Friday, June 26, 2009 ...iowahouserepublicans.com/wp-content/uploads/caucus-newsletter-2009-06-26.pdfJun 26, 2009 · Page 3 House Republican Newsletter ciations or organizations,

Inside this issue:

Appropriations 1

Agriculture 2

Commerce 3

Economic Growth 4

Education 4

Environmental Protection

5

Human Resources 6

Judiciary 7

Labor 7

Natural Resources 8

State Government 9

Transportation 9

Veterans Affairs 10

Ways and Means 10

Friday, June 26, 2009 www.iowahouserepublicans.com

On June 16, Fiscal Services released the Twelve-month Total Net Tax Re-ceipts memo. As was the case in the June 1 revenue memo from Fiscal Ser-vices, the news was not good. According to Jeff Robinson, an analyst for Fiscal Services, there is a $34 million drag on receipts caused by a combina-tion of a $12 million to $15 million drop in the tax insurance companies pay on their premiums, a decrease of at least $10 million income tax quarterly esti-mate payments and a calendar issue that boosted withholding taxes in May at the expense of June. Robinson said June probably won’t be as negative as April and May. In May, net state receipts fell by 12.4 percent and pushed tax collections into the negative column by 4.5 percent, below the Revenue Estimating Conference (REC) estimate of -2.6 percent. Based on current numbers, Robinson predicted the state will spend all of the $45 million ending balance legislators anticipated when they adjourned in April. Governor Culver has the authority to transfer $50 million from the Economic Emergency Fund and can transfer un-spent Medicaid funds to cover the short-fall. Robinson was doubtful that this would be enough to cover the potential shortfall. Robinson said there is plenty of money in state reserves to cover the overage, but Culver will have to go to the Legisla-ture to get more than the $50 million he can draw on his own authority. Not surprisingly, the Governor’s spokes-man said it is premature to speculate on what the final budget numbers will look

like. “There are always ups and downs during the fiscal year, but there is no clear evidence that this is anything more than a normal month-to-month varia-tion,” Troy Price said. (Des Moines Reg-ister, June 17, 2009) The Governor himself said that concerns about revenue and the state’s budget were partisan political attacks. “It's im-portant for people to separate the politi-cal, partisan rhetoric from the facts," he said. (Quad City Times, June 19, 2009) This is an interesting comment consider-ing the information came from a non-partisan fiscal analyst. On Wednesday, July 1, Fiscal Services will release the numbers on gross reve-nue and tax refunds for FY 2009. The full extent of the problem won’t be known until after the books close at the end of August.

The talking points on the budget remain the same. The Democrats spent too much, cut too little and once again are likely to be left with two budgets that are likely out of balance (FY 09 and FY 10) and a third (FY 11) that has a $1 billion spending gap.

Appropriations (Contact Lon Anderson at 1-5184.)

Non-Partisan Fiscal Services Disagrees with the Governor’s Assessment of State Budget

“This is an interesting

comment considering the

information came from a

non-partisan fiscal

analyst.”

Page 2 House Republican Newsletter

Agriculture (Contact Lew Olson at 1-3096.)

Grants are Available to Help Promote Specialty Crops

On Tuesday, June 17, 2009, Iowa Secre-tary of Agriculture Bill Northey announced that the Iowa Department of Agriculture and Land Stewardship (IDALS) is eligible to receive $242,767 grant funds through the Specialty Crop Block Grant Program and as a result will make grants available to help enhance the competitiveness of spe-cialty crops grown in Iowa. This announce-ment follows an earlier announcement in which IDALS requested input by specialty

crop growers on what the priorities for this program should be and their input on pro-posed rules by IDALS on how such funds should be allocated and awarded. These reviewer comments were due by 4:00 P.M. on June 26, 2009. IDALS receives these funds from the USDA Agricultural Marketing Service. Sec-retary Northey noted-- “Specialty crops are a very important part of Iowa agriculture as

they allow farmers to diversify and give customers access to locally grown prod-ucts. These funds are available to support food safety, research and marketing efforts that will encourage Iowans to choose the products that are produced right here in our state.” Iowa agricultural non-profit organizations, cooperatives, specialty crop industry asso-

(Continued on page 3)

Iowa Accountability and Transparency Board Meets On Tuesday, June 23, the Iowa Account-ability and Transparency Board had its initial meeting at the State Capitol. The Board was created by Executive Order #12, issued by Governor Culver on April 14, 2009. The purpose of the Board is to ensure that Iowa meets or exceeds the accountability and transparency requirements set forth by the American Reinvestment and Recovery Act (ARRA) and to monitor the use of the ARRA funds to prevent fraud, waste and abuse and make recommendations to the Governor to assure that best practices are implemented. The members of the Board are as follows: Donald Timmins, public member, chair Subhash Sahai, public member Clarence Hoffman, public member Angela Connolly, county member Lorie Bennett, city member Denise Bulat, regional member Jon Murphy, Governor’s designee Steve Larson, Treasurer’s designee Warren Jenkins, Auditor’s designee Representative Scott Raecker * Representative Andrew Wenthe * Senator Steve Kettering * Senator Bob Dvorsky * Teresa Hay McMahon, DOM * * Non-voting ex-officio members The Board will oversee the expenditure of

approximately $2.6 billion in federal stimu-lus funds from the ARRA. This is an esti-mated figure because the ARRA funds come in three forms: formula-based fund-ing (like highway and education funding), demand-based funding (Medicaid and un-employment insurance), and competitive funding (broadband and light rail). The $2.6 billion is divided into 67 different categories. However, $2.15 billion of that amount comes from the following 14 pro-grams: 1) Medicaid (FMAP) - $420.1 million 2) Education Stabilization - $386.4 million 3) Highway Construction - $358.2 million 4) Unemployment Compensation -

$232.4 million 5) Special Education - $122 million 6) Government Stabilization - $85.6 mil-

lion 7) Increase in Unemployment benefits -

$82.6 million 8) Nutrition Assistance Program -- $82.5

million 9) Weatherization Program - $80.8 million 10) Housing Credit Exchange Program -

$72.8 million 11) Unemployment insurance moderniza-

tion - $70.8 million 12) Broadband Technology - $56.9 million 13) EPA – Clean Water funding - $53.6

million 14) Title I Education funding - $51.5 million Jon Murphy, Governor’s designee, claimed that since the “big three” of Medicaid, edu-

cation, and highway construction already have built-in audit controls, the Board should focus on the smaller programs, like weatherization, which will be receiving more money than they have received in the past. The Board approved a four step action plan for implementing Board responsibilities. The first step is internal control evaluation, step two is establishing an on-time audit process based on possible risk level, step three is determining where additional over-sight may be needed on an ongoing basis and step four is to confirm what is to be reported on the transparency web site.

According to DOM, the new website www.recovery.iowa.gov will have the ability to do "real-time tracking" of expenditure of the ARRA funds. There is hope that this web site will be expanded to track all ex-penditures by state government. The Board’s next meeting will be scheduled to occur just after Labor Day in September.

“...the new website

www.recovery.iowa.gov will

have the ability to do "real-

time tracking" of expenditure

of the ARRA funds.”


ciations or organizations, and producer groups are all eligible to apply for funding to enhance the competitiveness of spe-cialty crops. In addition, individuals, part-nerships and universities may participate in the grant program by developing and sub-mitting proposals through an eligible appli-cant. Private individuals and companies are not eligible to apply. Grant awards will be considered up to a maximum of $15,000. Guidelines for the allocation of grant funds will be Food Safety 20%, Research 30%, and Marketing 50%. Administrative costs and indirect

costs are not allowed. Grant funds shall be used for projects that solely enhance the competitiveness of spe-cialty crops that benefit the specialty crop industry as a whole and will not be awarded for projects that directly benefit a particular product or provide a profit to a single organization, institution, or individual. “Specialty Crops” that are eligible under this program are fruits and vegetables, tree nuts, dried fruits and horticulture and nurs-ery crops, including floriculture. Proposals must be received by IDALS on or before 4:00 p.m. on Friday, July 17, 2009. For more information visit the IDALS Specialty

Crop Block Grant program at the Depart-ment’s web site at www.IowaAgriculture.gov. IDALS also recently announced that spe-cialty crop stakeholders are encouraged to consider submitting public comment to identify their priorities for the Program and is also establishing a new Review Commit-tee to help review, evaluate, and make recommendations on grant proposals sub-mitted to the Department. Iowans inter-ested in learning more about the program or submitting comment about the program can email [email protected].

(Continued from page 2)

Renewable Fuels Infrastructure Board Approves 23 Projects

On Thursday, June 18, 2009, the Renew-able Fuel Infrastructure Program Board (RFIP) issued a press release announcing the approval of twenty three (23) applica-tions for renewable fuel infrastructure amounting to $889,700. The successful applicants were: (a) 1 Biodiesel Terminal ($27,000); (b) 17 Biodiesel Dispenser (for a total of $641,100); (c) 3 E85 Dispenser ($145,700); and (d) 2 E85 Blender Dis-penser ($75,900). The approved applicants are as follows: Fred's Gas and Car Wash, Inc - McCausland - Biodiesel terminal; Green Plains Grain Co. - Superior - E85 blender dispenser; Riverside Sinclair - Estherville - E85 blender dispenser; Bucky's Express -

Council Bluffs (Broadway) - E85 dispenser; Bucky's Express - Council Bluffs (Madison) - E85 dispenser; Gas'n Go, LLC - Lovilia - E85 dispenser; Huyser Inc - Sioux Center - Biodiesel dispenser; Flying J Travel Plaza - Davenport - Biodiesel dispenser; Green Plains Grain Co. - Superior - Biodiesel dis-penser; Green Plains Grain Co. - Everly - Biodiesel dispenser; Houseman Oil Co. - Estherville - Biodiesel dispenser; Casey's - Oelwein - Biodiesel dispenser; Casey's - Essex - Biodiesel dispenser; Casey's - Polk City - Biodiesel dispenser; Casey's - Hawarden - Biodiesel dispenser; Casey's - Dyersville - Biodiesel dispenser; Casey's - Farmington - Biodiesel dispenser; Casey's - Fredericksburg - Biodiesel dispenser; Casey's - Perry - Biodiesel dispenser; Ca-

sey's - Springville - Biodiesel dispenser; Casey's - Denison - Biodiesel dispenser; Casey's - Durant - Biodiesel dispenser; Gas'n Go, LLC - Lovilia - Biodiesel dis-penser Jeff Hove, Chair of the RFIP noted--"We are seeing an increase in biodiesel dis-penser applications and the continuation of E85 dispenser and E85 blender dispenser applications." The RFIP Board will hold its regularly scheduled board meeting on Sep-tember 15, 2009 where they will review and approve applications for E85 dispensers, Biodiesel dispensers, Biodiesel bulk termi-nals (heated and non-heated).

Commerce (Contact Brad Trow at 1-3471.)

Iowa part of settlement in data breach case Iowa was part of a group of 41 states to reach a settlement with TJX Companies this week over a major data security breach. TJK, which is the parent company for stores like TJ Maxx, Marshalls, and others, agreed to pay the states $9.75 mil-lion for the breach. Between 2005 and 2007, secure information about 47 million debit and credit cards was exposed during the security breach.

As part of the settlement, TJX will pay the states $5.5 million for data and consumer protection efforts. Another $2.5 million will be placed in a trust fund to help states de-velop data security policies and enforce-ment. The remaining money will reimburse states for the cost of investigating the breach. Attorney General Tom Miller an-nounced that Iowa’s share of the settle-ment was $28,000. Congressional investigators contend insurance companies given faulty infor-mation to base health premiums on.

A United States Senate committee asserts that a Minnesota company sold health in-surers faulty health care data, which re-sulted in patients paying more for their health care than they should have. The company – Ingenix – has databases that are used to collect information on payment claims submitted to insurers. The company uses the data to determine reasonable and customary fees for a particular region and then they sell the information to insurers to use in setting payments for services pro-vided by out of network providers.


Commerce Issues in the News

Economic Growth (Contact Matt Hinch at 1-3298.)

Unemployment Update: 22 Year High Despite Democrat promises to spend our way to prosperity by saddling Iowans with $830 million worth of debt – in addition to borrowing $2.6 billion from Iowa federal taxpayers – Iowa’s economy continues to decline. On Friday, June 19, 2009, Iowa Workforce Development announced Iowa’s unemploy-ment rate spiked to 5.8% in May, up from 5.1% one month ago and up from 4% one year ago. As of the last report, which does-n’t take into consideration any of the jobs shed in the month of June, nearly 97,000 Iowans are out of work. The unemploy-ment rate in Iowa hasn’t reached this level since 1986, 22 years ago. In May, 96,600 or 5.8% of Iowans were out of work compared to 67,600 or 4% the same time last year. Total non-farm unem-ployment increased by 43,100 from this time last year. The manufacturing industry

took the biggest hit, cutting 27,800 jobs over the last year. Furthermore, a number of companies announced mass layoffs throughout the month of June. As a result it is unlikely the June report will be much better. The unemployment data for June won’t be made available until later into the month of July.

To make matters worse, President Obama and the Department of Labor are warning of future losses nationwide. The U.S. un-employment rate reached 9.4% in May, up from 8.9% in April. The President has told the country to expect the unemployment

rate to reach double-digits within the next few months. Iowans were repeatedly told last winter and spring that borrowing millions of dollars from hard working Iowa taxpayers is the answer to Iowa’s economic troubles. Re-publicans advocated for a different ap-proach offering ideas and proposing poli-cies to provide incentives to spur invest-ment and job creation in order to create an environment in which the economy could thrive. However, the Governor and De-mocrats in the legislature thwarted those efforts and instead decided to focus on spending and growing the size and scope of state government. House Republicans are eager to return to the Capitol and committed to fix the current financial mess create long-term sustainable jobs, and turn the economy around.


Congressional investigators said that In-genix had eliminated the highest tier of charges to artificially hold down the rates. In some cases, the information submitted

by insurers to Ingenix has already been reduced. The impact to the consumer is that when the insurance company has a lower reimbursement rate, the remaining cost is picked up by the consumer. The genesis of the congressional report

was an investigation by the New York At-torney General office, which reached a settlement with the company for $350 mil-lion. The report may end up being used by some in Washington to advocate for a na-tional system of health care fees.


“The unemployment rate in

Iowa hasn’t reached this

level since 1986, 22 years

ago.”

Education (Contact Ann McCarthy at 1-3015.)

U.S. Supreme Court sides with Parents and Private School in Special Education Case. CAUTION: This week’s U.S. Supreme Court decision is not a free pass to a pri-vate school for every parent who feels that their special education child is not being serviced by the public school district. On Monday, the U.S. Supreme Court held that parents who unilaterally place their child in a private school for special educa-tion services can get private school tuition reimbursement from the public school dis-trict. Key to the decision is that the school dis-

trict failed to propose any special education Individual Education Plan (IEP) for a stu-dent with a long history of ADHD, severe depression, substance abuse problems and failing grades. The case, Forest Grove School District v T.A., involved an Oregon school district’s failure to comply with the federal special education law’s “Child Find” requirement which requires districts to identify, locate, and evaluate all children with disabilities to ensure that they receive needed special education services.

In denying the student services the district failed to provide the student with the fed-eral law’s hallmark: Free Appropriate Public Education or FAPE. After the district determined that T.A. was not eligible for services the parent enrolled T.A. in a private school costing $5,000 per month. In that setting the child was deter-mined to need services.


Another key feature of the decision is how the delays in finding a resolution impact a student’s long term academic achievement. Here the Oregon parents filed for a due process hearing in April 2003 and the dis-trict court issued its decision in May 2005, which was almost a year after the student graduated from high school. Six years later the parents will get the tui-tion reimbursement. The Obama administration filed a “friend of

the court” amicus brief on the behalf of T.A. and his parents. The National School Board Association did so for the Oregon district. The U.S. Department of Education sided with the parents in the denial of FAPE. The school board association noted the rising cost of private placements – up to $100,000 in severe cases. Monday’s ruling is a victory for parents frustrated with arguing with the public

school districts, sometimes wasting critical years in the child’s educational develop-ment. It is still a steep hill to climb, because par-ents have the duty to show that the school is making the effort or failed to make the effort and what the school is offering is not appropriate.


On Thursday, June 25, 2009, the Iowa De-partment of Natural Resources (DNR) is-sued a press release that both praised the success and demand for state revolving loans for clean water purposes used by Iowa livestock producers and announced a July 8, 2009, presentation to the public about the program. This public information meeting will be held from 2:30 to 4 p.m. in the auditorium of the Iowa Historical Build-ing, 600 East Locust St in Des Moines. J. Gordon Arbuckle, Jr., sociology professor at Iowa State University, will present high-lights of an Iowa State University (ISU) of producers who took loans, versus those that didn’t. Bill Ehm, DNR coordinator for water quality noted that--“We wanted to know the poten-tial impacts of the loan program on Iowa’s land and waters.” Ehm asked researchers to identify why some Iowa producers were not taking advantage of the program, which caps interest rates at three percent. Initial findings indicate that not all parts of the

state were equally aware of the program. However, in areas where staff understood and actively promoted the program, usage tended to be higher. “The study has shown that farmers are willing to finance conser-vation when low-interest loans are avail-able,” said Ehm. “We gained information that indicates borrowing can be a useful tool for producers who want to improve their management practices.”

Other findings show that people who used the loan program were very satisfied. In general, they tended to spend more on conservation than the farmers who funded their conservation practices through cost-share programs. “The results are striking,”

said Arbuckle. “On average, loan recipi-ents spent 25 percent more on conserva-tion practices and implemented a greater variety of practices than folks who relied primarily on cost-share. The loans appear to help them make significantly larger in-vestments in conservation over shorter periods of time.” The loans are available through the State Revolving fund, an Iowa program aimed at improving water quality. Loans are offered to farmers and livestock producers through a partnership between the DNR, the Iowa Finance Authority, the Iowa Department of Agriculture and Land Stewardship, and Soil and Water Conser-vation Districts. Since the program began, farmers have borrowed more than $34 mil-lion to prevent sediment, chemicals and nutrients from polluting Iowa’s streams and rivers. However, use of the loans has var-ied around the state and program manag-ers wanted to know why which is what insti-gated DNR request for the ISU study. For more information about the loans, see www.iowasrf.com.

DNR Touts Success of Clean Water Revolving Loans for Livestock Farmers

Environmental Protection (Contact Lew Olson at 1-3096.)

Public Hearings for Proposed UST Operator Training Requirements On July 7th, 8th and 9th, the Iowa Depart-ment of Natural Resources (DNR) has scheduled three public hearing on pro-posed rules to substantially ramp up train-ing requirements for underground storage tank (UST) operator training, requiring clo-sure investigations be conducted by a certi-fied groundwater professional, amending the conflict of interest provisions for con-

ducting compliance inspections, clarifying the biennial compliance inspection require-ment, and providing piping leak detection requirements at unstaffed sites (ARC 7854B in the June 17, 2009 Iowa Adminis-trative Bulletin pages 2741 to 2748 [http://www.legis.state.ia.us/aspx/ACODOCS/DOCS/06-17-2009.Bulletin.pdf]. ARC 7854B proposes to change existing rules

and adopt new rules requiring underground storage tank (UST) operator training, re-quiring closure investigations be conducted by a certified groundwater professional, amending the conflict of interest provisions for conducting compliance inspections, clarifying the biennial compliance inspec-


“...in areas where staff

understood and actively

promoted the program,

usage tended to be higher.”


tion requirement, and providing piping leak detection requirements at unstaffed sites. This rule came about because of Iowa leg-islation, Senate File 499 (2007). It was in response to a federal United States Envi-ronmental Protection Agency (US-EPA) rule change that directed DNR to adopt rules consistent with US-EPA guidance (see http://www.epa.gov/OUST/index.htm) requiring underground storage tank opera-tor training rules. The new US-EPA guid-ance requires three classes of operators: Class A operators responsible for manag-ing resources and personnel to achieve and maintain compliance; Class B opera-tors responsible for implementing day-to-day aspects of operating, maintaining and record keeping for one or more facilities; and Class C operators who are the on-site employees controlling or monitoring the dispensing of fuel and who are the first line of response to emergency conditions. One person can be more than one class of op-erator. While DNR does not plan to pro-vide training for operators, it intends to ap-prove training classes for Class A and Class B operators. The training will be provided by third parties or within a com-pany’s normal training of personnel. All training must be approved by DNR. The proposed rule will allow for approval of

on-line computer training that meets the requirements. Class C operators can be trained by the Class B operator. Class A and Class B operators must be designated and trained by August 1, 2011. Written basic operating instructions, emergency contact names and telephone numbers, and basic procedures specific to the facility are required for Class C operators, who must receive some basic training within six months of the effective date of this rule change. The pending rule will also change existing state rules for compliance inspec-tions because the US-EPA guidance does not allow compliance inspections to be conducted by licensed inspectors who are employees of the underground storage tank owner or operator which was allowed under the existing state rule that was adopted before the revised US-EPA guid-ance was issued that now prohibits this. The new rule will require piping leak detec-tion at unstaffed facilities requires in-line leak detection to shut off the submersible pump and stop product flow to the dis-penser. In-line leak detection is for catas-trophic leaks in pressurized product lines. At existing sites that operate unstaffed, this requirement must be met by June 1, 2010. ARC 7854B further requires that a ground-water professional certified by DNR, con-duct the soil and groundwater investigation required when underground storage tanks are permanently closed by removal or filling

in place, but DNR has discretion to waive this requirement under certain circum-stances if agency staff are willing and able to provide direct supervision of the tank closure. Any interested person may submit written comments on the proposed amend-ments on or before July 10, 2009. Written comments should be sent to the Iowa De-partment of Natural Resources, Attn. Paul Nelson, 502 E. 9th Street, Des Moines, Iowa 50319; fax (515)281-8895; or E-mail [email protected]. Three public hearings will be held at 1 p.m. on the dates indicated at the following locations, at which time persons may present their views either orally or in writing. Tuesday, July 7, 2009 Denison Public Meeting Room 111 N. Main Street Denison, Iowa Wednesday, July 8, 2009 Coralville Public Library Meeting Room B 1401 5th Street Coralville, Iowa Thursday, July 9, 2009 Wallace State Office Building 5th Floor Conference Room 502 E. 9th Street Des Moines, Iowa


Human Resources (Contact Brad Trow at 1-3471.)

Twelve years after its creation, the Iowa Empowerment Board held a strategizing event last week to consider changes to the state’s leading program for helping families get their children ready to learn when they enter kindergarten. While the meeting be-gan a process of considering the future of the program, its results have set off consid-erable concern in many communities. The Empowerment Board cooperated with the Department of Management to have a LEAN event from June 15-19. LEAN is a process, created by business in the 1990’s, to identify new and more efficient ways to

operate. The Empowerment Board’s event identified four areas that local Empower-ment Areas and the Iowa Empowerment Board could change to improve the proc-ess. These areas are: Improving quality by establishing tiered lev-els of excellence;

Re-defining local Empowerment Area boundaries;

Examining the state level structure for Empowerment and programs dealing with children age 0-5; and

Improving the public’s knowledge of Community Empowerment and what

Empowerment is supposed to do. The central concern to be raised about these four issues is over boundaries. The current empowerment boundaries were determined by local people deciding to band together. The LEAN event produced a proposal that sets some criteria for how the boundaries should be set:

An empowerment area would be no more than 4 counties;

Counties that do not share a border


Empowerment Board Considering Ideas for Change


would not be in the same area;

Single-county Empowerment Areas would have to have at least 5,000 chil-dren age -0-5 to remain as a single-county area; and

Existing multi-county areas would not be broken up.

The issue of boundaries and Empowerment Area composition has come up as some groups have had financial viability issues. In putting these criteria together, a map was produced that identified potential new boundaries. At this point, the Empower-ment Board is still considering the criteria proposed at the LEAN event. While some have assumed that the map produced at the LEAN event is the final product. Em-powerment and DOM staff have assured

caucus staff that it is just a concept. In mid- July, the Iowa Empowerment Board will have meetings will local coordinators and other interested parties to discuss the results of the LEAN event and the next steps forward. That will be the next step, in what will likely be a long conversation on how Iowa can improve its early childhood efforts.


On July 1, a few new labor laws will go on the books for the State of Iowa. They in-clude new child labor and wage payment laws, amusement park ride insurance, workers compensation penalty benefits and an increase in contractor registration fees. Here is a brief rundown of each one: HOUSE FILE 618 – CHILD LABOR / WAGE PAYMENT VIOLATIONS HF 618 increases the fine for wage pay-ment violations from $100 to $500. The bill states the evidence obtained by the Fed-eral Government can be used as evidence that a business has violated the child labor

law. (This was because current law did not allow evidence obtained by ICE to be used against them.) The bill changes the legal standard for child labor violations from “willfully” to “negligently” allowing child labor. This is a compromise between the Attorney General and the business community because the AG wanted “strict liability” which is a must tougher legal standard. The grocers have some concern about this impacting them as they hire many younger employees. Also, the bill increases the penalty for a parent or guardian who allows child labor

or any person who furnishes child labor from a simple misdemeanor to a serious misdemeanor and instructs the Labor Com-missioner to establish a civil penalty (of no more than $10,000) for child labor viola-tions. The House approved HF 618 on March 12 on a 97-0 vote and the Senate approved the bill on March 19 on a 48-0 vote. The Governor signed the bill on April 8. SENATE FILE 318 – AMUSEMENT PARK INSURANCE / CONYENCE


Labor (Contact Lon Anderson at 1-5184.)

New State of Iowa Labor Laws as of July 1

Judiciary (Contact Tony Phillips at 1-3026.)

Judicial Council to Explore Digital Recording Last month, the Judicial Council formed the Digital Audio Recording Technology com-mittee (DART). The committee was formed to “examine digital recording equipment for purposes of assessing the reliability of this technology, the accuracy of a record made with this technology and the cost of acquir-ing, installing, operating and maintaining this technology.” The formation of the DART committee fol-lows the discussion by the Court earlier this year of replacing the State’s roughly 190 court reporters with digital recording ma-chines. Such a move is largely seen as a cost savings move. Many questions remain about a move to

digital recordings. Some have expressed concerns that relying purely on digital re-cordings may not preserve “the integrity of the record”. With a court reporter in the room, if something is unclear, they can ask for it to be repeated. With only a recording, there will be no way to go back.

Additionally, the savings to be achieved by replacing court reporters may be less than

first thought. You still must pay someone to operate and maintain the recording ma-chines. You must also still pay to have the record transcribed. As some states have found, these costs add up quickly. The DART committee consists of judges, attorneys, and court administrators from around the State. They met on Friday, June 26 with a number of vendors showcasing their digital audio recording equipment. The Committee will meet again on July 31 and hopes to be able to test the technology in select courtrooms later this year.

“Additionally, the savings to

be achieved by replacing

court reporters may be less

than first thought.”


SF 318 increases the insurance policy minimums needed to obtain an operator's permit under Code chapter 88A, relating to amusement ride safety. The policy amount for bodily injury, death, or property damage in any one incident is raised to $1 million. Currently, the minimum amount required for bodily injury to or death of any one per-son is $100,000; for bodily injury to or death of two or more persons, $300,000; and for property damage, $5,000. The bill also directs the elevator safety board to adopt rules regarding the submis-sion of plans, drawings, and measurements concerning new conveyance installations and alterations. The bill also allows the labor commissioner to determine the form of an application for an installation permit for a new conveyance. An application is required to be submitted to and approved by the commissioner before an installation permit for a conveyance is issued. SF 318 passed the Senate on a 47-0 vote on March 9 and passed the House on a 99-0 vote on April 16. The Governor signed the bill on April 24. SENATE FILE 478 – STANDING APPRO-PRIATIONS BILL FOR FY 2010 SF 478 is the Standings appropriations bill for FY 09. The bill funds the property tax credits from the Property Tax Credit Fund, makes appropriations from the Cash Re-

serve Fund, puts limitations on several standing appropriations, ratifies the collec-tive bargaining agreements and sets ap-pointed officers salaries, sets the mental health allowed growth factor for FY 11, adds several bills or parts of policy bills that did not make it through the funnel deadline and makes several technical and corrective changes. Here are some of the substantive provi-sions of Standings that take effect on July 1: Section 110 – Workers Compensation Penalty Benefits HF 791 is advocated by the Trial Lawyers Association in response to two Iowa Su-preme Court cases (Keystone Nursing Care Center v. Craddock and City of Ma-drid v. Blasnitz) where the claimants were denied penalty benefits. Under current law, the Work Comp Commissioner may award a penalty of up to 50% of the weekly bene-fits that were "unreasonably" delayed/denied or terminated (although the word "denial" does not appear in 86.13, the word "delay" has been construed to include the circumstance where a claim is denied but ultimately determined to be compensable). The commissioner liberally assesses such penalties if employers/carriers do not have reasonable grounds to deny a claim, delay payment, or terminate weekly benefits. Advocated as a “simple clarification” of existing penalty law by the Trial Lawyers.

In actuality, it's anything but. Sections 4a, 4c2, and 4c3 would limit and/or directly override the Supreme Court’s decisions in Craddock and Blasnitz. The upshot would be to limit employers/carriers' defenses to penalty claims and to limit the appellate courts' ability to correct erroneous penalty awards. Division XVI -- Contractor Registration Increase Fees for contractor registration are in-creased from $25 every other year to $50 per year. Fees are deposited in the Con-tractor Registration Revolving Fund – not the GF. Out of state contractors may file a blanket bond for a two-year period. Estab-lishes a contractor registration revolving fund. Fees from Contractor Registration are deposited in the fund. Moneys from the Fund are appropriated to the Labor Com-missioner to pay actual costs and ex-penses of the Division of labor. Moneys from the fund do not revert and the fund retains interest earned. The Commis-sioner may adopt emergency rules to im-plement these sections. Rules are effec-tive immediately upon filing unless a later date is specified. Rules adopted shall also be published as a notice of intended action. The House passed the bill on a 55-45 vote on April 25 and the Senate passed it on a 27-16 vote on April 26. The Governor signed the bill with item veto on May 26.


Natural Resources (Contact Lew Olson at 1-3096.)

Honey Creek Business Lagging Behind Projections, Summer Uptick Anticipated Just prior to the June 11, 2009, Natural Resource Commission (NRC) meeting that was held at the Wabonsie State Park Na-ture Center, the Iowa Department of Natu-ral Resources (DNR) distributed to NRC commissioners, and select legislative and executive staff, materials tracking the busi-ness performance compared to projections of the Honey Creek Resort State Park op-erations. These documents noted that occupancy so far at the resort has been 32.6% for April and 35.2% since Septem-

ber 18, 2008, compared to projected levels of 45% for April and 46.5% since the resort opened. This failure to meet expectations occurred even though the resort has offered dis-counted rates approximating 12-15% from what it had projected for this period. For April the average daily rate (ADR) for the resort was $87.38 compared to a projected $97.50. These values compare to state-wide average of 48.7% occupancy and

ADR of $68.30, though it should be noted that Honey Creek offers far more amenities than most Iowa hotel/motel/resort opera-


“This failure to meet

expectations occurred even

though the resort has offered

discounted rates...”

State Government (Contact Ann McCarty at 1-3015.)

A dizzying display of 100 pages of docu-ments described over a six hour period at the IPERS Investment Board meeting this week boils down to this:

IPERS net worth dropped 18 % in the past year.

In 2008, IPERS showed a portfolio worth $22 billion. Today the portfolio value hov-ers around $18 billion The IPERS Real Estate portfolio, for exam-ple, which makes up 9.2 percent of the fund allocation has lost 14 percent with the luxury hotels within the portfolio seeing a 30 percent write down. The IPERS invest-ment advisors touched on the “evidence of stress” in retailer bankruptcies (Circuit City and Linen and Things) and the bankruptcy of General Growth Properties. Disturbing to this sector of the portfolio was the news that the year 2012 is a refinancing year for many commercial, retail and office proper-ties. The Investment Board questioned the loss

of funds through the Westridge fraud case. From March of 2007 through October of 2008, IPERS invested $500 million with Westridge. The market value of those funds today is $291 million. Of the $291 million, IPERS officials expect that 40 percent of that amount will never be recovered. The federal fraud case pending shows that funds recovered may allow IPERS to recoup 60 percent of the $291 million.

So from a $500 million initial investment, IPERS stands to maybe, possibly recoup $175 million. News like this accentuates the relevance of the actuarial studies described in the last

newsletter. In September, the Benefits Advisory Board will look at the results of these three studies: 1. Review the Rule of 88 and the rule of

age 62 with 20 yrs of service. Instead full retirement benefits at age 65 or a 3 percent reduction in benefits if you go b/4 age 65.

2. Reduce future benefits for new and current employees (not retirees).

3. Increasing the contribution rate as much as is affordable, but no more than 14 to 16 percent. For FY10 the contribution rate is 10.95 percent.

Expect IPERS to be a key topic for the 2010 session.. It certainly looks like changes are ahead for those public em-ployees now paying into IPERS. By law, current retiree benefits cannot be reduced. But for current employees, the benefits, retirement rules and contributions rates can and most likely will change.

Transportation (Contact Tony Phillips at 1-3026.)

IPERS Net Worth Down 18 Percent


The Iowa Transportation Commission re-cently approved the FY2010-2014 Iowa

Transportation Improvement Program. The program outlines a five year window of

investment priorities for the State’s trans-(Continued on page 10)

Transportation Commission Approves 2010-2014 Plan

tions. The consequence of lower occu-pancy and lower ADR meant that the resort generated only $257,899 in total revenues compared to projected budget of $384,512 for this period. Consequently, April net income before management fees and fixed charges were under budget by $77,259. The DNR-distributed materials noted and touted that one of the highlights of Honey Creek resorts performance has been that the Rathburn Lakeshore Grille dining room revenue for April was more than double projected levels ($75,481 compared to

$35,600) and since the resort and restau-rant opened the number of customer has exceed expectation for this period by nearly 2 and ½ times (54,391 to 22,309 covers). However, this bright spot was offset by lower than anticipated use of the resort’s banquet operation that have been only about 40% of project level since the open-ing of such facilities (11,162 to 27,750 cov-ers) and the banquet operation use in April lagged even more (1,331 to 5,600 antici-pated which is less than 24%). The presented materials did project a more favorable performance of the resort in the upcoming summer months noting that res-

ervation for both the newly opened cabins and lodge facilities indicate a booked cabin occupancy of 71% for June, 92% for July and 66% for August, while booked lodge occupancy is 43% for June, 62% for July and 58.6% for August. The report also noted RAGBRAI is slated to pass through the area on July 23rd and the resort will be hosting the Rathbun Lake Association Summer splash which between the two events, the resorts anticipates will provided an opportunity to make 15-20,000 guest impressions at the resort.


“...from a $500 million initial

investment, IPERS stands to

maybe, possibly recoup $175

million.”


portation system. The program anticipates that there will be $2.1 billion available over the five year pe-riod for highway construction. Four objec-tives were outlined for the highway section through 2010-2014: Maintain and preserve the existing highway system and its operational and safety fea-tures. Maintain scheduled completion of capacity and economic development projects identi-fied in the previous program. Continue investments in major interstate capacity and economic development pro-jects. Add non-stewardship capacity and eco-nomic development projects or phases of projects.

The Department found it important to note that while stimulus funds will lead to record short term transportation spending, there remains long term funding problems. The Department highlighted in their release that “it is important to note there remains a sig-nificant shortfall in sustained annual trans-portation investment to meet Iowa’s critical transportation needs.”

Curiously, the Department refers to the I-JOBS initiative as a solution to the long term shortfall, citing that “in recognition of this shortfall, Governor Culver introduced the I-JOBS initiative, which was recently enacted.” Of course, the I-JOBS money will be spent in a relatively short time frame and will contribute nothing toward solving the underlying funding troubles. Still referring to the I-JOBS money, the Department claims “this funding will extend the benefits of Recovery Act funding and set the stage for addressing the shortfall in annual funding for the next few years.” In other words, we’re kicking the can down the road with one-time federal and state funds and no solution to the long-term problem.

Required Hours for County Veterans Services Offices Begins July 1 On July 1, 2009, the County Commission of Veterans Affairs bill will take effect. Pursu-ant to the bill passed in 2008 (SF 2134), and amended this year (HF 283), each county will be required to be open a mini-mum number of hours to provide services to veterans in their counties. The required number of hours is based on the population of the county as follows, and the hours are to be posted prominently outside of the office:

20 hours per week for counties with a population of 30,000 or less

30 hours per week for counties with a population between 30,001 and 60,000

40 hours per week for counties with a

population of 60,001 or greater The bill also states that employees are required to become accredited by the Na-tional Association of County Veteran Ser-vice Officers (NACVSO) by June 30, 2010, or within one year of being hired. An ac-creditation school will be held in Des Moines by NACVSO October 19 -23, 2009. Information will be available at NACVSO’s website at http://nacvso.org/?page_id=16. An appropriation of $1.0 million was part of the legislation as well and was finally fully funded in House File 811. It is a standing appropriation that is to be used by the counties to help provide services to veter-ans by meeting the qualifications set forth

in code section 35B.6, addressing adminis-trative duties and training for County Veter-ans Services Offices. SF 2134 was passed by the House and signed by the Governor last year. HF 283 was passed by the House February 18th and signed by the Governor February 26th of this year. The Department of Veterans Affairs has sent a letter to each County Board of Su-pervisors, County Auditor and County Commission of Veterans Affairs in early June explaining the new law.

Veterans Affairs (Contact Jason Chapman at 1-3440.)

Ways and Means (Contact Matt Hinch at 1-3298.)

Iowa’s corporate tax laws have often been a point of contention and credited with de-terring businesses from locating their op-erations in Iowa. Currently, the State of Iowa taxes corporations at 12% on busi-ness income on $250,000 and above.

However, other taxes on the books are forcing companies out of Iowa and may prevent future companies from locating here as well. Over the past several months, a former Marion recruiting consult-ant has been battling the Department of Revenue over an audit that resulted in a

tax bill issued to his company totaling tens of thousands of dollars. The issue is the collection of sales tax on recruitment ser-vices provided to companies located out-side of Iowa.


Iowa’s Predatory Tax Laws Push Businesses Away

“...the I-JOBS money will be

spent in a relatively short

time frame and will

contribute nothing toward

solving the underlying

funding troubles.”

The state sales tax law in chapter 422 of the code and its supplement – rule 701-26.38 – is the point of contention. It is the rule that guides how private employment agencies and executive search agencies are treated under the tax code. However, the rule is very antiquated and has not been updated in several years. Just one example can be found by looking at the income threshold for management posi-tions established in the rule. The rule de-fines top level management positions as those positions with salaries over “$30,000.” Clearly, top level management positions no longer pay $30,000 a year. Furthermore, many of the definitions in-cluded in the rule are poorly written and appear to provide auditors with lots of lev-erage when determining the audit. Even the Department of Revenue is expected to review and amend its rules sometime be-fore the end of the year.

However, it does not appear that the De-partment’s rule review will help the recruit-ing consultant firm in Marion, unless there is a retroactivity component attached to it. While an appeal to the auditors findings has been submitted, it is still pending and it is uncertain whether or not the Department of Revenue will change its stance on this particular case. The recruiting consultant company in Marion, which is credited with helping several companies to locate and fill jobs in Iowa has decided the headaches incurred during the last several months are

no longer worth it and the competitive dis-advantage by staying in Iowa would put him out of business. He has packed up his office and moved to Utah. House Republicans tried to change the law during the last legislative session. Repre-sentative Wagner (R-Marion) was con-cerned that many recruiting consultants and other recruiting firms would leave Iowa, seeking a more friendly business climate for their operations. Accordingly, Repre-sentative Wagner introduced legislation, House File 605, which would exempt the services of certain executive search agen-cies and private employment agencies, in order to persuade the firms who provide these services to stay put in Iowa and con-tribute to the growth of the state economy. However, Republicans were unsuccessful in their pursuit as Democrats on the House Ways and Means Committee refused to hold one meeting on the proposal.



SENATE FILE 480 – FILM, TELEVISION AND VIDEO PROMOTION TAX CREDITS The Department of Economic Development administers a film, television and video project promotion program to encourage the production of films, television shows, and videos in Iowa. The program provides tax credits for specific qualified expendi-tures on eligible projects and allows project vendors to exclude project income from income taxes in the year it is earned. SF 480 adds the salary expenditures for directors, producers and principal cast members to the list of qualified expendi-tures eligible for tax credits. SENATE FILE 481 – STATE HISTORICAL TAX CREDITS PROGRAM EXPANSION SF 481 provides tax credits to developers who rehabilitate historical buildings. Cur-rent law provides $20 million for these tax credits, the bill increases the annual credit maximum to $50 million. Recipients are

eligible for 25% of the cost to rehabilitate the property. The bill also changes the per-centage allotment between subcategories of recipients. SENATE FILE 478 – TAX INCENTIVES FOR DATA PROCESSING CENTERS This bill provides incentives for data busi-nesses, similar to existing incentives for web-search portals and Information Tech-nology facilities. The bill creates a five-tiered graduated scale based on the size of the investment a business commits to the state. The top four investment levels require the facilities physical location be a minimum 5,000 square feet and all projects are re-quired to meet sustainable design stan-dards established by the state building code commissioner. Outlined below are the investment categories and the corre-sponding incentives: $200 million or more: 100% sales, use and

property tax exemption on computers, equipment, backup fuel and electricity. In-centives are good for the life of the busi-ness. $136 million – less than $200 million: 50% sales and use tax refund on computers, equipment, backup fuel and electricity. In-centives are good for 7 years. $73 million – $136 million: 50% sales and use tax refund on computers, equipment, backup fuel and electricity. Incentives are good for 10 years. $5 million – $73 million rehabilitated build-ing / $10 million – $73 million new building: 50% sales and use tax refund on com-puters, equipment, backup fuel and elec-tricity. Incentives are good for 15 years. $1 million – $5 million rehabilitated build-ing / $1 million - $10 million new building: 50% sales and use tax refund on fuel and electricity. Incentives good for 5 years.


Notable Tax Provisions In Effect Beginning July 1st

“The recruiting consultant

company...has decided...the

competitive disadvantage by

staying in Iowa would put

him out of business. He has

packed up his office and

moved to Utah.”


SENATE FILE 483 – LIMITATION OF TAX CREDITS SF 483 places a limitation on the aggregate amount of tax credits to a maximum of $185 million each year for 5 tax credit pro-grams. The following tax credit programs will be limited if this bill is enacted: ■ The High Quality Job Creation Pro-

gram.

■ The Film, Television and Video Promo-tion Program.

■ The extra research credit under the quality jobs enterprise zones program.

■ The Enterprise Zone program. ■ The Assistive Device Tax Credit Pro-

gram. The bill also places a $6 million cap on how much the Agricultural Development Author-ity can issue for a program that encouraged

farmers to transfer their assets to a begin-ning farmer. Beginning with Tax Year 2009, the bill eliminates the ability for corporations to carry back net operating losses back to previous tax years when the company was profitable.

Documents

Friday, June 26, 2009 ...iowahouserepublicans.com/wp-content/uploads/caucus-newsletter-2009-06-26.pdfJun 26, 2009 · Page 3 House Republican Newsletter ciations or organizations,