Economic development tops local lawmakers' priorities
1/9/2005 By ADAM MORRIS, Courier Staff Writer
WATERLOO --- The Iowa Legislature faces a host of hot-button issues when it ushers in the 2005 legislative session Monday. But most lawmakers from the Cedar Valley say economic development tops their list of priorities.
Lawmakers will address key decisions, mostly revolving around reviving the Iowa Values Fund, the state's largest-ever economic development program.
The fund has friends among Cedar Valley legislators, several of whom serve on economic growth and development committees.
Sen. Bill Dotzler, D-Waterloo, and newly elected Sen. Jeff Danielson, D-Waterloo, are members of the Senate Economic Growth Committee. Sen. Bob Brunkhorst, R-Waverly, is co-chairman. Dotzler is also co-chairman of the Economic Development Appropriations subcommittee. Rep. Bob Kressig, D-Cedar Falls, a new legislator, serves on the subcommittee.
Area lawmakers who aren't on economic committees also support reviving the Values Fund.
Lawmakers will likely reinstate the fund, which was disabled last summer when the Iowa Supreme Court nullified the law that created it. Lawmakers will have to hammer out the details. They'll have to decide how to finance the fund, whether the fund should be limited to grants for businesses or include tax cuts intended to stimulate the economy. They will also determine whether grants should be given to a balance of both rural and urban areas or only the best opportunities for new jobs.
Reinstituting the fund has implications for the state's future. The fund will help businesses grow and create high-paying jobs, Dotzler said. "It's going to be one of the most important things we do this session," Dotzler said. "If we're ever going to have enough money to support Iowa's values, we're going to have to have more revenue. The only way I see having more revenue is by economic growth."
While legislative leaders believe there may be enough support to move Values Fund legislation forward, sticking points remain.
Brunkhorst maintains Senate Republicans want economic development legislation to include tax incentives and be coupled with reforms to regulations, like workers compensation and unemployment compensation. Iowa's tax and regulatory rules, business leaders say, make the state a less-attractive location to operate.
"We still believe (grants) shouldn't be the only method for economic development," Brunkhorst said. "Giving grants to companies does less good and (helps) fewer companies than creating a competitive business climate with benefits for all."
Education spending, early childhood initiatives, a Medicaid funding crisis and property tax reform will also compete for lawmakers' attention. Complicating any legislative action is an even split along party lines in the Senate, where Republicans and Democrats each hold 25 seats. Republicans hold a 51-49 majority in the House. Until the November election, Republicans controlled both chambers.
Complicating the situation further are the state's cash-strapped coffers. State tax revenues are up, but the state faces a budget shortfall in excess of $545 million.
Cedar Valley lawmakers say increasing funding to grade schools, community colleges and universities remains another top priorities. In recent years, the Legislature allocated fewer dollars to schools.
The Iowa Board of Regents, which oversees the state's three public universities, has asked lawmakers for $40 million a year over the next four years. The money would allow the universities to offer new programs, increase faculty salaries and hire staff members lost during budget cuts.
"The Board of Regents has put forth a proposal that's pretty ambitious," said Rep. Willard Jenkins, R-Waterloo. "I hope we can come through with something in response, though I'm not sure we can come up with the $40 million they want."
Cedar Valley lawmakers, including Rep. Don Shoultz, D-Waterloo, and Rep. Deborah Berry, D-Waterloo, made major pitches for increased education funding during their campaigns in the fall. All hope public schools see more state dollars.
Gov. Tom Vilsack wants to expand access to high quality preschool programs, create financial incentives for school districts that offer a more stringent curriculum and secure more money for teacher training and salaries.
Local Democratic legislators say they support the ideas behind Vilsack's initiatives but want more details, such as how much the reforms would cost and where the money would come from.
"My only concern is making sure it's affordable for all of our kids, and I think that's what Vilsack is saying," Berry said. "I support the governor 100 percent on that."
Republicans say they, too, want to see specifics.
"I'm willing to listen, and I think I'm going to like what the governor proposes, but I want a definition before I say yes," Jenkins said.
The state faces major funding shortfalls for its Medicaid program. The health care program for the poor and disabled is seeing rising costs, growing enrollment and may face a decrease in federal funding.
Lawmakers need to find an estimated $60 million during this fiscal year and an additional $170 million to cover cost increases in fiscal year 2006.
Vilsack has proposed increasing the state's 36-cent-per-pack cigarette tax, using the revenue to cover Medicaid shortfalls. The governor has not yet said what size increase he supports this year. He proposed a 60-cent increase last year, but Republican lawmakers resisted.
Jenkins supports a modest increase in the tax. While Jenkins supports dedicating the revenue to health services, he also would support funneling the revenue to the state's general fund, where lawmakers could decide how to spend it. Dotzler supports a modest increase.
Some lawmakers have proposed limiting enrollment in the program, but Berry believes scrutinizing Medicaid's operations for inefficiencies is a better answer.
"I think we're going to have to look at where the excess is ... but with no enrollment cuts ," Berry said. "People are obviously in need."
Property Tax Reform
Local lawmakers see a property tax reform plan developed by a coalition of Iowa cities and counties as a place to start rather than ready-for-approval legislation. The plan would expand the state's property-tax base to groups now exempt, lowering taxes for nearly everyone else.
Shoultz, a member of the House Ways and Means Committee, applauded the Iowa League of Cities and the Iowa State Association of Counties for hashing out a proposal, but expects certain aspects of their plan to meet resistance.
Jenkins believes the proposal probably won't make it far without adjustments.
"It's a place to start," Jenkins said. "I'm pleased they put it on the table, but I think there need to be a lot of compromises before it will get a majority vote in either the House or Senate."
Adam Morris can be contacted at (319) 291-1461 or firstname.lastname@example.org.