Iowa Budget Address 2011

DES MOINES, Iowa – Jan. 27 – Following is Gov. Terry Brandstad's (R) 2011 budget address:

Madam Lt. Governor, Mr. President, Mr. Speaker, Leaders, justices, judges, legislators, elected officials, distinguished guests, family, friends and fellow Iowans:

I am humbled to stand before you once again as your Governor in this, the people’s House. It is here that our forefathers set the direction of our state: educating our kids, building our roads, protecting our citizens, caring for the unfortunate. And they did so, while being careful with the tax dollars and balancing our state’s budget.

In this storied chamber, I cut my political teeth as a young state representative — learning both to advocate my position and respect my adversary. To disagree without being disagreeable. To listen, because that is the only way to learn. Because, at the end of the day, we are all Iowans working hard to make our special state an even better place. Let us never forget why we are here: to do the people’s business as their servants with respect and dignity and good will.

Today, I stand before you to present the state’s budget for the next two years. But, at the risk of sounding a bit like the grandfather I am now, I think we need to start with a stern talking to. When I began the preparation of this budget, I was handed a list of dozens of programs — 89 to be exact — that had been funded with money we no longer had. Everything from paying for teachers to state troopers had been funded with one-time money — nearly 900 million dollars’ worth. Now, you wouldn’t run your family budget that way. If you did so, you would soon be visiting the bankruptcy court. And we should never run the people of Iowa’s budget that way, either. And with this budget, it will come to an end, now.

I understand that this budget method of borrowing from Peter to pay Paul didn’t just happen overnight. I understand that it has been building over at least a ten years. But that doesn’t make it right; and that doesn’t mean we can ignore it for another decade. You see, if we don’t fix it, the very integrity of our government is threatened. When we over-promise and under-deliver, time after time, we erode, like a corrosive acid, the ties that bind our society. And, our ability to do those things we desire — whether it be educating our kids, caring for the sick, protecting the vulnerable, or improving our ability to create jobs — will be lost in a sea of red ink.

It is our responsibility, as servant-leaders, to pass a budget as honest, frugal and balanced as the people it serves. And, the time to do it is now. The rebounding agricultural economy gives us a unique opportunity to bind up Iowa’s budget wounds quickly. We must not squander that opportunity. It will not be easy. It will require difficult and painful choices. But the pain we endure by fixing our budget today, will lead to great opportunities for Iowa in the future. It will require change. No longer can every organized constituency get what it wants. There is a greater good we are seeking. We must restore predictability and stability to our state budget, ensure our decisions are sustainable for the long term, and set the stage for a period of unprecedented economic expansion. It is the taxpayers, not the interest groups, we must protect.

So, the budget I present to you today cleans up the budget mess that has been made. It cleans out the cobwebs in the closets of government. It sets Iowa on a new course with smaller, predictable, sustainable government. That is nimble enough to respond to needs and small enough to stay out of the way of our job creators. And we do it by: First, $770 million of general-fund spending that was funded by one-time revenue is moved back into the general fund, where it belongs, once and for all. This is an honest budget that matches ongoing spending with ongoing revenue. And it funds our commitments to schools, health care for the poor and elderly, and troopers with funds that won’t evaporate in a year.

Second, this budget provides nearly $160 million in direct property tax relief to Iowans. It fully funds the state’s share of our school funding commitments — erasing the need for local school districts to make up the difference in property taxes. Iowa property taxpayers have paid a high price for the state’s past practices and it is time to make them whole. Third, this program and budget make it clear that Iowa is ready for job creation. We all know that small businesses are the engines of our growth. Yet, our small businesses pay an income tax rate that is highest in the nation at 12%. And our small business pay commercial property taxes that are as high as those in mid-town Manhattan. This budget will make us competitive for new jobs.

The small business income tax rate will be cut in half and made a flat 6%. Commercial property taxes will be reduced by 40% over the next 5 years. New investment will be immediately taxed at 60% of its valuation. And existing commercial property will be rolled back by 8% a year over 5 years. My plan includes funding for these tax cuts through the use of new revenue coming to the state due to economic growth, the additional revenue generated by the extension of the Bush tax cuts, and by a restoration of the gaming tax to the level at which it was originally agreed to years ago. I will be bringing forth legislation to transform our current Department of Economic Development into a public/private partnership. This will be a partnership that unshackles our economic development efforts from an alphabet soup of bureaucratic programs and brings the best practices from both sectors to recharge our job creation mission. And I intend to give that new partnership new tools to market and sell our state to job creators.

I have asked each of our Department and Agency heads to do a top to bottom review of all administrative rules and regulations to determine how we can best fulfill our responsibilities while eliminating impediments to job growth. While tax policy can take us a significant way forward in our effort to compete for new jobs, much of that work can be undone by a bureaucracy that fails to understand the critical relationship between burdensome regulation and job creation. The rules and regulations identified through this process will be the first subjected to our proposed rolling sunset and I will further order all future proposed rules and regulations to contain a jobs impact statement so we can identify those that cost jobs before they impact our Iowa employers. We have wrung our hands over these issues long enough. Now is the time to make Iowa’s main streets truly open for business with the jobs we so desperately need. It is only by these actions that we can be assured of the growth we need to fund our future state budgets.

Many new Governors across this nation are aggressively moving to reduce tax and regulatory burdens to spur new job growth and I want to position Iowa as the leader. Our unemployed deserve nothing less than our best efforts to bring new jobs to this state. No one will work harder to bring new jobs to Iowa than me, Lt. Governor Reynolds, Director Durham, and our entire economic development team. Fourth, we must reduce the size and scope of government. State agencies and local governments must break down the silos that divide them. Services must be shared so Iowans’ needs are met. Costs must be reduced — we can no longer afford to pay 46% more for public services; the collective bargaining law must be changed to recognize the rights of the taxpayers. And we, the leaders of our governments, must do a better job of managing our scarce resources.

Over the past two months, Lt. Governor Reynolds and I have been actively working with our management team, reviewing the current budget in excruciating detail. In fact, the Lt. Governor and I have taken the time to personally review every line item in the state budget so we can look Iowans squarely in the eye when we tell them we simply have too much government and the status quo is no longer a viable option. With this budget, we have a choice. Do we take the bold and difficult steps, make the painful decisions, and honestly align our spending and revenue? Or, do we kick the problem down the road yet again?

Fellow Iowans, I didn’t come here to avoid tough decisions. No more games. No more gimmicks. No more bail-outs. Fifth, we must budget for the long term. This budget doesn’t solve all our problems overnight. No budget can. But it puts us on a path of sound budgeting principles. And we must stay on that path by resisting the temptation to push our obligations to the next generation. I plan to insist on budget discipline.

The results of our past budget practices have been across the board cuts and a mountain of broken promises. The days of unsustainable commitments are over. It will come as no surprise to any of you that I am submitting a biennial budget that includes my recommendations for both Fiscal Years 2012 and 2013. Also included with this budget is a five year financial projection that shows how the decisions we make this year will impact the bottom line over the next five years. Iowa desperately needs these financial planning tools and I will insist the Legislature join me in this commitment to provide Iowans with an honest, open, and transparent approach to spending the public’s money. We will make our government as good, as dependable, as well-managed as the people it serves.

How do we accomplish our goals? We cut unnecessary spending. Programs that have passed their time are eliminated and others are modified to make sure those in need are those who receive government help. Every area of state government will be asked to share in this sacrifice. I have appointed a collection of talented leaders in our state departments and agencies and have charged them with remaking government at all levels to find more efficient and less costly methods to deliver our state services.

While school systems across this country are reeling from massive budget cuts, this budget for the next two years holds school spending authority at the current level. No increase. No decrease — but with an assurance that we can deliver on this promise and allow our creative school leaders more flexibility and opportunity to make things work. And let’s not forget, even while holding spending authority at current levels, last year the state underfunded its commitment by $156 million. Local school districts were left holding the bag with little choice but to levy additional property taxes to make up the difference. This budget funds that commitment with state dollars and provides direct property tax relief to Iowa taxpayers.

But education isn’t all about dollars and cents. It is about our children and our willingness to take the steps necessary to reform our schools and make them among the best in the world. To that end, I will convene an education summit this summer — bringing together the nation’s most dynamic educational reform leaders. These national leaders will work with our new education policy team and strive to reach a consensus on what changes are needed to give our children the nation’s highest quality schools. Should we reach that critical consensus, and I have no reason to believe we won’t, I will convene a Special Session of the Iowa Legislature in the fall of this year to approve our bold reform agenda and make good on our new covenant promise to provide our children with a globally competitive education. In addition, I cannot leave the education discussion without renewing my commitment to ensure that every Iowa child has access to quality preschool.

This budget proposes a $43 million annual investment in providing preschool assistance to those families in greatest need. Research shows preschool investments have the most long-lasting impact on children who come from homes with financial need. As such, our program will be targeted to those families and will give parents flexibility to choose the preschool environment that best meets their needs. But we cannot do this alone, all across this state parents, private donors and caring organizations have for years partnered with preschool providers to ensure access. I am happy to have the state of Iowa join them — as a partner, not as the sole provider.

My fellow Iowans, none of what I have brought forward today will be easy. But all of it is necessary. We must put an end to the budgeting practices that failed our people and brought unprecedented instability to the delivery of critical state services. We must adopt long term budgeting practices that provide decision makers with an early warning system to coming budget cliffs in time to make adjustments that prevent service disruptions. We must cut real spending out of state government and challenge our Department leaders to remake state government in a manner that provides services more efficiently and at less cost. We must provide financial stability to our schools while we engage in an historic effort to reform our schools and restore our preeminence in educational performance. We must fund more of our property tax credits and obligations and provide Iowa taxpayers with nearly $160 million in much needed relief. We must reduce small business income and property taxes, and eliminate rules and regulations that cost us jobs.

If we have the courage to do these things and do them now, then I am confident Iowa will be the leader in America’s economic recovery. The more than 100,000 unemployed Iowans deserve nothing less than our best efforts and we have an obligation to take the bold and decisive actions necessary to dramatically improve Iowa’s ability to compete for new jobs. When God made his covenant with Abraham and his people so many ages ago, it was a covenant that required immediate and significant sacrifice in return for a promise of incredible abundance. However, that abundance was to be years and even decades in the making. Our new covenant between this state and its people does indeed require significant immediate shared sacrifice. But, as with Abraham and his people, the people of Iowa can expect our efforts will lead to tremendous abundance which we, our children, grandchildren, and future generations of Iowans will enjoy.

I stand before you today older and wiser than when I first set foot in these chambers. But I am no less passionate about our future. If we make the right choices, the days before us will be ones of abundant growth and new jobs: Enough abundance to bring back our sons and daughters and those who wish to join us. Enough abundance to meet the needs of our kids, and our elderly, and the sick and the vulnerable. Enough abundance to make the future the golden years in Iowa history. We stand at the crossroads of that history. Which path will we take? I know that this institution is fueled by compromise; but we cannot compromise on the future of Iowa. Our state will be driven by the right policy choices and I will fight with all my political might to make sure that we make the right choices. We are the fortunate few who have been chosen by the people to do what is right. Let us be motivated by the better angels of our nature for the good of all Iowans. Together, we will accomplish great things. Thank you and God Bless you and God Bless the people of Iowa.

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