Capitol Update

Problems Continue to Plague Unopened Fort Madison Prison

Over a year after the Iowa State Penitentiary at Fort Madison was scheduled to open, the prison sits empty. Guards patrol the perimeter and inside of the buildings, lights are on and electric bills are being paid but there is still no set date to transfer prisoners. As costs continue to rise, the House Oversight Committee continues to seek answers and find solutions to this seemingly endless problem.

After two inmates escaped the maximum security prison in 2005, plans were created for a new, state of the art prison. In 2008, the estimated construction cost of the prison was

$130.7 million, and in October of 2013 a ribbon cutting was held. Since that time the new prison has faced multiple equipment problems and design flaws that have prevented the prison from being occupied.

In late 2013, prison officials found problems with the geothermal system. Pumps installed with the geothermal system were found to be the wrong size in many buildings and corrective changes had to be made. These changes could cost the state $6.7 million. As of today, the geothermal systems have been fixed and Department of Corrections Officials believe they will continue to work.

After geothermal issues were fixed, the prison failed a required smoke evacuation test. In order to receive a certificate of occupation from the fire marshal, smoke must be able to be cleared through the ventilation system. Unlike a regular building, windows cannot simply be opened in a prison to clear smoke. The solution for this problem has yet to be found, but approximately $350,000 has been spent to design and test solutions. The actual cost for the fix has yet to be determined, but it is expected to be costly. It is unclear who will pay for these changes.

Two additional problems have also been brought to light in the past few months. Air leaks in some of the buildings have required water to be shut off when temperatures dropped. Officials are working to find the air leaks and a solution to the problem. As of now, there is no estimated cost for repair to these air leaks. Additionally, there are more problems with the ventilation system, separate from the smoke-clearing problems. There is no estimated time or cost for these repairs.

Almost a year and a half after the projected opening date, there is still no end in sight to the problems at Fort Madison. The House Government Oversight Committee has continued to review documents sent by the Department of Administrative Services and the Department of Corrections. Unfortunately, there is no quick solution to these problems but the Oversight committee is working to ensure these issues never happen again in a public project and that the parties responsible for these problems cover the costs and not the Iowa taxpayer.

Prayer in the House

Many of you have contacted me in the last few weeks about a Wiccan leading the prayer in the House. A Wiccan from Cedar Rapids did present an invocation on Thursday this week. She was the guest of Rep. Liz Bennett of Linn County. I have thought a lot about this, conducted some research, and wanted to share my conclusions.

The Constitution was founded on the idea of religious freedom. The Founding Fathers recognized the importance of anyone being able to worship who or how they want. The first amendment must be upheld in situations like this.

Wiccan is a form of Paganism. Wiccans base their beliefs on living in harmony with one’s environment and community. They don’t worship devils or demons. They worship deities of earth and nature. Pagans often uphold a close relation with the earth, seeing all nature as sacred and alive with the Devine presence.

I was reminded that none of us have “rights” as legislators except by virtue of your elected office. Thus, the act of inviting someone to open the Iowa Legislature in Prayer is a privilege delegated ultimately by the citizens through the Legislature and is not a private “right” of the Representative. We are indeed REPRESENTATIVES of the people and must ask ourselves, “Does this action show respect to the faith and the will of Iowa citizens?”

How, then, should Christian legislators react? I was encouraged to walk out of the chamber before the Wiccan did her prayer, as a sign of my disapproval. However, wisdom tells me that this would have brought too much attention to this event and fuel the engines of those who would use this incident as a case for eliminating prayer all together. Supporters of the Wiccan prayer wanted Christian legislators to say no, to walk out and cause a scene. Doing that would have threatened lawsuits with goal being to get rid of the prayer all together. I do not want that.

I received an email that encouraged legislators bow their heads in silence before the Wiccan is introduced and remain in prayer to God with heads bowed during her entire prayer, asking The Lord to come against the powers of the Devil, to free the legislative process from the destructive forces of human sin, and to forgive us individually and corporately for the times we have been faithless and forgetful of His many blessings.

By being silently in prayer to God, we are bearing witness to our Faith and not causing offense to others. So that is the route I took as the Wiccan did her opening prayer.

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.state.ia.us or by phone at (515) 281-3221.

Sincerely,

Rep. Lee Hein

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Pictured  above are Iowa Corn Growers members with Rep. Quentin Stanerson and I.

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Delaware County Farm Bureau and I in the House chamber.

Capitol Update

How Much New Money Does Iowa Have to Spend in FY 2016?

When the Revenue Estimating Conference (REC) met in March, most Iowans learned that the committee had lowered the revenue estimate for the next budget year. The REC also issued a revised estimate for the current budget year, and some people are using those numbers to try and fool Iowans into believing the state has more new revenue than it actually does.

On March 19, the Revenue Estimating Conference projected that the state’s General Fund will take in $6.7674 billion through June 30, 2015. This was lower than their December 2014 estimate of $6.8571 billion, due to changes made this session in a bill aimed at matching Iowa’s tax with the Federal tax code. The problem is that last session the legislature used a revenue estimate that was just above the approved FY 15 spending level of 6.994 billion. Now we have the new estimate from March 19 that says only $6.767 billion is available. This leaves the state in a position where spending exceeds revenue. The last thing the Legislature should do is spend even more.

The Senate majority are claiming that the state is experiencing 6 percent revenue growth. If someone were to follow their lead take the difference between the projected revenue for FY 2015 (6.7674 billion) and the projected revenue FY 2016 ($7.1755 billion), you would find an increase of $408.1 million or 6 percent.

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But there’s a small problem with this calculations – the FY 2016 budget will be built from the actual spending levels on programs in FY 2015, not the REC’s revenue projection for that year. Below you will see a chart describing the actual growth in revenue.

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The actual amount of additional revenue that will be in Iowa’s budget next year is $180.9 million. This number comes from subtracting the actual spending in FY 2015 ($6.9946 billion) from the FY 2016 revenue estimate.   That gives the state a 2.59 percent increase.

The House is committed to these principles to produce a balanced and sustainable state budget:

  1. We will spend less than the state collects;
  2. We will not use one-time money to fund on-going needs;
  3. We will not balance the budget by intentionally underfunding programs; and
  4. We will return unused tax dollars to Iowa’s taxpayers.

Our position on government spending is reasonable, sustainable and based on simple common sense – don’t spend more than you take in, don’t spend one-time money for on-going things and don’t knowingly underfund commitments simply to make the numbers work. Doing any of those things are short-term, unpredictable practices which lead to widespread budget problems.

If the Senate majority is intent on passing budget bills that spend $227 million more than what the state will actually has, it means they have other financially disastrous plans. They may have decided to spend the state’s ending balance and return the state to Chet Culver accounting by setting up across the board cuts in FY 2017, or they may have a plan to cut $227 million out of other programs like higher education, Medicaid, or public safety. Either way, Iowa taxpayers and Iowa schools will be the losers.

This week was the second funnel week of the session. All bills have to have passed out of one chamber and committee in the other to remain alive for the rest of session. We’ll find out which bills survived and which didn’t after the official deadline on Friday.

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Pictured above are Rep. Brian Moore and I with the Jones County Safe and Healthy Youth Coalition at the Capitol this week. The group visited the Statehouse to discuss youth issues with legislators.

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.state.ia.us or by phone at (515) 281-3221.

Sincerely,

Rep. Lee Hein

Capitol Update

3 26 153 26 15-1REC Drops Estimate

The Revenue Estimating Conference met on March 19 for its required meeting during the legislative session.  The three-member committee reduced the amount of new dollars the General Fund will have to spend in FY 2016.

For FY 2015, the General Fund estimate was lowered by $89.7 million to $6.7671 billion.  The REC made adjustments by lowering their projections for personal income tax collections by $40.3 million and corporate income tax collections by $20.5 million.  The REC also increased their forecast for tax refunds by $33.4 million.  These adjustments are the result of the passage of the IRC update bill, which was projected to reduce revenue by $99 million.  Removing the impact of the IRC update bill, the net impact would be a slight increase in FY 2015 revenue by $9.3 million.

For FY 2016, the REC lowered the General Fund revenue projections to $7.1755 billion.  The group raised their forecast for personal income tax revenue by $56.4 million, but that was nearly offset by a reduction in the corporate income tax projection of $49.6 million.  The REC also increased their projection for tax refunds by $36.4 million.

While IRC update bill had lowered FY 2015 revenue, it was expected to raise FY 16 revenue by $19.2 million to $7.2138 billion.  The REC estimate eliminates the boost from the bill and further lowers the FY 2016 number by an additional $19.1 million to the new level of $7.1755 billion.

The amount of new revenue available to be spent is the difference between the FY 2016 revenue forecast ($7.175 billion) and the FY 2015 budget ($6.9946 billion).  The revised estimate means the state has $180.9 million of new money to spend in FY 2016.  Prior to today’s meeting, we had been working under the assumption that the state would have $200 million of new money in FY 2016.

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All three members of the REC said there had been little change in the economic factors since their last meeting in December.  Economic growth in the US and Iowa remains solid, if at a modest pace.  Iowa’s collections from income tax withholding remain strong.  The average work week is now at 42 hours and wage growth is beginning to pick up in-state, even though is has yet to reach the level seen before the 2008 recession.

There is concern over Iowa’s ag economy.  The state saw a loss of manufacturing and ag machinery jobs in the last few months and the Rural Main Street Index fell below neutral levels.  The strong dollar is having an impact on export markets, which are a key part of Iowa’s ag economy.  Average corn prices are still 43 percent below their 2013 highs with significant supplies still in the bins.

Even with these caution signs, Iowa’s farm economy is not in trouble.   Income tax returns are showing farmers are holding their own or posting small profits from the last year.  Ag debt levels are at a manageable level, since many of the purchases made during the last few years were with cash.  Livestock producers continue to have solid prices.  Input costs should begin to decline if lower oil prices remain during calendar year 2015, and the over-supply of corn should be reduced in the next two to three years.

Update on School Start Date

The House passed the school start day bill stating schools can start on or after August 23rd by amending SF227. The bill passed the House in a bipartisan vote, 71-29. I think it’s a good compromise for an issue that has be debated since long before I was a part of the legislature.

Current law states schools cannot start before September 1st without a waiver. This bill is a compromise between school districts and the tourism industry. On Wednesday, the Senate passed the bill with a bipartisan vote of 28-22, but Senate Majority Leader Gronstal motioned to reconsider. That means the bill will stall in the Senate until it is reconsidered. If not dealt with by the end of session, it will be sent back to the House for the Speaker to sign and then to the Governor’s desk for his signature. This option unfortunately delays the decision until the end of the session and puts schools in limbo.  The bill has passed both Chambers and should be on the Governor’ desk.  This issue should have been solved this week and put it behind us but Senate leadership is only interested in playing politics.

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Matt and Beth McQuillen donated a 139-acre conservation easement along the Maquoketa River in Delaware County to Iowa Natural Heritage Foundation. Mature upland woodlands are interspersed with limestone outcroppings. About 30 acres of former agricultural land has been planted with native prairie species and trees. This reconstructed prairie provides habitat for grassland birds, small mammals, insects, reptiles and amphibians. The protection of this land helps prevent erosion, slow runoff and improves the water quality of the Maquoketa River, which was listed as an impaired waterway in 2012 under the Federal Clean Water Act. I want to thank the McQuillen’s for their generous donation.

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Pastor Darryl Larson and his wife Nancy were at the Statehouse on Tuesday. Pastor Darryl delivered the opening prayer to the House chamber. Afterward we visited and went on a tour of the Statehouse.

I will be at a forum in Monticello at noon on Friday in the City Council Chambers and another on Saturday in Dyersville at 10 am at Golfside Grill. You can contact me by e-mail at lee.hein@legis.iowa.gov or by phone at (515) 281-7330.

Sincerely,

Rep. Lee Hein

Capitol Update

House Passes Binding Arbitration Changes for School Districts and AEAs

After two days of debate, the House passed House File 549, which narrowly changes the binding arbitration process for school district and Area Education Agency (AEA) employees. The bill makes three small, yet very significant changes to what an arbitrator is allowed to consider when rendering a decision on union contracts.

For too long the scale of fairness has been tilted in favor of labor and against taxpayers during contract negotiations for school districts and AEAs. School boards and their negotiating teams have been forced to build 3-4% yearly raises into their budgets, regardless of district revenues, putting a financial strain on districts. House File 549 seeks to remedy this problem and even the playing field in labor negotiations for teachers. The three changes that the bill would make are solely focused on school districts and AEAs as a cost-containment measure.

First, an arbitrator no longer is required to pick one or the other of the two parties’ final offers on an item when there’s an impasse. Instead, the arbitrator is authorized to choose a point between the two offers. This ensures that a compromise position can be reached where both sides can come away from negotiations happy.

Second, an arbitrator is no longer able to consider the public employer’s authority to levy taxes to finance an increase in compensation packages. Unions point to government’s unlimited ability to raise taxes as the basis for pay increases beyond what current revenues can afford.

Third, an arbitrator is required to look at a comparison of public and private sector wages, hours, and conditions of employment for workers doing comparable work to get a true and fair comparison. Current law only requires an arbitrator to look at a comparison of other public sector workers.

During debate Democrats filed numerous amendments, all of which were not germane to the bill. Six of the amendments expanded the scope of negotiations to include class sizes, teacher prep time, overtime, classroom-expense reimbursements, continuing education costs, and the costs associated with renewing licenses. Another amendment set State Supplemental Aid at 4%, and another dealt with a school financing issue. Additionally, one Democrat offered an amendment which he then divided into 16 separate amendments, mostly reversing the changes in House File 549, and then adding numerous other factors that an arbitrator must consider when rendering a decision.

After several hours of debate and five Democrat caucuses, the bill finally passed on a party-line vote of 56-41. House File 549 now heads to the Iowa Senate where it faces an uncertain future.

Weekly Recap

Chad and Emily Becker visited the Capitol this week. We took a tour to the top of the dome while they were here. Chad is the son of Charlie Becker from Monticello and is attending med school here in Des Moines.

Chad and Emily Becker on the balcony at the top of the dome

Chad and Emily Becker on the balcony at the top of the dome

Charlie Becker bought a set of Iowa Code books at the Monticello School Foundation Dinner. Charlie is the director of Camp Courageous. I donated a set of books that contains the current version of the Iowa Code of Laws.  The tour was part of the package. I want to thank Charlie for his generous donation to the foundation. I hope he enjoys the books.

Wednesday was a special day for me. Marie Hein came to the Statehouse. She is a very unique lady and I am proud to call her my Aunt. Senator Zumbach is also her nephew. She is the only Iowan I know to have a nephew be both her State Representative and her State Senator. She was introduced on the House and Senate floor to legislators. It was her first time in the House and Senate chambers. It was great to have her here.

Sen. Zumbach and I with our Aunt Marie Hein

Sen. Zumbach and I with our Aunt Marie Hein

Next Friday, March 27th I will be attending a forum in Monticello at the City Council Chambers at noon.  Everyone is welcome to attend.

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.state.ia.us or by phone at (515) 281-7330.

Sincerely,

Rep. Lee Hein

Capitol Update

Absentee Ballots

Debate dominated our time at the Statehouse and several bills passed the House. The first bill we passed deals with absentee ballots. HF 506 was brought to us the County Auditors. They wanted clarification because of the large number of unmarked ballots by the post offices.  Current law states an absentee ballot clearly needs postmarked the day before the election and must be received by the Auditor’s office by noon on the Monday following the election. The postal service currently does not mark all ballots with a postmark. If a ballot does not meet those requirements it is not counted. HF 506 changes the law by requiring an absentee ballot to be turned into the Auditor by the time polls close on Election Day.

Many people’s ballots have not been counted because they were not postmarked- even if they were sent in on time. There was a directive to the post offices to follow the protocol of current law and put postmarks on ballots. However, this still wasn’t followed during the last general election in November.

HF 506 clears up the issue. As long as your ballot is turned in by Election Day, your vote will count. Just like people who go to the polls. The bill also places a page on the Secretary of State’s website where you can check to see if your ballot was received.

If you received an absentee ballot, you can always turn it over to election officials if you wish to physically vote at the polls. Your absentee ballot will then be shredded and not counted. If you have an absentee ballot and don’t bring it with you to the polls, you can cast a provisional ballot.

2nd Amendment Protections

HF 527 was debated and passed on Tuesday. It addresses various areas of firearms laws. The bill allows persons to renew their carry permit every 5 years, but only requires retraining class every 10 years. The bill clarifies what retraining classes are accepted. HF 527 strikes the minimum age to handle a firearm. The current age is 14. Additionally, the bill makes all carry and purchase permits private and only available to law enforcement officials in certain situations. The bill allows a peace officer to carry their weapon on school grounds if they are off duty. Current law only allows peace officers to carry their weapon on school grounds if they are on duty. HF 527 also creates a database to make it easier for both law enforcement and permit holders to verify permits.  This bi-ll helps advance Iowans 2nd Amendment rights. The bill passed with overwhelming bi-partisan support.

Taking Catfish by Bow and Arrow

Also on Tuesday, the House passed House File 288 which allows Iowans to take catfish by bow and arrow in state parks and preserves.  Currently, this practice is prohibited.  Iowans are allowed to take rough fish, like carp, by bow and arrow.  A violation of this bill is punishable by a $50 fine.  The Natural Resources Commission will permit the taking of catfish in the rules process.

These bills have passed the House chamber and are now going over to the Senate for their consideration. Next week will be more floor debate. As we receive bills from the Senate, committees will start working on those before the next funnel deadline.

On Wednesday Jody Martens from Bellevue, Chad and Renee Adams, and Dominic and Karren Hogan from Monticello were at the Capitol this week. The group visited on behalf of Farm Bureau to discuss issues with legislators. Jones County supervisor Jon Zirkelbach and Delaware County supervisor Jeff Madlom were also at the Statehouse Wednesday. They were here to talk to legislators about issues relating to county interests. On Thursday, I got to visit with Tirzah Wedewer from F&M Bank in Manchester. Tirzah joined fellow bankers in Des Moines to discuss banking issues with elected officials.

Rep. Brian Moore, Jody Martens from Bellevue, Chad and Renee Adams,  Dominic and Karren Hogan from Monticello and myself

Rep. Brian Moore, Jody Martens from Bellevue, Chad and Renee Adams,
Dominic and Karren Hogan from Monticello and myself

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.state.ia.us or by phone at (515) 281-3221.

 Sincerely,

Rep. Lee Hein

Capitol Update

Problems Continue to Grow at Fort Madison Prison

Last Thursday, the House Oversight committee called in Department of Administrative Services Director, Janet Phipps Burkhead, to answer questions on the continual delays and rising costs at the new Fort Madison Prison. Unfortunately, the committee was left with more concerns and questions than real answers. Representatives now believe there may be additional costs and longer delays before the prison can be opened.

Director Phipps was appointed in May of 2014, and in previous Oversight meetings the committee had been told by the Department of Corrections that the Director had been working with DOC to resolve problems. After over 9 months on the job, the Director was unable to answer many basic questions about the problems plaguing the unopened prison. Representatives were disappointed with the Directors’ knowledge of the major issues and are following up with questions and document requests, in order to better understand how so many problems happened on this project and what parties are responsible.

While she could not answer many important questions, Director Phipps did tell the committee there is an additional $20 million being requested by the General Contractor, Walsh Construction, for equitable adjustments. When asked for specifics, the Director was unable to give examples of the equitable adjustments and could only tell the committee the request is made when a company believes it has provided additional resources or labor not part of the original bid. The committee was unable to get additional information on these equitable adjustments from the Director. This $20 million in equitable adjustment requests had not previously been shared with Representatives during the Oversight investigation. The Director was unsure if the State would have to pay the additional money.

The largest issue preventing the prison from opening is the ineffective smoke evacuation system. Director Phipps told the committee it will take a fire specialist another four to six weeks to finish modeling the buildings and determine the best way to manage the smoke. Once those models are complete, a Fire Marshal will be asked to review the plans and if they are approved, then reconstruction of the smoke evacuation system will begin. The Director could not tell the committee how much the design, or construction is expected to cost or when it will be completed.

Representatives also asked the Director about problems with the geothermal system. While she had little information about original problems and the cost to fix the system, she did inform the committee that the geothermal system appears to be fixed and working. Unfortunately, this week, it was reported that there may be additional problems with the system. Prison officials had to shut down a sprinkler system in a building that houses a library, gymnasium and chapel due to cold temperatures. According to the Department of Corrections, there is cold air leaking between the ceiling and the roof of the building and the temperatures dropped below freezing in that area. Additionally, there is cold air leakage in the mechanical alleyways adjacent in two housing units, the DOC did not say if water was shut off in either of those buildings. Representatives are just learning about these additional issues and will be following up with questions.

Currently there is no estimated date to open the prison. Once the buildings receive occupancy permits, it will take approximately another three months to retrain Corrections Officers before prisoners can be transferred. Representatives are worried it could be another year before the new prison is occupied.

The bi-partisan House Oversight Committee will continue to push for answers from all parties involved with the construction of the prison. Within the next week, members are expecting more detailed answers and documents from DAS. Once those documents have been reviewed the committee will be calling in more individuals involved with the prison construction to understand how all the problems occurred and to find a solution to ensure problems of this magnitude never happen again.

Nominations for Iowa Farm Environmental Leader Awards Sought

On Tuesday, February 24, 2015, the Office of the Governor issued a press release in which Iowa Gov. Terry E. Branstad, Lt. Gov. Kim Reynolds and Iowa Secretary of Agriculture Bill Northey encouraged Iowans to nominate farmers for the Iowa Farm Environmental Leader Award. The award goes to farmers who have taken voluntary actions to improve or protect the environment and natural resources of our state. Nominations are due by June 15, 2015 and the nomination form can be found at http://www.iowaagriculture.gov/EnvironmentalLeader.asp. The award is a joint effort between the Governor, Lt. Governor, Iowa Department of Agriculture and Land Stewardship, and Iowa Department of Natural Resources to recognize the efforts of Iowa’s farmers as environmental leaders committed to healthy soils and improved water quality.

Farmers that are nominated should have made environmental stewardship a priority on their farm and incorporated best management practices into their farming operation. As true stewards of the land, they recognize that improved water quality and soil sustainability reaps benefits that extend beyond their fields to citizens of Iowa and residents even further downstream. Nominations may be submitted on a year-round basis and are due by June 15th of the year to be considered for the award. Farm owners and operators are eligible for consideration.

An appointed committee of representatives from both conservation and agricultural groups will review the nominations and select the winners. The recipients will be recognized at the Iowa State Fair. Since creation of the award in 2012, 219 farm families have been recognized. Winners are presented a certificate as well as a yard sign donated by Monsanto. Hagie Manufacturing also sponsors a recognition luncheon for award recipients following the ceremony.

Agriculture Theft on the Rise

I wanted to tell you about an agriculture issue brought to my attention that deals with livestock and crop theft. In 2011, 428 people were convicted of livestock or crop theft. Compare that to the number of car theft convictions in the state, which is 407. There are more livestock thefts than car thefts in the state of Iowa.

Of the 428 convictions of crops or livestock, 407 were charged with aggravated misdemeanors, which carry a sentence of up to two years. The remaining convictions are serious misdemeanors and simple misdemeanors which carry a sentence of up to one year and 30 days, respectively. If you combine and figure the averages of the sentences, a person who is convicted of livestock or crop theft is incarcerated an average of 52 days.

When we started discussing this issue in Des Moines we introduced a bill setting a minimum 30 day sentence on all crop or livestock theft convictions. However, we learned most people convicted are already serving over 30 days of jail time. I’m not sure we will advance the bill since it is already being implemented. We are exploring other options such as setting a hefty fine to deter people from livestock theft. I want to make sure farmers get reimbursed for their stolen crops and livestock. The discussion will be ongoing.

I bring this up to make sure the agriculture community is aware this is happening. There have been a few times I’ve been off my head count myself. It makes you wonder. Unfortunately we are living in an era where stealing things from other people is way more common than we realize. Please keep an eye out for your neighbors and keep alert around the confinement buildings and grain bins. Also, investments in locks and security cameras might be something farmers should consider this season.

Dan Rickels and Darrick Hall from Jones County Farm Bureau and I in the House Chamber

Dan Rickels and Darrick Hall from Jones County Farm Bureau and I in the House Chamber

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.state.ia.us or by phone at (515) 281-3221.

Sincerely,

Rep. Lee Hein

Capitol Update

Economic Indicators, Revenue Give Mixed Signals on Regional Economy

In its latest release, the Department of Revenue’s Iowa Leading Indicators Index showed modest growth in December 2014. The Index rose to 109.4 for the month, a slight hike over November’s rating of 109.3. Six of the eight components making up the Index improved in December, including average weekly manufacturing hours, residential building permits, and the Iowa Stock Market Index. The Index had remained relatively stable for the last six months of 2014, with December’s figure being only one-tenth of percent below July’s number.

Pointing in the negative direction is Creighton University’s Iowa Business Conditions Index. This monthly indicator fell in January to 52.2, down from 53.4 figure reported for December. While any number above 50 is viewed as indicating economic growth, the Iowa index has fallen in six of the past nine months. Also raising concern are forecasts from USDA concerning farm income in 2015. USDA says that farm income will continue to fall from the 2012 highs, while input costs continue to creep up.

The conflicting economic forecasts and slow, but sustained revenue growth is not just isolated in Iowa. These conditions are also being experienced in a number of the neighboring states. In Missouri, lawmakers and Governor Jay Nixon are considering actions to take in light of slowing tax revenues. Nixon has stopped over $500 million of state spending in the current fiscal year and is proposing additional revenue streams to fund new spending for schools and health care.

In Wisconsin, legislators are faced with having to close a growing budget gap. Revenue in the Badger state is 2.7 percent below the previous year, and the tax collections are now projected to be $619 million below state appropriations. Governor Scott Walker is proposing a series of cost savings measures, including a $300 million cut to higher education.

To the west, Nebraska saw tax revenue fall in January. That state saw tax revenue fall 6 percent when compared to January 2014. For the fiscal year, Nebraska tax revenue was still growing by 1 percent.

The outlier of the group is Minnesota, as that state’s economy continues to exhibit solid growth. Revenue for November and December 2014 was 6.4 percent higher than what the state had projected at the start of November. For the first six months of the fiscal year, actual revenue had exceeded projections by 2.3 percent.

The economic forecast for all states in the region is complicated by factors that are benefiting other parts of the economy. The strength of the US dollar has made the price of imported products significantly cheaper. That strength creates headwinds for US exports, including agriculture products. The drop in exports has been a factor in falling commodity prices and layoffs at major regional manufacturers like Caterpillar and John Deere.

Zero-Based Budgeting Bill Passes House State Government

The House State Government committee voted earlier this week on HF 1; a bill requiring state agencies and departments, as well as the judicial branch to adopt a zero-based budgeting approach. The bill passed out on a party line vote 12-10.

Currently, state executive departments and agencies use estimates based on 75 percent of funding provided for the current fiscal year, and the form for budget submission is decided by the director. The judicial branch operates on the same procedure. With this bill, executive departments and the judicial branch will be required to use zero as their base approach when determining their budgets. Additionally, it requires the departments to prioritize requested expenditures, with support as to why every request is needed.

It is a useful tool to help the departments and agencies justify why they need the amounts they request, and also helps with the budgeting process by helping legislators identify the “low hanging fruit” should adjustments need to take place. It also prevents across the board cuts, and provides an open and transparent process throughout.

Opponents argue that this would place an undue hardship on departments and agencies, and it would take up a lot of time. Additionally, they argue this practice disrupts the legislative budgeting process, and the governor should have deference to decide what budgeting principles to use.

If signed, Iowa would join Georgia as the only two states following a true zero-based budget system; although both states are in good company as many other states use hybrids of several budgeting principles in their overall budget process.

NEWS FROM DISTRICT 96

On Monday, Anna Mary Rinikerand her daughter Elizabeth visited the Capitol. They both had the day off so they decided to come to Des Moines for the day and stop by the Statehouse. Elizabeth is a sixth grader at Anamosa High School. Elizabeth was very interested in the legislative process. We took a tour of the House Chamber, the Governor’s office, and went to the top of the dome.

Anna Mary Riniker (left), her daughter Elizabeth (center) and myself in the House Chamber.

Anna Mary Riniker (left), her daughter Elizabeth (center) and myself in the House Chamber.

Farm Bureau members from across the state came to Des Moines Wednesday to talk with legislators. I met with members from both Jones and Delaware Counties. We discussed the pending gas tax as well as other topics important to their members.

The gas tax bill passed out of Transportation committee on Wednesday. Since the bill deals with taxes and fees, it also had to go through Ways & Means committee. The bill passed out of Ways & Means on Thursday. It now moves to the House floor where we will likely debate it next week. The Senate has an identical bill. It passed out of their committees this week as well.

I wanted to give everyone an update on Lake Delhi. The Lake District Trustee Board met to review the recommendations made for awarding the Phase 2 project to General Constructors Inc. GCI was the lowest bidder and based out of the Quad Cities. According to the recommendation, General Constructors Inc. met all the technical and commercial requirements of the bid specifications. After discussion, the District Board of Trustees awarded the project to General Constructors Inc. whose low bid came in less than the original engineers’ estimate. Phase 2 will is scheduled to start in early March if the weather cooperates. The target date to start filling the Lake is October 23rd.

Friday morning I am speaking to government classes at Monticello High School and Kirkwood. I will be at the Jones County Economic Development Forum at the Lawrence Center in Anamosa on Friday the 20th at noon. I’ll be joining Lt. Governor Reynolds will be touring Orbis Corporation in Monticello on the 20th at 2:45.

If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.state.ia.us or by phone at (515) 281-3221.

Sincerely,

Rep. Lee Hein