Home Builders Association of Iowa

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Legislative E-Update ~ 4.28.08

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in this update:

1.      Legislature Adjourns 2008 Session
2.      Democrats, Republicans Disagree On Success
3.      Lawmakers Approve New Sales Tax For Schools
4.      Labor Bill To Culver; Fate Uncertain
5.      Other News: Legislative Briefs
6.      Bill Tracking
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1.      Legislature Adjourns 2008 Session

In the early morning hours of Saturday, April 26, Iowa lawmakers adjourned the 2008 legislative session. Democrat lawmakers praised the successes of the session, citing their achievement to fund priorities in education, health care and the environment. Republicans spoke of increased spending and higher taxes for Iowa families.

Democrats noted that the budget is balanced and that the state's savings accounts were more than $600 million, more than at any other time in Iowa's history. They noted key legislation that deals with such issues as education, expanding renewable fuels and health care for uninsured residents and establishing a statewide public smoking ban.

The last policy bill passed was House File 2700, a $127 million budget proposal known as the "standings bill" that includes salaries for state workers. The standings bill is typically the last proposal passed before lawmakers wrap up their annual legislative session. It's a catch-all measure that also includes some legislative proposals that were too unpopular to gain much ground earlier in the session. Included in the proposal was a pay raise for Gov. Chet Culver. His annual salary will go up by more than $12,000 to $142,580. Another component of the bill was $315 million for prison expansions that includes a new state penitentiary at Fort Madison and upgrading the women's prison in Mitchellville.

On the 103rd day of the 2008 legislative session, lawmakers also adopted a plan to expand public health insurance programs to cover about 50,000 Iowa children now without insurance. Lawmakers also decided schools statewide should follow a consistent educational curriculum, and considered a final budget proposal that includes $130.7 million in bonding to pay for a new state penitentiary at Fort Madison. Another part of the proposal would spend $184 million for upgrades at the women's prison in Mitchellville, expanding community corrections facilities in Des Moines, Waterloo, Sioux City and Ottumwa and other projects. While many lawmakers praised their own work, some were less than pleased with last-minute compromises and decisions to abandon proposals such as reform for open government laws.

Core curriculum bill adopted: The bill lawmakers approved would require teachers to teach uniform skills and content to kindergartners through 12th-graders in English, math, science, social studies and 21st century skills such as finances, health and technology. The state already has core content standards in reading, math and science but no mandated curriculum to accompany those standards. The bill requires school districts to have an implementation plan in place by July 1, 2012. The districts would be required to begin using the plan in the 2014-15 school year.

Health care bill expands coverage for children: Lawmakers sent to the governor a bill that aims to provide more children with health insurance. House File 2539 is a wide-ranging bill that would expand public health insurance programs to cover about 50,000 Iowa children who are now uninsured. The plan would cost about $5 million in the budget year that begins July 1; it would cost about $25 million annually to implement by 2011.

Other major issues approved by the legislature: A few other big items approved this year by lawmakers include:
MEDICAL PROFESSIONALS AND HOSPITALS: Medical professionals and hospitals will get a provider increase. Hospitals also got a rebasing increase; they will be paid a higher base rate for services and procedures. Schools must give every child registered for preschool a vision card from the Iowa Optometric Association; the goal is to have every child receive an eye examination by age seven.
SMOKING BAN: A statewide ban on smoking in almost all public areas, including restaurants and bars, will take effect July 1.
ROAD IMPROVEMENTS: Lawmakers, some from both political parties, voted to increase license and registration fees on vehicles to raise money to improve Iowa's roadways. The increases will raise an estimated $161 million a year by 2012.
SCHOOLS: Replacing a local option sales tax for school projects with a statewide sales tax. That's good news for rural districts, some lawmakers said, because the money will be distributed more evenly.
ENVIRONMENT: $3 million more for the Resource Enhancement and Protection Program, an environmental and recreational program. The program, in the current year, got $15.5 million. Gov. Chet Culver asked for $20 million.

Issues not considered by the legislature: A few items that failed to gain ground this year, several of which were Gov. Culver's priorities mentioned in his State-of-the-State address:
OPEN RECORDS: The plan would have revised Iowa's open-meetings law and created a commission that would investigate claims of violations. The idea passed the Senate but failed to be debated in the House because of a lack of time, said House Speaker Pat Murphy, a Democrat from Dubuque. One amendment to a budget proposal would incorporate portions of the plan, but that idea had not passed late Friday night.
BOTTLE DEPOSITS: An effort to expand Iowa's 5-cent deposit on more beverage containers.
CORPORATE TAX: An effort to end a tax loophole that allows corporations headquartered in other states to avoid paying some Iowa taxes. Ending the practice would pump an estimated $75 million into the state's budgets.
NURSES: Culver urged lawmakers to look at taking action to improve nurse pay in Iowa, which ranks 49th lowest in the nation, according to the U.S. Department of Labor.

2.      Democrats, Republicans Disagree On Success

Depending upon who you ask, the 2008 legislative session was either a blowout success or a pathetic failure.

"We've done more for Iowans and their families than probably" has been done "in the last 20 years in this session," said Sen. Jack Kibbie, a Democrat from Emmetsburg.

Democrats, who represent the majority in both the House and the Senate, highlighted a $6.25 billion budget that includes $621 million in savings, progress toward increased health care for uninsured Iowans and various educational efforts.

"We talked about, in the beginning of last year, that we were going to govern from the mainstream and not the extreme. We think we've done that," said House Majority Leader Kevin McCarthy, a Democrat from Des Moines.

Republicans, though, offered a glass half-empty perspective.

"This has been a session where they've punished employers, they've punished poor people and they've punished taxpayers," said House Minority Leader Christopher Rants, a Republican from Sioux City.

Republicans are unhappy with a proposal that was sent to the governor to allow public employee unions the ability to negotiate a wider range of issues at the collective bargaining table. The idea, House File 2645, will result in higher taxes, they said. Many Democrats, however, say the added union powers would foster a stronger work environment, and increase safety and productivity.

3.      Lawmakers Approve New Sales Tax For Schools

Schools across Iowa, even those in poorer areas, would get the same amount of money per student as more wealthy counties under a bill that has now cleared both chambers of the state Legislature. A 1-cent-per-dollar sales tax for school projects that is now locally approved by the 99 counties every 10 years would become a statewide sales tax that expires after 2029. The switch would mean that the tax money would be distributed more evenly across the state, Democratic lawmakers said. School districts that now get as little as $558 per student would get more than $900 per student by 2014.

The Iowa Senate approved House File 2663 on a vote of 34-15 this week. The House approved the plan April 9. The legislation now goes to the governor, who is expected to sign it into law.

Under the proposal, Iowans would pay about $32 million more per year in consumer use taxes on out-of-state purchases. If they have the purchase delivered to their home, they would pay a 6 percent tax. If they go to a store in another state, they wouldn't pay the tax. Some Iowans would see lower property taxes because that consumer use tax money would go toward property tax relief. The state sales tax would go from 5 percent to 6 percent. But Iowans won't pay any extra on purchases in Iowa because every county already has a penny sales tax for schools. The statewide sales tax will bring in about $400 million a year, the same as now, said Sen. Steve Warnstadt, a Democrat from Sioux City.

Utility taxes for Iowa families would go down about $12 million a year. Purchases of motor vehicles would not be subject to the statewide tax. Neither would auto rentals, hotel or motel rooms or pay television services. Those items would still see a 5 percent sales tax.

"It's not a tax increase, it's a tax shift," Senate Majority Leader Mike Gronstal said. "It's a tax shift away from property taxes."

Some Republican senators argued against the bill, saying they don't like taking away the "optional" part of the tax.

Sen. David Johnson, a Republican from Ocheyedan, said the bill "breaks faith" with voters whom lawmakers promised a vote on the tax every 10 years. "People want more accountability," he said.

Other Republicans said they don't trust lawmakers not to raid the state sales tax revenue for something besides school infrastructure or property tax relief in the future. Sen. Michael Connolly, a Democrat from Dubuque, said the bill has strong protections for the money. Shifting the money to other purposes would require a two-thirds majority vote of both chambers and approval from the governor, he said.

4.      Labor Bill To Culver; Fate Uncertain

A controversial labor-backed bill will head to the governor's desk and union officials believe that's a sign that Gov. Chet Culver may sign it into law. Culver, however, has not yet decided what he intends to do, Democratic leaders said.

After a month of silence about what, if anything, troubles him about the collective bargaining bill, Culver met this week with House Speaker Pat Murphy, Senate Majority Leader Mike Gronstal, House Majority Leader Kevin McCarthy and Senate President Jack Kibbie. Afterward, the leaders said the bill will go to Culver this week upon adjournment of the session. If Culver doesn't sign the bill into law within 30 days of receiving it, the bill will be considered vetoed.

"We remain hopeful that he will sign the bill," McCarthy said. "He has not made up his mind yet and he's going to weigh the competing concerns and contemplate what to do. He'd like more time."

Culver this week sent a message to reporters saying that after more than 30 meetings with managers, union members, lawmakers and the public, he realized there's no way to rewrite the bill in a way that would satisfy all parties.

"Through these meetings and communications, we have attempted to reach consensus among the many stakeholders who would be affected by this legislation," Culver said in the statement. "Unfortunately, it has become clear that it is not possible to amend or revise this bill in a way that reflects a genuine consensus."

Culver spokesman Brad Anderson wouldn't speculate about the likelihood that Culver would sign the bill. He said Culver's statement would have to speak for itself. Last month, Culver said there was a strong possibility he would veto the bill unless there was a real effort to listen to the concerns of stakeholders and to try to reach common ground.

The proposal, House File 2645, would allow public employee unions the ability to negotiate a wider range of issues at the collective bargaining table. House and the Senate Democrats had intended to pass the bill within two days, but Republicans over a six-day period used delay tactics to allow more time for public input.

Opponents say the proposal would take key decisions out of the hands of elected officials and could result in higher taxes. That's because if public employers and employees can't reach an agreement on the broader array of topics, an arbitrator would make the final decision. Advocates say the new union powers would foster a stronger work environment, and increase safety and productivity. They said less than 1 percent of negotiations end in arbitration.

Republican leaders at the Statehouse immediately urged Culver to veto.

"The governor has two options: to stand with Iowans and veto or to side with big union bosses and sign the bill," said House Republican Leader Christopher Rants, from Sioux City. "I'm hopeful he will listen to the outcry of Iowans."

The bill tilts the playing field in favor of big labor and ends provisions that provide a balance between management and labor, Rants said.

Advocates say the process for deciding whether a teacher should be fired would be more streamlined and fairer. A neutral adjudicator would decide whether a teacher should be fired rather than a school board, and that decision would be final. Groups such as the Iowa League of Cities and the Iowa State Association of Counties registered in opposition to House File 2645. Several unions registered in favor, as did the American Civil Liberties Union.

The Iowa Association of School Boards opposes the bill because neither school officials nor teachers could appeal a teacher firing in court, and because there would no longer be a probationary period for new teachers.

5.      Other News: Legislative Briefs

New Fort Madison prison gets green light

In the rush towards adjournment, the Iowa Legislature approved $130.7 million in bonding to pay for a new state penitentiary at Fort Madison. It also approved spending $184 million for upgrades at the women's prison in Mitchellville, expanding community corrections facilities in Des Moines, Waterloo, Sioux City and Ottumwa and other projects.

The spending was approved in a $484 million infrastructure budget bill. The new 800-bed prison there will be built on a prison farm owned by the state about half a mile away from the existing prison. Construction would begin in 2010 and the prison would open in 2014. Tobacco securitization funding will be used to pay for the project at the women’s prison in Mitchellville, which includes tearing down some buildings and constructing new ones.

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Culver signs bill that increases vehicle fees to help road budget

Iowa drivers will plunk down an extra $161 million a year in vehicle fees under legislation that Gov. Chet Culver signed into law this week. The increases will help pay for a massive, multiyear effort to repair Iowa's aging roads and infrastructure. Officials have estimated the state needs an additional investment of $4 billion over the next 20 years to cover the costs.

The issue is one of public safety, Culver said, noting the bridge collapse last year in Interstate Highway 35W in Minneapolis.

"All Americans learned a lesson from the tragedy in Minneapolis," Culver said before signing Senate File 2420 into law.

The increases mean that pickup truck drivers, for the first time in 20 years, will pay more than a flat-rate $65 registration fee. Owners of aging vehicles won't see their registration fees decrease as quickly or as much. Title and trailer registration fees will also increase.

Many of the increases will be phased in, beginning in January. Any cars and pickups Iowans already own won't see higher fees. The increases would apply to vehicles purchased after January 1. The money collected from the fees would grow from just over $104 million in 2011 to $161.4 million by the budget year beginning in July 2012. The proposal falls short of the $200 million a year that's needed, but it's a start, lawmakers said.

Culver has said he's willing to consider a gasoline tax increase as soon as next year, but he wants to make sure motorists are sold on the idea that it's needed to pay for road construction projects. By law, all the money collected from the increased vehicle fees will be used for road improvements. Sixty percent will be used by the state, while cities and counties will each receive 20 percent.

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Lawmakers approve limits on state agency ads

Advertisements financed by taxpayers would be limited by legislation that passed the this week. State agencies would be banned from using public money for advertising that advocates for or against legislation under Senate File 2427, which was introduced by Democratic and Republican leaders in the Iowa Senate. The legislation is aimed at appeasing Republican senators angry over $600,000 worth of health department ads that favored a public smoking ban.

Republican senators had blocked the Senate confirmation of Thomas Newton, the interim director of the state public health department, who approved some of the spending for the ads. They voted in favor of his confirmation once Senate File 2427 was approved and sent to the governor.

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State using up cash from tobacco lawsuit

Iowa has spent nearly all of the bonanza it gained from suing tobacco companies in the 1990s. The cigarette makers agreed in 1998 to pay up to $2 billion to Iowa over 25 years. In 2002, the state sold off the rights to most of those payments for about $500 million in immediate cash.

The plan then was to funnel the money into a standing fund whose earnings would pay for anti-smoking campaigns, cancer treatment and other tobacco-related expenses. But the state hit hard budget times, and legislators dipped into the fund for other needs, critics say. After scraping along for several years, the account now is all but dry. Lawmakers gave final approval this week to a bill that would allow the state to sell off remaining future income from the settlement and place the money in the general fund.

Attorney General Tom Miller, a Democrat who helped win the original settlement, said he now wishes the state hadn't sold off rights to the 25 years of payments. Miller said he didn't oppose the sale at the time, because it decreased risk. But he now thinks that if the money had come in more gradually, it would have lasted longer and been more carefully targeted.

Miller said Iowa has done a fairly good job of fighting smoking. In the past 10 years, he said, the adult smoking rate has dropped from 24 percent to 18 percent, partly because of measures financed by the settlement money. "It would be incredibly foolhardy to pull back now," he said.

6.      Bill Tracking

The following legislation was either sent to or signed by the Governor this past week. For full details of the legislation, please visit www.legis.state.ia.us.

HF 2672 WATER PERMIT FEES
Authorizes the EPC to set fees for water use and establishes the criteria for setting the fees. Requires that fees be set so that no more than $500,000 is raised in a year.. Limits the uses of the fees for reviewing applications, issuing permits, giving technical assistance to applicants and for ensuring compliance. Requires the EPC to review the fund balances and anticipated expenses annually. Allows the EPC to use emergency rules to rescind existing fees.

        H-8528 - WITHDRAWN
       The House PASSED the bill, 87-9; the Senate PASSED the bill, 47-0; it goes to the Governor

SF 517 ENERGY CONSERVATION CODE
        S-5389 by the House - A Strike & Replace: Establishes provisions on sustainable designs, lighting efficiency and on green building design. Makes energy conservation requirements applicable for new residential construction (1 and 2 family homes). Allows the State Building Code Commissioner to offer training to builders and other interested persons on energy conservation requirements. Adds additional provisions on state energy efficiency reporting by the DNR. Establishes an energy bank fund for administering the energy bank program. Requires the Commissioner and the Regents to develop provisions for implementation of conservation measures. Contains other related provisions.

        The Senate CONCURRED & PASSED the bill, 49-0; it now goes to the Governor

SF 2160 UNEMPLOYMENT CHARGES
Does not allow an employer who wins a benefits appeal to collect charges for benefits already paid if the employer failed to participate in the initial fact finding, except if the employee received the benefit through fraud or misrepresentation.

        H-8641 by T Taylor - Strikes the provisions that the employer who fails to participate shall be charged for the benefits. Requires that a firm which represents employers and consistently fails to appear at the initial hearings shall be denied the right to represent employers. Requires the DWD to determine by rule what constitutes a pattern of failing to appear. Adds provisions similar to HF 2589 UNEMPLOYMENT REPORTING (Creates a $35 penalty for each delinquent or insufficient unemployment report from an employer and a $30 fee, plus costs, for a faulty unemployment payment to the DWD. Makes an employer responsible for paying costs associated with a subpoena relating to unemployment law)

                H-8648 by T Taylor - Excludes attorneys from the provisions regarding being barred from representing employers. ADOPTED

        H-8641, as amended, ADOPTED
       The House CONCURRED & PASSED the bill, as amended, 98-0;
        The Senate CONCURRED in S-5444 & PASSED the bill, 48-0; it now goes to the Governor

SF 2222 WAGE OVERDRAFT CHARGES
Allows an employee to file a wage claim for an overdraft charge anytime an employer fails to pay wages.   Allows an employee to make a request that wages be sent by mail.

       The House PASSED the bill, 92-0; it now goes to the Governor

SF 2386 ENERGY EFFICIENCY GOALS
Creates a statewide energy savings goal of 1.5% per capita, per year 2011 to 2021. Establishes a three-year phase-in period to develop strategies for the goal. Directs the Office of Energy Independence, with assistance from advisory councils created in the bill, to coordinate strategies. Establishes reporting requirements, requirements for utilities and a pilot project. Contains other provisions on achieving the energy use reduction goal.

        S-5385 by the House - Requires utilities to assess potential energy savings strategies and to report to the Utilities Board. Requires utilities to study cost-effectiveness related to renewable energy. Includes other provisions on cost-effectiveness. Requests the legislative council to establish an interim study on energy efficiency plans.

        The Senate CONCURRED & PASSED the bill, as amended, 49-0; it goes to the Governor

SF 2420 TIME-21
Requires the treasurer to deposit money into TIME-21 after the collection of $392 million in registration fees. Trucks: Makes truck registration fees the same as car registration fees for model years from 2010. Changes the use tax to a new rate schedule for registration fees. Makes the minimum registration fee $50. Allows cars and trucks paying the current fee to continue to pay at those rates. Business trade: Establishes a business trade class of trucks, meeting certain requirements, that are registered for a flat fee from $50 to $150 depending on the age of the truck. Owners of a truck registered incorrectly as a business trade truck can be charged the difference in registration fees. Owners who knowingly register a truck that doesn’t qualify can be charged $750 per year in penalties (up to $2,250). Other vehicles: Raises the fees for farm trucks and special trucks (under 6 tons, $100; 7 tons $125; 8 tons $155; 9 tons $170; 10 tons $190; 11 tons, $205; 12 tons, $225; 13 tons, $245; 14 tons, $265; 15 tons, $280; 16 tons, $295; 17 tons, $305; and 18 tons, $315). Raises the registration fees for truck tractors, road trucks or motor trucks that are registered like cars to: 3 tons, less than 7 years old ($150); 9 years ($120); less than 12 years ($100) and more than 12 years ($50); for trucks that exceed 3 tons: under 4 tons ($165); under 5 tons ($180); under 6 tons ($195); under 7 tons ($215); under 8 tons ($220); under 9 tons ($225) Other fees: Increases other title registration fees to $20 with $10. Other: Includes several studies.

        Signed by the Governor

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