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Legislative Update 04/02/2015

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Quote of the Week

Public sentiment is everything. With public sentiment nothing can fail; without it nothing can succeed. He who molds public sentiment goes deeper than he who enacts statutes or decisions possible or impossible to execute.

Abraham Lincoln


Legislative Update

Friends,

I had the privilege of starting my Easter celebration this Maundy Thursday attending the Iowa Prayer Breakfast.  Senator David Johnson presided over this annual event and I commend him for his outstanding leadership and hard work organizing this wonderful occasion.  We also had the wonderful privilege of hearing from Os Guinness, a reknown author and social critic, and his enlightening program, America's "True Remedy" for Global Terrorism.  I want to wish you all a very Happy Easter and hope you are able to celecbrate surrounded by family and friends on Sunday.

I have  been at the State Capitol for just a few months now and this week has been abnormally slow as compared to years past I am told.  There were very few bills and just a few debates this week.  As you might imagine, the school funding issue has had a lot to do with that. 

School funding is still a contentious topic as the Conference Committee that makes the final decision has met only a few times.  This committee has the bargaining ability for the House and the Senate to create a bill that both chambers agree on.
 
I understand the critical roles our local schools play in our communities and in the development of children.  Our teachers are more than just teachers; they’re mentors, friends.  Our principals are more than just principals; they’re counselors.  Those of us from rural Iowa know that our schools are the lifeblood of our small towns; they are the glue that holds us together.  Together we are all facing these difficulties.
 
Living within your means is a shared Iowa value.  It forms the foundation of every discussion in the Iowa House on budgetary matters.  That includes the discussion over Supplemental State Aid.  We are listening to concerns regarding the House approved level of 1.25 percent.  We have heard your fears about the effects a 1.25 increase could have on class size, teachers, per pupil spending levels.    

While some say we’re unwilling to put more money towards education, House Republicans have supported even higher increases in the past.  In fact, it was only two years ago we supported 4 percent supplemental state aid.  The driving factor in that decision was that the state revenue was there to fulfill that commitment.  Our proposed 1.25 percent increase in aid isn’t derived from some malicious need to punish schools or some secret plan to shut down rural Iowa.  Those charges are obnoxious and ridiculous.  School funding levels, like everything in the state’s budget is about the money, or lack thereof.
 
As you know, the Revenue Estimating Committee (REC) outlined a specific projection at their meeting on March 19th.  The legislature is required to use that estimate.  This new estimate for Fiscal Year 2016 is $7.175 billion.  Last year (FY 15) the state spent $6.995 billion.  Simple math tells us there is $180.9 million of revenue above what was spent last year.  That is 2.6 percent growth.  While the state budget is complicated, the constraints legislators must operate within isn’t.  It is simple math.

You may have been told that the state is experiencing 6 percent revenue growth, instead of the 2.6 percent outlined above, and simple math tells you a 4 percent supplemental state aid level easily fits.  This is false and misleading.  Last spring, the REC’s revenue estimate for Fiscal Year 2015 was $6.983 billion.  Actual spending for FY 2015 was $6.959 billion.  When the legislature adjourned last May, we had approved a spending level just under the estimate.  Then economic factors worsened and ACTUAL revenue dropped but spending levels did not, leaving the state in a position where expenditures exceeded revenue.  The latest estimate for Fiscal Year 2015 final revenue is $6.767 billion.  The new Fiscal Year 2016 estimate is 2.6 percent more than actual spending and 6 percent higher than the current Fiscal Year 2015 estimate.  That FY 2015 estimate is irrelevant since the actual FY 15 spending level was higher.

I’m sure you know by now, our current proposal combined with teacher leadership dollars is a $100 million commitment, over half of the $180.9 million in new revenue to K-12 schools. The rest of Iowans’ priorities like Medicaid, economic development and public safety have to fit within the remaining $80.9 million in new revenue.  The increase in Medicaid alone is projected at over $200 million.  It’s easy to see the problem.

A 4 percent increase in funding ($210 million) has no regard for the state’s projected revenue numbers.  Simple math tells you:   that’s more than the state can afford.  Some say, “Fund schools then figure out the rest of the state budget.”   This kind of short-term thinking without considering what the state can actually afford is the same type of haphazard budgeting that led to the crippling of school funding and across the board cuts in the past.

Even further, there are some who are now advocating the Legislature take money from the state’s reserve account to address what they perceive as a funding “emergency.”  The reserves were tapped during two periods of time over the past 20 years; the first, during Fiscal Year 2001, when revenue growth was just $60.9 million.  The state was experiencing the effects of the end of the dot-com bubble and also a precipitous drop in hog prices impacting Iowa livestock producers.  The reserves were also used in FY 2002 when revenue dropped $16.5 million, FY 2003 when it dropped another $128.5 million, and FY 2004 when growth was $82.2 million.  This period was during the recession in the aftermath of the September 11th terrorist attacks.

Fiscal Year 2009 was the next time the reserve funds were tapped, when revenue fell by $190.4 million as a result of the start of the great recession and the aftermath of the 2008 floods.  Fiscal Year 2010 saw General Fund revenue drop another $300.1 million.  FY 15 increase of $180.9 million does not constitute an emergency.

Furthermore, tax revenue does not come in at a steady rate.  The state receives the largest share of tax revenue in the last few months of the fiscal year.  In the 1980’s, the state did not have a cash reserve fund and payments to schools, local governments, and service providers were not made on time.  Sometimes schools were forced to borrow money to make payroll as they waited for school aid payments from the state.  Schools were forced to incur additional costs because of the state’s lack of fiscal responsibility.

When the Legislature decided to reform the budget process in the early 1990’s, one of the key elements was ensuring that payments were made in a timely manner.  That’s the purpose of the Cash Reserve Fund.  It has an amount equal to 7.5 percent of that year’s budget to help cash flow the state during the year.  Right now, the state holds $522.3 million in this fund.  I’m sure you would agree that it is important for the state to maintain the Cash Reserve Fund so that your school gets its state aid payments on time, instead of your district having to borrow money like back in the 1980’s.

Finally, many of you have been told that the state is sitting on a $1 billion surplus.  Again, this is false.  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, invest key infrastructure projects at our Regents institutions, and improve water quality.  The ending balance is estimated to be $420 million at the end of Fiscal Year 2015 on June 30.  Once money from this source is spent it is not automatically replenished.  That means using it for on-going expenses like school aid this year forces all of you into the unenviable position of having to cut all of that money out of your budgets next year.  Why?  Because the state will no longer have a source to continue providing your schools that funding.

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.

I understand your frustrations.  That said, in Des Moines we’ve gone to work to ensure K-12 funding is getting the first (and biggest) bite of the apple.  The problem is the apple isn’t as big as we’d hoped. 

Respectfully,

Representative John H. Wills
 


Legislative Priorities 

2015-16 HOUSE REPUBLICAN BUDGET PRINCIPLES

House Republicans are committed to these principles to produce a balanced and sustainable state budget:

  1. We will spend less than the state collects;
  2. We will not use one-time money to fund on-going needs;
  3. We will not balance the budget by intentionally underfunding programs; and
  4. We will return unused tax dollars to Iowa’s taxpayers.
The House Republican position on government spending is reasonable, sustainable and based on simple common-sense budgeting principles.

Per Pupil Funding Increases
As The Des Moines Register pointed out on March 1, the information being disseminated by legislative Democrats regarding education funding is misleading.  The latest piece of misleading information coming from legislative Democrats claims that Iowa’s commitment to increase education funding per pupil has plummeted.  The legislature has provided nearly ½ million dollars of additional supplemental State Aid in the last 5 years of new money.  That is a tremendous investment in educating our young ones. 

School Start Date
Last Thursday, the Senate voted on the school start date compromise date. A majority of senators voted for the House language to set "on or after August 23". Subsequently, Senate Democratic Leader Mike Gronstal make a motion to reconsider, a procedural tactic to table the bill. He did not say when the bill will be brought back up- but did say he's not in a hurry. On Tuesday, however, the bill was brought back up and passed by the Senate. 
As an update to last week's newsletter, the Iowa Tourism Industry provided the following information: 
The state and local taxes generated by travel-related expenditures between August 11-23 will generate additional revenue to help fund education.
New revenue scenario August 11-23
Estimated travel-generated revenue based on 12 days @ $15 million per day $179.6 million
Sales tax 5% $8.98 million
Local option 1% $1.8 million
SILO 1% $1.8 million  
Estimated taxes generated $12.57 million
 
Indiana Passes Religious Freedom Restoration Act
Politicians in Indiana are facing criticism for their support of the Religious Freedom Restoration Act (SB 101). Governor Mike Pence signed the bill last week after it passed both the House and Senate with substantial support. Indiana is now one of 21 states which have some form of a Religious Freedom Restoration Act. The Arkansas legislature passed similar legislation yesterday and sent it to the Governor for approval.


REC Drops Revenue Estimate  
The Revenue Estimating Conference met on March 19 for its required meeting during the legislative session.  The three-member committee reduced the amount of new dollars the General Fund will have to spend in FY 2016.
For FY 2015, the General Fund estimate was lowered by $89.7 million to $6.7671 billion.  The REC made adjustments by lowering their projections for personal income tax collections by $40.3 million and corporate income tax collections by $20.5 million.  The REC also increased their forecast for tax refunds by $33.4 million.  This adjustments are the result of the passage of the IRC update bill, which was projected to reduce revenue by $99 million.  Removing the impact of the IRC update bill, the net impact would be a slight increase in FY 2015 revenue by $9.3 million.
For FY 2016, the REC lowered the General Fund revenue projections to $7.1755 billion.  The group raised their forecast for personal income tax revenue by $56.4 million, but that was nearly offset by a reduction in the corporate income tax projection of $49.6 million.  The REC also increased their projection for tax refunds by $36.4 million.
While IRC update bill had lowered FY 2015 revenue, it was expected to raise FY 16 revenue by $19.2 million to $7.2138 billion.  The REC estimate eliminates the boost from the bill and further lowers the FY 2016 number by an additional $19.1 million to the new level of $7.1755 billion. 
The amount of new revenue available to be spent is the difference between the FY 2016 revenue forecast ($7.175 billion) and the FY 2015 budget ($6.9946 billion).  The revised estimate means the state has $180.9 million of new money to spend in FY 2016.  Prior to today’s meeting, we had been working under the assumption that the state would have $200 million of new money in FY 2016.
All three members of the REC said there had been little change in the economic factors since their last meeting in December.  Economic growth in the US and Iowa remains solid, if at a modest pace.  Iowa’s collections from income tax withholding remain strong.  The average work week is now at 42 hours and wage growth is beginning to pick up in-state, even though is has yet to reach the level seen before the 2008 recession.
There is concern over Iowa’s ag economy.  The state saw a loss of manufacturing and ag machinery jobs in the last few months and the Rural Main Street Index fell below neutral levels.  The strong dollar is having an impact on export markets, which are a key part of Iowa’s ag economy.  Average corn prices are still 43 percent below their 2013 highs with significant supplies still in the bins.
Even with these caution signs, Iowa’s farm economy is not in trouble.   Income tax returns are showing farmers are holding their own or posting small profits from the last year.  Ag debt levels are at a manageable level, since many of the purchases made during the last few years were with cash.  Livestock producers continue to have solid prices.  Input costs should begin to decline if lower oil prices remain during calendar year 2015, and the over-supply of corn should be reduced in the next two to three years.
 


News from Around the District

IOWA GREAT LAKES ARE OFFICIALLY DECLARED ICE-FREE
 
The Iowa Great Lakes are officially ice-free for another season.

Kirk Ewen of Arnolds Park keeps track of the freeze-thaw dates of the Okoboji's. He tells KUOO news East Lake Okoboji was declared ice-free March 21st, while the last chunk of ice on West Lake Okoboji went out Sunday (March 29th). 



Environmental Protection & Natural Resources

GOVERNOR SIGNS LANDFILLING OF YARD WASTES AS METHANE ENERGY CONVERSION LEGISLATION

This is the first bill that I have managed on the floor that has gone to the Governor's desk and I am proud to say that on Tuesday, March 31, 2015 Governor Branstad signed House File 266 which amends the Iowa Code concerning the prohibition of landfilling of yard waste to create a fourth exception to the prohibition that now allows the landfilling of yard-waste at a landfill that has an Environmental Protection Agency approval to use a methane collection system that produces energy.  Currently five of the larger landfills in the State or Iowa will be able to use this new flexibility to make productive use of a waste product.. These are: Metro Waste Authority [Polk County]; Waste Commission of Scott County; Cedar Rapids Linn County Solid Waste Agency; Central Disposal Landfill [Winnebago County] and Des Moines County Solid Waste Landfill.  EPA has designated 15 more Iowa landfills as candidates for this technology.  
 
Enactment of this legislation will allow the landfills eligible to use this new option, such as the one serving the Des Moines metro-area to increase methane production from its land fill which in this instances is calculated to increase over 50% in the next decades and will increase the number of homes provided with electricity from the Metro Waste Authority landfill 11,500 currently to an estimated 17,700 in 2035.  The other existing allowable instances in which yard-waste may be landfilled include;
(a) when yard wastes are delivered separated from other solid waste and is used for purposes of soil conditioning and composting;
(b) the yard-waste is the result of collection of yard waste debris created by a severe storm in an area that has been declared a disaster area by the Governor of Iowa or the President of the United States;
(c) or the yard waste materials is collected for disposal as part of an insect-pest, or plant disease eradication effort or from invasive plant species control efforts where alternative composting efforts would risk further spread of the pest, disease or invasive plant.
 
This ability to utilize yard waste in landfill for methane production purposes should enable the waste collection service to reduce their costs as they will typically be able to run one less trip per house hold and may even utilize the same automatic cart for household garbage that minimizes workplace injury by waste collection employees rather than lug paper yard bags off curbs and into truck collection mechanisms.  The new law will go into effect on July 1, 2015. 



Tour of Our District

OCHEYEDAN MOUND STATE PRESERVE

Ocheyedan Mound State Preserve is located in the Des Moines Lobe landform region and is named after a large glacial hill called a "kame," which formed during a glacier melting around 12,000 years ago. It's made of sand, gravel and small boulders deposited and heaped together by streams of glacial meltwater. Only part of the Ocheyedan Mound is contained on the preserve, as it is almost 40 acres in size, and it's one of the highest points in Iowa. Sioux Indians used to visit the mound, and pioneers used it as a landmark. More recently, it was a popular place for picnics and winter activities like skiing. The mound's vegetation is slowly returning to native grasses and flowers, like little bluestem and sideoats grama. Springtime brings blooms like hoary puccoon and white camass and Summertime welcomes flowers like milk vetches and prairie violet. 

In 1983 the Shuttleworth family donated the tract of land containing the mound to the Iowa National Heritage Foundation and it became a geological state preserve the following year before ownership was transferred to the Osceola County Conservation Board.



State of Iowa Fun Fact

IOWA MEANS "BEAUTIFUL LAND" 

Origin of the name - Named after the Iowa River which was named after the Iowa Indians who lived in the territory. The Iowa tribal name "Ayuxwa" was spelled by the French as "Ayoua" and by the English as "Ioway." 



Tour of The Iowa State Capitol

 

THE GRAND STAIRCASE

Connecting the Capitol's first and second floors on the east side is the Grand Staircase. Among the most unique and beautiful features of the Grand Staircase are the two figurines located at the base, attached to the top of the newel posts. The figurines were originally commissioned for the Illinois Statehouse, but later donated to the state of Iowa. The gas lanterns contained on the figurines were subsequently converted to electric and have been on display ever since being placed in the Capitol.
The newel posts of the staircase are constructed of 12 types of marble. Each newel post also has an alabaster wreath decorated with various carvings. These carvings include a bat, ladybugs, snakes, fruits and many
other unusual items.



Map of the Week


The map of the week is of the Number of State and Federal Prisoner Deaths - 2012 document published location:
The map can be found here


Quick Links

State Representative, John H. Wills
Governor, Terry Branstad
Iowa Legislature
Iowa Judical Branch
Secretary of Agriculture, Bill Northey
Secretary of State, Paul Pate
State Auditor, Mary Mosiman
State Auditor, Mary Mosiman
State Senator, David Johnson
State Treasurer
U. S. Congressman, Steve King
Senator Chuck Grassley
Senator Joni Ernst

 

Visitors to the Capitol

Rep. John Wills (R-Spirit Lake) met with Bob Faulkner from Arnold’s Park and Heath Richter from Spencer at the Capitol this week. The two visited the Statehouse to discuss issues concerning them with legislators.  

Pictured here are Rep. Wills, Bob Faulkner, and Heath Richter.

Rep. John Wills (R-Spirit Lake) met with members of the Central Lyon FFA Chapter and members of Iowa Corn Growers at the Capitol this week. The group visited the Statehouse to attend Iowa Corn Growers Day on the Hill.

Pictured here are Rep. Wills, Dean Meyer, Nash Knobloch, Dwayne Postma, and seated is Grant Metzger.

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