To sign up for my newsletter, please email me at jason.schultz@legis.state.ia.us.

NEWSLETTER 3/3/2010

While Des Moines has been busy with the Women’s State Basketball Tournament, the focus at the state capitol has been on the second round of funnels and budgetary concerns.  On Monday, March 1, the Fiscal Services Division released the general fund revenue numbers for the first 8 months of this Fiscal Year (FY2010) The good news is that net revenue through February was slightly above the Revenue Estimating Conference estimate for FY 2010.  The bad news is that we are still below last year’s number.  The REC estimated that 2010 revenue to date would be -8.5%.  The actual number is now negative 6.5%.  The report listed that personal income tax, corporate income tax, and sales tax revenue are all down from FY 2009.    These are all real numbers, looking back to the last 8 months.  The next look forward will be when the Revenue Estimating Conference meets this Thursday, March 11, at 1:30 pm.  If the REC lowers their estimate from their December meeting, state law mandates that we set next year’s budget on the lower estimates.  Unfortunately, we have not seen the entire budget proposal yet.  It appears that the majority party will pass a nearly $6 billion budget, including one time money from unspent stimulus funds, taking from the Cash Reserve Fund, and underfunding Medicaid in the short term.  This does not serve Iowa well.

In other news, the Federal Government gave the states funding to encourage Iowans to purchase energy efficient appliances.  In Iowa, the Office of Energy Independence was given the responsibility to administer the program.  Iowans were eligible to get rebates of up to $500 on new refrigerators, stoves, dishwashers, clothes washers and dryers, and furnaces.  OEI projected that the funding would last at least two weeks.  The Office had contracted with an outside firm to set up a system whereby Iowans could apply for the rebate over the internet or the phone.  OEI boasted that their contractor was more than capable with handling any volume of interest. When Monday morning arrived, many Iowans attempted to take advantage of the program.  What they discovered was a website that they could not access and jammed phone lines.   Some shoppers spent hours trying to get through on the phone, while others kept tried to get through on the website.  By the middle of the afternoon, the Office of Energy Independence announced that all the refund money had already been claimed.  While it took six hours to hand out the money, it will take a lot longer to figure out why things went so quickly and so badly.  After the program was closed, Iowans were still being encouraged to buy appliances, on the chance that someone who claimed a rebate would not file for it and there would be money left over.  We have been swamped with complaints about the failure of the OEI to handle the program.  I have spoken to Representatives from across Iowa, and the frustration stretches from river to river.  While the Office is now saying they are conducting an investigation of the situation, it is extremely unlikely that they will produce a report any time soon.

Recently, the Director of the Department of Human Services reported to the Legislature that the proposed FY 2011 budget would result in massive layoffs and cuts in services throughout the state.  He projects a loss of 850 positions in the Department due to a $30 million shortfall in his funding.  Cuts in positions to the Sexual Predator Unit and Mental Health Institute in Cherokee total 64 staff that will lose their jobs.  More county offices may not be open full time.  Right now, 34 counties have part-time offices, and 30 more counties may be added to that list.  It is important for the citizens of District 55 to prepare for fewer state services.  The overspending of the last few years has created a bloated government that tried to do too much for too many, and unfortunately, the result is that services are also going to be cut for those who need the basic services that have been offered for generations.

NEWSLETTER 2/25/2010

The first half of the 2010 session in over, and we are working on the last of the policy bills that are still alive, and debating budget issues.  The news on the state’s budget is grim.  The Legislature has not changed its spending patterns.  At this time, it appears that the majority party is about to propose a budget that spends $5.4 billion not counting $200 million that is  to be taken out of the Cash Reserve Fund, $200 million from the remaining Federal Stimulus dollars, and $200 million in underfunding Medicaid.  Underfunding Medicaid is not a savings, it is an expense, because it is considered an entitlement, and must be fully funded in the following legislative session.  When we add the General Fund proposal, the one time money and intentionally underestimate Medicaid expenses, we come to roughly $6 billion in FY 2011 spending.  This is nearly as much as 2009 and 2010.   It will also set us up for an incredibly difficult 2012.

In difficult times such as these, it is always easy for some to say that our problems are impossible to fix without a tax increase.  I think we send enough to Des Moines, and that the problem is that it isn’t managed wisely.  While thinking about our budget decisions, I came across a summary of Iowa’s tax revenue sources.  I’d like to pass it on to the citizens of HD 55 for your review.  This information is from the Iowa Department of Revenue.

In 2009, the Iowa Department of Revenue processed more than 1.5 million individual income tax returns.  Of those returns, 74% were filed electronically.  According to the report, IDR collected a net total of $6.87 billion from taxpayers in 2009.  This statistic is calculated after refunds were issued.  Furthermore, a variety of local taxing authorities collected over $4 billion in property taxes.  That means Iowans spent more than $10.9 billion in taxes.

A net total of $3.1 billion was collected from income taxes, the breakdown is as follows:

• Individual Income Tax: $2.82 billion
• Corporation Income Tax: $253 million
• Franchise Tax:  $28 million

In addition, Iowa taxpayers paid more than $2.88 billion in sales, use and motor vehicle taxes in 2009, the breakdown includes:

• Sales Tax:  $2.29 billion
• Use Tax:  $355 million
• Motor Vehicle Use Tax (registration fees): $239 million

A number of other taxes are levied to fund government activities.  They include:

• Consumption Tax (motor vehicle fuel tax, cigarette tax, and tobacco tax):
  $678 million
• Inheritance Tax:  $73.6 million
• Miscellaneous Tax (environmental protection charge, motor vehicle use 25% EPC deposit, real estate transfer tax, hazardous materials permit fees, insurance premium tax, motor vehicle title surcharge):  $126 million.

In 2009, Iowa property owners paid more than $4 billion in property taxes to various local taxing authorities.  The following taxing authorities and the total amount of taxes they levied are as follows:

• K-12 School:  $1.68 billion
• Counties:  $874 million
• Cities:  $1.2 billion
• Merged Area Schools:  $86 million
• Hospitals:  $80 million
• Assessors: $46 million
• Townships: $23.9 million
• Ag Extension:  $15.4 million
• Miscellaneous:  $15 million

Nearly eleven billion of your tax dollars are collected, yet many say that we need to take more.  I will work to manage your tax dollars in the same way you manage your checkbook.  When you run out of money, you have to stop spending.  Your state government should do the same.  It is an honor to serve District 55 in the State Capitol, and I am grateful for the opportunity to do so.  If you have questions or comments, please call 1-515-281-3221, or email jason.schultz@legis.state.ia.us.

NEWSLETTER 2/18/2010

Government Reorganization

As we move past the first funnel week, major pieces of legislations are moving to floor votes.  After 2 days of debate and countless amendments, Senate File 2088 “Government Reorganization” was passed 98-0 by the House.   The version passed by the House is estimated to save $70.6 million general fund dollars and $55.7 million in other funds during FY2011.  Not all provisions are favorable, such as prohibiting the Department of Human Services from taking new applications for the Family Support Subsidy program that aids low-income families with mentally disabled children.  I am also unhappy with the new $500 cap on legal fees paid to families who adopt.  These two changes amount to just over $500,000.  These are not the cuts Iowans should look for.  The bill does have good points. We are about to save $7.5 million with a new centralized purchasing system.  Another section is estimated to save $15 million by reducing the number of supervisors over front line personnel.   This is a complicated bill, and it is very different from the bill that the Senate passed and sent to the House.  That means that a conference committee with members from both the House and the Senate will negotiate what is in the final version.

Puppy Mills

This week also marked the passage of HF2280, also known as the Puppy Mill bill.  This bill claims to address the issue of sub-standard dog breeding operations.  However, its only effects are increased fees and inspections.   These will be implemented on respectable businesses that are already operating properly.  When we look behind the scenes, we see that bills such as this originate from organizations such as the Humane Society and the International Society on Animal Rights.  These groups use issues like breeding regulation to open the door to further government intrusion into livestock production.  Livestock is a $10 billion industry and is vital to Western Iowa.   The Puppy Mill bill is dangerous development for agriculture in Iowa.

FY2011 Budget

On February 17, the majority party released partial FY2011 budget targets for the appropriations subcommittees.  Unfortunately, it only reveals $2.5 billion of the General Fund spending.  From what we have so far, it appears that the Democrats are $475 million below the Governor’s recommendations in the subcommittee areas, but will still spend as much as the 2010 budget.  What we aren’t told in this partial release is how much K-12 will be underfunded compared to the 2% allowable growth that schools were given.  Remember, any amount of allowable growth that is not funded by the state tax dollars is a potential property tax increase.  The school boards in District 55 are responsible with your tax dollars, but expenses are increasing, and the state’s irresponsibility may leave them few choices.  School funding and some of the poor choices in the State Reorganization bill are two examples of why we need to correct our previous patterns of overspending.

NEWSLETTER 2/12/2010

The Iowa House of Representatives is working its way through its first funnel week.  There are two ‘funnels’ each year which are the administrative hurdles which move us to the next step in the legislative cycle.  This funnel means any bill that is not passed out of committee is finished for the session. Bills in the Ways and Means and Appropriations Committees are ‘funnel proof”, so all tax and spending bills are available for debate through the end of the legislative session.

One of the large bills that will be passed is the State Government Reorganization bill.  This bill, SF 2088, is an effort to restructure agencies in order to save as many tax dollars as possible.  I am concerned about many of the changes that this bill makes, both in terms of claimed dollars saved, and in changes to state services.  One of the largest disagreements is to move Community Empowerment from the Department of Management, where they are independent, to the Department of Education.  I believe this will change their mission, which is to support children age zero to five, and will only give additional spending authority to the Department of Education, covering children not yet in school.  Another concern is the closing of one of Iowa’s Mental Health Institutes (MHI).  It seems that few savings will be realized, due to other state agencies that would still use the facilities, and would then bear the entire expense of operating the facilities, and other MHI’s will still treat the patients moved from the closed Institute.  The entire bill saves $76 million, while the state still faces a $1 billion dollar difference between revenues and expenses.

House Republicans have offered additional budget solutions to help balance the budget and streamline government.  They are:

1. End all state benefits to illegal immigrant adults (savings $92.3 million)
2. Combine administrative functions at the Regents universities (savings $62 million)
3. Shift voluntary preschool responsibilities to Empowerment (savings $45 million)
4. Eliminate the Power Fund and the Office of Energy Independence, reassign responsibilities (savings $25 million)
5. Sell and completely privatize the state general purpose vehicle fleet (savings $18 million)
6. Sell or lease the Iowa Communications Network (savings $15 million)
7. Delay the implementation of K-12 core curriculum for one year (savings $10.5 million)
8. Cancel all Regents sabbaticals for Fiscal Year 2011 (savings $6 million)
9. Cut funding for office supplies, service contracts, equipment purchases (savings $5 million)
10. Eliminate taxpayer-funded lobbyists (savings $4 million)
11. Eliminate the Just Eliminate Lies (JEL) program (savings $2.25 million)
12. Eliminate funding for empty shelter care beds (savings $2 million)
13. Eliminate the family planning waiver (savings $2 million)
14. Eliminate the Rebuild Iowa Office, give responsibilities to Homeland Security (savings $1 million)

This amounts to a $290 million dollar savings in state tax dollars.  Some items of the proposal are controversial, but I believe some of these expenditures are why the state of Iowa finds itself in this difficult financial situation.  We must work to find solutions which will help for the long term, not just find another short term fix to patch a budget hole.  We must provide the essential services of government to the people and provide these services while being financially responsible with the people’s tax dollars.  Iowa families are faced with making tough decisions every day we, the elected officials, must do the same.

NEWSLETTER 1/27/2010

This column finds the Iowa Legislature in week three, and we are approaching an important date in our session.  As of today, the budget committees have met only once, and that was to review last year’s ending numbers.  I have joined other Legislators in calling for the Governor to release important numbers from his 2011 budget proposal.  The Governor must release his proposed budget by the end of January.  When we see the budget, each of us will dig into the details to find the savings needed to return Iowa to a responsible financial path.

This past week of winter has been particularly difficult for Western Iowa.  These disasters remind us of how important our front line service providers are within all of our communities.  The effort we have seen from the State, County, and City road maintenance crews as they worked tirelessly against a weather pattern, that pulled no punches, was truly impressive.  In many cases, workers did not go home to rest, instead they slept in maintenance sheds so they could be sure to be in their trucks early the next morning.  This series of storms not only added more snow and ice to an already impressive total for the year, it destroyed a lot of our electrical infrastructure.

At one point, WIPCO estimated five hundred electrical poles were broken.  Northwest REC had four miles of line down in one location.  Many of our neighbors have been without power for six days.  Crews from our local REC’s, Municipal Utilities, and MidAmerican, have been joined by crews from across Iowa and even other states in an unrelenting effort to restore power.  These men and women have worked in unbearable conditions to keep the electrical system up and running and restore power to the hundreds of homes who lost services.  I have been told that the largest obstacle now is getting access to the broken poles.  The snow is still so deep that the repair trucks cannot get into fields or down unplowed roads to re-attach wires.  The cooperation between our electrical providers and the different levels of government has been spectacular.  Each organization I talk to has complimented the others.

I have been working with Representatives and Senators from Western Iowa to get the state involved in the recovery process.  On Monday, January 25^th, I joined Representatives Roberts and Windschitl and met with Governor Culver’s senior assistant to convey the seriousness of our problem.  Amazingly, the conditions are such that our rural residents have been able to travel from their homes almost immediately after the worst of the storm, but they still do not have power to heat their homes or pump water for themselves and livestock.  I explained there is what I call a “Hierarchy of Priorities” when a storm, such as this effects the entire state, the Department of Transportation moves first to provide routes for emergency services, and second to allow us to get from each of our homes to work, farms, or where ever we need to go.

In this case I made the case that after basic snow removal for emergency services, which is the top priority statewide, the brunt of state effort should be to provide access to repair electrical infrastructure providing service to homes which have been without power for so long that the house is in danger of freezing and catastrophic property damage is imminent.  I asked specifically for all of the DOT’s truck mounted heavy snow blowers to be sent to the Governor’s Proclaimed Disaster Emergency Area.  If this heavy equipment is sent and placed under the guidance of our electrical providers, property loss could be minimized, and the heavy equipment could be returned to statewide duty within a few days.   I will follow up in the coming days to monitor the state’s response to these requests.

I know Western Iowa will recover from this natural disaster.  The hard work, dedication, and personal sacrifice of the crews that cleared our roads, restored power, responded to accidents, and those who somehow made it to work each day, kept the machine running.  Thank you to everyone who helped on every level.  I am fortunate to hear many accounts of tremendous generosity by our neighbors.  Iowa is a great place because of its amazing people, we proved it again in this storm.

NEWSLETTER 1/14/2010

Week one of the 2010 session began while Legislators from all 99 counties in Iowa gathered together in the Iowa Capitol to begin our work for the people.  The week has a traditional feel to it as we are informed on the Condition of Iowa by speeches the Governor and the Chief Justice.

The Governor’s Condition of the State Address was delivered on the second day of the session.  After an opening, which looks forward to a better tomorrow, Governor Culver described today’s Iowa in ways that I did not recognize.  I was disappointed in the claim of balancing the budget for three years without raising taxes.  This simply isn’t true.  A little research reveals the truth.  I have listed the taxes and fees that Governor Culver has proposed.  Not all of these have been signed into law, but it is clear that the Governor is not a friend of the taxpayer.

FY07 – $32.3 million

• Cigarette and Tobacco Tax Increase – $32 million
• Additional DCI Agents for Riverboats –$200,000
• Additional Fire Marshall inspections fees –$100,000

FY08 – $169.5 million

• Cigarette and Tobacco Tax Increase – $138.4 million
• Combined Corporate Reporting –$25 million
• Additional Department of Revenue Auditors –$4.6 million
• Additional DCI Agents for Riverboats –$600,000
• Additional Fire Marshall inspection fees – $400,000
• Additional Department of Commerce fees – $100,000
• Restaurant Inspection fees – $400,000

FY09 – $134.3 million

• Combined Corporate Reporting – $75 million
• Bottle Deposit Expansion – $21.5 million
• Improved Court Fine Collections – $18 million
• Uncollected Bottle Deposit – $13.2 million
• Workforce Development Withholding – $4 million
• Child Care Credit Fun – $2.6 million

FY10 – $30.6 million

• Cap Tax Credits at $200 million – $15 million
• Cap Research and Activities Tax Credit – $13 million
• Child Care Tax Credit – $2.6 million

All of these add up to $366.7 million in proposed tax and fee increases in three years.

I will stand to defend the taxpayer in all of these instances.  You send plenty of your hard earned paychecks to Des Moines.  The problem of state government for years has not been enough revenue; it’s been too much spending.  We must work to reduce the size of state government.

A few of the issues I will be watching and reporting back to you would include an effort to repeal your ability to deduct your Federal tax bill on your state return, labor bills, increases to your property taxes, and education bills which will change the way our local schools are funded.

This will be an intense 80 day session, and I will work to keep you up to date.  If you would like to be on my email list of smaller updates, please send an email to:jason.schultz@legis.state.ia.us.  Also use this email address to send me your comments and concerns.  Thank you for your support and the opportunity to work for you in Des Moines