income-tax related identity theft was the leading identity theft complaint received by the Federal Trade Commission in 2014 and the problem is only growing.  In an email to University of Iowa employees, UI Public Security reported that states are seeing incidents of income tax-related identity theft rising between 50 and 3,700 percent this tax year.  Why would UI Public Security put out a statement?  Because nearly 400 employees of Iowa’s state universities have reported being a victim this year.

House Study Bill 237 would have Iowa join other states in being proactive in verifying identities and preventing identity theft.  The bill would require the Department of Revenue to establish a process to verify identities of those people filing Iowa income tax returns before Iowans start filing their income tax returns in 2016.  The Department would also implement procedures to prevent income tax returns from being filed via foreign internet service providers

These provisions are just one part of the bill, which also implements identity verification systems for unemployment compensation claims and Medicaid.  At a time when Iowans are under a growing threat of identity theft, it would be inexcusable for legislators and state agencies to not do everything to protect citizens from this devastating crime.

Recycling Study at UNI’s Waste Reduction Center

On Tuesday, April 14, 2015, the House Appropriation Committee considered, amended and passed House File 541 by a largely bi-partisan 21-aye to 3-nay vote.  The proposes to allocate $100,000 of from the Solid Waste Groundwater Protection fund moneys in FY 2016 to the Waste Reduction Center at the University of Northern Iowa for purposes of conducting a study and preparing a report on the feasibility of developing a hub and spoke recycling program designed to serve more remote small and rural communities to deliver recyclable to recycling hubs.  The bill as amended by Committee requires the Iowa reduction center to do all of the following:

  • Research and consolidate existing and pertinent Iowa data concerning statewide waste generation, recycling infrastructure, and recyclable materials market trends.
  • Identify additional data that may be useful for program evaluation and implementation.
  • Perform a literature review of like programs in other states and summarize the findings.
  • Identify a representative geographical area or region in a rural part of the state in which to prepare a conceptual perspective for implementation of a hub and spoke recycling program that includes at least the following--
    • Proposed location and number of spoke collection sites and transportation needs;
    • transportation requirements;
    • hub requirements;
    • market and public education requirements; and
    • incentives and disincentives.
  • Prepare a preliminary cost=benefit analysis to implement the program in the representative area or areas.
  • Provide a preliminary report with findings to DNR by December 31, 2015, and a final report by July 1, 2016.

House Committee Passes Home-Buying Incentives for First-Time Home Purchasers

Last week the House Ways and Means Committee unanimously passed what is now House File 631. The bill establishes a new chapter in Iowa Code entitled the Iowa First-Time Homebuyer Savings Account Act and is an effort to try to incentivize young people to save and plan for the single biggest purchase of their life—their first home.

Specifically, the bill provides for the establishment of a first-time homebuyer savings account. The account holder must be a resident of Iowa. An account can be established individually or jointly with a spouse so long as both individuals are first-time homebuyers. The bill requires that the account be an interest-bearing account.

House File 631 also spells out the use and administration by the account holder. It states that the account holder shall use the money for eligible costs related to the purchase of a residence within ten years following establishment of the account and shall not contribute to the account for longer than ten years. There is no limitation on the amount of contributions that may be made to or retained in the account.  Additionally, the bill provides for an Iowa income tax deduction of up to $3,000/year per individual ($6,000 for married couples) for contributions to that individual’s first-time homebuyer savings account.

House Republicans remain committed to developing creative ways to encourage young people to make Iowa their home.  Buying a home is a huge purchase—one that takes careful planning and considerable saving. With these tax incentives, hopefully more first-time homebuyers will put down roots in Iowa communities. The bill now moves to the House floor for further consideration. 

Visitors at the Capitol

leit col yehieli1Cadet Lieutenant  Colonel Daniel Yehieli of the Army ROTC, University of Northern Iowa received the Governor’s Cup Award for his outstanding accomplishments in the ROTC, academics, and leadership.  I look forward to watching the career of Lieutenant Colonel Yehieli.

Capitol Review 4/10/15

School Funding Conversation Continues

The House Republican position on spending is reasonable, sustainable and based on simple common sense - don't spend more than you take in, don't spend one-time money for on-going things and don't knowingly underfund commitments simply to make the numbers work.  Doing any of those things are short-term, unpredictable practices which lead to widespread budget problems.

Using those principles moving forward, this is budget picture:  Last year the legislature appropriated for spending $6.995 billion.  Based on the Revenue Estimating Conference’s last estimates, the new revenue coming into the state for this year is $7.175 billion.  The difference is 2.6% or $180.9 million.

The House proposed an increase of 1.25%, a total funding commitment of about $100 million.  This is 55% of the new available revenue, giving K-12 schools in this state the first and largest share of any new revenue available.  

With the remaining new revenue the Legislature will have to find a way to fund the remainder of the state budget which includes community colleges, the state universities, increasing Medicaid costs, programs through the Department of Human Service, economic development and public safety, among many other responsibilities. 

Chris Earl from KCRG did an honest story of the legislative impasse, where he interviewed me.  Here is the link: http://www.kcrg.com/subject/news/legislative-divide-lingers-on-public-school-funding-20150408

Property Tax Reform’s Impact on School Funding

The latest narrative being built is that the commercial property tax reform bill approved in 2013 is strangling school districts by reducing the amount of property tax revenue they receive.  This argument is not supported by facts.  According to the non-partisan LSA, the 2013 bill did several things:

  • Created a business property tax credit.  This has no impact on school finance.
  • Rolled industrial, commercial, and railroad property down to 95% and then to 90% of assessed value.  This is 100% reimbursed by the state for the first few years of the bill’s implementation so it also has not had any impact on school finance.
  • Reduced the allowed growth in residential and agricultural property taxed value from a maximum of 4% a year to 3% a year.  This does reduce the amount a dollar of school tax rate can generate.  However, the school aid formula then dictates a higher tax rate, so for the parts of school budgets determined by the formula, school budgets are not impacted.  But they do see reductions on the parts of their rate NOT controlled by the formula.  But they have the ability to set a higher rate unless the rate is somehow limited. 
  • Decreased telephone utility property taxed value.  This has a similar type of impact as the point directly above and the result is the same.  A higher tax rate can be set.   
  • Created a new multi-residential property class.  This has not yet taken effect so this item has not impacted school finance.

Iowa’s Expenditure Limitation Law

Iowa’s expenditure limitation law was created in a time of budget turmoil.  Throughout the 1980’s, Iowa faced a number of fiscal challenges that caused the state to be unable to meet the funding obligations made by the Legislature.  These issues reached a head in 1992, when the Iowa Supreme Court ruled that Governor Branstad was required to provide raises to unionized state employees even though the state did not have the money to pay them.

The Supreme Court’s ruling forced the Governor and legislative Democrats (the majority party at the time) to rewrite the FY 1993 budget.  In the end, the Legislature and the Governor were forced to increase the state’s sales tax from 4 to 5 percent.  That required bipartisan cooperation and the price for that cooperation from legislative Republicans was the creation of the cash reserve fund and economic emergency fund.  Also part of the deal was the creation of an expenditure limitation law.

Revenue Growth Slightly Slower in March

General Fund revenue dipped slightly in March, according to the latest revenue report from the non-partisan Legislative Services Agency.  Revenue collections for the month were $1 million less than what was taken in during March 2014.  These figures put Fiscal Year 2015 revenue growth through the first nine months of the year at 4.7 percent.  This is below the 5.5 percent growth projected by the Revenue Estimating Conference at its March meeting. 

For personal income tax collections, March’s total was $7.3 million below the previous year’s level.  A factor in the decrease could be the problems with online forms needed for farmers to file.  Because of this issue, the Department of Revenue allowed taxpayers using these forms to have until April to file their returns.  Usually they are required to be filed by March 1.  For the fiscal year, personal income tax collections are up 4.3 percent.  This is just below the REC projection of 4.7 percent growth for FY 2015.

Sales and use tax collections were also down this March.  The state took in $9.9 million less for March 2015 in this category.  For the fiscal year, sales and use tax collections are up 4.5 percent.  This is in line with the REC’s latest estimate for this category.

Up on the Roof
written by Dani Boal, Clerk for Rep. Rogers

fire

Did you know the Capitol caught fire on January 4th, 1904?  In 1902, an effort to modernize the building began including electric lighting, elevators, and telephones.  In early January 1904, a workman’s candle started a fire in the House chambers in the North wing of the Capitol.  The fire destroyed much of the House chamber, Supreme Court chamber, and other offices in the North wing.  The fire blazed from 10 am to 6 pm that day, even though some newspaper’s reported the fire smoldered for several days. 

Crampton Linley was the engineer working with the Capitol Improvement Commission.  He was in the building at the time of the fire and was credited with saving the remainder of the building.  Linley crawled through attic areas to close doors separating the wings of the Capitol, an action that smothered the flames and brought the fire under control.  Sadly, Lindley did not live long enough to be recognized for his heroism.  The day after the fire, while examining the damage, Linley fell through the ceiling of the House Chamber and died instantly from severe head injuries.  His death was the only one associated with the fire. 

Representative Rogers, Representative Fry, and their clerks got a rare chance to go behind the scenes of the Capitol with Senior Facilities Manager, Mark Willemssen.  We crawled above the House, Senate, Library, and Grand Staircase and went up into one of the side domes.  Thank you Mark for a great behind the scenes tour!

Visitors to the Capitol

santorum blum

Rick Santorum came to speak to people at the Capitol. I had the privilege of hosting him and introducing him to fellow Legislatures and staff at the Capitol. Congressman Blum also stopped by to visit the Capitol and speak with Legislatures.

UNI basketball

The UNI men's basketball team visited the Statehouse to witness the passing of their resolution which recognized their successful winning season.

Capitol Review 4/3/15

State Revenue Growth Debate

To confuse Iowans and help their argument in favor of higher spending, legislative Democrats are purposefully misleading Iowans by telling them there is 6% growth or $408.1 million.  They conjure up that growth by ignoring actual state spending.  Instead they take the latest estimate on final FY 15 revenue ($6.767 billion) and subtract it from the latest estimate on FY 16 revenue ($7.175 billion).  The difference is 6% or $408.1 million. 

Actual state spending last year was $6.995 billion.  The new revenue estimate is $7.175 billion.  The difference is 2.6% or $180.9 million.  It is simple math; actual state revenue growth is 2.6%, not 6%.  In actual dollars, growth is $180.9 million, not $408.1 million.

The state’s Cash Reserve Fund has $522.2 million.  It must equal 7.5% of that year’s budget to help cash flow the state during the year.  When the Legislature decided to reform the budget process in the early 1990s, one of the key elements was ensuring that payments – especially school aid payments - were made in a timely manner.  

The state does not have a $1 billion surplus.  Back in 2013 the state had an ending balance of roughly $900 million.  Since then that revenue has been used to pay off state debt and invest in key infrastructure projects in our Regents institutions and improving water quality.  The ending balance is estimated to be $420 million at the end of Fiscal Year 2015 on June 30.  If that money is spent, there is no automatic source for it to be replenished. 

senate democrates

real world

School Funding

The first bill House Republicans approved in 2015 was school funding.  Schools are getting the first bite of the apple when it comes to state spending.  The problem is the apple, due to falling revenues, is not as big as many had hoped.  Other important responsibilities such as funding Medicaid, economic development, and public safety still have to receive funding in addition to education.

The House position continues the legislature’s trend of providing significant increases to the state’s K-12 system, bringing the 5 year total increase to over $570 million, a nearly 22% increase.

Senate Democrats have taken the position that the Legislature needs to enact a higher increase now, regardless of the current state revenue numbers, and then figure out how to fund it later.  These are same flawed practices former Gov. Culver used to get the state into a huge financial mess during his only term in office.

Short term decisions which are contrary to available data rarely result in long term success.  Saddling the folks in our communities with higher taxes and more debt is a destructive financial course for our local schools and taxpayers. 

Growlers, Howlers and Steins –Oh My!

Earlier this week, the House State Government Committee unanimously passed Senate File 456 allowing those who hold class “C” beer permits to sell beer in a container other than the original container, with restrictions, to be enjoyed off premises.  In other words, this bill allows grocers and convenience stores to fill and refill growlers of beer to those of age to be enjoyed at home.

For those who are not as familiar with craft beer and its terms, a growler is a glass, ceramic, or stainless steel jug used to transport craft beer for home consumption in the US.  They come in a variety of sizes, usually ranging from 32 oz. – 72 oz. and can be refilled as many times as a person wishes.  Other interesting beer containers include “howlers,” which are half growlers, “bombers,” which are 22 oz. bottles and the glasses used to drink these beers such as: steins, snifters, pilsners, mugs, tulips and much, much more.

Regardless of the name, however, filling growlers is a practice that is typically reserved for craft breweries and restaurants which provide craft beer on tap.  So, what is the appeal of a growler or why can’t folks just use regular bottled beer?  There are several craft breweries in Iowa that do not bottle their beer, but use growler-fills for patrons to be able to enjoy the beer at home or only sell kegs to restaurants to tap these beers and sell to customers on-site.  Additionally, growlers are popular to provide beer at functions and more economical than buying a large keg to be wasted, or bringing six-packs.  And some true beer connoisseurs just prefer beer out of a bottle to drinking it out of a can.

The bill itself will allow grocery and convenience stores the ability to use these growlers, and fill them for patrons inside the store.  These stores hold Class C alcohol permits, which allows commercial establishments to sell beer and wine coolers for off-premise consumption in original, unopened containers and not sales by the drink.  With this bill, these grocery stores will still be subject to the rules of the Alcoholic Beverage Division.  With micro and craft breweries only growing in popularity, this topic is likely to remain in discussion.

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PO Box 1142
Cedar Falls, IA 50613

 

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