The I-JOBS infrastructure bonding initiative helped fund more than 1,600 infrastructure projects around Iowa during the “Great Recession.” From the beginning, Republicans have used misleading rhetoric to make their case against I-JOBS. Terry Branstad and GOP lawmakers exaggerated the initiative’s costs and understated its benefits repeatedly during the 2010 campaign.
Now some Iowa Senate candidates are putting lies about I-JOBS at the center of their radio advertising.
Background: I-JOBS involved $875 million for infrastructure projects in 2009 and 2010, of which $65 million came from non-bonded sources and $810 million came from selling state bonds. I-JOBS targeted funding to the following areas:
* $185 million for improvements at community colleges, corrections facilities, and the Iowa Veterans Home;
* $100 billion for other state infrastructure, including at state parks;
* $118.5 million for reconstrction of local public buildings and flood control or prevention;
* $46.5 for flood recovery projects in Linn County and for fire stations in three other communities affected by flooding in 2008;
* $50 million for the Bridge Safety Fund to be used on obsolete or structurally deficient bridges;
* $3 million on studies and capital improvements related to passenger rail;
* $3.5 million for building and improving recreational trails;
* $1.5 million to improve railroad infrastructure, including money to repair railroad bridges damaged during the 2008 floods;
* $750,000 for infrastructure at Iowa airports;
* $1.25 million for the Public Transit Infrastructure Grant Fund;
* $10 million for competitive grants to fund road and street improvements in cities and counties;
* $45 million distributed among all Iowa cities and counties for road repairs and maintenance;
* $100 million to rebuild facilities on the University of Iowa campus that flooded in 2008;
* $15 million for a new veterinary hospital lab at Iowa State University;
* $35 million for sewer construction in small communities;
* $20 million for other local water improvement projects;
* $25 million for soil conservation, flood prevention, and other water quality projects;
* $20 million for affordable housing;
* $10 million for shelters serving homeless or abused Iowans, or Iowans needing protection from extreme weather;
* $5 million to fix homes damaged during the 2008 floods; and
* $35 million on telecommunications and renewable energy projects.
The I-JOBS bonding leveraged hundreds of millions more dollars in federal, state, local, and private funding for the infrastructure projects. For instance, the $100 million designated for flood recovery on the University of Iowa campus unlocked nearly $500 million in federal funding to repair those buildings.
Republicans argued that Iowa should pursue infrastructure projects only on a “pay as you go” basis, as if millions of Americans don’t borrow to buy homes or expand businesses all the time. Borrowing at a time of historically low interest rates made sense and produced some social goods that will last for decades.
Even taking into account the I-JOBS bonding, Iowa’s per capita state debt remained low by national standards. Given the poor condition of our bridges, I would argue that Iowa hasn’t borrowed enough for infrastructure projects over the past several decades, but that’s a topic for another day.
When Iowa House and Senate Democrats approved the I-JOBS program in April 2009, the cost of repaying the bonds was estimated at $1.7 billion. However, strong investor demand drove down the interest rate when most of the I-JOBS bonds were sold in July 2009. The lower rates reduced the long-term borrowing costs to about $1.1 billion.
The State budgeted $55 million annually from existing gaming revenue to finance the I-JOBS bonds without a tax increase. However, due to Iowa’s AAA bond rating from Standard & Poor’s, overall strong financial position, and the structure of the bonds, the annual debt service on the bonds will be approximately $43.2 million, which is funded by existing state gaming revenues.
It’s important to note that the I-JOBS bonds are being repaid with gambling revenues, not appropriations from the state of Iowa’s general fund.
Two Democrats who served in the Iowa House in 2009 are now running for competitive open Senate seats in northeast Iowa: John Beard in Senate district 28 and Nate Willems in Senate district 48. Their Republican opponents Michael Breitbach and Dan Zumbach are highlighting the I-JOBS vote in radio commercials:
“State legislators voted for the I-JOBS debt plan. They put Iowa families on the hook for 25 years and more than $1 billion,” one ad says.
“They put Iowa families in debt for 20 years to the tune of $1 billion,” says another ad.
Two ads, two races, with a nearly identical message. I-JOBS was a bad program and cost too much money.
Former State Senator Bill Heckroth, who is running in the open Iowa House district 63, was incensed by the radio ads.
I could not believe the number of political ads I heard on behalf of Republican Iowa Legislative candidates which were out-and-out lies related to the I-JOBS bonds. […]
If you talk to any business person…and they set their politics aside…they will tell you that they would have done the same thing for their own business. At the time, we had almost record low bond interest rates. So, to utilize bonds and lock in great, low rates was a terrific job of managing our state’s finances.
The first “false statement” being made about this “debt” is that it left the taxpayers of Iowa with this huge future burden. In fact, the ads I heard today actually claim that every Iowa taxpayer is on the hook for $1,000 of debt that has to be paid by our taxes. This is simply an out-and-out lie!! […] [Neither] The “general fund”, nor future tax revenues are being used nor will ever have to be used to pay off these bonds. Unless you are contributing to the gambling revenues, you are NOT paying for these bonds.
The 2nd “false statement” that is being made about the I-Jobs funding is that this money and these projects “created no new jobs”. WOW…how is that for a distortion of the facts. Tell that to the thousands of hard-working Iowans who took home regular paychecks from these jobs so they could pay their mortgage and feed their families.
Governor Chet Culver originally predicted that I-JOBS would create more than 20,000 jobs during the recession. Iowa State University economist Dave Swenson estimated the bonding would create about 4,000 jobs. According to a 2010 report by the Iowa Department of Management, “For the month of June [2010] alone, I-JOBS has created or retained 7,079 jobs. That number doesn’t count indirect jobs created or retained (such as employees who make asphalt purchased for road projects) or induced jobs (such as a restaurant that benefits from a nearby I-JOBS project).”
You can argue that I-JOBS didn’t create enough jobs or fund enough worthwhile projects to justify the long-term borrowing costs, but you can’t credibly claim that the infrastructure projects added nothing to local economies.
Unfortunately, I suspect that many listeners will believe that I-JOBS accomplished nothing and forced their families to repay the debt.
KWWL.com in Waterloo did a half-hearted fact check of the radio ads (although the story incorrectly stated that the bonds will cost $55 million per year to repay).
“If you take three million people in Iowa and an average family size of 2.8 people, a billion dollars comes down to about $1,000 per family,” said Michael Breitbach, (R) Iowa Senate 28 candidate. […]
But what about the cost to taxpayers?
“That money will be repaid with casino money, with casino revenue or fines collected by the state. So on a financial aspect of it, the idea taxpayers are on the hook is perhaps a little misleading,” said Chris Larimer, KWWL Political Analyst.
“Whether you want to split hairs on if this is gambling revenues or other types of taxes, it’s still revenue that’s coming into the state that’s being diverted away from other activities that’s instead being used to pay down on this debt,” said Breitbach.
“Casino revenue would be the primary source of servicing the debt, and liquor taxes the second. To say it’s a taxpayer burden is simply inaccurate,” Breitbach’s opponent, Democrat John Beard, said.
In typical journalistic style, KWWL downplays a flat-out lie as “a little misleading” and uses “he said, he said” to evaluate the Republican ads. But I give them credit for attempting a bit of fact-checking. In 2010, few Iowa news media made any attempt to correct inaccurate claims about I-JOBS or other falsehoods that were staples of GOP attack advertising: the so-called “billion-dollar deficit” and non-existent heated sidewalks.
Share any relevant thoughts in this thread.
P.S. Many Iowa House Republican candidates are highlighting false claims about I-JOBS and heated sidewalks in “voter guides.” Bleeding Heartland will discuss GOP direct mail in future posts.
UPDATE: Jane Jech, the GOP nominee in Iowa Senate district 36, is using the same lies in a television ad against Democratic incumbent Steve Sodders. Here is my transcript of the commercial, which is running on WHO-TV in Des Moines.
Male voice-over: When state legislators voted for the I-JOBS debt bond plan, they put Iowa families in debt for 25 years to the tune of one billion dollars.
That’s right: Steve Sodders voted to borrow one billion dollars on behalf of Iowa taxpayers. Now every Iowa family is on the hook to pay back one thousand dollars through their taxes.
Steve Sodders paid state bills with debt, rather than making the tough decisions to balance the budget.
Bottom line: Steve Sodders means more debt for us and less money in our pocket.
Four blatant lies in 30 seconds:
1. “Now every Iowa family is on the hook to pay back one thousand dollars through their taxes.” No, gambling revenues are repaying the I-JOBS debt.
2. “Steve Sodders paid state bills with debt” No, I-JOBS funded capital projects, not ongoing state expenses.
3. “rather than making the tough decisions to balance the budget.” No, Iowa’s budget has been balanced every year.
4. “Steve Sodders means more debt for us and less money in our pocket.” No, I-JOBS didn’t take any money out of any Iowan’s pocket, nor did it impose any personal debt on any citizen.
Incidentally, Senate district 36 includes Marshalltown, where I-JOBS funded major improvements at the Iowa Veterans Home.