From the Iowa Republican Party –
With the conclusion of the 2016 legislative session, scribes, pundits, and other “experts” come out of the woodwork to pass judgement on the session’s accomplish- ments and to complain about what did not happen. In a May 9 editorial entitled “Let’s finally fix the state’s money pit”, the Des Moines Register’s editorial board displayed a stunning lack of knowledge and command of the facts when putting togeth- er its position that the state has a moral obligation to borrow money to fix the Wallace State Office Building.
In reviewing the history of the efforts to address the concerns with the Wallace Building, the Register wrote:
“In 2013, state lawmakers ap- proved plans to gut the interior of the building and rebuild it at a cost of $40 million to $50 million.”
As with so many things in this editorial, this assertion is simply not correct.
During the 2013 legislative session, the General Assembly was presented a report by the De- partment of Administrative Services that recommended the state demolish the old Des Moines General Hospital building and renovate Wallace. The estimated cost of updating the building was $50.7 million. At the same time, downtown Des Moines was experiencing a glut of vacant commercial rental space.
Instead of appropriating the full amount for the renovation of Wallace, the Rebuild Iowa Infrastructure Fund appropriations bill for FY 2014 and FY 2015 provided only $4.4 million for immediate roof repairs and plan- ning, study, and design of the Wallace Building. The only specific instructions in this language in HF 638 was that another $3.1 million was to be used to move employees out of Wallace and to find rental space for them to occupy by December 31, 2013.
The Governor vetoed this language, since the funding did not go to his top infrastructure project – renovation of the State Histori- cal Building. An additional, unspoken con- cern was while the bill provided funding to plan for the renovation and moving employ- ees out, the funds needed to do the actual work was not provided. It was possible for the state to begin renting substantial com- mercial space in downtown Des Moines, and the Legislature to be persuaded to just demolish Wallace and enter into a long-term rental agreement.
Administrators with the agencies located in Wallace expressed this concern as the bill moved through the process during the 2013 session.
In reviewing this session’s actions regard- ing Wallace, the Register stated:
“Shortly before state legisla- tors adjourned last month, Sen- ate Democrats approved a plan to bond for upgrades to the Wallace building, but that idea was rejected by the Governor and House Republicans.”
It is true that House Republican leaders and Governor Branstad stated their opposition to any bonding for infrastructure, after the Culver/Judge I-Jobs boondoggle. But that is all that happened since the Iowa Senate never cast any vote on a plan to issue bonds to fix the Wallace Building. Senate Democrats never approved any plan to bond for upgrades. House Republicans could only state their opposition to bonding as there was never any plan to formally reject.
Instead of passing an actual bonding plan, the Senate voted to provide $1 to renovate Wallace, along with a $1 dollar appropriation for renovating the State Historical Building and $1 for the Iowa Law Enforcement Academy. Why? So Senate Demo- crat negotiators could then force the issue into conference committee negotiations with the House. But this “brilliant” scheme was quickly recognized and thwarted as the House found the needed three dollars to match the Senate proposal. By matching the three $1 proposals, the individual projects became ineligible for conference committee negotiations. If the Senate Democrats were truly serious about the Wallace Building, as the Register erroneously opined, then there would have been an actual plan sent to the House.
With their review of the past fifteen years, the Register came to the following conclusion:
“The Governor knows full well it’s almost impossible for govern- ments, businesses, or individuals to pay for major brick-and-mortar projects without borrowing.”
Over the past two decades, the state has generally adopted the position that the cost of building and maintaining infrastructure should be done on a “pay as you go” status.
The only time that the state abandoned this approach since the creation of the Rebuild Iowa Infrastructure Fund in the mid-90’s, was between 2007 and 2010, when Democrats controlled the Legislature and Chet Culver was governor. Then, the insatiable desire to spend drove them to bond and borrow for the construction of a new maximum-security pris- on in Fort Madison and expansion of the women’s correctional facility in Mitchellville. That ravenous desire for spending also allowed them to put together the I-Jobs pro- gram.
Since the start of the 2011 legislative session, the General Assembly has invested RIIF funds into major construction projects at the three state universities. In 2011, the Legislature committed to funding three construction projects:
■ Construction of phase II of the ISU Bio- engineering Complex, $60.4 million;
■ Renovation of the UI Dental School facili- ty, $29 million; and
■ Renovation and conversion of UNI Bartlett Hall, $21 million.
Once these projects were completed, the Legislature approved funding in 2014 for three new projects:
■ Construction of ISU Biosciences Build- ing, $52 million;
■ Construction of UI College of Pharmacy Building, $66.3 million; and
■ Renovation of UNI Schindler Education Center, $32.9 million.
During the 2015 session, another project was added when the Legislature committed $40 million towards the ISU Student Innovation Center. All of these projects were funded with dollars from the Rebuild Iowa Infrastructure Fund on a pay as you go basis. A basis the Register said was almost impossible.
The pay as you go approach has not been limited to Board of Regents projects. The last major construction project on the Capitol Complex was the building of a structure to house Iowa’s judicial branch. This project was completed in 2003, at a cost of $30 mil- lion to the state. And how did the state pay for the Judicial Building? As future NFL hall of famer Randy Moss would say, “Straight cash, homey.”
The Register also expressed its fervent belief that there are no downsides to the state tak- ing on more debt:
“As the governor also knows, the short term costs associated with interest payments on capital im- provements are often dwarfed by the long-term costs associated with doing nothing.”
Any homeowner can tell you that there is nothing “short-term” about interest payments. Whether it be a 15 or 30 year mortgage, inter- est payments are there every month, and they never insignificant. The same can be said about bond payments. The “short term costs” the Register envisions are really a 20-30 year payment plan, with gaming tax revenue as the source of repayments. Sound familiar? It should, because that is the same source of payments for the Vision Iowa Program bonds and the I-Jobs bonds.
In FY 2017, the first $69 million of gaming revenue collected by the state will go to make the state’s bond payments for those bonds. That figure is approximately 25 percent of the tax revenue that is supposed to be used on infrastructure projects each year. The Register’s editorial board chooses to ignore this simple fact – if the state did not have to make the bond payments on the Demo- crats’ I-Jobs scheme, the Rebuild Iowa Infrastructure Fund would have enough money to pay for the complete renovation of the Wallace Building in one year. In FY 2017, the state will pay $52.6 million from the RIIF for the I-Jobs debt service. One can only wonder what the state could do to update and improve state buildings if it didn’t have the I- jobs millstone hanging around the taxpayer’s necks.
Hopefully in the future, the Register will have at least examined the facts and reviewed history before e espousing its beliefs on a similar topic.
