In a week that brought hundreds of layoffs and two new reports showing a continued economic downturn, Iowa Governor Chet Culver tried to reassure Iowans that the state was on sound financial ground.
John Deere announced it will lay off nearly 700 at its Ottumwa plant; Principal Financial Group, the state's largest private employer, announced it is eliminating 220 jobs, including 140 in Des Moines; and the University of Iowa Hospital will cut an unspecified number of positions.
The value of the Iowa Leading Indicators Index decreased by 0.9 percent in April from 99.9 to 99.0, the sixth consecutive monthly drop of 0.9 percent or greater, according to a report from the Iowa Department of Revenue. During the six-month span through April, the index dropped 6.3 percent, reflecting "widespread weakness in the Iowa economy with all eight components experiencing a 0.5-percent or greater decrease over the last half year," the report said.
And a report by the Legislative Services Agency showed general-fund receipts fell $161.4 million over the past two months, and the state's ending balance will be $44.6 million. State fiscal experts said cash year-to-date growth is $90.4 million below the official estimate and warned that it's possible this year's revenue shortfall will be more than the $94.6 million available from the projected ending balance and economic-emergency fund.
But Culver said the state has more than enough money in reserves to handle the budget shortfall without another across-the-board cut or a special session of the legislature. "We will be able to balance in '09 as we have always believed, despite the additional ... lowering of estimates," he said.
Culver also maintained that Iowa can balance its budget next year without raising taxes. "I've been very clear in my opposition to raising taxes. Period," he said. "It's very likely that we will not have a debate about the gas tax or any tax increase next session."
The first-term governor pointed to some good news: Bureau of Economic Analysis statistics released this week showed Iowa's gross domestic product grew 2.12 percent in 2008, placing Iowa ninth in the nation in growth and more than two percentage points higher than the national growth rate.
In addition, all three indicators used to measure economic activity among large employers in the state for the coming six months inched higher, according to 2009 second-quarter results of the Iowa Business Council's Economic Outlook Survey. The index increased to 38.3, three points higher than the 35.3 reported in March, but 26 points lower than the 64.3 a year ago.
"While it is premature to say a full rebound is underway, the fact more business segments expect improved activity over the next six months should allow business leaders and Iowa's workforce to be a little more optimistic that the economy may be beginning to stabilize," said Mel Haught, chair of the Iowa Business Council and president and CEO of Pella Corporation.
Gambling Proponents Point to Jobs
Community leaders and other supporters of building new casinos in Iowa argued Thursday that such a move would create 2,400 new jobs at a time when companies continue to lay off hundreds of workers.
"The impact of approximately 420 additional jobs [in Ottumwa] at a time when the largest number of layoffs was just announced by John Deere in Wapello County would make a big difference as to whether Wapello County residents will be able to prosper and pay taxes to support the state, or if they're forced to seek employment perhaps outside Iowa," said Ottumwa City Administrator Joe Helfenberger.
He was one of more than a dozen stakeholders who spoke this week to the Iowa Racing & Gaming Commission at its meeting in Johnston. The vast majority spoke in favor of building new casinos.
Chair Greg Seyfer said the commission will decide at its July 16 meeting whether to accept applications for new casino licenses. While Iowa has no moratorium, the last casino license was issued in May 2005. Voters in five counties -- Wapello, Webster, Franklin, Tama, and Lyon -- have approved referendums and hope to be granted a license.
"A casino in Wapello County and the city of Ottumwa would be a significant move in the direction of self-sufficiency," said Helfenberger, who pointed out that Ottumwa and Wapello County have the highest poverty level in Iowa, and as the economy worsens, the area will become more dependent on the rest of the state for support.
Helfenberger also said a casino would benefit Ottumwa's two-year-old, $23-million events center, a proposed hotel and restaurant being pursued by three developers, and the aquatic park across the street. "In these tough economic times, a casino next to these facilities would net a quicker return on investment," he said.
John Pavone, president of Signature Management Group -- which wants to build a casino near Tama -- said the new casinos would bring the state $400 million in new construction, $270 million in revenues, and $54 million in tax revenues.
"At a time when Iowa needs jobs and needs economic impact, I don't know how you avoid this," said Pavone, who's also former president of the Iowa Riverboat Association and Iowa Gaming Association.
Mark Monson, president of casino-license-holder Missouri River Historical Development of Woodbury County, was one of the few arguing against construction of additional casinos because of the financial impact it would have on existing casinos.
"We have some concerns about expansion," Monson said. "The very conservative estimates are that we will lose about 6 percent of our revenues ... ."
"Cannibalization," or the financial impact on existing casinos, was a key factor considered by two new statewide gaming studies presented Thursday to the commission by officials of GVA Marquette Advisors and The Innovation Group.
"We believe that additional casino development in most of the areas that we were charged with looking at would result in moderate to significant cannibalization of existing facilities," said Louis Frillman, president of GVA Marquette Advisors.
Both studies concluded that Lyon County in far northwest Iowa is the most compelling site for a new casino, with high incremental impact and low cannibalization. But should Sioux Falls, South Dakota, decide to build its own casino just across the border, "It would totally change the dynamics of our forecast," said Jim Oberkirsch, The Innovation Group's director of consulting services.
The Innovation Group study showed Webster and Wapello counties in the middle of the pack, with decent demand for gaming and modest cannibalization. On the tail end were Franklin and Tama counties, which have no large anchor city, a lower demand, and higher cannibalization.
I-JOBS Board Holds First Meeting
State Treasurer Michael Fitzgerald said Iowa will have $640 million "cash in hand" by July 23 to be used for Culver's signature I-JOBS program to bond for infrastructure. Fitzgerald sits on the 11-member I-JOBS Board that met for the first time this week.
"I know a lot of folks are saying, 'How can the state of Iowa do this?'" Fitzgerald said. "One of the main reasons we're here is to try to recover from a 500-year flood. But I also want to point out that the state has a very strong financial foundation. We're not ready to dry up and blow away."
The I-JOBS board must award $165 million in grants from the $815 million in total bonds the state will take on for the project. Of that money, $46.5 million is for noncompetitive grants, something the board will have little say in. The board must determine where and how to award competitive grants totaling $118.5 million.
Culver spoke to the board from Quebec, saying this is the biggest investment in the state's history and that the board must be active and decisive.
"That's my first point, for all of you to understand how important it's going to be for us to move as quickly as possible to get money out the door, to fund shovel-ready projects, to help flood victims in communities that were impacted by the floods," Culver said. "They are really counting on all of you to make this investment work to speed up significantly, in some cases, their recovery process."
Mark Thompson, general counsel for the Iowa Finance Authority, said noncompetitive grants could be approved as early as June 29, and competitive grants by August 31, although he said funds actually going out the door on those dates is contingent on when the bonds are received.
Cedar Rapids and Linn County are likely to receive nearly all -- $45 million -- of the noncompetitive grants. The remaining $1.5 million will go to Palo, Elkader, and Charles City for fire stations.
Culver emphasized in his comments to the board that "we have promised pretty much every county" that there would be investments in their local infrastructure.
"Eighty-seven counties were declared disaster areas because of the flood in 2008, and we want to make sure we make important investments in the 12 counties that were not impacted," Culver said. "My point is [that] I hope we can find a way to invest in every part of our state ... ."
The board discussed having three to five public meetings around the state to spread information about applying for grants. The board could also see first hand where grant money might end up and the devastation the state has faced.
Iowa Child-Abuse Numbers Down
Child abuse has declined in Iowa over the past two years, with "denial of critical care" or neglect continuing to be the most common form of abuse, the Iowa Department of Human Services (DHS) said this week.
New statistics released show 11,003 Iowa children were abused or neglected in 2008. That's down 14 percent from 12,786 in 2007, and down 18 percent from 13,445 in 2006. There are about 730,000 children in Iowa.
Overall, DHS abuse investigators conducted 23,236 assessments for child abuse or neglect last year, down 2 percent from a year earlier. An assessment is launched when complaints from the public meet the legal threshold for sending an investigator.
DHS Director Charles Krogmeier said a heavy emphasis on preventing abuse is showing results. A redesign of the child-welfare system was launched in 2005, concentrating on strategies such as "family team meetings," a mentor program to help parents overcome shortcomings that led to abuse or neglect.
"While the trend of lower abuse is encouraging - and I truly hope we can keep it going - it is also clear that far too many Iowa children are put in harm's way," Krogmeier said.
See the county-by-county abuse report for the past five years at http://www.dhs.state.ia.us/Partners/Reports/PeriodicReports/Abuse/Child.html.
At Least a Dozen Republicans Still Considering Gubernatorial Bids
Interviews this past week with more than a dozen possible Republican gubernatorial candidates revealed that two are definite candidates, two are leaning toward runs, five are thinking about it, three are leaning against it, and six have decided against it.
Bob Vander Plaats and state Representative Christopher Rants, both of Sioux City, are candidates who have been actively campaigning and fundraising across the state. Two state lawmakers - Representative Rod Roberts of Carroll and Senator Jerry Behn of Boone -- are leaning towards it.
Those four potential Republican gubernatorial candidates are scheduled to appear at a Sac County Republican Party breakfast on June 27. Each candidate is scheduled to speak about 15 minutes at the hourlong event, according to Sac County GOP Chair Brian Krause.
"There is speculation that other candidates may also be in attendance at what is shaping up to be Iowa's first chance to see all the major candidates side by side," Krause wrote. "Just as Iowa sets the tone for the presidential race with our first-in-the-nation caucuses, so Sac County may set the tone for what should prove to be a spirited and enthusiastic governor's race in 2010."
Krause said the event should be a good chance for the candidates to test their messages. He is offering half the net proceeds from the fundraiser to any candidate who officially announces at the event that he is running for governor. Krause said he hopes to use the technique to further drum up interest in the event.
Rants said losing his position as leader of the House Republican caucus last November was a crushing blow that led to six months of reflection.
"I can't deny that. It hurt a lot," Rants said in an interview. "For me personally, it was probably a good thing. [I] didn't know it at the time but in retrospect, it was good on a number of fronts, both in giving me time to step back and reflect and giving me an opportunity to find my own voice instead of spokesperson for the caucus."
Vander Plaats said he hopes a visit by former Arkansas Governor Mike Huckabee to Iowa next week will produce an endorsement for him, a full year before next year's June primary election. "It's no small deal to have the caucus-winner do a kickoff fundraiser for us," Vander Plaats said. "Hopefully he'll endorse us as well."
Huckabee, who won the 2008 Iowa caucuses, will speak at an Iowa Association of Business & Industry convention next Wednesday in Okoboji, and will then be the keynote speaker at a Vander Plaats fundraiser down the street, at the Arnolds Park pavilion.
Meanwhile, five other Republicans still thinking about a run for governor are former Senator Jeff Lamberti of Ankeny, U.S. Representative Steve King, Mike Whalen of Bettendorf, U.S. Attorney Matt Whitaker of Urbandale, and former state GOP Chair Mike Mahaffey of Montezuma.
The three leaning against it are Iowa Agriculture Secretary Bill Northey of Spirit Lake, Iowa Area Development Group President and Executive Director Rand Fisher of West Des Moines, and Kevin McLaughlin of Des Moines.
And six have already said "no": State Auditor David Vaudt, 2002 gubernatorial candidate Doug Gross, former state Representative Chuck Larson Jr., former Governor Terry Branstad, Iowans for Tax Relief President Ed Failor Jr., and Vermeer Corporation CEO Mary Andringa.
Democrats Release Details of Governor's Next Fundraiser
Just as top Iowa Republicans are talking about the need to have fun, Democrats hope to have some fun of their own by holding a "summer party" as the next fundraiser for Culver in a location that's been billed as "a great place to feel like a kid again."
The invitation-only event will be held on Thursday at the AllPlay/Forte Conference Center in downtown Des Moines.
Culver campaign officials say they're trying to have some fun with this event by not having it at one of the same old locations. November's million-dollar affair was held at the Wakonda Club, and the Culver-Judge Holiday Party in December was at the Val Air Ballroom. The campaign also held a fundraiser at Noah's Ark Restaurant.
But AllPlay definitely has a different feel to it, featuring a slew of arcade games and mini bowling. The place has been described as a grown-up arcade. People can show up to this fundraiser in jeans.
Culver has not made his intent to seek re-election official, but stated clearly last week that he's looking forward to seeking a second term. Campaign-finance reports showed in January that he already had $1.5 million in his war chest.
This weekly summary comes from IowaPolitics.com, an online government and politics news service. IowaPolitics.com staff contributed to this report.
