January 27, 2015

School funding fight underway at statehouse

Republicans and school groups are staking out widely different positions over how much state aid should be forwarded to Iowa’s public school districts.

Governor Terry Branstad and many of his fellow Republicans favor a one-and-a-quarter percent increase for the next academic year, while all the state’s major school groups are seeking a six percent hike. Representative Cecil Dolecheck, a Republican from Mount Ayr, scoffs at that.

“You’re asking for six percent and let’s be realistic,” Dolecheck says. “You don’t expect that.”

A bill that would provide the 1.25 percent increase in general state aid to schools cleared the House Education Committee with just the votes of Republicans. Dolecheck says that level of spending is more than what many House Republicans really wanted. Margaret Buckton lobbies for the Urban Education Network as well as the Rural School Association of Iowa. She says state funding for schools has lagged behind actual costs for several years.

“There was a study put out by the Center on Budget and Policy Priorities last May that said between Fiscal 2008 and Fiscal 2014, Iowa has lost $641 per student in our capacity to spend,” Buckton says.

Brad Hudson of the Iowa State Education Association says the 1.25 percent hike that Republicans propose won’t even cover teacher salaries, which are expected to go up an average of three percent.

“I’ve never seen this coming out of a period of recession, where we are underfunding our schools like we are now,” Hudson says.

But Republicans like Representative Ron Jorgenson of Sioux City say the increase in general state aid to schools that Republicans propose is in line with state budget reality.

“We’re not cutting education,” Jorgenson says, ” and I understand the need.”

Jorgensen, who is chairman of the House Education Committee, is a former school board member. Senate Democrats have been critical of the level of state aid for schools Republicans propose, but they have yet to offer their own target level for school spending.

Senator Grassley questions president’s tax proposal

Senator Chuck Grassley

Senator Chuck Grassley

Iowa Senator Chuck Grassley says he will attend tonight’s State of the Union Address, but he’s already skeptical about at least one of President Obama’s main areas of focus. Grassley, a Republican, says the president plans to unveil a proposal to create new tax breaks and benefits on the lower end of the income scale while raising taxes on higher earners.

“I don’t think his approach will succeed in Congress,” Grassley says. “Many of us are interested in comprehensive tax reform that makes the tax code easier for taxpayers and makes the United States more competitive worldwide.”

Industry leaders, like the creators of Apple and Amazon, need an environment that encourages job growth and investment in the United States, Grassley says, not in China or Ireland. “The president’s proposal would make the tax code more complex and so contradicts one of the main goals of comprehensive tax reform which is greater simplicity,” Grassley says. “The president seems less concerned about encouraging innovation than in scoring political points.”

Congress needs to keep looking for ways to increase what Grassley calls “tax fairness,” and he spearheaded tax relief efforts in 2001 and 2003 as chairman of the Senate Finance Committee. “The new Finance Committee chairman has named me to help lead a working group on individual taxes to advise the complete committee on good reform,” Grassley says. “I’ll listen to the president’s proposal but so far, what I’ve read about it, it doesn’t seem he has job creation and economic growth in mind and that sounds like a non-starter.”

Grassley says what the nation will end up needing under Obama’s plan is more taxpayers.

 

Des Moines franchise fee case could get one more legal hearing

Iowa Supreme Court building.

Iowa Supreme Court building.

The long legal battle over franchise fees charged by the city of Des Moines isn’t over just yet, as a new legal issue was raised in a ruling Wednesday by the Iowa Court of Appeals.

The court turned down the appeal of the lawyers who represented Des Moines residents which sought to overturn the 18-percent limit on their fees from the $40 million awarded in the case.

Attorney Brad Schroeder says they will ask the Iowa Supreme Court to review the decision as the amount is well below the agreement they made when they took the case.

“That provided of a one-third recovery in the event that we were successful, zero if there was no recovery, and we had to advance all the expenses of the case obviously as we proceeded,” Schroeder says. “It allowed for 45-percent recovery on appeal, which is also not uncommon. In this case we had not one, not two, but three appeals — one to the U.S. Supreme Court — which we had to defend against.”

The appeals court ruled 2-1 in upholding a district court ruling that said the award in this case should be looked at differently because the city gets its funding from residents, the very people who are supposed to benefit from the settlement. So, increasing the award to the lawyers effectively costs more for the clients that Schroeder’s firm represents.

“I understand that argument. I didn’t create the situation, the city of Des Moines did when it decided not once, but twice to raise this legal fee after this lawsuit was already on file. That was 10 years ago, and they have taken every opportunity since then to make this problem worse and worse and worse,” Schroeder says.

As the city continued to appeal, the interest and legal costs continued to climb. “That’s what created the 40 million dollar fund that we recovered ultimately that’s the subject of the dispute. All they had to do was stop and there would have been no 40 million dollars, no attorney’s fees. Just stop, and they wouldn’t do it,” according to Schroeder. A Sioux City Judge awarded a 33-percent fee to lawyers in a settlement brought on by the original Des Moines ruling. That amounted to $2.1 million as the settlement process did not drag out and the settlement was $6.5 million.

Schroeder says while the 15 million dollars they are asking for seems like a lot of money, they took a risk on accepting the case and deserve to be compensated based on the agreement they made at the start. “I don’t know that anybody was going to be willing if we were not successful to say ‘we’re going to go ahead and pay you anyway’,” Schroeder says.

He says the ruling could hurt future cases. “I think if this case stands, it will have a chilling impact on a citizens ability to get wrongdoing by their governments redressed. I don’t think there is any doubt about that,” Schroeder says. “Your are not going to get qualified council to stand up and help you when you could get paid a reasonable fee on other cases as opposed to this one where you go through all the work, take on all the risk, and at the end you are paid half of what you agreed to.”

Schroeder says they will ask the Iowa Supreme Court the review the ruling on fees. He says it is something they don’t do very often, but he believes the new aspect of the ruling compel them to look at the issue. “There was a factor that the district court applied in deciding this opinion that hasn’t been expressed before in Iowa law, and that is mainly this distinction that been’s created between attorney fees in cases against private wrongdoers and attorney fees in cases against public wrongdoers,” Schroeder says. Some states do cap attorney fees in cases involving cities, but Iowa does not.

Schroeder says the split decision from the appeals court is another reason he thinks the Iowa Supreme Court might take up the review.

Other stories related to this case:

Judge awards attorneys $7 million in Des Moines franchise fee case

U.S. Supreme Court denies Des Moines appeal on franchise fees

Supreme Court rules Des Moines has to pay back franchise fees

Court rules Des Moines charged too much in franchise fee

 

 

Legislators applaud Branstad speech, but hint at conflict ahead

Pam Jochum

Pam Jochum

Legislative leaders from both political parties are giving Governor Branstad generally good marks for the tone of his annual “Condition of the State” message.

“I thought it was a great speech. I think he’s providing leadership. I think he’s been a great leader for the state of Iowa and he clearly has a bold agenda to continue that,” says House Speaker Kraig Paulsen of Hiawatha, the top-ranking Republican in the legislature.

But Senate President Pam Jochum, a Democrat from Dubuque, says not all the governor’s proposals will be cheered by Democrats. Specifically, Branstad’s recommended level of state aid for public school districts is tens of millions of dollars less than Democrats favor.

“It is less than what we know we need in order to bring Iowa’s per pupil spending investment up to at least close the national average,” Jochum says.

But Jochum says she’s “cautiously optimistic” about the main goals Branstad outlined.

“Certainly the anti-bullying proposal as well as the anti-domestic violence proposal will get a very good response from the Iowa Seante,” Jochum says.

The Branstad agenda does not include something House Republicans like Paulsen want.

“Obviously finding a way to for Iowans to leave more of their own money in their pockets is a priority of House Republicans,” Paulsen says. “I expect to work on that.”

The governor presented his own budget sketch to the General Assembly this morning and Paulsen says that helps speed up decision-making on the state budget plan legislators will develop.

2015 Iowa General Assembly convenes, ‘time to make a decision’ on road funding

state-capitolThe 2015 Iowa legislative session begins today and unfinished debates of the past — like whether to raise the state gas tax — are on the agenda.

Finding a way to increase the amount of money to improve Iowa’s transportation system has eluded lawmakers for the past several years. Governor Terry Branstad says he hopes legislators make a decision “sooner rather than later.”

“It is my goal to put together a whole series of options,” Branstad told reporters last week during The Associated Press Legislative Forum.

But Branstad doesn’t plan to publicly advocate one approach over another. He said that would give critics something to shoot at because it’s his idea.

Mike Gronstal

Mike Gronstal

Senate Democratic Leader Mike Gronstal of Council Bluffs said it would be best if the governor were to “exert some leadership” and make a specific proposal.

“Iowa used to be the envy of the Midwest when it came to roads and we’re now towards the bottom end of that,” Gronstal said, “and so I think it’s time to do something about it.”

The state fuel tax not only finances work on the Interstates and state highways, part of it goes to cities and counties for local streets and roads. House Speaker Kraig Paulsen of Hiawatha, the top-ranking Republican in the legislature, said he’s concerned that officials in more than 30 counties have now borrowed money to fix roads and bridges because they don’t have enough revenue from the fuel tax.

“I think the discussion is about as robust as any time I’ve been in the General Assembly,” Paulsen said. “I think there’s also to some degree a consensus that’s it’s time to make a decision.”

The main responsibility of the legislature is passing a budget plan for state government. Paulsen warns there’s not enough state tax revenue to fulfill past promises to spend more on education reform and property tax relief, so over 40-million dollars will have to be cut elsewhere.

“We’ve done difficult things before,” Paulsen said. “I’m sure we’ll find a way to work through it.”

Gronstal, the legislature’s top-ranking Democrat, agrees that “expectations” are going to have to be “tempered” when it comes to the budget as well as other issues.

“And it’s about figuring out a way to turn off the partisan switch,” Gronstal said.

Bill Dix

Bill Dix

Senate Republican Leader Bill Dix of Shell Rock said legislators should approach the state budget as they would a family’s budget.

“We always need to be mindful that it is the taxpayers’ money,” Dix said.

Because Iowa’s unemployment rate is lower than most other states, the federal government is reducing the amount of money it will send to Iowa to pay for Iowans who’re getting health care coverage through Medicaid. House Democratic Leader Mark Smith of Marshalltown said it’s “a challenge” for the state to pay greater share of the Medicaid budget, but he expects a bipartisan solution to emerge.

“Our history has been to work on these issues together,” Smith said. “I would expect we would continue to do so.”

Other issues on the docket for legislators including finding extra money for the state’s three public universities, to avoid a tuition increase for in-state students, and investigating why the new maximum security prison in Fort Madison hasn’t opened yet.

Formal activity in the Iowa General Assembly will get underway at 10 a.m. today. In the senate, 25 members who were elected to a four-year term in November will take the oath of office. Senator-elect Mark Costello of Imogene won a special election on December 30th to serve out the remaining two years of Joni Ernst’s term in the state senate and he’ll be sworn in today, too. Costello — the soon-to-be-state-senator — was elected to a seat in the Iowa House on November 4. His replacement in the House will be chosen in a special election sometime in February.

In addition, there was a special election last week in northwest Iowa, but the results won’t be certified in time for that new House member to be sworn in today. It means 98 members of the House will take the oath of office late this morning.

Governor says he hopes legislators raise revenue for roads ‘soon’

construction-cones

The governor says he will give legislators a variety of options to fund more road improvements.

Governor Terry Branstad is planning to present legislators with a “whole series of options” to raise the amount of tax revenue available to repair and expand the state’s transportation network, but he won’t indicate which proposals he prefers.

“If you say, ‘This is what I recommend,’ then you give people something to shoot at,” Branstad said this morning during the Associated Press Legislative Forum at the statehouse. “…What I intend to do is take this approach: ‘These are all ideas I think that could be acceptable to me. What’s acceptable to you?’…Then everybody will have some ownership in it and hopefully we prevent it from becoming a political football.”

In addition to a hike in the state’s per gallon tax on motor fuel, some of Branstad’s other ideas include raising the fees charged excessively heavy semi loads, collecting more taxes from the owners of electric and hybrid vehicles as well as charging the sales tax on fuel purchases. Branstad also suggested legislators might consider giving cities and counties authority to raise a local option sales tax, to finance local street and road projects.

“I just think we need to seriously look at all of those and decide what is something that could be acceptable and what are things that the legislature feel that, no they wouldn’t want to consider,” Branstad said. “Out of that process I’m hopeful that we’ll come up with a consensus that will get us the revenue that we need.”

Governor Terry Branstad.

Governor Terry Branstad.

According to Branstad, transportation infrastructure is “an important issue” for the state’s economy and the state is near a tipping point. Branstad is suggesting legislators should tackle the problem before spring, while gas prices as low.

“And I believe that the opportunity is there to work with both houses int he legislature on this issue,” Branstad said, “and I’m very hopeful this is the year that we can accomplish it.”

House Speaker Kraig Paulsen, a Republican from Hiawatha, said nearly a third of Iowa’s counties have passed local bond issues to finance needed road improvements and property taxpayers are footing that bill.

“In half a dozen years that’s effectively gone from zero to now $280 million,” said Paulsen, one of four legislative leaders to speak at the Associated Press Legislative Forum. “That’s obviously a significant concern and, in particular, when you’ve got debt that’s going to outlive the life of the project, that’s not particularly good public policy.”

And that’s one reason Paulsen said legislators “should have a conversation” about other ways to raise the resources needed to fix Iowa roads and bridges. Senate Democratic Leader Mike Gronstal said the governor “could do more” to exert some leadership and get something passed.

“If this is going to be done in a broadly, deeply bipartisan way, we’re going to need his help to get some Republicans to support this,” Gronstal said.

And Gronstal said it’s “really nonsense” for Branstad to suggest Democrats would shoot down a proposal if Branstad announces it’s the plan he favors.

“The time for politics is passed. We have been studious in avoiding locking ourselves into any particular position on this because we want to work together,” Gronstal said. “…We certainly are open to lots of ideas and to considering them. What we need now is for the governor to provide some leadership in that area.”

Gronstal, Paulsen and Branstad made their comments this morning during the Associated Press Legislative Forum at the statehouse.

House GOP seeks ‘conversation’ about state income taxes

Kraig Paulson

Kraig Paulsen

House Republicans hope to advance an alternative way for Iowans to file their state income taxes, but Republican Governor Terry Branstad says the reality is Democrats in the Iowa Senate won’t go for the idea.

Nonetheless House Speaker Kraig Paulsen, the top Republican in the legislature, says Republicans in the House want to “have a conversation about income taxes.”

“We’ve tried to have that conversation for several years now,” Paulsen says. “We’ve sent several proposals over to the senate and we have not had any success on landing on an idea that we can get to the governor’s desk.”

Iowa’s top income tax rate today is just under nine percent. One plan Paulsen and other Republicans have favored would allow Iowans to file under the present system or to opt pay a “flat tax” of 4.5 percent on their income.

“We think that makes the state more inviting to employers and to individuals to come and invest in the state of Iowa and invest in our workforce,” Paulsen says.

Branstad will lay out his priorities for the 2015 legislative session next Tuesday, but income tax reform won’t be on his list.

“I believe in recommending things that have a realistic chance of getting bipartisan approval and I don’t see that as something that’s going to happen this session,” Branstad says.

While Branstad supports the idea of a flat tax that would lower Iowa’s top income tax rate, the governor says key Democrats like the long-time chairman of the Senate’s tax-writing committee will not even consider it. Democrats say a “flat” state income tax of 4.5 percent would be a big tax break for upper income Iowans. Senate Democratic Leader Mike Gronstal says Democrats are interested in making the tax system fairer, to help more Iowans move into the middle class.

“We have always been open to discussions about targeted tax relief that will help grow Iowa’s economy,” Gronstal says.

The 2015 legislative session begins Monday.