Branstad's new property tax plan and other Condition of the State news (updated)

Governor Terry Branstad just finished delivering his annual Condition of the State speech to Iowa House and Senate members. He unveiled a new property tax reform plan, which would cut commercial property taxes by 20 percent over four years. Previously the governor had called for cutting commercial property taxes by 40 percent. Branstad also urged legislators to approve the key points of education reform proposals he released yesterday. Finally, he outlined three policies that, in his view, would help Iowa become the healthiest state in the country.

Links and more details are after the jump. I will update this post later with more information and reaction. The video of Branstad's speech will be available on and will be broadcast statewide on Iowa Public Television at 6:30 pm on January 16.

Branstad started by taking credit for Iowa's strong fiscal condition and an unemployment rate now lower than it has been in four years. He then discussed three major policy areas. O.Kay Henderson reported for Radio Iowa,

The first was economic development and primarily his plan to cut commercial property taxes by 20 percent over the next four years. That is half of what Branstad recommended last year.  Under Branstad's new proposal, the state would send millions to city and county governments to make up for the lost property tax payments from commercial property owners.  In the fourth year, when the 20 percent cut would be fully implemented, the governor would commit $400 million in state money for local governments.  

The governor also wants limits on the tax increases for other classes property - homes, farms and industrial property. He would limit potential property tax increases to two percent for all property in Iowa.  Currently, there's a four percent limit on property tax increases, but just for residential properties and ag land.

On education reform, Branstad's remarks tracked closely to what he outlined yesterday.

It includes raising beginning teacher pay to $35,000 and providing more money to teachers who take on more responsibility to be a mentor to others. [...]

While the plan doesn't directly link teacher pay to student test scores, it does call for incorporating the performance of a teacher's class or a principal's entire school in annual evaluations.

The governor proposes providing up to $20,000 in tuition grants to college students who pledge to teach in Iowa for five years. The plan calls for first-year teachers to have both a mentor and a lighter course-load - similar to the "residency" required for medical doctors. [...]

The entire package would be phased-in over five years and, in the fifth year, would require $187 million more dollars in state spending. In the first year, it will require spending just $14 million, according to the governor. [...]

Another proposal included in the reform package calls for boosting a current state program that provides on-line classes in advanced science and math classes. There currently are long waiting lists from high schoolers hoping to take the courses, because those classes aren't being taught in their local district.

Branstad's education director, Jason Glass, suggested the plan would make Iowa's "good" schools into "world class" schools. [...]

According to Glass, legislators need to rework a long-standing grant program that finances literacy classes in schools, to incorporate some of the requirements laid out in a law passed last year that calls for ensuring third graders can read at their grade level before they move on to fourth grade.

Branstad emphasized that we need to encourage more of our strong students to become teachers and to stay in Iowa.

Toward the end of his speech to lawmakers, Branstad promoted three policies that would help make Iowa the "healthiest state" by encouraging doctors to live and work in Iowa. The first would allocate $2 million to support medical residency programs in Iowa. Branstad also wants $2 million to launch the rural physician loan repayment program and expand it to include emergency medicine doctors and OB/GYNs. Finally, Branstad called for steps to prevent "frivolous lawsuits" against doctors and cap non-economic damages (that is, punitive rather than compensatory damages) in malpractice cases. Tort reform is one of those conservative proposals with very little evidence backing it up.

I find it disappointing that the governor didn't say more about reducing poverty in Iowa and child poverty in particular. Better child nutrition would improve student achievement and go a long way toward making Iowa a healthier state. We have a record number of Iowans behind on their heating bills. Branstad talks so often about business tax cuts. Where is the sense of urgency to help the people who are barely getting by?

Senate Majority Leader Mike Gronstal spoke briefly to Iowa Public Television's Dean Borg after Branstad's speech today. He said Senate Democrats want to increase funding for K-12 education and took issue with the governor's efforts to restrict local governments. Regarding property tax cuts, Gronstal pointed out that under Branstad's plan, two-thirds of the money businesses save would go out of state. Senate Democrats have pushed for property tax cuts that target most of the help to small businesses based in Iowa.

UPDATE: After the speech, journalists including Iowa Public Television's Borg and WHO-TV's Dave Price commented that it was a noticeably quiet Condition of the State speech, with fewer interruptions for applause than usual. Branstad's not an electrifying orator, but I think that statehouse Republicans were so excited in 2011 to have a governor from their party for the first time in 12 years. In 2012 they were still fired up, expecting to win control of the Iowa Senate later that year. Now they are less excited about what Branstad's promising, knowing that a repeat of last session's stalemate is likely.

Todd Dorman analyzed the speech for the Cedar Rapids Gazette:

It was taxing, at times, with variations of "tax" or "taxes" mentioned 30 times, with "property taxes" garnering 18 alone. It was educational, with "education" and "schools" getting 17 each. "Job"/"Jobs" was uttered 15 times.

"History" beat the "future" 7-6. "Best" drubbed "worst" 12-0. Best education, best students, best in the world, best financial position, etc. Big speeches are no time for modesty. [...]

His hefty laundry list even came with a trip or two through the spin cycle. Branstad said Iowa has created 100,000 jobs, failing to note that it's really 23,000 or so when you subtract jobs lost. Gross, net, whatever. Let the economists sort it out. [...]

It's certain that, as I type, lawmakers are sifting through the details of the $6.5 billion FY 14 budget plan Branstad delivered before his speech. And they're finding stuff they do not like. Not at all. Both parties.

And, really, condition of the state speeches are similar to another annual ritual, the Governor's Charity Steer Show. In this case, the governor trots out his prize proposals, shows them around the ring and then hands them over to the Legislature. He takes one last wistful glance at them before he departs.

I agree 100 percent with the statement from the Iowa Fiscal Partnership (a collaboration of the Iowa Policy Project and the Child & Family Policy Center).

"Governor Branstad's speech today missed an opportunity to bring a spotlight to several critical issues," said Peter Fisher, research director of the nonpartisan Iowa Policy Project and co-director of the Iowa Fiscal Partnership.

"Indeed, the legacy that the Governor and lawmakers must confront is that of unfinished business to address fairness in our tax code, to improve the stability of revenue sources, and to restore and enhance services cut over the past several years. It remains to be seen how this legislative session might take us closer to that.

"First, the Governor was silent on a priority issue for low- and moderate-income working families, expansion of Iowa's Earned Income Tax Credit (EITC). Iowa's meager EITC must be the starting place for tax reform, and new corporate breaks must be last. Corporate tax credits in Iowa are excessive and unaccountable, and the Governor did not offer a solution to the giveaway mindset that dominates Iowa public policy toward corporations.

"Significant reform of tax-increment financing (TIF) is essential as part of any change in the commercial property-tax structure. The Governor in the past and again today obscured the reality of Iowa's overall low tax rates on business. We need to see promotion of this point rather than denial of it.

"The decision to put off education funding decisions until after reform assures difficulty in budgeting for local school boards across the state. New initiatives will take new money; that is not necessarily what the Governor is offering. We need to see whether there is a greater investment in education - which has been held back - or a shift of funds from ongoing needs to new areas of emphasis within education."

Senate Majority Leader Gronstal and Iowa House Minority Leader Kevin McCarthy spoke to Radio Iowa's O.Kay Henderson about education spending.

Democrats fault Branstad's education spending plan for being too lean. According to state law, the level of general state support of K-through-12 public schools is to be set about 18 months before a school year starts - yet Gronstal notes Iowa schools still don't know how much state taxpayer support they'll get for the school year that starts this July 1.

"We think the governor should follow the law he signed until somebody changes the law he signed," Gronstal says.

House Democratic Leader McCarthy says the "low point" of Branstad's speech was his ultimatum over school finance issues.

"What I took away from the speech is: 'We're going to violate the law. We're not going to fund our schools. Schools are going to send layoff notices unless you pass my bill.' In other words: 'It's my way or the highway,'" McCarthy says. "I think usually on the first day of session we try to start off in a little bit more bipartisan tone, at least on the signature proposals."

Branstad's budget plan calls for a status quo state spending level on schools, although the governor does call for giving schools $14 million more in the coming year to finance some of his education reform ideas, like boosting beginning teacher pay. Senator Gronstal says that's far from adequate.

"This is really a historic retreat in terms of support for public education, not a committment to public education," Gronstal says.

After the speech, the Iowa Senate released this statement from Senate Judiciary Committee Chair Rob Hogg (emphasis in original):

Correcting Governor's oversight on mental health, public safety

Senate Judiciary Committee hearings

will address topic next week

Statement by Senator Rob Hogg (Cedar Rapids), Chair of the Senate Judiciary Committee

"In a 3,769 word speech, the Governor did not utter the words 'mental health.'  This is a huge oversight when mental health services are in jeopardy statewide and we are trying to reform the mental health system.

"Mental health care is a major statewide public safety issue and is my top priority as chairman of the Senate Judiciary Committee.  On January 22, our committee will hear from law enforcement officers and a nonprofit that works on suicide prevention about ways we can address mental health and keep Iowans safe."

Outgoing Iowa Democratic Party Chair Sue Dvorsky released this statement:

Governor Branstad Continues to Strike an Out-of-Touch Chord

Statement from IDP Chair Sue Dvorsky on Governor Branstad's 'Condition of the State'

Des Moines - Sue Dvorsky, Chair of the Iowa Democratic Party, released the following statement following Governor Terry Branstad's remarks during today's Condition of the State:

"While The Iowa Democratic Party agrees that Iowa has tremendous opportunity to grow, Governor Branstad's plan -- as he laid it out today -- continues to strike an out-of-touch chord on key issues that the majority of Iowans are concerned with. Most notably, he failed to address ways to increase Iowans access to healthcare, he provided merely a status-quo approach to job creation, he did not discuss tax cuts for working Iowa families, and, perhaps worst of all, the governor offered a major retreat on the state's commitment to Iowa school children.

"In two years, Governor Branstad has failed to put forth a budget plan that adequately funds the type of environment which supports teacher development and increases student achievement. His announcement today that we do away with allowable growth only continues this trend of a sharp decline in funding for K-12 education.

"There are ways to capitalize on the full state treasury which would support Iowa's efforts to advance education policy and simultaneously grow the Iowa's workforce and, thus, support the middle class. If the Governor wants to retain students and create jobs, a stronger commitment to public -- and higher -- education is something the governor should consider as a core priority of his administration. So far his record on education has not matched his rhetoric and it sends a very discouraging message to Iowans about his commitment to advancing this issue in a meaningful way."

SECOND UPDATE: I couldn't agree more with this part of the Des Moines Register's editorial response to Branstad's speech:

In his health care initiative, the governor again talked about making Iowa the healthiest state in the nation, but he was not clear how that will happen. There is little the state can do about lifestyle choices that lead to poor health, especially for people who lack health insurance.

Yet, Branstad opposes adding 150,000 low-income Iowans to the Medicaid program, which Congress expanded and will mostly pay for in the Affordable Care Act. It is hard to see how Iowa can hope to become the healthiest state in the nation until every Iowan has reasonable access to health care.

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