January 13, 2004
Thank you Madame President. Thank you Mr. Speaker and members of the General Assembly for your kind invitation to share my thoughts about the condition of our great state. I should, also, express appreciation for the sacrifice each of you makes, spending time away from family and community in service to the people of Iowa. Thank you, as well, to the Chief Justice and members of our state appellate courts for your attendance here today and your service everyday. Finally, let me acknowledge state-wide elected officials, specifically the Lieutenant Governor, Sally J. Pederson, and my first and only lady, Iowa’s First Lady, Christie Vilsack accompanied by our sons, Jess and Doug, for the effective work you all do to make Iowa a better place to live, to work, and to raise a family.
My fellow Iowans, today across our state, our nation and the world, Iowans raised with a deep sense of responsibility, trained to put service above self, and unafraid to sacrifice to secure a greater good -live and lead lives of service – educating, healing, protecting and defending – daily helping all of us in ways we may not know or fully appreciate.
The effort of these unsung heroes should inspire and motivate us to follow their example by making a difference with the opportunities we have been blessed to receive.
A hero who inspires me is B.J. Jackson – specialist B.J. Jackson, proud member of the Iowa National Guard. At the call of his country, B.J. left his wife, Abby and his daughter and stepdaughter to fight tyranny and terrorism in Iraq. Shortly, after he arrived in country, B.J. sustained serious and disabling injuries while on patrol. B.J. lost both of his legs below the thigh and suffered third-degree burns to his face and hands. After spending time in treatment and therapy, B.J. returned home and received his Purple Heart. As the medal was pinned to his chest, B.J. painfully stood at attention. No one, including his commanding officer, would have objected if B.J. had chosen to sit – but he stood.
I experienced the honor of meeting this brave Iowan. I asked this soft-spoken, humble soldier why he stood. He explained simply but profoundly, “out of respect for all the men and women who serve and sacrifice.”
B.J. joins many other Iowans, including those recently injured from mortar attacks, doing their duty for freedom and liberty. Some, like B.J., return but will never be the same. Some will never return. With their ultimate sacrifice the names of : Jeffrey Bohr, Michael Deutsch, Paul Fisher, Kurt Frosheiser, David Kirchoff, Brad Korthaus, Kenneth Nalley, Aaron Sissel, and Bruce Smith, Iowans recently killed in the service of our country, will forever be on the honor roll of heroes who spent their lives making a difference, in a cause much larger than themselves.
Today, in this magnificent state capitol, let us follow the lead of B.J. Jackson by standing out of respect for all those who serve and express our full appreciation for their sacrifice.
In the face of such supreme and extraordinary sacrifice, a reciprocal duty and responsibility arises for each of us. We, too, are called to a life of service and sacrifice.
Although to a degree much less severe our challenge in Iowa mirrors the challenge our nation assumed in Iraq and Afghanistan. There, schools, libraries and hospitals must be opened – here our schools and libraries must be constantly improved and health care made more affordable and accessible. There, local security forces must be formed – here police officer and firefighters must be better supported. There, an economy must be built to create quality of life – here an economy must be transformed to support quality of life.
There and here resources are needed to make any and all of it happen. Despite large deficits, congress and the administration recognized the importance of the work to be done in Iraq and Afghanistan, and found the resources to make sure the job gets done. American financial assistance acts as a bridge between the Iraq and Afghanistan of now and the self-supporting and free Iraq and Afghanistan of tomorrow.
In Iowa we face a similar choice. A sluggish economy, a jobless recovery, and zealous tax reductions when times were better, help to create a significant gap between available resources and investments needed to support our values and meet our needs in education, health care, and public safety and security – the foundation of a transformed Iowa. We also need a financial bridge that will enable us to strengthen that foundation and maintain the momentum of recent transformation efforts.
Recently, the Lieutenant Governor and I conducted a series of public hearings across the state to listen to Iowans express their concerns and their hopes about the budget and the priorities it would establish for our collective future. From Dubuque to Sioux City, the message from the people was clear and consistent – we must maintain Iowa’s excellence in education, ensure access to quality health care, and protect essential local services and we must hold the line on local property taxes.
In communities across this great state, teachers, administrators, school board members, business leaders and, most importantly, parents urged us to not risk Iowa’s national standing as a K-12 educational leader and recent advances in student achievement by trying only to cut our way out of budget difficulties.
People who were born and raised here and people who moved to Iowa to take advantage of our quality education system warned us that our failure to adequately fund our schools will lead to more teacher and staff layoffs, large class sizes, and less education opportunities for our children.
Deb Henry, a 3rd grade teacher from Ankeny, brought the threat into clear focus when she catalogued the meager supplies she would receive for her 176 students next semester: One box of number two pencils, 12 pencils to a box; 10 boxes of crayons, 16 crayons to a box; three packets of construction paper, 50 sheets to a packet and five glue sticks.
We understood better the limitations on learning when Desira Johnson, a parent at the Ankeny hearing held up this 1984 textbook used today to teach her child and her classmates about the world around them. Our children will experience difficulties understanding our complex world if they must continue to rely on textbooks that teach of a place which no longer exists – the Soviet Union.
As dedicated teachers and parents advocated for children, I realized that someone needed to advocate for the teachers and staff that lead lives of service. The duty belongs to the governor and legislators as leaders of a state that prides itself on its schools and educational opportunity. The fact remains that supplies, textbooks, or the most sophisticated technology mean very little without quality teachers and staff.
This duty extends beyond K-12 and includes advocating for higher education as well. Without support our colleges and universities will not attract the quality of faculty or staff required to maintain academic excellence on our campuses unless they continue to reply on higher tuitions which price too many out of opportunity.
Public concerns were not limited to teacher and educators, nurses, hospital workers, health care professionals like chiropractors and pharmacists, mental health advocates, and people with disabilities raised similar issues about health care.
Our state ranks in the top six states for quality health care according to the Center for Medicare and Medicaid and we can take pride in the fact that more than 90% of all Iowans and 94% of all Iowa children have health care security. However, without continued investments in our Medicaid program for seniors and low-income persons with disabilities and our children’s health insurance program, access to critical services will be denied to Iowans most in need. Cheryl Jones, a nurse from Bloomfield confirmed at the Ottumwa hearing that occurs today in some rural areas of our state.
With frequent changes to the nation’s homeland security threat level, we need no reminder of the importance of adequately staffed, trained, and equipped local law enforcement officers, firefighters, and first responders. At every public hearing those on the frontline of homeland security, like firefighter Chris Sorenson from Council Bluffs, outlined the negative impact on security efforts resulting from state cuts in support to local governments. As layoffs occur in critical security positions and as training and equipment purchases are delayed or deferred at the local level, the question can appropriately be asked of us – given the magnitude of the risk, from terrorism to meth labs, are we comfortable being understaffed, untrained, and ill equipped?
Yesterday, at my instruction, the Department of Management furnished each member of the General Assembly a budget based on revenues as they are. A budget, that if passed, will confirm the fears and ignore the priorities of the hundreds of Iowans we heard during our public hearings. A budget after all is not just a set of numbers. Our budget should reflect our values, demonstrate our priorities, and positively affect people’s lives.
Let me be as clear as I can be. A budget based solely on available revenues under funds education at every level and fails to meet our basic responsibility to provide our children with great schools, colleges and universities. With it we run the risk of extinguishing the passion for education, a return to declining student achievement and test scores and a continuation of higher tuitions eliminating for some the dream and the opportunity of a higher education.
A budget based solely on available revenues under funds health care and fails to keep faith with the Iowa promise of health care security for seniors needing nursing homes, for people with mental illness or physical disabilities needing specialized care, and for uninsured children.
A budget based solely on available revenues under funds property tax credits and local government support and fails to strengthen the partnership between state and local government. With this budget the deal for Iowans from local government is simple – higher property taxes and fewer critical services – pay more get less.
We must not turn our backs on our children, our seniors, our friends and neighbors with disabilities – on all Iowans. We can and we must do better.
The budget we enact at this critical juncture for our state must protect our priorities, preserve our values, and promote the greater good and the brighter tomorrow for all of us. Our budget must reflect the people’s interest not the special interest. Guided by fairness and equity the budget must ask some to sacrifice more for the betterment of all.
To bridge the gap between revenues and our priorities I propose a three-step plan based on simple fairness and equity and not one based on an income or sales tax rate increase.
Step one. Modernize the sales tax system by expanding the base of services subject to tax and lowering over time the sales tax rate – an approach suggested last year by the Speaker. We would generate sufficient revenue to increase support for all levels of education in the short term while reducing taxes for most Iowa families in the long run. This approach builds upon what we started last year in modernizing our property tax system and remains consistent with fair and equitable tax policy of broadening the base and reducing the rates.
Step two. Today in Iowa we all pay for smoking related illnesses through taxes and higher insurance premiums. We pay more for the treatment of smoking related illnesses than we receive from those who smoke. We need to correct this inequity by better balancing what we receive with what we spend. An increase in what smokers pay to smoke, an idea advanced last year by senate republican leaders, will create better balance while generating the revenues to keep faith with those who need health care.
Step three. By simply closing tax loopholes and ending unfair preferences; we will collect sufficient revenues to fully fund property tax credits. Property owners would receive the full benefit of the credits lowering their property taxes without a cut in essential services.
I will submit a budget this week that provides details, but let me outline the impact of what I propose today.
Our sales tax system reflects a 20th century economy centered more on goods being sold rather than services being provided. The narrow base of activities subject to tax means most of us pay a higher rate than necessary. By extending sales tax to services like engineering, surveying, accounting, consulting and the like, we can better align the system to the economy of today. With an expanded base, we should systematically reduce the rate of tax on all transactions by 15% over the next four years.
The additional revenues collected during the period where rate reduction is phased in can act as a bridge to better times and will enable us to more adequately fund education.
Under the approach I offer state, support for schools would increase by $131 million. We would fully fund this year’s allowable growth including restoring state funds cut from last year’s budget. We would continue and expand the teacher compensation – student achievement effort started two years ago. State resources would act as incentive for local districts to reduce administrative costs and redirect those savings into greater support for teacher compensation and professional development. Important efforts to reduce class sizes, improve reading and prevent dropouts would continue without interruption. New efforts to meaningfully tackle the achievement gap among minority students would be launched in places like Waterloo and Sioux City.
What does it mean for schools? – More and better-qualified teachers and smaller class sizes. For our children it means better learning opportunities. For Iowa’s future it means a more educated and productive workforce to meet the challenges of a 21st century global economy.
Additional funds would also be available for empowerment and early childhood education. If we are to leave no child behind we must begin by making sure that no child starts behind.
Higher education would also benefit. Community colleges would receive increased state aid. The Regent’s universities would receive support to fully fund faculty and staff salaries. Students relying on the Iowa Tuition Grant program would receive additional help with tuition costs. Quality higher education would remain affordable for working families.
Finally, resources would also be available to better support tuition assistance for National Guard members, which will aid in recruiting and retaining soldiers, airmen and airwomen in Iowa.
Bottom line under this sales tax modernization proposal: a few will pay more, most will pay less and all will benefit, as Iowa remains an education leader. Most important of all, our children will enjoy the fruits of educational excellence as they grow up and become the everyday leaders and heroes of tomorrow.
No doubt exists that smoking costs all of us and kills too many of us. Fairness and equity dictate that smokers should assume more of the responsibility of the costs of smoking- related illnesses. As they do, research tells us fewer children will begin smoking and more lives will be saved.
With a 60-cent increase in the cost of every pack of cigarettes, resources will be freed up to keep faith with seniors and their long-term care needs. We can begin weaning ourselves from reliance on the senior living trust to help fund nursing home care. This fund can be preserved longer for its primary purpose of financing in-home care. The dignity and independence of seniors – an Iowa tradition can be expanded and not curtailed.
Additional investments will be made to continue our children’s health insurance effort; and to more adequately fund substance abuse treatment and smoking prevention efforts.
In response to the legislature’s charge, the Mental Health Developmental Disabilities Commission issued a blueprint for redesigning the system of services for adults with disabilities.
Their recommendations will assure basic quality services statewide to support Iowans with mental retardation, mental illness, developmental disabilities and brain injury to live to their God-given potential.
Revenue will now be available to fund the commission’s recommendations bringing hope to those facing mental and physical challenges.
At the same time the growing crisis in which tens of thousands of Iowa’s children and seniors fail to get even simple routine dental care can be addressed. If children of low-income families or seniors cannot get to a dentist office, we will bring the office to them. These mobile offices will provide routine but necessary dental care that will improve health outcomes.
A few will pay more to offset the costs paid by all and our most vulnerable citizens will be assured of health care security.
Today some avoid the payment of their fair share of the costs of essential services and some receive the benefit of property tax credits actually designed for others. A number of corporations, particularly non-Iowan, out-of-state corporations shift income and expenses to avoid paying millions of state taxes owed here. At the same time, the ag land tax credit (against property taxes) designed for those who farm the land is also available to those who own the farmland but allow others to farm it. Providing these credits to absentee landlords costs the state millions of dollars.
This corporate loophole should be closed and this special preference for absentee landowners should be ended. The revenues and savings should be dedicated to more fully funding local property tax credits and services assisting local governments. While a few may pay more, most will pay less, and essential services protecting our families and communities will continue.
Even with the approach I’ve outlined, some areas of state government will receive less and more sacrifice will be required. Efforts began four years ago to reduce the size of state government and to improve efficiency and effectiveness must continue. Budgets and workforces have been cut and more may be required, but I am confident in the commitment and ability of those working for us in state government to get the job done.
With a people’s budget and a common-sense bridge approach to financing it, our responsibilities will be met and our priorities will be preserved in the short term. But this will not be so over the long term unless we continue the work begun over the last four years to transform our economy.
Before I talk about continued efforts to transform our economy, I want to talk about a transformation of a different type – the transformation of the heart. Bullying and harassment takes place in too many of our schools. No one has the right to harass or bully because of the color of one’s skin, the language one speaks or the language one does not speak, a person’s religion, a person’s politics, a person’s appearance, of a person’s perceived or real sexual orientation. Every child deserves a safe haven at school to learn and to grow. Teachers, administrators, and staff must guarantee that safe haven and schools must be held accountable when bullying or harassment takes place. I will present to the General Assembly legislation that will require that accountability and ask for your consideration and support.
All around the state evidence of change in our economy exists. The construction of new power facilities, expansion of high speed internet to many areas of the state, a doubling of ethanol production facilities, the commencement of bio diesel and bio-mass energy production, the building of the new beef harvesting facility at Tama, the creation of the Plant Science Center at Iowa State University, the establishment of state and local venture capital funds, and the locating of the nation’s largest wind energy project reflect the emergence of the transformed Iowa 21st century economy.
The Grow Iowa Values Fund represents a major effort to continue our effort to transform the Iowa economy. In less than a year and with funding only guaranteed for two years, the Values Fund began to stabilize manufacturing jobs threatened by overseas competition, to create thousands of good paying opportunities in the financial services and insurance sector, and to form Iowa’s special niche in the growing bio-economy. From Lenox in Marshalltown to Wells Fargo in West Des Moines and Des Moines to Trans Ova in Sioux Center, interest in Iowa opportunities continues to grow. Last year at this time, our Department of Economic Development listed 60 potential projects in the pipeline – today that number has quadrupled to 240 potential projects.
The vital work of the Grow Iowa Values Fund must continue, but under its current structure, assurances for funding remains guaranteed for only two of the seven years of the fund. Initial investments have been made in Iowa’s growth. With the investment 3,557 new, good-paying jobs will be part of our future and almost 1,000 good-paying jobs already part of our economy will be retained. These new opportunities will generate over the next decade more than $2 billion of additional income for Iowans and an additional $197,000,000 in support of better schools for our children, accessible healthcare for seniors and veterans, and available fire and police protection when we need it for our families and communities.
The timid and the hesitant never lead a transformation. The better future belongs to those with faith in the future. Members of the General Assembly, finish the good work you started last year by eliminating any conditions on future funding for the Values Fund. Guarantee these funds for the full seven years of the program – and watch Iowa grow.
Four years ago, members of the General Assembly reflected a strong belief in our future by expanding the successful Community Attractions and Tourism program into the Vision Iowa program. This effort fueled a transformation of 119 communities into cultural and recreational centers. In Gladbrook, Iowa, I’ve seen a refurbished theatre providing family entertainment while acting as a powerful symbol of a small community’s desire to remain strong. I’ve seen the America’s River project, a celebration of the Mississippi River’s many gifts to us, in Dubuque; the Tyson events Center in Sioux City; the Mid-American Convention Center in Council Bluffs; and the steam-powered carousel in my hometown, Mt. Pleasant projects border to border and places in between – encourage people from outside Iowa to enjoy a wide variety of cultural and recreational treats. These tourists and thousands like them will help spur the local and state economy. In addition these programs led to thousands of good paying construction jobs and permanent jobs operating and managing the facilities.
The success of the CAT and Vision Iowa program and the wonderful variety of artistic, cultural, and recreational experiences in our state deserve recognition and celebration. It is in uncertain times like ours that we seek pleasure, solace, and instruction in the arts and humanities. A vibrant society gains meaning and direction from its creative thinkers. We should celebrate and appreciate the impact arts, culture and recreation play in our lives during this year – 2004 – The Year of the Arts, Culture, and Recreation in Iowa. Studies show that creativity spurs economic growth; breakthroughs in understanding are essential to the task of building a world of opportunity. Creative thinking, the hallmark of Iowa’s success, will lead us to a more dynamic future.
We should not and we must not be satisfied with what has been done with CAT and Vision Iowa. We must focus on what more can be done if the programs are continued and expanded.
We are blessed with breathtakingly beautiful open spaces and wonderful streams, rivers, and lakes. These natural resources should be celebrated and more fully utilized.
Last year thousands of Iowans participated in a consensus driven process to improve water quality that culminated in the water quality summit in Ames, Iowa. Summit participants identified many ways in which we could improve water quality with the ultimate goal of eliminating any impaired waters within our state.
From the summit there was broad consensus that our approach must be based on a respect for the natural lay of our land rather than artificial boundaries. As such, we must develop a watershed approach – locally led and locally based – to enable a holistic approach to improving water quality and targeting high priority watersheds. The Summit confirmed what we suspected: that existing efforts must be better coordinated and better focused on targeted areas for improvement. Our collective work to initiate a comprehensive water-monitoring program has greatly enhanced our efforts. Water monitoring must be continued and expanded. It was also evident from the Summit that additional research is necessary to enhance our ability to improve water quality.
Living in Iowa means accepting responsibility for preserving and protecting our natural resources. Every one of us should engage in the effort to preserve our soil and protect our air and water. Our state budget in every year, even in years of tight budgets, must reflect that responsibility.
Our ability to continue transformation depends on our ability to improve quality of life in Iowa. We sometimes fail to recognize how important the environment is to our quality of life. We must continue to invest in the protection of our natural resources to be true to our heritage and our name; Iowa – a beautiful land.
To that end I recommend an increase in our commitment to the Environment First Fund. We should also extend Vision Iowa and CAT by $150 million to come from additional bonding and to be repaid over time from the Rebuild Iowa Infrastructure fund. With interest rates low and the State’s exceptional bond rating the time will never be better. Repayment from RIIF insures no conflict with the important education, health care, and security protection of our general fund. These resources should be committed to protection and preservation of our natural resources, with emphasis on improving water quality and to expand our understanding of the environment and the important role it plays in transforming Iowa.
Today and for the foreseeable future, Iowans will be placed in harms way in the service of liberty and freedom. Their task of improving the world in which we all live is our task as well. In our work at home we should draw inspiration from them to do our duty.
While they make the world safer, we must make our schools better, our health care more accessible and affordable, our families and communities more secure, and our environment cleaner and our economy stronger. They sacrifice to transform a nation and open up opportunity for someone else’s child. We sacrifice to transform a state and open up opportunity for their children and all of our children.
They will not fail the world. We must not fail them ourselves.
God bless these brave young men and women – our troops here and abroad – and all those who serve and sacrifice for others. God bless our nation and God bless the great state of Iowa.
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