Branstad sets focus on jobs, economy

Do not attempt to adjust your calendar.

It's 2011. It just feels like 1991 - with Terry Branstad bemoaning state government's structural deficit and Chuck Palmer calling for Medicaid reform in the Iowa Department of Human Services, like they did 20 years ago.

With November's election signaling a desire for a change, Iowans are embarking on a back-to-the-future journey with Branstad at the helm for a fifth term and the legislative deck reshuffled to put Republicans in control of the Iowa House. Democrats maintain a weakened grip on the Iowa Senate.

Branstad's return after 12 years in the private sector feels familiar because the effects of the national recession and reliance on one-time federal and state funding sources have created a confused budget picture. The state is running a surplus this fiscal year, but - as in Branstad's past terms from 1983 to 1999 - budget-makers are facing a potential $600 million imbalance for fiscal 2012.

The problem could snowball in subsequent years without structural changes.

Along with making government smaller, less costly and more efficient, Branstad and GOP legislators want to lower unemployment and put Iowans to work. They intend to do that with a public-private partnership that recruits and retains businesses by easing regulations and lowering taxes on commercial property and corporate income.

Democrats have pledged to work with the new governor and GOP forces where possible to achieve shared objectives of growing jobs, incomes and opportunities for Iowans.

“I think we have an opportunity to make dramatic change,” said Branstad, who called some of the challenges facing the state “sobering.”

“I believe the future can be a lot brighter than the status quo,” he added. “... My primary focus is jobs and economic development, restoring our leadership position in education and getting our state's financial house in order so our annual spending is not higher than our projected revenue.”

Branstad has indicated he will sign an executive order, requiring a “small-business and jobs impact statement” for any new administrative rule imposed by state agencies. He plans to ask lawmakers to apply the requirement to any proposed legislation, too.

The rural Boone Republican also wants lawmakers to establish a staggered, four-year rolling sunset for business regulations that includes identifying and eliminating redundancies, inefficiencies and “job-killing bureaucracy.” The point, Branstad said, is to curb excessive government regulations that frustrate the ability of Iowa to compete with business-friendly states.

He also has Debi Durham, his choice for head of the Department of Economic Development, conducting a cost-benefit analysis of state business incentives, tax credits and related programs. The agency will become a public-private partnership promoting and marketing Iowa to attract new investments and jobs.

Another major focus of Branstad's 2011 legislative agenda will be cutting the state's corporate income tax rate in half and easing commercial property taxes, while capping tax increases for agriculture and residential property classes. He intends to do that while shielding local governments from revenue hits.

“I don't think there's any question that thematically we're on the same page” with Branstad, said Rep. Kraig Paulsen, R-Hiawatha, the next speaker of the House. “There's obviously a learning curve (but) ... there's lots of energy. They're eager to learn; they ask good questions. We'll be ready to go on Jan. 10.”

Gronstal said Iowans want elected officials to work together to create jobs and put people back to work, and legislative Democrats will proceed in that vein. At the same time, he said any proposed tax changes have to be affordable within current budget realities and not merely shift costs from one class of taxpayers to another or from one level of government to another.

Senate President Jack Kibbie, D-Emmetsburg, said some property tax relief could be offset by looking at whether sales tax exemptions should be repealed or loopholes closed. House Democratic Leader Kevin McCarthy of Des Moines said the plans will need close scrutiny to square the talk of bloated budget imbalances with massive tax cuts.

Senate GOP Leader Paul McKinley of Chariton said the new configuration of a Republican governor and split-control Legislature poses “a whole new dynamic” that he finds refreshing. For many GOP lawmakers, he noted, it will be their first time serving with a Republican governor.

“For the first time, we have somebody taking a leadership role in the Governor's Office to say, yes, we have a problem, and while it may not be a comprehensive solution, here is a solution to part of it. I think that is a giant first step,” he said.

McKinley called Branstad's idea to eliminate state rules and regulations fantastic, but Gronstal said the approach may be overreaching.

“I'm all for sunsetting the stupid ones, but the ones that help keep salmonella or E. coli out of eggs, I don't think that's a good one to sunset,” Gronstal said. “I think a process for reviewing those rules is certainly appropriate, but I also think you've got to be careful ...”