History of General Fund Appropriations – 1993 to 2007

There have been a lot of questions asked about how the 10 percent increase in this year’s budget compares to the increases in General Fund spending over the past 15 years.

The last budget approved by a Democrat legislature was during the 1992 session, for FY 93. The General Fund appropriations for that year were $3.394 billion, which was an increase of $216 million, or 6.8 percent compared to the previous year. Last session, the budget approved spent $5.301 billion, an increase of $287 million, or 5.7 percent compared to the previous year.

The Democrats’ budget targets for FY 08 spend $5.830 billion, which is $530 million, or 10 percent more than the budget which was enacted last session.

Here is the historical chart on General Fund appropriations and who was in control of the Legislature and the Governor’s office at the time the budget was approved:

House Republican NewsletterApril 4, 2007

Appropriations

Inside This Issue:

General Fund Spending Since ‘93 1REC May Increases Estimate Friday 2Livestock Trespass Measure 3Moving Business Growth in Iowa 4Teacher Pay Bill 5Global Warming Bills on the Move 6HHS Budget a Big Disappointment 8Judiciary Update 9Prevailing Wage and Worker’s Comp 10Honey Creek Project Re-Bid 11 Webcam Exposure Bill 12Non-Casino Gambling Expansion 12GOP Leads on Flag Protection 15Dems Reject Vets Bills 16Tax Cheats Get Break from Dems 16Use Tax Overview 18House Republican Talking Points 21

Fiscal Net General Fund Total Percentage ControlYear Appropriations* Increase Increase Legis./Governor

FY 93 $3,394.3 215.5 6.8% H-D, S-D, G-RFY 94 $3,471.6 77.3 2.3% H-R, S-D, G-RFY 95 $3,615.0 143.4 4.1% H-R, S-D, G-RFY 96 $3,842.0 227.0 6.3% H-R, S-D, G-RFY 97 $4,122.7 280.7 7.3% H-R, S-D, G-RFY 98 $4,353.8 231.1 5.6% H-R, S-R, G-RFY 99 $4,525.8 172.0 4.0% H-R, S-R, G-RFY 00 $4,763.3 237.5 5.2% H-R, S-R, G-DFY 01 $4,828.1 64.8 1.4% H-R, S-R, G-DFY 02 $4,590.8 -237.3 -4.9% H-R, S-R, G-DFY 03 $4,529.0 -61.8 -1.3% H-R, S-R, G-DFY 04 $4,517.4 -11.6 -0.3% H-R, S-R, G-DFY 05 $4,603.3 85.9 1.9% H-R, S-R, G-DFY 06 $5,014.6 411.3 8.9% H-R, S-T, G-DFY 07 $5,301.5 286.9 5.7% H-R, S-T, G-D

(*in millions)Here are a few notes about the above figures. FY 96, FY 97 and FY 98 included large increases for property tax relief (which counts as spending) and the costs of opening three new prisons. The revenue downturn due to a slowing economy began in FY 01 and continued until FY 04. Three percent of the 8.9 percent increase in the FY 06 budget went to covering spending that was previously covered by one-time or time-limited sources of revenue (like the Senior Living Trust Fund), which means the actual increase for FY 06 was in line with the FY 07 increase. Both of those years featured the 25-25 tie in the Senate.

The bottom line is that a 10 percent increase in the budget will be the largest increase in the past 15 years and is simply not sustainable in the future.

Revenue Continues to Exceed Estimates, REC to Meet on Friday to Consider Increase

On Monday, April 2, Fiscal Services released the General Fund revenue numbers through the end of March. While revenue continues to exceed the Revenue Estimating Conference (REC) estimate, there are some warning signs that the economy may be slowing down.

Through March, total General Fund revenue increased by $215.1 million, or 5.3 percent above FY 06. The REC estimate for the entire year is $285 million, or 4.9 percent compared to FY 06. This is the first time since December that a month did not end with an increase of 6 percent or more.

The REC will meet again this Friday, April 6, to review and revise the revenue estimates. Even though revenue is exceeding the REC estimate, it is unlikely the REC will increase the FY 07 estimate by much (if at all) and will likely leave the current estimate for FY 08 in place.

Once again in March, all major parts of General Fund revenue increased compared to FY 2006.

Personal income tax receipts were up by $114.2 million, or 5.7 percent compared to FY 06. Income tax withholding payments increased by 5.1 percent (after adjustments), income tax estimate payments were up 9.3 percent and payments with income tax returns were up 9.2 percent.

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Corporate income tax revenue continues to exceed expectations. Through March, corporate income taxes (which are based on the profitability of the state’s corporations) were up $72.5 million, or 36.0 percent compared to FY 06. That is well above the REC estimate of 24.3 percent growth.

Now for the bad news. Sales and use tax receipts are up $8.4 million, or 0.6 percent compared to FY 06. Sales tax receipts for March were down $23 million, or 17.4 percent compared to March 2006. Most of the decrease was due to two timing issues but even without those two issues, sales and use tax receipts for the month were negative. This likely means that the economy is slowing down because consumers are spending less, which results in lower sales tax receipts.

The concern is that increasing taxes and spending at an uncertain time for the economy is a recipe that sets the state up for a fiscal mess in the coming years.

(Contact: Lon Anderson, 1-5184)

Senate Passes Measure Suspending Some Maximum Size, Weight Limits For Harvest

On Tuesday, March 27, the Senate amended and passed Senate File 484 by a near unanimous 49-1 vote. SF 484 proposes to codify a recent practice by the Governor to suspend certain vehicle weight and size limits to facilitate movement of the farm harvest from fields to farm storage or market. The bill proposes to create a two-month period, September 15 to November 15 of each year, during which the maximum weight limit for vehicle and combinations of vehicles (80,000 pounds) on primary and non-primary highways may be exceeded as long as the total weight remains below 90,000 pounds gross weight. The bill also allows for the suspension of provisions dealing with excess size of divisible loads that require a permit to move oversize loads of hay, straw or stover. The legislation explicitly states that this temporary increase in maximum weight does not apply to interstate highways, and covers only vehicles hauling loads of soybeans, corn, hay, straw, and stover. The bill further provides that maximum axle weights must not exceed those specified in the table in Code section 321.463.5b that are applicable to non-primary roads by more than 10-percent; must not exceed 20,000 pounds on any one axle; and must comply with posted limits on bridges.

The House Agriculture Committee planned to debate SF 484 on Tuesday, April 3, but the Federal Highway Administration (FWHA) notified the state DOT at the last moment that the bill, if implemented, could threaten federal funding for primary and non-primary road bridges. This is because, in FHWA’s opinion, the bill could have a detrimental impact on some bridges unless they were inspected and re-rated, and re-signed if necessary, to protect the bridges. The DOT informed the committee that while it inspects bridges more or less on a biannual basis, re-rating and re-signing the bridges is an additional operation that would likely cost state and local governments about $126 per bridge, signage not included. Considering that there might be 15,000 to 20,000 bridges that need this evaluation, the cost would be substantial ($2 million, plus or minus $500,000) Just the day before, the state DOT liaison had told the SF 484 subcommittee that the agency was fine with the bill as it was re-crafted through a floor amendment adopted by the Senate.

Agriculture

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House Panel Okays Habitual Livestock Trespass Measure

On Tuesday, April 3, the House Agriculture Committee passed Senate File 200 by 21-0 vote. SF 200 proposes to modify the current trespassing and stray livestock Code chapter (169C) to provide for a remedy when livestock are habitually trespassing onto a neighboring landowner’s property or upon a public roadway.

The measure provides that after the third separate trespass occasion within a twelve-month period, the neighboring landowner may request that the responsible landowner of the land where the trespassing or stray livestock are kept to erect or maintain a fence on the land. If the responsible landowner fails to take corrective action within 30 days after receiving the request to erect or maintain the fence, the neighboring landowner may apply to the fence viewer as provided in the Code chapter dealing with legal partition fences (359A). The bill adds a new section to the Code chapter dealing with fences to add a reference to the new section of 169C.6 created in Section 2 of SF 200 and to explicitly state the liability of a landowner where livestock is kept or an owner of adjoining land to erect or maintain a fence so that livestock do not trespass or stray onto public roadways. SF 484 was amended and passed by the Senate on Wednesday, March 14, by a 49-0 vote.

(Contact: Lew Olson, 1-3096)

Next Time You Fly, Keep that Cell Phone Turned Off

For many Americans, once they board an airplane and buckle into their seats they know what is coming next. “Please turn off your cell phones, laptops, and other electronic devices.” Since 2004, there have been efforts to remove the restriction on using cell phones on flights. The belief is that technology has advanced to the point where cell phone activity would not interfere with radar and other communications networks.

Yesterday, the Federal Communications Commission surprised many observers by terminating its rulemaking action to allow in-flight cell phone use.

Why would the FCC drop this effort? In their release, the commissioners said that they could not go forward due to insufficient technical information on the potential interference with communication networks. But the real reason for their action is likely the tremendous public backlash against this move.

News reports have quoted a number of Americans who took up the commission’s offer for public comment by venting over the appropriate use of cell phones. Many of them cited comments have exposed a widely-held belief that personal privacy is being lost with the cell phone. As one citizen wrote:

These days it's impossible to get on a bus without at least one person hollering into their cell phone, invading the private space of everyone around them.

While the FCC left the door open to reconsidering at some point in the future, it is unlikely given the public feedback during this rulemaking period.

(Contact: Brad Trow, 1-3471)

Commerce

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Moving Iowa Out Front in Business GrowthSix proposals advance at Economic Development Board

Seizing promising opportunities for business growth, the Economic Development Board and the Iowa Department of Economic Development (DED) have approved participation in the expansion plans of six companies. These proposals create and retain 209 jobs in advanced manufacturing and renewable fuels. Interim IDED Director Michael Tramontina said, “Iowa’s renewable fuels industry is extending its presence into every region, adding more value to Iowa’s vast resources in agriculture.” Since July 2003, the board and IDED have assisted 421 projects that will create or retain 32,231 jobs. New capital investment planned with the projects totals nearly $10 billion. Supporting Davenport expansionThe Economic Development Board awarded $60,000 from the Community Economic Betterment Account (CEBA) and tax benefits from the High Quality Jobs Creation (HQJC) program to expansion plans of CML USA Inc, which has its North American headquarters in Davenport. The company may construct 50,000 sq. ft. building in the Eastern Iowa Industrial Center, creating and retaining 23 jobs. Three of the new jobs pay an average starting wage of $25.02 per hour. CML is a distributor of industrial equipment for precision bending of pipes and tubes. The company needs more space to upgrade equipment and technical services, expand research and development, and increase exports.  Leveraging renewable fuelsVictory Renewable Fuels, a newly formed company, is planning a 30 million gallon per year biodiesel plant near Lester that would employ 28 persons at an average wage of $17.20 per hour. The northwest Iowa project in Lyon County was awarded $400,000 from the Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP) and tax benefits from the High Quality Jobs Creation (HQJC) program. Soybean oil will be the primary raw material but the plant will have the ability to use other vegetable oils and animal fats to make fuel as well. Enterprise Zone tax benefits were awarded to Red Oak Ethanol, Inc., a start-up subsidiary of NexGen BioFuels of New York City. The company plans to begin construction this spring on a 108 million gallon per year ethanol production facility that would employ 45 people earning an average starting wage of $24.04 per hour. Corn oil, distillers’ grain and carbon dioxide will also be produced at the Red Oak site. Council Bluffs Ethanol was awarded tax benefits from the High Quality Jobs Creation (HQJC) program for a 100 million gallon per year ethanol plant in Mills County. The $194 million project would create 45 jobs, 41 of the jobs paying an average starting wage of $24.63 per hour. High Quality Jobs Creation (HQJC) tax benefits were also awarded to U.S. BioEnergy to create 40 jobs, 28 of the jobs paying an average starting wage of $18.99 per hour, at the ethanol plant about to start construction in Dyersville. The 100 million gallon per year facility will provide a market for 37 million bushels of corn at full output. New Denison company expandingAPPA Fine Foods, which moved its cooked poultry products operation from California to Denison last year, has found new success in Iowa and is planning a $1.3 million expansion to introduce a new product line. Adding 4,400 sq. ft. and grilling equipment to the plant are part of an expansion that will create 28 jobs paying an average starting wage of $13.94 per hour. The expansion was awarded $132,500 from the Economic Development Set-Aside (EDSA) program and Enterprise Zone tax benefits for job creation and new business investment.

Economic Growth

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(Contact: Kristin Gray, 1-3026)

Teacher Quality

This weekend, walk your constituents through the Teacher Quality bill. Hit these important highlights:

A. Increases TQ appropriation . SF 277 doubles the 2006 commitment for new money. 2006 legislation increased the Teacher Quality by $35 million per year for a total increase of $105 million. SF 277 increases the Teacher Quality by $70 and $75 million for a total increase of $175 million

2006 Legislation SF 277_______ FY 07 $105 million $105 million FY 08 $140 million $175 million FY 09 $175 million $250 million

B. Shifts management rights to collective bargaining giving the teacher’s union more muscle.

1. Market Factor Pay is now subject to collective bargaining. Current law gives the school board the decision making authority to tailor to district needs.

2. Intensive Assistance Program for low performing teacher is now subject to collective bargaining. Current law gives this authority to school boards.

3. Strikes current law saying that a low performing teacher is limited to a COLA-only raise.4. Professional Development is now subject to a collective bargaining look-alike. A new local Teacher

Quality Committee with an equal number of union-approved teachers and board-approved decides who get professional development money.

C. Mandates that school districts employ a qualified guidance counselo r and school nurse.  A one-year, one-time only waiver is provided.

This is an unfunded mandate. School districts either can levy property taxes or use their current budget to pay for these new employees.

o Mandate only for public schools.o 2006 Teacher Quality bill mandated teacher librarians per former Governor Vilsack.o 115 school districts needed a waiver from the teacher librarian requirement this year. o 40 school districts currently do not have a “qualified” guidance counselor.  “Qualified” means that the

guidance counselor has a master’s degree in school counseling.  Your district may have guidance counselor but is that person “qualified”?

o 85 districts do not have a school nurse meeting the qualifications

D. Creates two-year pilot programs for districts to experiment with Career Ladders and Pay-for-Performance. The House Appropriations Committee amendment specifies 8 two-year Career Ladder pilots and 2 Pay-for-Performance Pilots. A statewide career ladder is contingent upon “sufficiency of funds.”

Question to ask: If $415 million in NEW Teacher Quality Funding and NEW Allowable Growth isn’t “sufficient”, what is?

Education

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(SF 277 and SF 109 provide $355 million in new state aid and $50 million in new property tax funding for FY 08 and FY 09)

(Contact: Ann McCarthy, 1-3015)

Senate Passes Pair of So-Called Global Warming Measures on Partisan Votes

On Monday, April 2, Senate passed Senate File 485 by a partisan 29-20 vote. SF 485 defines “greenhouse gas’ as ‘carbon dioxide’, ‘methane’, ‘nitrous oxide’, ‘hydrofluorocarbons’, ‘perfluorocarbons’, or ‘sulfur hexafluoride’.

The bill creates a new regulatory duty for the state Environmental Protection Commission and the director of the Department of Natural Resources. That is to quantify the potential for greenhouse gas emissions arising from proposed projects regarding conditional permits for electrical generating facilities or application for construction permits or prevention of significant deterioration permits.

The other greenhouse gas piece of legislation that the Senate dealt with this week was Senate File 574. On Tuesday, April 3, the Senate passed SF 574 by a partisan 28-20 vote. SF 574 creates “Greenhouse Gas Inventory and Registry” functions for DNR. The measure directs DNR to establish an inventory of greenhouse gas produced in this state through a method of collecting mandatory data from producers of greenhouse gases. DNR may phase in the reporting requirements. DNR is further directed by the bill to establish a voluntary greenhouse gas registry for purposes of cooperating with other states in tracking, managing, and crediting entities in the state that reduce their generation of greenhouse gases or that increase energy efficiency.

SF 574 also creates an ‘Iowa Climate Change Advisory Council” charged with developing multiple scenarios designed to reduce statewide greenhouse gas emissions, including one that would reduce such emissions by 50% by the year 2050. The council will be comprised of 18 voting members serving staggered three-year terms and four nonvoting ex-officio members (one representing each political caucus of each chamber). The voting members will be appointed by the Governor and shall represent the following:

1) The University of Iowa Center for Global and Regional Environmental Research;2) The University of Northern Iowa center for Energy and Environmental Education;3) The Iowa Farm Bureau;4) The Iowa Public Transit Authority;5) The Rural Electrical Cooperatives;6) Investor-Owned Utilities;7) Municipal Utilities;8) The Iowa Utility Board;9) One association with environmental interests or activities;10) One association with conservation interest or activities;11) The International Brotherhood of Electrical Workers;12) The Iowa Association of Business and Industry;13) The Iowa Energy Center;14) The Iowa Renewable Fuels Association;

Environmental Protection

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15) The Office of Consumer Advocate of the Iowa Department of Justice; 16) A representative from local government;17) The director of the Office of Energy Independence in the Office of the Governor; and18) A manufacturer of equipment used for alternative energy production.

The voting members of the council shall serve at the Governor’s pleasure and serve without compensation. The chair will be designated by the Governor and the chair may convene the council at any time. A vacancy in membership shall not impair the right of a quorum, which a majority of council members appointed, and a majority vote of a quorum is required for council action. DNR is directed by SF 574 to provide any necessary staff assistance and support for the council. In addition to the 50% cut in greenhouse gas emission scenario, the council is to develop short-term, intermediate-term, and long-term scenarios to reduce state greenhouse gas emission. The council is required to submit its proposal to the Governor and General Assembly by January 1, 2008, and may periodically adopt recommendations designed to encourage reductions of statewide greenhouse gas emissions. The bill provides that each September 1, DNR is to report to the Governor and General Assembly regarding greenhouse gas emissions in the prior year with the first report - for calendar year 2007 - due by September 1, 2008.

SF 574, as originally drafted, contained a $100,000 appropriation from the General Fund to DNR to fund the agency’s administrative staff support of the council, but that language was deleted by an amendment adopted by the Senate. It is anticipated that this funding will reemerge in one of the appropriation bills that will be considered later in this session.

The apparent intent of SF 574 is to start the statewide process of identifying the amount of greenhouse gases produced by Iowa facilities in anticipation of either a national/international program to cap, cut, and trade greenhouse emissions, or to justify imposition of a new carbon tax designed to suppress fossil hydrocarbon energy production and use. It is likely that the Democrats running this state will seek to join the developing multi-state effort led primarily by liberal Democrat politicians and activists that is seeking to force the U.S. government to adopt a stringent greenhouse gas control program. This option is likely to occur through a multi-state lawsuit that would build upon yesterday’s U.S. Supreme Court 5-4 ruling (Massachusetts versus E.P.A.) that the U.S. Department of Environmental Protection Agency has a duty under the Clean Air Act to consider controlling greenhouse emissions from motor vehicles. Another similar lawsuit involving controlling so-called greenhouse emissions from power generation sources is likewise moving to the U.S. Supreme Court for its consideration.

It is extremely clear from reading news stories from around the nation on this issue that have proliferated in recent weeks, press releases from Democrat-affiliated interest groups; and the likely recommendations from the stacked council established by SF 574 that liberal Democrats are seeking to squelch any additional fossil carbon use by businesses in the state that might occur in the future. Such action will either cause new fossil carbon energy development to occur in states west of Iowa, or it will cause potential new energy-intensive manufacturing jobs to locate either in states or other countries without such onerous greenhouse gas regulations. The other likely consequence is that Iowa businesses, manufacturers, and consumers will pay sharply higher and ever escalating energy prices, perhaps rising to 50% to 200% above already soaring energy prices for fossil carbon energy sources. This capping and forced reduction in greenhouse gas emissions creates a possibility that it might abort future expansion of Iowa biofuel industry by making the comparative cost of distilling unpurified biofuels in Iowa uncompetitive with the costs in state not restrained by this type of regulation.

(Contact: Lew Olson, 1-3096)

Winners in FY 08 Health & Human Services Appropriations? No One

Human Resources

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Continuing the tradition of being the last subcommittee to move their bill out, the FY 2008 Health and Human Services appropriations subcommittee’s bill has finally emerged. House Study Bill 301 provides an increase of $109,139,776 in spending on programs of the Departments of Elder Affairs, Human Services, Public Health, and Veterans Affairs. Even with all this additional money, it is hard to identify any one group that benefits from the increases in the bill. Instead, there are many groups who feel like they have gotten the short end of the stick.

Democrats claim that the bill puts all $127.6 million generated from the $1 increase in the cigarette tax. But a closer examination of their spreadsheet shows this claim to be more of a shell game. Over $97 million of the new revenue is used on Medicaid, but the spreadsheet also shows a $34 million reduction in General Fund appropriations. Medicaid is not the only place where this budgetary game of hide and seek is played. In the HAWK-I appropriation, the General Fund amount is slashed by more than one-third and replaced with tobacco tax revenue. The allowable growth funding for mental health that was approved last year is funded with tobacco revenue instead of General Fund dollars. The total General Fund budget for the bill is actually $14 million less than what was passed for the current fiscal year.

So where does the all this freed-up General Fund money go – health care? Not exactly. Because of questionable management in the Department of Human Services, the state is forced to appropriate $10.5 million in General Fund money to replace lost federal childcare funds. While every other provider group is receiving no increase in rates, child welfare providers get a three percent increase. Naturally, bureaucracy is a big winner in this as well, with DHS Field Operations and General Administration getting a $4.5 million increase over last year’s levels.

While legislative Democrats are more than happy to tell constituents that they have raised the minimum wage, they failed to provide a pay hike to those Iowans who serve our youngest citizens. In FY 2006 and FY 2007, House Republicans made sure that state child care assistance payments were increased. House Study Bill 301 does not include any funding to implement the 2006 child care rate survey.

Since the start of the legislative session, Iowa counties, mental health providers, and advocates have been promised by legislative Democrats that they will the receive additional funds they are seeking – between $16 and $19 million. But as the budget work has progressed, the amount of funding promised has shrunk. $15 million became $12 million, then $11.7 million, and now $8.5 million. Because of the failure of Democrats to keep their commitment on this issue, thousands of Iowans are likely to lose mental health services beginning in July.

On top of the incredible shrinking promise, counties also found that the Democrats on the subcommittee had cut $2 million in funding that was to be used to serve the brain-injured.

Iowa veterans expected Democrats to keep their word and fully fund the Veterans Trust Fund. Instead of depositing $5 million in the fund as had happened the previous year, subcommittee Democrats could find a measly $1.5 million for this vital fund. They also cut funding for county mental health programs by 25 percent.

FY 2008 is supposed to be a rebasing year for Iowa nursing homes. This process, which updates Medicaid reimbursement for these facilities, is necessary to help capture the expenses incurred for these services. In order for all nursing homes to be held harmless by this process, the Medicaid budget must have a $10.6 million increase for this. HSB 301 contains no money for the rebasing. Nursing homes have been promised by Democrats that their funding will be in another bill, but no one knows where the money will come from.

Maybe the biggest losers in this budget are Medicaid providers. Many of the provider groups went full out in support of the cigarette tax increase, with the expectation that improving Medicaid reimbursement rates would be one way the new revenue would be used. But they experienced of the cold reality of another broken Democrat promise when the budget came out with no rate increase. Instead, additional funding is provided to expand Medicaid eligibility for a number of groups. Will they have any provider to go to after the Democrats broke their promise?

Medicaid providers across the state are all asking the same question. If Democrats cannot find additional money for Medicaid rate increases in a year when $127 million in new revenue is generated for “health care”, when will

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they raise provider rates? The fact that House Republicans found ways to raise rates the past two years without the cigarette tax increase is not lost on the provider community.

(Contact: Brad Trow, 1-3471)

Committee Action

The following Senate files have passed the Judiciary Committee, this week, thus surviving the second funnel:

SF 199 – Granting the civil rights commission additional subpoena power to investigate unfair or discriminatory practices and providing an effective dateThis bill grants the Civil Rights Commission the authority to issue subpoenas and order discovery to aid in investigating alleged unfair or discriminatory practices. Current law grants the commission this subpoena authority only for investigations of unfair or discriminatory housing or real property practices.

SF 333 – Substantive code editors billThis bill contains statutory corrections that adjust language to reflect current practices, insert earlier omissions, delete redundancies and inaccuracies, delete temporary language, resolve inconsistencies and conflicts, update ongoing provisions, or remove ambiguities.

SF 373 – Relating to the postsecondary education subsidyThe bill provides, under the dissolution of marriage and domestic relations chapter (Code Chapter 598) that a parent may be ordered to provide a postsecondary education subsidy to a child whether or not the parents of the child were married to one another. Additionally, under the paternity and obligation for support chapter (Code Chapter 600B) the bill provides that upon a finding of paternity, the court may also order a postsecondary education subsidy and the construction, application, and interpretation of this provision is to be the same as the construction, application, and interpretation of the provisions relating to postsecondary education subsidy under the dissolution of marriage chapter (Code Chapter 598).

(Contact: Kristin Gray, 1-3026)

Worker’s Compensation and Prevailing Wage Bills Not Likely to Survive Funnel

With the funnel deadline rapidly approaching, it appears that the Democrats’ most egregiously anti-business bills may not survive.

House File 676 allows a settled worker’s compensation claim to be reopened if a factor that could have been considered in assessing the extent of the reduction in the employee’s earning capacity and existed or was known about by the parties at the time of a prior award or agreement does not bar a proceeding to reopen the award or agreement unless the factor was considered and properly reflected in the amount of the compensation paid. House File 676 was approved by the House Labor Committee on February 27 on a 9-6 party-line vote. This bill has not been debated on the House floor and does not have a Senate companion or similar file.

JudiciaryLabor

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House File 677 provides that a person who is hired by a temporary agency is an employee of the temporary agency for worker’s compensation purposes, and the employee is not an employee of the business where they have been assigned by the temp agency. House File 677 was approved by the House Labor Committee on February 27 on a 10-6 party-line vote. This bill has not been debated on the House floor and does not have a Senate companion or similar file.

House File 743 eliminates the use of scheduled injuries and allows for additional workers’ compensation payments for an injury resulting in a reduction in the employee’s earning capacity. House File 743 was approved by the House Labor Committee on March 6 on a 10-6 party-line vote. This bill has not been debated on the House Floor and does not have a Senate Companion or Similar.

House File 797 repeals apportionment of successive injuries from benefits previously paid. House File 797 was approved by the House Labor Committee on March 6 on a 10-6 party-line vote. This bill has not been debated on the House floor and does not have a Senate companion or similar file.

Senate File 424 repeals the employer choice of medical provider in workers’ compensation claims, and instead allows an employee to choose the doctor.  Additionally, this bill allow the employee to seek their own care at the employer’s expense without notice of injury to the employer for up to 90 days. This bill has not been debated on the Senate floor and does not have a House companion or similar file.

House File 810 requires a contractor to pay workers the same hourly wage plus fringe benefits for a public improvement costing more than $25,000 as the contractor would pay workers for a private construction or improvement project.

This bill requires the wage rates that the workers must be paid shall also include benefits such as medical care, life insurance, overtime pay, and vacation and holiday pay. House File 810 was approved by the House Labor Committee on March 8 on a 10-7 party-line vote. This bill has not been debated on the House floor and does not have a Senate companion or similar file.

(Contact: Mary Earnhardt, 1-3298)

Honey Creek Project Will be Re-Bid

A first-of-its-kind resort project destined for Honey Creek State Park will be re-bid after all of the bids received last week were rejected due to cost. Only one bid was received for construction of a 108-room hotel/convention complex. Hanson Co. of Johnston bid $24,350,000 for that project, which carried an engineer’s estimate of $13,500,000. The bid was also rejected for not meeting a bid requirement of providing unit prices for the proposal.

Also rejected was the low bid of $4,929,000 from Vieco Development and Construction of St. Joseph, Mo., for construction of 28 cabins that were estimated at $4,250,000.

“We are going through with this project and are fully committed to seeing a resort complex constructed at Honey Creek,” said Ken Herring, administrator of the Conservation and Recreation Division for the DNR.

Herring said that anyone who has been involved in a bidding process knows that occasional surprises, both good and bad, are inevitable sometimes even in the same project which has been the case at Honey Creek.

Natural Resources

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In December, the low bid for first phase of the project that included construction of an 18-hole golf course came in at just over $6 million, more than $700,000 less than the engineer’s estimate. The low bid allowed for the addition of several conservation-friendly additions to the project such as expanding the native grass plantings in the rough areas of the golf course by 23 acres and installing a more efficient irrigation system that will reduce water usage by 20 percent.

The DNR will now be working with its consulting engineers to review the project and re-bid it in the very near future, according to Arnie Sohn, Honey Creek project manager for the DNR.

“We are totally committed to providing a first-rate resort complex that Iowans can be proud of, but we are also very aware that we need to be fiscally responsible in the development of this project,” said Sohn.

Sohn said the DNR is already looking at a variety of options to reduce costs of the project and to attract more construction firms to participate in the next round of bidding. “We are going to notify a lot of likely prospective contractors about the upcoming bid process. We will also be casting a wider net, making sure that we are advertising the project to as many potential bidders as possible,” Sohn said.

Sohn said it is still possible to reach the goal of a Memorial Day 2008 opening because the initial land grading and extension of utilities such as electricity and water has already been completed. “Essentially, we are ready for construction to begin right away,” said Sohn.

The 108-room lodge, conference center, indoor aquatic center, 18-hole golf course and 28 family and group cabins are all components to the overall plans for the resort. In addition, the normal array of state park facilities will be provided: semi-enclosed picnic shelters, paved multi-purpose trails, hiking/nature trails, boat ramp, boat-docking facilities, and an upscale RV campground. These facilities will be located on an 850-acre tract of land on the north shore of Rathbun Lake.

The existing Honey Creek State Park (an additional 850 acres) lies across the bay, and development plans include a pedestrian trail bridge to link the two parcels.

The principle financing source for the project is $28 million in bond proceeds that will be paid off over a 30-year period with revenues generated by the resort. Rathbun Regional Water, Chariton Valley Electrical Cooperative and Iowa Telecom will contribute more than $2 million in utility systems. Appanoose and Monroe counties, Rathbun Lake Resort, Inc. and private contributors have provided more than $2 million in cash advances to be repaid from hotel/motel tax receipts.

Source: www.iowadnr.com

(Contact: Kristin Gray, 1-3026)

House to Consider HF 762, Indecent Exposure via Webcam

On March 8, the House Public Safety Committee approved House File 694, which creates the criminal offense of indecent exposure through a webcam. The bill became House File 762, which will soon be debated on the House floor.

HF 762 creates the criminal offense of indecent exposure through a webcam. The bill defines "webcam" to mean a real-time camera that can transmit images through the Internet.

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Under the bill, a person commits indecent exposure through a webcam in the first degree if the person exposes the person's genitals or pubes through a webcam to a minor or a person believed to be a minor, or commits a sex act intended to be viewed through a webcam by a minor or a person believed to be a minor, and the act is intended to arouse or satisfy the sexual desires of either party. A person commits indecent exposure through a webcam in the first degree if the minor is under 14 years of age.

In addition, a person commits indecent exposure through a webcam in the second degree under the same circumstances as the first degree charge except the exposure may be to another person of any age and the person knows or reasonably should know that the act is offensive to the viewer.

The bill prohibits a person from receiving a deferred judgment, or a suspended or deferred sentence, if the person is convicted of indecent exposure through a webcam and the viewer is under 14 years of age. A person who commits indecent exposure through a webcam commits a serious misdemeanor.

This bill is in addition to HF 756, which establishes safe zones for children.

(Contact: Lon Anderson, 1-5184)

Committee to Consider Non-Casino Gambling Expansion Bill

If the State Government Committee adopts the amendment proposed by Rep. Whitead that conforms HF 538 to SF 414, it expands gambling that will take place at the location of a veterans group’s organizational meetings and allows for the awarding of cash prizes during annual game nights for certain organizations. This bill goes much further than what has been considered in the past and could be interpreted as a large scale expansion of gambling in Iowa.

Veterans Weekly Card Game NightsThe veterans’ group may choose from two different options regarding prizes and number of participants. However, under both options the organization must meet the following requirements:

The veterans organization must have at last 12 members. The organization must have a license. Card games must be conduced on the premises of the veterans organization. Certain requirements are met regarding how the proceeds are spent. Only those individuals that are at least 21 years of age may participate. The total number of participants shall not exceed the occupancy limit of the premises where the card game

tournament is conducted. No more than two card game tournaments may be conducted per month and a card game tournament shall not

be held within seven calendar days of the previous tournament conducted by that veterans organization.

Under the first option the following requirements apply: Participants may include the members and as many guests as possible as long as the number of occupants

don’t exceed the occupancy limits. The cost to participate is $25 and shall be the same of every participant. Cash or merchandise prizes may not exceed $300 in total and no participant shall win more than $200.

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Under the second option the follow requirements apply: Participants may include members and one guest. The cost to participate shall be limited to $100 and shall be the same for every participant. Cash or merchandise prizes may not exceed $1,000 in total and no participant may win more than $500.

If an individual under age 21 participates in a card game tournament, a $500 fine is assessed. In addition, the Department of Inspections and Appeals (DIA) shall revoke, for a period of one year, the license of a veterans organization to conduct card game tournaments under this section if the licensee knowingly permits a person under the age of 21 years to participate in a card game tournament.

Cash Prize Awards for Certain Organizations that Hold an Annual Game Night LicenseThe bill also allows certain organizations to award cash prizes for participation in any game of skill, game of chance or card game conducted during an annual game night. The cash prize in total shall not exceed $10,000 and no one individual shall be awarded more than $5,000. Under current law, cash prizes are not allowed.

Those organizations that may offer cash prizes include: Veterans organizations – There are eight nationally-sanctioned veterans organizations. Some counties have

multiple chapters of each of these organizations; others may only have one and all eight organizations may not be represented in a county.

Volunteer emergency service providers - this includes volunteer firefighters and volunteer EMS groups.

Any qualified organization that is exempt from federal income tax under section 501(c)(3) that has conducted an annual game night during the period beginning January 1, 2001, and ending in December 31, 2001. 501(c)(3) organizations operate exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, to foster national or international amateur sports competition, or prevention of cruelty to children or animals. DIA is unsure how many organizations will meet these qualifications and who will be excluded.

This bill was scheduled for debate in committee on Wednesday afternoon (April 4). Once on the floor, it will likely be substituted for SF 414 which does everything mentioned above.

(Contact: Kelly Ryan, 2-5290)

“Signs of Change” Campaign Highlights Work Zone Safety Awareness Week

The telltale orange signs are already out in large numbers again this year as spring brings another season of road construction. To highlight that increased activity, the Iowa Department of Transportation (DOT) and Iowa Department of Public Safety (DPS) are observing National Work Zone Safety Awareness Week, April 2-6.

The emphasis on work zone safety promoted each year in early April is to remind motorists of the need for extra caution as roadwork swings into full gear across the nation.  The theme of this year’s observance is “Signs of Change,” which is intended to remind motorists to be alert, slow down, stay informed, and keep moving.

In calendar year 2006, 723 work zone crashes occurred in Iowa causing 2 fatalities, 30 serious injuries, and 107 minor injuries. Although preventing fatalities and reducing injuries is the focus of the awareness campaign, the Iowa DOT

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and DPS are optimistic that the education effort will reduce overall crash rates, including those that simply involve property damage. Accident claims of any type affect insurance rates for all motorists.  

DPS will be closely monitoring work zones to keep motorists safe. They caution drivers that fines double for infractions occurring in a work zone.

Being well informed about where major work zones are located can assist you in planning a safer trip. Visit 511ia.orgon the Internet to view construction information, in either text or map format. You can also call 511 for construction updates on the route you plan to travel.

For work zone delays throughout the U.S., visit the Federal Highway Administration’s National Traffic and Road Closure Information website, www.fhwa.dot.gov/trafficinfo/index.htm.

Tips for Driving Safely in Work Zones

EXPECT THE UNEXPECTED. Normal speed limits may be reduced, traffic lanes may be changed and people may be working on or near the road.

STAY ALERT AND MINIMIZE DISTRACTIONS. Dedicate your full attention to the roadway and avoid changing radio stations or using cell phones while driving in a work zone.

SLOW DOWN. Speeding is one of the major causes of work zone crashes.

DO NOT TAILGATE.  Keep a safe distance between you and the vehicle ahead. The most common crash in a highway work zone is the rear-end collision.

KEEP A SAFE DISTANCE BETWEEN YOUR VEHICLE AND THE ROAD WORKERS AND THEIR EQUIPMENT.

PAY ATTENTION TO THE SIGNS. The warning signs are there to help you and other drivers move safely through the work zone. Observe the posted signs until you see the one that says you have left the work zone.

OBEY FLAGGERS.  The flagger knows what is best for moving traffic safely in the work zone.  A flagger has the same authority as a regulatory sign, so you can be cited for disobeying his or her directions.

KEEP WITHIN THE TRAFFIC FLOW.  Motorists can help maintain traffic flow and posted speeds by merging as soon as possible.  Do not drive right up to the lane closure and then try to merge.

PREPARE FOR YOUR TRIP TO TAKE A LITTLE LONGER. Check radio, TV, Web sites or call 511 for traffic information. Expect delays and leave early so you can reach your destination on time. 

BE PATIENT AND STAY CALM. Work zones are not there to personally inconvenience you.  Remember, road workers are improving the road for your use.

Bill Action

The committee took action on one bill this week:

SF 407 codifies the Veteran Home Owners Program. It passed 19-0.

The House took action on one bill this week:

HF 815 calls for a conference regarding the marking of antenna structures. It passed 97-0.

(Contact: Kelly Ryan, 2-5290)15

House Republicans Take Lead on Protecting Iowa’s Flag Law

Last week, federal court Judge Robert Pratt declared Iowa’s flag desecration law unconstitutional due to vagueness. In reaction to the ruling, House Republicans led the charge to clarify the law as well as protect and preserve Iowa flag statutes.

After much work and research by several House Republicans, Rep. Windschitl and Rep. Dick Taylor offered an amendment to HF 817, the veterans omnibus bill, to clarify the Iowa Code.

Specifically, amendment H-1554: Defines the terms contempt, deface, defile, mutilate, and trample. These were all terms Judge Pratt had noted

in his decision.

Amends current law by saying “knowingly and publicly uses the flag of the United States in such a manner as to show disrespect for the flag as a symbol of the United States, with the intent or reasonable expectation that such use will provoke or encourage another to commit trespass or assault”, rather than what is currently in the Code which is a public offense. The section further defines show disrespect, deface, defile, flag, mutilate, trample.

Finally, the amendment clarifies that the subsection does not apply to a flag retirement ceremony conducted pursuant to federal law.

Rep. Windschitl was quoted saying on the House floor, "I have saluted our flag on many parade decks on different bases throughout this country. I saluted our flag while it flew over the sands of Iraq. I pledge allegiance to this flag every day that we are in session." Windschitl also said, "I think that our flag needs to have the utmost in respect and dignity afforded to it that is possible." This change is House Republicans’ effort to ensure that dignity is afforded.

The ACLU commented in a Des Moines Register news story that they believe the language as drafted is still unconstitutional the way it is written; however, they will wait to see if the Governor signs it before they review the final bill.

House Democrats Vote Against Benefits for Veterans and Families of Injured and Deceased Veterans

Rep. Worthan offered two amendments to HF 817 that would have provided educational benefits to veterans and the families of injured or deceased veterans.

H-1572 required the state to pay the tuition for attendance at any Iowa community college or Regents university for the spouse/unmarried surviving spouse or children of any Iowa service member who died in the line of duty or receives a 35% service related disability while on active duty.

H-1573 required the state to pay tuition to attend any Iowa community college or Regents university for any member of the Armed Services (past or present) who has received hazardous duty pay. If the veteran receives aid from the

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ROTC scholarship program or the Federal VA Vocational Rehabilitation program, those dollars will be used first and state dollars will pay for any remaining tuition costs.

These two provisions combined are very similar if not exactly the same as what is included in the Wisconsin G.I. Bill. The Wisconsin program went into affect in July, 2005.

Bill Action

The committee took action on one bill this week:

SF 407 codifies the Veteran Home Owners Program. It passed 14-0.

The House took action on one bill this week:

HF 817, the Veterans omnibus bill, which includes language relating to the Commission of Veterans Affairs, the duties of the DVA executive director, studying regional veterans offices and, now, the flag protection requirements. It passed 95-0.

(Contact: Kelly Ryan, 2-5290)

Tax Cheats Are Off The Hook with W&M Bill

On Monday, April 2, the House Ways and Means Committee approved House Study Bill 298, which provides delinquent taxpayers a two-month amnesty period to pay their state tax debts. Under these amnesty provisions, taxpayers would have any penalties imposed on qualifying past due taxes waived and half of any interest imposed on past due taxes would also be waived.

Interest would continue to accrue on past due taxes until payment is made. One condition for taking advantage of the amnesty is the taxpayer must agree to relinquish all administrative and judicial rights to challenge the imposition of the tax and its amount.

Letting Iowans who have broken the law by not paying their taxes off the hook in order to increase state revenue is an interesting move by House Democrats. Especially considering that they’ve consistently insisted that they want to reward Iowans who work hard and play by rules.

Unfortunately under the leadership of House Democrats, Iowans who have been working hard, playing by rules and paying their taxes get socked with at least $144 million in tax increases this session, while Iowans who have been breaking the rules and cheating the system, get a free ride.

HSB 298 provides amnesty to anyone who has a delinquent Iowa tax liability prior to December 31, 2006, on the following taxes:

Individual Income, Corporate and Franchise (Code Chapter 422) Sales and Use Taxes (Chapter 423) Hotel and Motel Tax (Chapter 423A) Local Option Taxes (Chapter 423B)

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Automobile Rental Excise Tax (Chapter 423C) Equipment Tax (Chapter 423D) School Infrastructure Funding (Chapter 423E) Environmental Protection Charge on Petroleum Diminution (Chapter 424) Inheritance Tax (Chapter 450) Generation Skipping Transfer Tax (Chapter 450A) Qualified Use Inheritance Tax (Chapter 450B) Iowa Estate Tax (Chapter 451) Motor Fuel and Special Fuel Taxes (Chapter 452A) Cigarette and Tobacco Taxes (Chapter 453A) Excise Tax on Unlawful Dealing in Certain Substances (Chapter 453B)

In January, Governor Culver suggested using amnesty to provide approximately $16 million in new revenue to spend in the FY 08 budget.

It is estimated by the Department of Revenue that gross collections from the amnesty program will likely be around $53.9 million. However, most of this amount would represent the acceleration of receipts from later during FY 2008. The net amount of new receipts is estimated to equal $16.0 million.

The impact estimate was derived as follows:

Gross revenue from non-filers is estimated at $9.1 million. Of this amount $4.5 million would represent new revenue.

Total revenue that would be generated from amended returns would equal $16.5 million. Of this amount $4.1 million would represent new revenue.

Gross revenue from assessments not in protest is estimated at $18.4 million. Of this amount $3.7 million would be new revenue. An additional, $3.7 million in new revenue would be raised during FY 2008 due to the freeing up of collections resources as a result of the amnesty to pursue other accounts.

Gross revenue from assessments in protest is estimated at $10.0 million. No new revenue is expected from this source.

(Source: Iowa Department of Revenue)

House Study Bill 298 also includes two appropriations for the cost of implementing the amnesty program. The first appropriation of $710,000 is to cover additional costs the Department of Revenue will incur in promoting and managing the amnesty. Of this amount $425,000 is budgeted for marketing and media, $100,000 is budgeted for information system changes, and $50,000 is budgeted for printing and postage.

Another appropriation of $150,000 is included in the bill to cover the cost of hiring additional revenue examiners. The responsibility of the new staff would be to insure taxpayers discovered through the amnesty program are not allowed to become delinquent again.

The last time the State of Iowa conducted a tax amnesty program was in 1986, and the state collected over $35 million from that effort. The 1986 Tax Amnesty Report can be found on the Internet at: http://staffweb.legis.state.ia.us/lfb/docs/ways_means/Tax%20Amnesty.pdf

Iowa Use Tax

The Iowa Use tax includes:

The 5% excise tax collected by out-of-state based firms making sales of tangible personal property or certain services purchased for use in Iowa.

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The 5% excise tax on goods or services purchased tax free by consumers and subsequently used in Iowa.

The 5% excise tax collected by Iowa county treasurers or the Iowa Department of Transportation on vehicles subject to registration.

The Iowa use tax rate is 5%.

Distribution of Funds: Revenue derived from use tax on vehicles subject to registration is deposited in various special funds. Revenue derived from the other sources is credited to the state’s General Fund.

At the time of a taxable purchase, Iowa state sales/use tax is collected by the retailer from the buyer. Unlike tangible personal property, which is subject to sales/use tax unless specifically exempted by Iowa law, services are subject to sales/use tax only when specified by Iowa law. The Iowa sales tax is due when the taxable service is rendered, furnished or performed. The Iowa use tax complements the Iowa state sales tax. Typically, when a taxable service is purchased or obtained outside of Iowa for use in Iowa, it is subject to Iowa use tax.

TAXABLE SERVICES aircraft lease or rental, 60 days or less alteration and garment repair armored car services bank and financial institution service charges barber and beauty services battery, tire, and allied services boat repair cable/pay television fees camera repair campgrounds carpentry carpet and upholstery cleaning and repair communication services; excluding Internet access fees dance school and dance studio dating services demolition drain cleaning; unplugging toilets, sinks and sewers dry cleaning, pressing, dyeing and laundering electrical and electronic repair and installation employment and executive search agencies excavating and grading exterminators farm implement repair of all kinds flying service and instruction furniture repair and cleaning fur storage and repair garbage collection and disposal, nonresidential commercial only golf and country clubs and all commercial recreation fees, dues and charges gun repair house/building moving household appliance, television and radio repair investment counseling janitorial and building maintenance or cleaning; non-residential only jewelry and watch repair landscaping, lawn care, and tree trimming and removal limousine, including driver

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machine operator fees machine repair of all kinds massage; unless performed by a licensed massage therapist mini-storage motor repair motor vehicle, recreational vehicle and recreational boat rental; when rented without a driver or operator motorcycle, scooter and bicycle repair oilers and lubricators on vehicles and machines office and business machine repair painting, papering and interior decorating parking facilities pet grooming pipe fitting plumbing, including drain cleaning and unplugging toilets, sinks and sewers reflexology roof, shingle and glass repair security and detective services sewage services, nonresidential commercial only sewing and stitching shoe repair and shoeshine sign construction and installation storage warehouse or lockers of raw agricultural products storage of household goods swimming pool cleaning and maintenance tanning beds or tanning salons taxidermy telephone answering service and telephone services test laboratories, except tests on humans and animals tin and sheet metal repair tree trimming and removal Turkish baths and reducing salons vehicle repair vehicle wash and wax water conditioning and softening weighing welding well drilling; repair only wood preparation (i.e. stripping, cleaning, sealing) wrapping, packing and packaging of merchandise other than processed meat, fish, fowl and vegetables wrecker and towing

The following are considered sales of tangible personal property and are taxable: engraving equipment and tangible personal property rental optional warranty contracts photography printing and binding recapping and re-treading tires retouching photographs vulcanizing

EXCEPTIONS:

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ConstructionWhen services are performed on or connected with new construction, reconstruction, alteration, expansion, or remodeling of a building or structure, they are exempt from sales and use tax. Repair services remain taxable.

Employee ServicesServices rendered, furnished or performed for an “employer” are exempt.

Exempt EntitiesServices provided to the following entities are exempt from sales and use tax: Iowa private nonprofit educational institutions, the federal government, Iowa governmental subdivisions, Iowa government agencies, certain nonprofit care facilities, nonprofit museums and nonprofit legal aid organizations. However, services provided to most nonprofit entities, churches and religious organizations are usually taxable.

Purchases for ResaleTangible personal property purchased by one who is engaged in the performance of a service may be purchased for resale and is not subject to tax if (1) both the provider and the user of the service intend that the property will be sold, (2) the property is transferred to the customer in a form or quantity capable of a fixed or definite price value, and (3) the sale of the identifiable piece or quantity of property is evidenced or shown by a separate charge.

Tangible personal property not sold as specified above is considered to be consumed by the purchaser who is engaged in performing a service and is subject to sales/use tax at the time of purchase.Example: A beauty or barber shop purchases shampoo and other items to be used in the performance of its service. Tax is due at the time the shop buys the items from its supplier. Tax is due because the items are not transferred to the customer in a form or quantity capable of a fixed or definite price value and because the items are not specifically invoiced.

Services for ResaleServices purchased for resale are exempt from sales and use tax. A service is purchased for resale when the person who is contracted to perform the service subcontracts another to perform the service.Example: An auto repair shop contracts with a customer to repair a damaged car. The shop does most of the repairs, but subcontracts the repair of the radiator to another shop. No sales tax is charged to the shop for repairing the radiator since the service was purchased for resale to the owner of the car. Tax is paid by the customer to the original repair shop.

Restoring Tangible PropertySimilar to services for resale, services that recondition or repair tangible personal property are exempt from sales and use tax when that property is normally sold in the regular course of the retailer’s business. Sales and use tax will be paid when the property is finally sold to a consumer.Example 1: The owner of a retail appliance store hires someone to repair a refrigerator that the owner is going to resell in the store. The owner can purchase the repair service tax free because the store regularly sells refrigerators and tax will be collected when it is sold to a final consumer.Example 2: Chris operates a retail farm equipment dealership and accepts a motor boat as partial payment for a piece of farm equipment. Chris then contracts with Don to repair the motor on the boat. After Don repairs the boat, Chris sells the boat at his dealership. Chris does not normally sell motor boats in the regular course of business. Therefore, the service performed by Don for Chris is taxable.

Casual SalesServices that qualify as casual sales are exempt from sales tax. In order for sales of services to qualify for exemption as casual sales, the sale must be made by a person who is not a retailer; or, if the seller is a retailer, the current sale must be unrelated to the retailer’s regular business and must not involve a liquidation of the business. Casual sales are exempt from the Iowa sales and use tax except for the casual sale of vehicles subject to registration and of aircraft.Two separate sales unrelated to the seller’s regular business within a 12-month period are not considered to be typical and, therefore, are not taxable. Three separate sales within a 12-month period are considered recurring or typical. Tax applies beginning with the third sale. If a

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sale occurs consistently over a span of years, it is considered recurring and not casual, even though only one sale occurs each year.

(Contact: Mary Earnhardt, 1-3298)

House Republican Talking Points

Teacher Quality Bill

Both Republicans and Democrats campaigned on raising teacher salaries. The difference is that while Democrats want to pay teachers more, Republicans want to pay our best teachers more. The Democrat’s plan dumps $145 million into teacher salaries without any accountability surrounding the money. Republicans don’t believe that higher pay equals better teachers or high student achievement. This bill isn’t about teacher quality, it is about payback to the powerful teacher’s union. The fact of the matter is that this bill represents genuine difference between Republicans and Democrats when it comes to education policy. The largest of those differences are the following:

1- Democrats are shifting power away from locally elected school boards to the teacher’s union.

2- Democrats continue to pass legislation that will raise property taxes.

3- Nothing in the Democrat’s plan increases student achievement.

Shifting Power Away From School Boards and to the Teachers Union

Under the Democrat’s plan, the teacher’s union will negotiate terms of evaluation and how the teacher quality money is dispersed. We seriously doubt the teacher’s union will negotiate a plan that makes it harder for teachers to get pay raises. The union is going to make it as easy as possible for its members to make more money.

The Democrats also make it harder to terminate bad teachers and makes it easier to give bad teachers a raise. Most Iowans don’t agree with that. Where is the incentive for poor performing teachers to improve? If the Legislature is going let the teacher’s union, instead of administrators and school boards, dictate the terms of teacher evaluation and make it easier for the poorest performing teachers to get raises, why improve?

Raising Property Taxes

This bill is just the latest example of a shift in policy that is leading down the path of increases taxes – especially property taxes. The preschool bill we did last week allowed school districts to take funding currently allocated to K-12 needs and spend them on preschool instead. Any kind of shift will open a funding gap that will need to be filled.

The two PPEL bills that are currently on the debate calendar allows school districts to spend cash currently restricted to infrastructure needs on non-infrastructure items. Any kind of shift will open a funding gap that will need to be filled.

Now we have this, the teacher’s union payback bill. The bill plows $145 million into teacher salaries without tying the increase to improved teacher performance to higher student achievement. The Democrat’s plan removes a restriction that prevents property taxes from being used to pay for salaries. As salaries increase, what do we think will happen to property taxes.

Student Achievement Ignored

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Research proves that paying teachers more does not appear to be associated with higher student achievement. Which means that this bill has nothing to do with helping our children become better students but has everything to do with paying back the teacher’s union for hundreds of thousands of dollars it poured into Democratic campaigns.

On Feb. 16, a Des Moines Register editorial stated: “Policymakers ‘should be aware that paying public school teachers more does not appear to be associated with higher student achievement.’ Wow. That’s something lawmakers should read twice. Higher pay doesn’t appear to be associated with higher student achievement.”

There needs to be accountability built into the system. This bill does just the opposite. It provides a disincentive for teachers to improve, it empowers the teacher’s union to set evaluation standards, it takes power from our locally elected school boards and finally it is yet another example of an agenda that will lead to higher taxes.

Democrat’s Agenda So Far

Raised the minimum wage from $5.15 to $7.25 per hour by 1-1-08. During the fall elections, House Democrats promised to raise the minimum wage in Iowa from $5.15 an hour to $7.25 an hour by 2009. While that’s good for low wage earners, it is bad for small employers.

Democrats are more than happy to tell constituents they have raised the minimum wage, however they failed to provide a pay hike to those Iowans who serve our youngest citizens. In FY 2006 and FY 2007, House Republicans made sure that state childcare assistance payments were increased. House Study Bill 301 does not include any funding to implement the 2006 childcare rate survey. Stagnation on commercial property tax relief after promising Iowa’s business communities they’d see action on property tax relief, the Democrats have fumbled along for two months without any progress.

Approved a symbolic bullying bill by requiring all school district to have bullying policy in place by September 1. The Democrats conveniently ignored the fact that all public and non-public schools are already required to have a student discipline policy in place addressing harassment in order to be accredited. In their rush to pass a bill they forgot to include cyber-bullying on their list. Thanks to Republicans it is now included. Below is the list of student traits or characteristics that the Democrats included on their “list”.

Age Color Creed National origin Race Religion Marital status Sex Sexual orientation Gender identity Physical attributes Physical or mental ability or disability Ancestry Political party preference Political belief Socioeconomic status Familial status.

Republican amendments to include a parent involvement policy and nonpublic school language clarifying that the bullying policy should not inhibit teachings or consideration of doctrinal matters were eliminated from the final version of the bill.

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Allowable growth funding levels that are suspiciously similar to the levels adopted by Republicans. Democrats adopted a 4% allowable growth rate and rejected an opportunity to approve 6% allowable growth. They also rejected a plan to have the state take the burden off local property taxpayers. Despite the opportunity to approve additional education dollars AND provide some property tax relief LIKE THEY PROMISED THE VOTERS LAST FALL, Democrats rejected the ideas.

Repealed Iowa’s ban on human cloning… Essentially the Democrats repealed the code section which bans human cloning and are replacing it with a new “ban” which isn’t a ban.

Chapter 707B prohibits human cloning for any purpose, whether it be for Reproductive or therapeutic cloning. A person performing or participating in cloning would be guilty of a class C felony, while transporting cloned embryos is a aggravated misdemeanor. The prohibition does not impact in vitro fertilization.

HF 287, the Democrat’s cloning bill, repeals Iowa Code Chapter 707B. It says so right on page 2, line 19 – “Chapter 707B, Code 2007, is repealed.”

What is the difference between reproductive and therapeutic cloning?

Reproductive cloning, sometimes called human cloning, is done utilizing a process called “somatic cell nuclear transfer” (SNT). SNT involves the removal of the nucleus of an adult somatic cell (any cell other than a sperm or egg). The nucleus from the cell is then transferred to an egg cell from which the nucleus has been removed. Through proper stimulation, the cell develops into an embryo that can then be implanted into the uterus. A real life example of this is Dolly the sheep.

Therapeutic cloning or nuclear transplantation utilizes similar procedures to reproductive cloning, with the difference being the end result. The embryo created for therapeutic cloning has the stem cells extracted from it. This is embryonic stem cell research.

An early childhood bill that has nothing to do with children but everything to do with ISEA recruiting. The Democrats have managed to pass a bill that:

does nothing to help the most at risk children receive quality pre-K instruction raises costs to parents of preschool children increases the red tape and regulations for private preschools specifically excludes private preschools from employing any of the teachers hired under the bill raises local property taxes to pay for it

The payoff for children and their parents? A public school teacher visiting every preschool for 10 hours a week. If one were cynical, one could argue quite convincingly that ISEA is in favor of this bill because the most tangible result is more union members for ISEA.

Pulled a fast one on the tobacco tax increase…After approving SF 128, Democrats insisted the first $127.6 million of increased tax revenue flowed into the new Health Care Trust Fund ostensibly to fund health care priorities. If the Democrats own balance sheet is truthful, 100 percent of the new revenue is deposited into the general fund NOT into the Health Care Trust Fund.

The bottom line is that all cigarette tax revenue is going to the general fund for new spending NOT for health care.

Speaker Murphy on the tobacco tax:

“Last week House Minority Leader Pat Murphy, D-Dubuque, said a cigarette tax hike isn’t needed because they state now has a budget surplus fueled by healthy tax revenues. That sounded a lot like the argument made last spring by GOP House Speaker Christopher Rants, who was criticized by Murphy for refusing to allow a vote on raising the tax.” (Sioux City Journal, 10-12-06)

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“The Iowa House is unlikely to go along with incoming Gov. Chet Culver’s proposal for a dollar increase in the cigarette tax, incoming House Speaker Pat Murphy said Friday. “I don’t think we’ll go that high,” said Murphy…Instead, he looks for a tax increase in the range of 40 cents to 60 cents a pack.” (Des Moines Register, 1-6-07)

"’Governor Culver has given some compelling arguments to go to a dollar," Murphy said during a taping of Iowa Public Television's "Iowa Press" program, which will air this weekend.” (Associated Press, 2-10-07)

The House Democrats claim that all of the new money generated by the cigarette tax hike will be spent on health care. However, when the joint budget targets are released, it will become evident that the bulk of the increase goes to fund increases for other areas of the budget including the Regents, teacher salaries and state employee salaries.

You may have also heard about what the Governor is calling the "smoking gap":

Governor Culver has been talking about the dramatic $187 million Medicaid gap between what the current tobacco tax brings in and what is paid out for smoking-related illnesses. Today, Iowa has the 9th lowest tobacco tax in the nation and currently brings in $90.5 million per year in revenue. Meanwhile, the annual Medicaid expenses for smoking-related illnesses amounts to $277 million per year. This leaves a $187 million gap funded mostly by non-smoking Iowans.

What he doesn't want you to know is that for every $1 the state spends on Medicaid, the federal government spends $2. Therefore, if the $90.5 million is spent on Medicaid, it will be matched with $181 million from the federal government, almost completely eliminating this so-called gap.

Killed Castle Doctrine…Castle Doctrine allows reasonable use of force to defend yourself and your home.

Shifting Power to the Teacher’s Union and Away From School Boards…Under the Democrat’s teacher pay plan, the teacher’s union will negotiate terms of evaluation and how the teacher quality money is distributed. We seriously doubt the teacher’s union will negotiate a plan that makes it harder for teachers to get pay raises. The union is going to make it as easy as possible for its members to make more money.

The Democrats also make it harder to terminate bad teachers and makes it easier to give bad teachers a raise. Most Iowans don’t agree with that. Where is the incentive for poor performing teachers to improve? If the Legislature is going let the teacher’s union, instead of administrators and school boards, dictate the terms of teacher evaluation and make it easier for the poorest performing teachers to get raises, why improve?

Raising Taxes…This bill is just the latest example of a shift in policy that is leading down the path of increases taxes – especially property taxes. The preschool bill we did last week allowed school districts to take funding currently allocated to K-12 needs and spend them on preschool instead. Any kind of shift will open a funding gap that will need to be filled.

The two PPEL bills that are currently on the debate calendar allows school districts to spend cash currently restricted to infrastructure needs on non-infrastructure items. Any kind of shift will open a funding gap that will need to be filled.

Now we have this, the teacher’s union payback bill. The bill plows $-- million into teacher salaries without tying the increase to improved teacher performance to higher student achievement. The Democrat’s plan removes a restriction that prevents property taxes from being used to pay for salaries. As salaries increase, what do we think will happen to property taxes.

Refused to allow debate on veteran’s assistance bills…Republicans offered two amendments which would have provided free tuition to Iowa veterans who received harzardous duty pay and to the families (children and spouses) who were severely disabled or killed in action.

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Just over the horizon…

Runaway Spending and Big Tax IncreasesDemocrats released the General Fund balance sheet last week which details all tax and spending increases. It amounts to a 10 percent increase in spending and $144 million in tax increases.

The total increase in the FY 08 general fund budget is $528 million, or 10 percent above the budget enacted last session.

Even when the $62 million in supplemental appropriations are factored into the FY 07 budget, the increase for FY 08 is $467 million, or 8.7 percent compared to last year.

The Democrats still plan to raise taxes by $144 million.

This level of spending increase is not sustainable in future fiscal years without significant tax increases.

Free Ride to Tax CheatsDemocrats plan to offer amnesty to tax cheats. Iowans who have been working hard, playing by rules and paying their taxes get socked with $144 million in tax increases, while Iowans who have been breaking the rules and cheating the system, get a free ride.

Top spending priority is union salariesDemocrats plan to spend $107 million on union salary increases.

The $107 million represents the largest increase in the budget this year. That means the top spending priority for the new Democrat majority is not for teachers, health care or economic development. It is to pay back the state employees union.

Raiding the Senior Living Trust FundThe Democrats have a balance of $142 million in the Senior Living Trust Fund (SLTF) in FY 08. This is $55 million less than the Governor’s recommendation. Also, they did not reveal how much they are taking back out of the SLTF to fund the Medicaid budget in FY 08. It is likely they will use at least $74.8 million (the Governor’s recommendation), meaning that if the revenue does not continue to exceed the REC expectations, the SLTF could be completely drained in FY 09.

Between raising taxes, approving an unsustainable rate of spending growth and raiding trust funds, the budget blueprint put forth by the Democrats is fiscally reckless.

Fair ShareSF 413 forces non-union public employees - like teachers- to pay union dues. The only way for public employees to avoid paying union dues is to quit their jobs.

The effect of SF 413 is the same as a direct repeal of the Right to Work law.

The so-called “Fair Share” legislation is not fair. It is forced unionism.

There is nothing fair about forcing individuals to pay dues to a union or an organization they do not choose to belong.

There are amendments to SF 413 which, among other things, would do the following: Relieve public employee unions of the burden of representing non-union employees and allow them to simply

represent their members.

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Require an annual audit and public reporting requirements to disclose how the unions are spending the cash raised from fair share fees.

Allow a religious exemption for public employees who have a religious objection to joining employee organizations. Other states, like Ohio for example, have this in Code.

Make the bullying and harassment of public employees who do not want to join the union illegal. Prevents fair share fees from being used for any political effort or lobbying effort germane or not germane to

collective bargaining. Makes it illegal for unions to recruit and/or sign up illegal aliens. Requires that any union making political contributions to Iowa political campaigns certify that all individuals

paying dues aer American citizens. Allows non-union employees who are forced to pay fair share fees the right to view and examine union

finances related to the fair share fees. Replaces all references to “fair share” in the bill to “forced union”. Allows teachers to be represented by an organization other than ISEA. Amends the scope of negotiations section of the code to allow employers and unions to collective bargain

diversity policies, harassment policies, discipline policies, promotion procedures. Requires the union to set the fair share fee based on actual historical data instead of the whims of union

leadership.

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