Hamerlinck’s Observations Week 15

As the state legislature attempts to track down the ever illusive final week of session, debate has been centered on whether or not policy can be included in appropriations bills. Historically, the majority party makes the determination on the germaneness or relevancy to the issue at hand, and appropriateness of policy on each piece of legislation and this year is no exception.

I am sure this scenario plays itself out each year no matter which party is in control. In a bit of research I found, though Democrats are doing it now, the Republicans did it to Democrats seven years ago, Democrats did it in the late 1990’s and Republicans did it after the farm crises of the 1980’s. Over the years this process has become a gateway for earmarks, irrational policy implementation and pet projects for incumbents in swing districts.

If the minority party offers policy in an appropriations bill it soon dies a quick death through floor tags of micromanaging, being non germane, out of order and/or duplicating the responsibility of other commissions or bodies. Note, even the dissenting comments may not match the policy attempting to be added. If the majority party adds policy it is labeled as responsibility, necessary, overdue and simple right for the future of Iowa.

With this background, I want you to consider two bills discussed in the Senate on Tuesday, House File 809 and Senate File 470. House File 809 was the same bill I spoke about in my last newsletter in relation to my failed amendments promoting a searchable online database so taxpayers could see where their tax dollars are being spent. This amendment, which promotes transparency, failed down party lines.

House File 809 is the Administration and Regulation appropriations bill. Within in the spending bill is a massive policy shift to the way alcohol will be available for consumption. It allows gas stations and convenient stores to now acquire a Class E liquor license. This license will permit the sale of hard liquor and distilled spirits. An amendment to strip this language passed as week. Democratic leadership in the Senate changed some minds during a caucus; the same amendment then failed in a motion to reconsider this week. As is, you will be able to purchase hard liquor at your local gas station. Sadly, the thoughts of city officials, substance abuse prevention specialists and the alcohol consumption rates of youth was found irrelevant when the vote passed.

In the same bill we ran an amendment to limit the purchase of new vehicles by the state of Iowa. This amendment failed as well. In a period of tough economic times, the state can now purchase vehicles with leather seats, seat warmers, upgraded floor mats, designer tent and paint coatings, CD players, blue tooth technology for I-Pods, side mirror defrosters, aluminum trim rims and fuel millage standards no longer apply. This is an example of your hard-earned tax dollars at work.

Most impressive, was how an amendment that passed on the bill now allows elected officials to be paid per diem for trips to Des Moines to sit on boards for which they have no voting power. The legislature showed their ability to make cuts in legislative pay during the session by cutting per diem just to quadruple pay to themselves over the summer interim.

In the same manner of removing amendments placed on Senate File 470, an appropriations bill for college students and the school for the blind included policy changes that were stripped in the Senate. Notice the actions by a majority in the Senate in this bill are procedurally the exact opposite as the bill discussed above. Define hypocrisy, it can’t be very far off from these examples.

Sadly, some of the policy removed in this bill deleted a requirement for the Pledge of Allegiance to be said in public school at the beginning of each school day. It also removed the requirement that the American flag be shown in auditoriums and gymnasiums in public schools. The last amendment removed the restriction on teachers in public schools from posting pictures of students on social websites like MySpace and Face-Book without permission from the student or parents. This isn’t about political parties. This is about rational common sense. It is inappropriate to allow pictures of students to be displayed on private websites without notifying parents.

On a side note, Senate File 389 which was the universal health care bill came back to the Senate from the House with some drastic changes. The bill made vast changes to the healthcare system in Iowa and it forced private insurance companies to offer government subsidized rates through a government board called the Exchange. The bill was more of a dream without the revenue stream by which to back it up. The new gutted form of the bill which returned to the Senate recommended a study group to investigate how to make healthcare in Iowa more affordable for all. As part of this research it requires parents to report insurance for their children on income tax filings next year and then gives them ninety days to either find health care or be given information on the state program Hawk-i.

As a taxpayer you are my boss. I welcome you to contact me with any issue. Thank you for letting me serve you at the Capitol.

Hamerlinck’s Observations Week 14

Iowans often dread this week every year because it brings about the deadline for the filing of federal income taxes. Yet, this year thousands of Iowans from communities all over the state decided to commemorate this annual occurrence by hosting tea parties to protest the unbridled spending that has occurred both at the federal level, but especially here in Iowa where the governor and his legislative counterparts have unsustainably increased grown government’s budget during the last two years while continually looking for new ways to raise taxes on Iowa’s families and employers. We were proud to make an appearance at the tea party held at the Iowa Capitol this week where well over 3000 Iowans gathered to send a message to the governor and his party allies in the Legislature to stop the overspending and to dump the plans to enact additional burdensome new tax increases.

While this time of year means tax season for Iowa taxpayers, it also means the nearing of the end of the legislative session and that means lawmakers are busy crafting the next year’s state budget. The governor and the current majority party in the Legislature have spent the state into serious deficits during the last two years and as a result, they have been forced to significantly scale back their earlier budgetary plans. Speaking to reporters earlier this week, Governor Culver admitted that his party’s inability to budget with restraint has led to a prolonged session saying, “I think if we had our t’s crossed and i’s dotted we’d be adjourned by now.” When the Legislature finally does adjourn, the current budget being crafted will still be among the largest in state history thus reinforcing the fact that Iowa is facing a spending problem – not a revenue problem.

In an attempt to increase movie production in the state, the Legislature passed a bill this week to give production companies, producers and lead actors tax credits. This was pushed in the Senate as a measure to spark investment in Iowa by attracting Hollywood dollars. Thirty-two other states currently offer similar programs to the entertainment industry. Earlier the same day we ran an amendment to replace the $250 teachers tax credit and it failed down party lines. With this credit, the money teachers in Iowa use to buy supplies for their classrooms can be deducted from their income taxes. During floor debate, supporters of eliminating the teachers tax credit stated we are in tough economic times and cuts must be made wherever we can find them. Even if solely out of principle, how can we give the richest Hollywood actors tax breaks when we can’t step up to support our teaching population?

Every year the federal tax code changes and traditionally the state legislature in Iowa adopts those changes into our tax code. This is referred to as “coupling” as we are coupling the state tax code with the federal tax code. For some reason the coupling bill this years has been forgotten and this lack of action will result in a $54 million tax increase for Iowans. We ran an amendment on Wednesday to request the coupling bill be taking up before the end of this legislative session and our action was ruled non-germane or not relevant to the bill at hand.

The first bill I filed in my freshman session was Senate File 102 which required the state to develop an online searchable database which would allow taxpayers the ability to see where their tax dollars are being spent. A similar form of this legislation passed in the House 97-2 and the Senate has refused to take up the measure. On Thursday I ran this bill in the form of an amendment on the Administration and Regulations Appropriations bill. During floor debate, the floor manager of the bill stated this amendment cannot be supported at this time because we are unsure of its cost and a concern that it would challenge state staff at a time when they are overworked. At this point, I am not shy to say, the debate gloves came off. President Obama requires any state which accepts stimulus funds to create a similar type of transparency website and we have copies of the Governors proclamation to the state implementing the transparency program. Apparently, transparency only matters when politicians believe they can get free money from the federal government for doing so. The hypocritical nature of watching state politicians say we need to be accountable with federal dollars while stating out the other sides of their mouths the state legislature shouldn’t be held to the same standard. My amendment failed down party lines during final passage. No politician should ever fear a transparent government.

The ideology which limited the transparency bill invokes the same thought processes which limits the open records legislation in the House. This bill would require city councils, school boards, county supervisors and state legislators to offer greater access to the information which is exchanged between elected officials during the decision making process. With advancements in technology, many times agreements are made via email before a bill even comes to the floor for debate. This is your government and you should always have the right to know.

I want to thank you for giving me the opportunity to work at the Capitol and represent you as the State Senator from the 42nd District. As a taxpayer, you are my boss.

Hamerlinck’s Observations Week 13

Though this year’s legislative session may be quickly coming to an end, there has not been a shortage of controversy and excitement during the past few days. It might even be an understatement to say that last week was an eventful and historical week in the State of Iowa. During the past two weeks, we have seen an enormous shift in the social fabric of Iowa with the Iowa Supreme Court’s decision to change the definition of marriage. Then, we witnessed a continued attempt to muffle the voice of taxpayers when 600 Iowans were thrown out of the House of Representatives because they objected to legislation that would dramatically alter Iowa’s fiscal policies, eliminate federal deductibility and raise taxes on hundreds of thousands of Iowa families and employers in absolutely every tax bracket.

The governor and his party allies in the Legislature are busy putting together the finishing touches on a bill that would eliminate federal deductibility and force hundreds of thousands of Iowa families and employers to bear the burden of a huge tax increase. Simply stated, this legislation amounts to a tax on a tax because Iowans would lose their ability to deduct their federal tax liability from their state tax liability.

Because the governor and his allies in the legislature failed to keep spending under control during the last two years, the state faces hundreds of millions of dollars in budget deficits. Instead of cutting up the state’s credit card and tightening the belt like any family or employer would, we continue to look for more taxes to increase, more bonding proposals to add to the state’s debt and more ways to grow the size and scope of an already bloated government. Iowans understand that we cannot spend, we cannot tax and spend and we cannot borrow and spend our way to prosperity and we must instead get serious about enacting real pro-growth policy that will help get the over 80,000 unemployed Iowans back into jobs.

Question #1 for the Iowa Taxpayer: As we head into one of the last days of session, how will the current majority keep spending, yet make their budget balance?

A: The Senate Ways and Means Committee has several possible tax increase bills ready to provide the revenue necessary to increase spending despite the tough economic times. What are some of the bills that could raise an Iowan’s individual taxes this year? Here are just a few examples:

SF 468: Eliminate Federal Deductibility: The bill allows for a tax on a tax. Federal deductibility allows Iowans to deduct all federal income tax payments on their Iowa income tax returns. For many taxpayers, the amount of tax payments made to the federal government is the only – or largest – deduction available to them. Estimates show, in 2009, 69% of the individuals (314,885) whose taxes will increase under the bill make less than $70,000 per year. In tax year 2011, estimates show that the bill will result in a $190 million tax increase on Iowans. If you think the state is entitled to more of your money, then the elimination of federal deductibility is for you.

SSB 1308: City and County Alternative Revenues: The bill is designed to lessen city and county dependence on property taxes. It authorizes a menu of new taxes for cities and counties to implement as an alternative to funding local spending by property taxes. The bill does not reform Iowa’s antiquated property tax system, however. Instead, the bill increases taxes on Iowans in many ways. For example, it is not dollar for dollar property tax relief. If you rent, any offsetting property tax credit the bill provides is worthless. For example, property taxes are deductible on your Iowa income tax return, while your city franchise fees are not.

SSB 1133: IRC Update bill: The bill updates references to the Internal Revenue Code to make federal income tax revisions enacted by Congress applicable for Iowa income tax provisions. The Legislature passes this bill each year because Iowa’s tax provisions based upon federal tax law. This year’s bill would help teachers, flood victims, business owners, parents, and students. The tax benefit to parents and students for the deductibility of college tuition and fees will definitely help families struggling to pay their monthly bills cover the increasing cost of a college education. The bill would provide Iowans a tax cut of $54 million in 2009, $64 million tax cut in 2010, and $33 million in 2011. So, how is the bill a tax increase? The bill will not even be debated, let alone voted on. The lack of your tax cut is revenue to the state for increased spending. The bill also comes with a few hidden surprises. It greatly increases the complexity of the Iowa tax code and forces many Iowans to revisit their tax preparer and pay again to amend their Iowa tax returns.

Iowans are starting to notice a troubling trend. They are losing their opportunity to have a say in the government that is supposed to be of the people and for the people. Last week, the public at a public hearing were removed and their voices were silenced. Next, the current Senate majority refuses to allow the Senate to vote on the marriage amendment and as a result, their voices are silenced. Now three million Iowans are having their voices silenced because they are more interested in the opinions of seven elite judges. Iowans handed the keys of power to Democrats during the last elections, but now the people of Iowa are being locked out of their own government.

The issue that has dominated the discussion in Iowa this week was the Iowa Supreme Court’s decision to allow same-sex marriage in Iowa. In 1998, the legislative and executive branches in Iowa voted to protect traditional marriage by defining it as only between one man and one woman. Last Friday, the judicial branch struck down that law and opened the door to a completely different view of marriage. As it stands now, there is an incongruity between the outcomes of the three branches of government. I believe the ultimate deciders of this important decision should be the people of Iowa. If the branches of government cannot agree, it is always best to allow the voters of Iowa to have the final say.

Unfortunately, Governor Culver and legislative counterparts are obstructing the process that would provide every voting Iowan the chance to decide the marriage question. Just last year, after a taping of the statewide Iowa Public Television program “Iowa Press,” Governor Culver made it crystal clear that he wanted to ‘do whatever it takes to protect marriage as between one man and one woman.’ Regrettably this week, the governor flip-flopped on his promise to Iowans by agreeing with the seven elite justices. His failure to lead likely means three million Iowans will be denied a vote on this important issue.

The Supreme Court justified their ruling by stating married couples enjoy sharing and distributing assets which have monetary value in a manner unwed couples, either same-sex or heterosexual, do not. If the ruling is derived from a monetary stance then it should be fixed by the same. The State of Iowa is in the marriage business as it grants powers of attorney to married partners. This ruling may actually become a prime opportunity to rework problems with the income tax, property tax laws, and powers of attorney over assets and medical care. I am disappointed to see the Supreme Court revert to a discussion about religion in their ruling just to eventually denounce religion in a hypocritical fashion.

I don’t see this issue as being one of Republicans fighting Democrats. In reality, it is an issue which is displayed by shifts in culture through generations. Statistically, those in their twenties are more likely to be open to Civil Unions as long as marriage is still held between a man and a woman. Those in their seventies are more likely to be in favor sustaining marriage in its traditional fashion. Since all three branches of government can’t agree this is even more reason to allow the public to vote.

As I discuss this issue with you my biggest disappointment is in the complete failure by politicians to even take up the issue for discussion. At minimum, those who you elected to office should stand up and hold the debate. I am finding politicians are more than willing to hide behind arbitrary deadlines and funnels just to avoid the topic and leave the Capitol.

The ultimate dilemma is in offering a tax code which is fair to all free taxpaying citizens.

Hamerlinck’s Observations Week 12

How do you take the public out of a public hearing? Apparently, it is easy for the House Speaker; you just request the public to be removed by state troopers. Note to future politicians, you never, ever, ever step on the free speech of a free public. Also, you never, ever, ever limit the American voter’s right to establish grievances with their government. No matter how much you agree or disagree with an item, the discussion and any criticisms must be heard. As a politician, the taxpayers will be your bosses and all politicians must be accountable to the people who put them into office as politicians are ultimately public servants.

On Tuesday I attended the public hearing on House File 807 which removes federal deductibility from Iowa. Take a moment and look at your tax returns. Iowa allows you to deduct the money you pay in taxes to the federal government. The money you pay to the federal government is rarely enjoyed as it comes out of your paycheck and goes straight to the federal government. If this bill passes, you will begin paying state taxes on the tax money you pay to the federal government. Eliminating federal deductibility will result in a double taxation and would be a tax increase of $600 million.

Sadly, the bill was passed by the House Ways and Means Committee the night before it was scheduled to have a public hearing. The same bill passed out of the subcommittee in the Senate the same morning before the public had an opportunity to express their opinions at the hearing as well. Taking a vote before the public has an opportunity to speak on the issue is a direct insult to those who want to share their opinions. This inappropriate move by Democratic leadership in the House increased the passion of those wanting to speak to their elected officials. In response, the House Speaker requested state troopers to empty the House Chambers. That day the voters lost three times; once at the House committee meeting, once at the Senate subcommittee meeting, once at the public hearing.

No matter how you feel about federal deductibility or what political party you side with most, the public must have the right to express their opinions to government. Arrogance by elected officials at the state level resulted in politicians voting to push a bill without concern or care for public opinion. Even more egregious, most of the house members were not in attendance.

Political propaganda is utilized to shove these bills onto the public as if they are actually making positive steps for taxpayers. It is key to notice how bad legislation is being hidden in the same bill behind positive legislation. For example, eliminating federal deductibility alone would be a nearly $600 million tax increase on Iowans. No one can argue with these facts as the data is coming from the nonpartisan agencies of the Legislative Service Agency and the State of Iowa’s own Revenue Department. In order to gain public support behind repealing the state’s federal deductibility they are coupling tax credits and decreasing income taxes paid for 49% of Iowans. That is, for only the first year.

These credits and deductions will not be advantages to the taxpayer after the Congressional Tax Cuts of 2001 and 2003 run out at the end of the year. When you begin paying more in federal taxes more is available for the state to collect on. This means taxpayers are being told they will receive a deduction in the year of the federal stimulus package only to see themselves paying more at the exact same time the Bush Tax Cuts sunset in 2010. This means all Iowans will see a double tax increase in one year - one coming from the state and one coming from the federal government. I often hear it called “playing politics” however, I firmly believe it should be referred to as “distorting the truth.” This is your money!

Note: Friday, the Iowa Supreme Court unanimously ruled that gay marriage be allowed in the state. I will address this in my Friday newsletter.

Hamerlinck’s Observations Week 11

Removing federal deductibility in Iowa would result in taxing Iowan’s for paying taxes. Iowa is one of a handful of states that allows a 100% deduction for federal income tax payments on the state individual tax return. It protects Iowans from paying a state income tax on money used to pay their federal income tax. It is the largest way some Iowans may lessen their tax burden. Democratic Senate leadership has announced a push to remove federal deductibility as a means of increasing revenue to cover budget shortfalls. If this method is used, Iowans will begin paying a tax on a tax.

Remember to always be careful when listening to politicians. Wording offered in the justification of policy changes can have drastically different implied meanings. For example, In Governor Culver’s pledge during his Condition of the State Address he promised not to raise taxes. I have heard a number of legislators make comments that removing federal deductibility would not be a tax increase, rather it would be a reduction in the deduction offered to tax payers.

Proponents of the elimination of federal deductibility claim the deduction allows wealthy Iowans to avoid paying their fair share of Iowa personal income taxes. The simply does not support this political propaganda. In fact, the top 10% of Iowa taxpayers pay about 40% of all Iowa personal income taxes. The next 20% pay about 30% of the burden and the bottom 50% of all Iowa income taxpayers pay less than 10% of the total Iowa personal income taxes. Removing federal deductibility would be a tax increase of $594 million.

Seeking out alternative revenue streams and diversifying revenue patterns are alternative ways of justifying tax increases. Ultimately, the debate is simple, so much money comes into the state and only so much can go back out for desired programming. Yesterday, I sat on the subcommittee for Senate Study Bill 1308 (SSB 1308) which will give individual municipalities and counties the authority to now tax individual income, entertainment and tobacco. Presenters discussed the overreliance local government has on property taxes and the need to diversify revenue streams in order to provide property tax relief. The bill was not presented as a tax increase due to the necessity of local elected officials in each city approving the implementation of the tax and the claim that this bill only gives local officials the authority if they choose to utilize it. Note, every time the state of Iowa has approved a new form of taxation in the name of property tax relief, real property tax relief has never occurred.

As the state continues to draw more resources from cities and counties while increasing the financial burden of unfunded mandates, local communities become strapped for funds to provided basic services. Sadly, ideas such as SSB 1308 are popping up. My ultimate concern is the steady and slow movement towards the fee as a solution. Local communities are utilizing storm water fees, garbage fees, recycling fees, waste water, and even development fees to compliment revenues derived from property taxes. By the end of our subcommittee meeting on Thursday, SSB 1308 moved in that direction as well.

Taxes can be filed on Iowa income tax returns, fees cannot. If we move down this path you would be paying for services in your property taxes and through the fee payment without having the right to claim the payment on your tax return. Before we ask more of you through your federal tax deductions and request you to pay more in fees we must first ask what is happening with the state budget to put local communities in this difficult spot.

If the state budget, in the past ten years, grew by double the rate of inflation we would still have a surplus this year of $20 million. Instead, the Revenue Estimating Conference last Friday reported we have a roughly $820 million gap in the FY 2010 budget. The ultimate alternative being offered to the taxpayer is bonding. Governor Culver came to Scott County last week and proposed the $750 million bonding package as our ultimate savior. This would result in $1.3 billion in payments and fees on the loans over a 20 y year span and that is only if we bond for 5%. Total appropriations for FY 2009 will be just over $13 billion with $6.1 billion of that coming from the general fund.

Rather than asking for more money from the taxpayers legislators should first offer receipts to the taxpayers to show how we have been spending their money. Legislators must first be accountable with the tax dollars you pay before we can ask for more. The transparency bill I cosponsored, Senate File 102, which would give you a searchable online database to see how your tax dollars are being spent passed through the House on Wednesday. We received word on Thursday that Democratic leadership in the Senate will not take up the measure for a vote.

No politician should fear accountability. It has been a pleasure serving you in Des Moines. I welcome you questions and comments. You may contact me on any issue at the Capitol this session. (Shawn.hamerlinck@legis.state.ia.us, Phone: 515-281-3371)

Hamerlinck’s Observations Week 10

Recently the Governor revealed his $750 million dollar temporary work plan that, over a 20 year span, would actually cost taxpayers $1.3 billion dollars when all the interest and finance charges are added. We hear the ultimate goal of these bonding packages are to put people to work and insulate Iowa from the economic struggles plaguing the rest of the country.

We must first remember that the federal stimulus package and the Governor’s bonding proposal utilize money which taxpayers have not paid yet. This is like saying we are going to fix our economy today by spending your tax dollars next year. This is where we hear debates about the State of Iowa using credit cards to solve our current financial turmoil.

My ultimate goal is to find a solution to our current economic downward trend which does not require the State of Iowa to go further into debt, which will create more jobs and which will continue to be an asset for years in the future. This is why two weeks ago I introduced Senate File 402 – an education pilot program.

To explain the program, I’d like to start with giving you a visual, think of high school student achievement in the 1950s mimicking the standard deviation which appears on a standard bell curve. There were few students earning failing grades, few earning all “A’s,” and the majority of students earned grades in the satisfactory or above range. In post-modern American society we are experiencing a trend toward polarization in student achievement resulting in a larger number of students excelling in high school with straight As and a larger population falling below the satisfactory threshold. Those in the higher achieving brackets are often moving onto post-secondary education. (Note, this discussion excludes the debate on academic dilution.)

While, statistically, this is occurring in education we are seeing simultaneously, the need to provide a sustainable workforce for our large employers in the region. Statistically, we are noticing an increased percentage of the local workforce which will become retirement eligible in the next 5-10 years.

Fixing all of our political and state problems will not happen in one piece of legislation, however, one piece of legislation can foster a discussion and put into motion ideas which can put Iowa on the right track toward progress. Senate File 420 is a pilot program with the support of the Eastern Iowa Community College District which allows high school students entering their junior year of high school to dual enroll in their local high school where the student will still receive a diploma and the local community college where the student will receive an additional certificate in technical training. In the pilot program, if approved, limited state funding would follow the student for academic requirements at the community college.

Each time I attend meetings between members of the state’s economic development department and perspective companies, the first questions we are asked relate to the quantity and quality of the local workforce. Senate File 420 attempts to offer a template for ensuring the reproduction of a local workforce.

Bonding for one-time projects will put individuals to work only for the length of the specific project. Creating a new method of workforce development may be used as an economic development tool which creates long-term employment. Long-term employment and one-time work are not the same.

I strongly encourage you to read the pilot program presented in Senate File 402 (click here to read: http://tinyurl.com/djrawl) and contact me with you ideas.

Thank you for reading this letter and I welcome you to contact me on any issue at the Capitol this session. (Shawn.hamerlinck@legis.state.ia.us, Phone: 515-281-3371)

Hamerlinck’s Observations Week 9

This time of year is always exciting because high school teams from all over Iowa and college teams from all over the country are putting their seasons on the line with the understanding that they must win to keep playing or they lose and go home. Just like in basketball, it is also an interesting time in the Iowa Legislature as this week marks “funnel week.” This means that legislation that was introduced for consideration during the previous two months of session must either be voted out of its respective committee and keep moving through the legislative process or it will die and be removed from consideration for the rest of this year’s session. “Funnel week” usually marks the beginning of the end of session as many bills are weeded out and serious work finally commences on next year’s state budget.

The first piece of legislation pertaining to the FY2010 budget, Senate File 376, requires the State of Iowa to sell bonds for general maintenance projects on state assets. Wednesday night this bill passed along party lines (32-18). Though it is common to see municipalities and school boards sell bonds for capitol improvement projects, states may often avoid borrowing money through fiscally responsible budgeting practices. State revenues often match the demands of depreciating maintenance of state assets. On rare occasions, states will bond for projects which exceed revenue projections over multiple years. Massive road construction expansions and new state penitentiaries fall into this category.

When a state sells bonds, bondholders attempt to weigh the relationship between the risk of their investment and potential profit by gauging the sellers ability to make payments on the debt. Simply put, those who loan money to the state want to know that we have the ability to pay them back. General obligation and moral obligation bonds include language of collateral and resources for the repayment of debt.

Senate File 376 attempts to sell appropriation bonds which are not backed. This bill prohibits the state from being obligated to make a payment from any source of any amount beyond the amount of the previous appropriation, if the funds are not appropriated for a fiscal year. (I will explain each of these in a moment.) It also prohibits the annual appropriation bonds from being obligations, indebtedness, or debt of the state and it prohibits the bill from creating or being construed as creating general, legal or enforceable obligations.

Long story short, we are telling creditors that this legislative assembly intends to pay them back but we are making no obligation on whether or not future legislators will want to pay them back. This uncertainty forces our percentage rate up because buyers of these bonds normally don’t want to assume the risk. Ultimately, the taxpayer is on the hook for the difference in the percentage rate.

The State of Iowa couldn’t sell tobacco bonds last year because no one was willing to invest in them at a decent rate. What makes politicians this year believe an investor would sponsor our debt when we don’t tell them when or even if we can pay them back? The total debt services on a $175 million bond is $316 million over the 20-year life of the bond. This means my son will still be paying for this when he is twenty-six.

There is no doubt that we should fully fund the Iowa Veterans Home in Marshalltown and upgrade the prison system in seven of our cities. These are General Fund responsibilities. In the past, politicians utilized general fund dollars towards pet projects and they now have run out of funds for the projects which the General Fund was designed for. Rather than cutting waste out of the budget, we are now using twenty-year bonds with no backing to complete one time maintenance costs.

The answer to this problem is to first look at the budget and find out where mistakes occurred in previous years and were we can be more efficient in the future. The Revenue Estimating Conference will not meet for another two weeks to tell us how much money is available for the General Fund. It makes no sense borrowing money before we know our revenue or expenses for the year.

Thank you for reading this letter and I welcome you to contact me on any issue at the Capitol this session. (Shawn.hamerlinck@legis.state.ia.us, Phone: 515-281-3371)

Hamerlinck’s Observations Week 8

Notice, simply complaining about poor decision making processes at the Capitol is easy and often politicians are able to sustain lengthy careers by mastering that art. Offering realistic solutions to stave off a similar economic downturn which is plaguing Kansas and California is many times more challenging. Understand, in the current fiscal year the state of Iowa does not have a revenue problem. We have a spending problem. Because of the eighteen month differential in the taxing and spending structure the country’s economic turmoil will not hit Iowa until the 2011 Budget. The decisions we make in this session will determine the severity and duration of Iowa’s participation in a national recession.

Rather than depleting cash reserves for one time expenditures the legislature must employ recessionary tolerant practices which spark job growth and local investment. If our problems are derived from overspending then our first step should be to control expenditures and minimize waste in our current departments. Senate File 102, which I cosponsored was voted on today in the House. This piece of legislation establishes a searchable budget database website for the public to access the details of the expenditure of state tax revenues and a searchable tax rate database for the public to access the details of each tax rate for all taxing districts in the state.

In an effort to encourage families to remain in Iowa and grow the tax base, I offered today Senate File 325 which has been assigned a subcommittee. This is a bill for an act increasing the amount of pension income that is exempted from the individual income tax and including a retroactive applicability date provision. Iowa currently taxes pension funds after a recipient receives $8,000. Illinois’s tax on pension kicks in at nearly four times this amount and South Dakota doesn’t tax pensions. This results in seniors claiming residency in our border states to avoid the high cost of living in Iowa.

With a bit of a push I am also hoping my Military Veterans Income Tax Exemption, National Guard Income Tax Exemption and bill requiring departments to Zero-Based Budget will find a favorable subcommittee. I am hoping each of these small steps of encouraging families to remain in Iowa and forcing government to be responsible with your tax dollars will prepare Iowa for the full affect of the national economic downturn.

This week we received preliminary data on the state’s share of the federal stimulus dollars given to the states through American Recovery and Reinvestment Act. Of the $787 billion appropriated by congress, Iowa will receive roughly $2.1 billion. With a current $69 million gap in the FY2009 budget and a nearly $750 million gap in the FY2010 budget projected, it is likely some of this money will be used to backfill revenue shortfalls. Though making up budget shortfalls is a positive move towards supporting many of our well deserved programs it is not a wise fiscal management practice. To budget and become solely dependent upon one time money actually extends the size of the gap once the one-time funds run out in 2011. For example, if we backfill allowable growth and teacher pay with one-time infused funds, what will we pay teachers with when the funds are gone?

One time funds are most appropriately used for one-time expenditures and not for funding ongoing expenses. More importantly, the state legislature is required under the Iowa Constitution to approve all state appropriations even it is only a pass through for federal dollars to find their way to local communities. The legislature must be cognoscente during all votes that this is not “free money.” These are tax dollars and technically, they are tax dollars citizens will pay in the future as this money doesn’t really exist yet.

For a list of bills that were debated and passed in the Senate this week, please visit the Iowa General Assembly Web Page: http://www.legis.state.ia.us/index.html. You are welcome to email me with questions about any vote I have taken and any questions you may have on the federal stimulus package. Thank you again for allowing me to represent you in Des Moines!

Hamerlinck’s Observations Week 7

It’s What We’re Not Talking About
How to see through a politician

When a politician is asked his/her opinion on an issue or on the progress of a piece of legislation a safe answer is often the phrase, “I don’t know yet.” Often, this quick response is accompanied by a shrug of the shoulders and a small shake of the head. If you really catch a politician in a difficult question, look for him/her to accompany this entire process by letting out a deep breath of air as if to avoid the impending punch to the gut.

In my short time in the State House I have learned the phrase, “I don’t know,” means one of three things: the politician is in the minority and is honestly wondering what the majority party is doing, the person does have an answer but they want to avoid the difficult discussion which will follow if they confess, or the person is using it as an aversion because the vote was embarrassing. Too often the combination of the shrug, head nod and phrase has allowed politicians a back door retreat.

I have also noticed politicians are unlike any other creatures on earth. Back any animal into a corner, even the family dog who is believed to be mans best friend, and the creature will instinctually employ a fight-or-flight response with the aggressor. The act of standing one’s ground or fleeing for protection has assisted in establishing the social hierarchy for years.

The politician lives by completely different rules. It diverts the unfixable, twists the malleable and absorbs the positive.

This week the State Senate set the 2011 allowable growth rate at 2% for public schools without knowing or caring where the money would come from or how much the budget growth would mean in actual dollars. Allowable growth refers to the set percent public school funding will grow. The problem begins with our current budget. In December, Governor Chet Culver cut school funding for 2009 by $33 million with his 1.5% across the board cut. In the 2010 Budget, Governor Chet Culver set allowable growth at 4%, however he only funded it with state dollars up to 2%. This will force local school districts to raise local taxes if they want the other 2%. The gap between 4% and 2% in 2010 equals $93 million.

Yesterday, the vote was split and the majority party in the State Senate approved a 2% allowable growth for 2011. There is a problem with asking where this 2% comes from? Will we fund 2009 fully at 4% or stick with 2.5%? Will we backfill funding for the full 4% in 2010? If so, this is 4% growth of which number used in 2009? Most importantly, 2011 is 2% of what mark set for 2010? When I asked these questions in the Senate’s Education Committee we were repeated told, “I don’t know.” When we asked on the Senate Floor how we can make an appropriation for a number that doesn’t exist the sponsor said she didn’t know and the bill passed anyway.

The State of Iowa will receive $387 million to use towards education from the federal stimulus package. When I asked if the Governor would use this money for allowable growth, we were told that he did not know yet. What we do know is that when the majority party passed the 2% allowable growth for the 2011 budget they raised your property taxes by another by $53 million.

Thank you for the opportunity to take on these issues at the State Capitol. Feel free to contact me on any issue. As always, common sense can go a long way in government.

Hamerlinck’s Observations Week 6

Though this year’s session of the Iowa General Assembly is fast-approaching the mid-way point, many of the most contentious issues and controversial pieces of legislation being pushed by the Governor and his legislative counterparts are yet to come to full debate in the Legislature. In particular, there are four major anti-job bills and one colossal rapid school consolidation scheme all being pushed by the party currently in control of the Legislature. Should any of these proposals or bills be passed and signed into law, their consequences will have an immediate and indefinite influence on the freedoms and economic futures of Iowa’s citizenry. The only plans that warrant any kind of serious consideration are proposals that create jobs and opportunities for Iowans and those who want to make this state their home.

We know that it is just plain common sense to resist legislation that will seriously hinder – not help – Iowa’s economy while instead promoting policy alternatives that will place Iowa at the top of the economic pinnacle. We know that Iowa’s economy can grow stronger and produce the kinds of jobs and opportunities that will lead Iowa towards being a true worldwide beacon of economic prosperity if the barriers and roadblocks to job creation and economic development are reduced and removed. Iowa already has a tremendous reputation for having an industrious workforce and a stellar educational heritage that continually produces new leaders that make a difference in our communities, churches, schools and civic organizations.

Insanity at the Capitol
The Iowa Voter No Longer Matters to Some Iowa Politicians

Each year the Iowa State Legislature considers roughly four thousand bills which are filed by state departments and politicians. The vast majority of these bills are never considered as those who chair subcommittees place them in random desk drawers never to be seen again. Legislation must have merit and support from elected officials who lobby for the bills passage in order to see it move through the subcommittee and committee process.

Usually, poor pieces of legislation like, Senate Study Bill 1128 or the Popular Vote Bill, are quickly filed away and forgotten. Sadly, this bill was approved by two senators in the subcommittee and it will soon be debated before the full State Government Committee.

Senate Study Bill 1128 would require Iowa’s Electoral College votes to go the Presidential candidate who wins the national popular vote rather than the popular vote within the state. This means the State of Iowa will support the candidate who wins the national popular vote irrelevant of how many people vote in the State of Iowa.

In summary, the voter no longer matters in the state of Iowa. There are more voters in New York, California, Texas, Florida, Illinois and Pennsylvania than the rest of the country. Iowa voters are being told they no longer count in Presidential elections.

It is even more amazing to see this piece of legislation supported by Senators Appel, Courtney and Jochum. Legislators who were elected have now voted against the very people who sent them to Des Moines. Even more appalling, is the chance this horrible piece of legislation may actually make it to the floor. Sadly, the House is simultaneously running a companion in House Study Bill 98.

Though Iowa has the first in the nation caucuses, we could no longer have a presidential vote. I fully encourage you view these bills on the state’s website and to call your State Senators and Representatives.

Thank you for the opportunity to represent you in at the Capitol. I welcome anyone with questions to call me at (515) 281-3371 or email me at shawn.hamerlinck@legis.state.ia.us. If you know of anyone who would like to receive future newsletters or you wish to no longer receive newsletters please email me at shawn@hamerlinckforsentate.com.