# State Borrowing



Iowa third-worst state for deficient bridges

“The Unsafe Bridges of Iowa Counties” wouldn’t be an appealing feature film, but it could be an appropriate subject for a documentary. The Transportation for America coalition released a report today on the state of bridges in the U.S., and the results are not pretty for Iowa. Nationwide, “69,223 bridges – 11.5 percent of total highway bridges in the U.S. – are classified as ‘structurally deficient,’ requiring significant maintenance, rehabilitation or replacement.” Table 1 and Appendix A of the full report (pdf) rank the states by percentage of structurally deficient bridges. Iowa’s percentage is nearly twice the national average: 21.7 percent of our state’s bridges are deficient. Only Pennsylvania and Oklahoma scored worse on this metric. Iowa is among just five states in which more than 20 percent of bridges are structurally deficient.

Appendix B shows the two busiest structurally deficient bridges in each state. In Iowa, those are an I-80/I-35 bridge over a drainage ditch in Polk County (average daily traffic 82,100 vehicles) and an I-29 bridge over the Floyd River in Woodbury County (average daily traffic 42,100 vehicles).

Appendix C shows the 100 worst counties nationwide in terms of percentage of deficient bridges. Iowa has 17 counties on this list, more than any other state.

Iowa has an unusually large number of towns and more road miles per capita than any other state, to my knowledge. Historically, our state’s political leaders have been reluctant to borrow to pay for infrastructure needs, which explains Iowa’s relatively low debt load and the furious Republican reaction to the last administration’s I-JOBS infrastructure bonding initiative. Some states routinely borrow to cover infrastructure projects, including our neighbor to the north. I wonder if Minnesota’s much larger state borrowing than Iowa over the years is one reason the state does relatively well in Transportation for America’s report (8.8 percent of bridges in the state are structurally deficient).

In the past, federal highway money has gone predominantly toward building new roads. The Transportation for America report advocates more federal assistance to states for fixing roads and bridges:

Allowing roads and bridges to slip into disrepair ultimately costs state and local governments billions more than the cost of regular, timely repair. Over a 25-year period, deferring maintenance of bridges and highways can cost three times as much as preventative repairs. The backlog also increases safety risks, hinders economic prosperity and significantly burdens taxpayers.

Preservation efforts can also extend the expected service life of a road for an additional 18 years, preventing the need for major reconstruction or replacement.4 In addition to the safety imperative, investing in the construction, expansion and repair of our nation’s transportation infrastructure creates jobs today while laying the foundation for long- term economic prosperity. Repair work on roads and bridges generates 16 percent more jobs than construction of new bridges and roads.5

A recent report on the use of federal stimulus funds for transportation showed that maintenance projects created more jobs per dollar spent than new road construction.

Transportation for America’s full report is here. After the jump I’ve posted the 17 Iowa counties that made Appendix C (worst 100 counties nationwide) and the percentage of deficient bridges in each. I also posted an excerpt from the report explaining the criteria for naming a bridge “structurally deficient.”

This page at Transportation for America’s website includes a map and chart with information about all 99 Iowa counties: number of bridges, number of structurally deficient bridges, percent of bridges that are structurally deficient, bridge average annual daily traffic and average daily traffic on structurally deficient bridges. After the jump I’ve posted an excerpt from that page showing Iowa’s five best and five worst counties in this area.

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Republican hypocrisy watch: Pawlenty and Culver edition (updated)

Minnesota Governor Tim Pawlenty toured eastern Iowa over the weekend to raise money for several Iowa House Republican leaders and state Senate candidate Bill Dix. It was his fourth Iowa trip during the past year. Since Pawlenty is laying the groundwork for a future presidential bid, journalists covering his latest visit focused on what he is doing for Iowa Republicans, as well as his views on foreign policy, government spending and the economy.

I’m more interested in the way Iowa Republicans embraced Pawlenty. Naturally, they liked his message about retaking the state legislature, and GOP House leaders can really use the campaign cash. But it’s surreal to watch Republicans promise their serious consideration for Pawlenty as a presidential candidate when you compare his record with the case conservatives make against Iowa Governor Chet Culver.

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Exploring Paul McKinley's fantasy world

If Iowa Senate Minority Leader Paul McKinley believes the spin he serves up to journalists and the Republican Party faithful, he must have an active imagination.

I don’t know which is most detached from reality: McKinley’s take on Iowa’s finances, his views on “state sovereignty” or his election predictions.

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Don't believe everything Republicans tell you about I-JOBS

Iowa Republicans have been throwing around misleading talking points about the I-JOBS program since the Iowa legislature approved the infrastructure bonding initiative last spring. I’m still waiting for Republicans to address some basic questions, like where would they have found $45 million for flood recovery efforts in Linn County without I-JOBS? What was their plan for repairing ten flood-damaged structures at the University of Iowa, if they didn’t want to issue $100 million in state bonds to leverage $500 million in federal funds to rebuild the campus?

Some Republicans have called for delaying infrastructure projects until we have enough cash to pay for them up front, but Iowa’s worst-ever flooding hit the state during the most severe national recession since World War II. There was no realistic way to pay for flood recovery efforts without state borrowing. Even David Yepsen, a notorious skeptic about state spending, could see that. During the summer of 2008, Iowa State University economist Dave Swenson pointed out, “When you borrow money, that allows you to fix things as quickly as possible,” he said. “You can’t move as quickly on a ‘pay-as-you go’ basis.” Yet every Republican in the legislature voted against borrowing money to repair the damage from the devastating 2008 floods.

In addition to the flood recovery funds allocated to Linn County and the University of Iowa, the I-JOBS program included $118.5 million for “reconstruction of local public buildings and flood control prevention,” to be awarded by competitive grants. It wasn’t enough to fully meet local infrastructure needs across the state; requests for that portion of the I-JOBS money totaled $333.6 million. But it was a good start.

Republicans recently seized on a new talking point: some I-JOBS money is supposedly being spent on projects unrelated to disaster recovery. By way of example, State Representative Pat Grassley mentioned the community center in the Des Moines suburb of Windsor Heights. I contacted Windsor Heights City Manager Marketa George Oliver about this allegation, and she forwarded a copy of a letter from Mayor Jerry Sullivan to Grassley. You can view the whole letter here, but the small print is hard to read, so here’s the relevant excerpt (emphasis in original):

The City is currently constructing a new Community Center. The structure that used to be in [Colby Park] at this location was originally built in a flood plain and was repeatedly flooded. It sustained flood damage year after year and flood after flood. The new structure is being built out of the flood plain and protected from any future flooding, mitigating the effects of a natural disaster. The Center, once finished, will be a heating/cooling facility in the event of prolonged power outages, which is much-needed in our region. In the event of natural disasters, it will also be available as temporary housing. […]

The I-Jobs program gave us the ability to make a substantial investment in mitigating and responding to natural disasters. The program was also able to support our efforts in a timely manner, unlike many other grants programs.

Oliver explained to me that a heating/cooling center is a place residents without power can go during a cold spell or dangerous heat wave.

Republicans will continue to attack the I-JOBS program during this year’s campaigns for governor and state legislature. Democrats need to be ready to defend these infrastructure investments, because journalists will sometimes pass along ill-informed claims like Grassley’s without providing context or an opposing view. In addition, some Republican candidates may falsely suggest that I-JOBS pays for ongoing spending programs instead of capital projects, like bridge and sewer repairs. Maybe they are thinking of Republican Terry Branstad, who borrowed money to solve the state’s cash flow problems in 1992.

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Republicans trying to have it both ways on I-JOBS

Attacking Governor Chet Culver’s I-JOBS infrastructure bonding initiative continues to be a staple of Republican Party rhetoric. I’ve written about the GOP’s misleading talking points before, but State Representative Chris Rants added a new twist at last night’s fundraising dinner in Scott County. Not long ago, Rants altered his stump speech to complain about Sergeant Bluff receiving an I-JOBS grant while Culver’s recent across-the-board budget cuts will cost the community a larger amount. Speaking to a crowd of 300 in Bettendorf, Rants put a local spin on this story:

Rants began his remarks by sharing the story about Lt. Governor Patty Judge coming to Sergeant Bluff, a town that Rants represents, to give them an I-Jobs grant to refurbish the city hall. Rants then told the audience, “What Patty Judge giveth, Chet Culver taketh away.” Rants then told the crowd that Culver’s fiscal mismanagement will force the Sergeant Bluff school district to increase property taxes by over $400,000.

Rants then asked if anyone in the room knew what Governor Culver’s budget cuts were going to cost the property tax payers in the Davenport School district. Rants informed them that the cost will be $7.6 million. He also drove home the point that, while Sergeant Bluff received $250,000 I-Jobs grant to remodel their city hall, the city of Davenport has not received any I-Jobs money for its big sewer project. Rants’ ability to talk about local issues played well with the audience. Of all the candidate speeches, Rants was the one candidate who grabbed everyone’s attention.

It is clever for Rants to capitalize on local resentment about I-JOBS. Although entities in Scott County have received more than $5 million in I-JOBS grants, officials in the Quad City area have understandably been frustrated by the lack of I-JOBS support for Davenport’s sewer and flood prevention projects.

What Rants glosses over is that without I-JOBS, unmet needs for infrastructure improvements would be even greater. The I-JOBS program includes $118.5 million for flood prevention and reconstructing buildings in communities affected by last year’s flooding. But requests for that portion of the I-JOBS money totaled $333.6 million.

I-JOBS allocated $80 million for water quality improvements, including sewer construction and repair. Substandard and outdated sewer systems are a huge environmental problem in Iowa, as the Des Moines Register’s Perry Beeman and Chase Davis chronicled last week here and here. Iowa has more than 500 unsewered communities. At least I-JOBS and the federal stimulus package will help make a dent in this problem.

Rants wants to have it both ways, criticizing Culver for borrowing while claiming the governor’s program hasn’t done enough for Scott County. If Republicans in Congress and the state legislature had had their way, Iowa cities and towns would not be getting any help this year for improving their sewage systems.

I have yet to hear Rants or any Republican candidate explain how they would have paid for flood recovery projects without state borrowing. For instance, I-JOBS included $100 million targeted for the University of Iowa, which unlocked $500 million in federal funding to help rebuild flood-damaged buildings on campus. How would Republicans have addressed this problem? Would they have turned down the federal funding, and if not, where would they have found $100 million to match the federal dollars?

Linn County received $45 million from I-JOBS for flood recovery. That’s in addition to money raised from the local-option sales tax (which most Republicans opposed). How would Republican candidates have paid for flood recovery in the Cedar Rapids area without I-JOBS?

Terry Branstad’s criticism of I-JOBS reaches a special level of hypocrisy. He asserted on Saturday night, “Too much debt is bad and those that create it should be thrown out of office.” But while he was governor, Branstad used state bonding several times, and his total borrowing in inflation-adjusted dollars was larger than the I-JOBS program. After the jump I’ve posted a press release from the Iowa Democratic Party, which contains more details about Branstad’s use of state bonding.

It’s also worth noting that interest rates are currently near historic lows. That, coupled with Iowa’s rock-solid bond rating, reduced the cost of the I-JOBS borrowing. I would wager that the state had to pay higher interest rates on bonds issued while Branstad was governor.

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Comparing Branstad and Culver: budgets and floods

I stand by my prediction that former Governor Terry Branstad will not seek his old job again, but I can’t resist responding to these comments by Republican blogger Constitution Daily:

Now back to Branstad, his credentials as a governor are amazingly good. He governed during the farm crisis and floods of 1993, all while balancing a budget and even having a surplus. […]

Branstad against Culver will be a great campaign. Culver has shown no leadership skills even within his own Party. The flood will be a defining issue. Branstad led us through that with ease where Culver still has us wading through the muck. Culver has no excuses and no one to shift blame to. This is a big advantage for Branstad.

Also with Culver, the budget is massively in the red. Whether or not you agree, the perception is that Branstad always had a balanced budget and didn’t grow government. That is what people want and dream of returning to. Can you imagine the debates between the two? How would Branstad not come out smelling like a rose not just on rhetoric but actual experience?

If Constitution Daily is old enough to have been politically aware during Branstad’s tenure, he is suffering from serious memory loss. I’ll explain why after the jump.

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I-JOBS bonds sold well, will cost less to repay

Most of the bonds that will fund the I-JOBS program were sold this week, and Iowa’s solid credit rating fueled strong investor interest. According to State Treasurer Michael Fitzgerald,

investor enthusiasm and high market demand for the Iowa bonds helped drive down the interest rate to 4.31 percent, which resulted in a $42 million yearly payback for the state and a roughly $12 million annual savings over what originally was budgeted to repay the borrowing. […]

“Investors were impressed with the state of Iowa and put their money on the table to show it. There was strong support for the bonds from Iowans and from national institutional investors,” he added.

“This is where our balanced budget, our surpluses that we have and our history of running the state – we’re not California or even Minnesota or Wisconsin or New York right now. All those states are having trouble and we’re doing well,” the state treasurer said. “In fact, one of the investment bankers said Iowa is a refreshing contrast to the other states that have been coming to the market.”

Over $600 million of the I-JOBS bonds have now been sold. Another $115 million of bonds will be issued in 2010.

Speaking to me by phone today, Fitzgerald explained that the I-JOBS bonds are rated AA (a notch lower than the state of Iowa) because they will be repaid out of gaming revenues. We would have had to issue A-grade bonds if Iowa were like other states, which have exhausted their reserve funds and are borrowing simply to meet budget obligations. Investors liked the fact that the I-JOBS bonds will fund capital improvements and not ongoing government spending, Fitzgerald said.

Republicans like Iowa House minority leader Kraig Paulsen and Iowa Senate minority leader Paul McKinley have discounted the importance of Iowa’s AAA bond rating. It’s clear today how wrong they were. If Iowa’s overall financial condition were not strong enough to warrant the AAA bond rating, repaying the I-JOBS bonds would cost $55 million annually instead of $43 million.

A press release from the governor’s office noted that Iowa is among just 11 states that have a AAA bond rating. I’ve posted the full text of that release after the jump.

Once the proceeds from the I-JOBS bonds come through next week, funds will be available for various infrastructure projects, from renovating the Iowa Veteran’s Home in Marshalltown to rebuilding flood-damaged facilities to upgrading sewer systems around the state. Those projects will create jobs while improving the quality of life in many communities.

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I-JOBS board agrees on draft rules and timeline

The I-JOBS board met for the first time on June 3. According to this news release,

The I-Jobs Board is specifically tasked with awarding approximately $165 million of funds from the I-Jobs program. Of  that amount, $46.5 million is earmarked for projects in Linn County, Cedar Rapids, Palo, Elkader and Charles City. The  remaining $118.5 million will be available on a competitive basis to support the construction of projects relating to  disaster relief, mitigation and local infrastructure.

The board approved this tentative timetable for allocating the money. The key date is August 3, when applications are due. As Governor Chet Culver’s deputy chief of staff Phil Roeder told Iowa Independent,

“Everyone in the administration understands that with I-JOBS, time is of the essence,” Roeder said. “In order to have impact on the economy, we have to move quickly.”

I was pleased to see Roeder highlight the importance of transparency for the I-JOBS program. The administration is creating a website that supposedly will allow the public to track how money is being spent. I strongly agree with Kathleen Richardson, director of Iowa Freedom of Information Council, who emphasized the need for the I-JOBS board to follow open meetings rules as well.

Citizens can find draft rules for the I-JOBS program here. You can send comments about these rules to ijobs@iowa.gov.

Meanwhile, Iowa Republicans continue to bring out their misleading talking points, such as this Twitter comment from IowaGOP,

Culver keeps pumping I-JOBS (1st mtg. today.) But how will it help create and keep long-term jobs in IA? Still haven’t heard.

How the program will create jobs should be obvious when you read which kinds of construction projects are eligible for the money (such as roads, bridges, sewers, repairing flood-damaged structures). As for how these public works will keep jobs in Iowa, what part of “quality of life” do Republicans not understand? Also, expanding broadband access in rural areas will allow more Iowans to operate internet-based businesses.

Even Iowa State Economics Professor David Swenson, whom Republicans like to quote on this subject, estimates that the I-JOBS program will create around 4,050 jobs.

Funny, Iowa Republicans don’t acknowledge Swenson’s insight when it comes to ending federal deductibility, which he considers an “archaic holdover” in our state’s tax system. But that’s a point for another post.

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