From the Desk of Representative Chuck Soderberg

The third week of the 2008 Iowa General Assembly was primarily filled with committee meetings.  It was great to have a number of northwest Iowa groups stop at the Capitol this week to visit and share their ideas on a number of issues.  This week, I will review with you a couple key issues being discussed in the legislature.

State Agency Shares Concern with Proposed $350 Million Budget Deficit

The Director of the State Fiscal Services Agency, a non-partisan services group, provided an overview of Governor Culver’s proposed budget for FY 09 to the House Appropriations Committee.  The good news for FY 08 is that while the Revenue Estimate Conference (REC) projected a 6.9 percent growth compared to last year, actual revenue through January 28 is running 11.7 percent above last year.  The bad news is that the financial outlook for FY 09 Budget, we are working on now, is much worse.

Due to the excessive $570 million spending increase approved for FY 08 during the 2007 session, the FY 09 budget faces a $350 million budget deficit.  The Governor is recommending $332 million in tax increases and shifts of one-time money to fill his proposed budget deficit.  If adopted, his recommendations will create an even bigger problem in the FY 2010 budget.  Here are his recommendations:

Ø      $75 million tax increase on businesses that use the combined corporate tax reporting method

Ø      Shifting and spending $90 million from Infrastructure Fund to general fund

Ø      Spending one-time taxable bond proceeds of $67 million from a third series of tobacco bonds

Ø      One-time transfer and spending of $36 million from the Healthy Iowans Tobacco Trust

Ø      Bottle bill tax increase of $34.7 million for the 2 cent increase on cans and bottles

Ø      Court fine collections increase of $18 million

Ø      State collection of $5 million in expired consumer gift cards

Ø      Miscellaneous transfers $6.6 million for workforce development and child care

The Fiscal Services Director also indicated the Senior Living Trust Fund will be depleted in FY 09 if the proposed budget is adopted.  The Governor’s budget can be found on the Iowa General Assembly website: http://staffweb.legis.state.ia.us/lfb/docs/BudgAnalysis/BudgAnalysis.htm.  

Combining last year’s actual spending increase with this year’s proposal, the state government will increase spending by more than $1 billion.  That is a $1 billion spending increase in two years, or a 20 percent increase over a two-year period.  I will not support a budget that is not sustainable, does not limit spending, and does not protect our reserve funds.

What Could The Climate Change Initiatives Cost Us?

The Chair of the Iowa Climate Change Advisory Council (ICCAC), Jerald Schnoor, presented information this week to the Environmental Protection Committee on global climate change and Iowa’s efforts to respond to it.  This group is expected to recommend reducing Iowa’s green house gas emissions by 60% to 80% by 2050.  The discussion is occurring at the Capitol to assess whether climate change is primarily a natural occurring cycle of the earth, caused by man and what cost implications might be to Iowans.

If the ICCAC greenhouse gas reduction recommendations are implemented, many are concerned there will very likely be a significant adverse economic cost to Iowans.  An Iowa Policy Project paper just released titled “A Climate Policy Challenge:  Minimizing Impacts on Low-Income Iowans” states that efforts to fight climate change by reducing greenhouse gas emissions will impose a significant economic hardship particularly on the poorest 25% of Iowa’s population.  This report also states that out-of-pocket home heating expenses have soared from just over 4% of household budgets in 2002, to nearly 12% this past year. 

The report also concludes that to accomplish a modest 15% reduction of the greenhouse gases would cost the poorest 20% of Iowans an additional $750-$950 per year.  As mentioned earlier, some are suggesting a total reduction of 60% to 80%, carrying a big price tag for Iowans.  Mr. Schnoor acknowledged that Iowans might face financial “challenges” from these efforts.

Another report was just released by the federal government’s non-partisan Congressional Research Service concluding that efforts to reduce our greenhouse gas emissions will come at a very significant cost and may more than double our electric bills.  The reoccurring climate change discussion at the Capitol is an indication the Majority Party is intending to move legislation on this issue.  If passed, we would all be required to pay for and make significant changes to our future lifestyles in order to reduce future greenhouse gas emissions. 

Please share your thoughts with me on this issue?

Federal 2008 Economic Stimulus Package – Bonus Depreciation is a Key Piece

The United States House and Senate are working on a $150 billion economic stimulus package.  The stimulus package includes tax rebates for individuals and a 50% bonus depreciation schedule for property acquired by businesses during 2008.  State Legislative Leaders from both parties have assured Iowans that the rebates will be exempted from state income taxation.

On February 2^nd, Senator Mulder and I are holding joint Legislative Forums at the Le Mars Public Library beginning at 9:15am and the Akron Public Library beginning at 11:00am.  On February 9^th, we will be holding joint Legislative Forums at the Orange City City Hall beginning at 9:00am and the Maurice Community Center/Firestation beginning at 11:00am.  I hope to see you all there to discuss these and other issues. 

If you have any questions, comments or know someone who would like to receive my electronic newsletter via email, please feel free to reach me during the week at (515)-281-3221, on weekends at (712)-546-6136 or email me at Chuck.Soderberg@legis.state.ia.us.