The Racing and Gaming Commission voted unanimously today to grant a new casino license for Lyon County in Iowa’s far northwestern corner, but the five commissioners rejected applications for new casinos in Fort Dodge, Ottumwa and Tama County. The vote is no surprise; only the Lyon County project was expected to bring in mostly out-of-state gamblers. Opponents argued that the Fort Dodge, Ottumwa and Tama projects would hurt several of Iowa’s 17 current casinos. Also, the commissioners raised questions about the financing of the other projects during last week’s public hearing.

Governor Chet Culver said today that he respects “the independent body that ultimately makes the decision,” but defended his open letter to commissioners urging approval for all four new casino applications:

“I think it’s important for everyone to know where a governor stands. That’s why a public letter made perfect sense,” Culver said.  “Commission members had asked me prior to that letter. The executive director of the Racing and Gaming Commission had asked me prior to that letter. The four communities had asked me prior to that letter. I felt I had an obligation to make sure everyone understood I was for job creation in those four communities.”

Former Governor Terry Branstad is among those who have criticized Culver for trying to influence an independent body. But let’s not be naive: commissioners usually find out through private channels what the governor thinks of such proposals. I don’t see any reason to keep the public in the dark.

Whether Culver helped himself politically is a different question. Some people in the affected communities may appreciate that he did his best to move the projects forward, but the risk is that the governor looks ineffective now that the commission has rejected the Fort Dodge, Tama and Ottumwa applications.

Share any relevant thoughts in this thread.

UPDATE: Radio Iowa has reaction from the groups that sought casino licenses.

Todd Dorman wasn’t impressed by the commissioners’ decision:

I’ve said many times that I think if a county votes for gambling, has financing and a plan, they should get a license. I don’t care if existing casinos don’t want competition. It’s a mature industry. A free market, supposedly. What’s with gambling titans who don’t like risks? […]

Tama and Ottumwa had public votes, but their plans were full of missed deadlines and big funding holes. I don’t blame the commission for voting them down.

Fort Dodge had a 57-percent yes vote, money and a plan. Oh, and baggage. Two backers are being investigated for possibly giving illegal campaign contributions to Gov. Chet Culver. City workers were famously paid to attend a pro-casino rally, etc. There was plenty of foot-shooting to go around.

But Fort Dodge’s plan could have been certified baggage-free by Good Housekeeping and it still would have been voted down because it threatened to take profits from the Wild Rose Casino in Emmetsburg. Wild Rose paid millions of dollars for a state license in 2005, and that, evidently, includes a no-competition insurance policy.

A commission that was once a friendly dealer handing out licenses to the lucky is now a security guard protecting its flock from competition.

Was anyone else disappointed that the “major endorsement” Terry Branstad’s campaign hyped yesterday turned out to be State Auditor David Vaudt? He’s not exactly a celebrity, and his stamp of approval only reinforces that Branstad is the Republican establishment candidate. I guess the big deal is that Vaudt normally does not endorse in competitive Republican primaries, but when I think “major endorsement,” I think game-changer, and Vaudt doesn’t fit the bill.

At yesterday’s press conference, Vaudt cited several of Branstad’s accomplishments as well as his proposals for the future. For example, he praised the 1985 government reorganization. It takes guts for Branstad to keep bragging about “cutting out half the state agencies” when Iowa’s general fund budget increased by 166 percent during his tenure, and the number of state employees increased by about 15 percent (from 53,342 in 1983 to 61,400 in 1999).

Vaudt also credited Branstad with implementing budget reforms to use generally accepted accounting principles, establishing the rainy day fund, spending no more than 99 percent of expected revenues, and leaving Iowa with a $900 million surplus in 1999 (which happened to be near the peak of an economic cycle). As State Representative Chris Rants has noted, Governor Branstad wanted to spend more:

Republicans were unwilling to go along with Branstad’s desire to spend more money – a fact he forgets when he talks about how much money was left in the reserves when he left office as it was only there because the legislature wouldn’t agree to his spending plans.

Vaudt praised Branstad for promising to reduce the cost of state government by 15 percent. We still haven’t seen specifics about how Branstad will achieve that. The 2011 budget was adopted in March; it’s past time for Branstad to tell us which services or programs he would eliminate to put us on track to reduce the size of government by 15 percent. Cutting funds for preschool programs, family-planning services and Area Education Agencies administrators won’t be nearly enough to keep his promises on spending.

Vaudt’s endorsement invites questions about Richard Johnson, who was state auditor during most of Branstad’s time as governor. Johnson famously endorsed Fred Grandy during the 1994 Republican primary and now co-chairs Bob Vander Plaats’ gubernatorial campaign. Asked about Johnson yesterday, Branstad said,

“First of all let me say, I’ve learned a lot.  Dick Johnson made some valid criticisms back in the 80’s when the Democrats were in control of both houses of the legislature.  As a result we put together the Committee to Reform State Spending in 1991 and passed the spending reforms.  I didn’t just accept the legislature saying, ‘That’s all we can do.’  I brought them back twice in 1992 until we got all the spending reforms.”

Branstad went on to say that, after Republicans got control of the Iowa House in the 1992 elections, they passed the 99% spending limitation, and he strictly enforced that limit the rest of the time he was in office.

Whatever reforms Branstad enacted in 1992 weren’t enough to satisfy Johnson two years later. Johnson also called out Branstad for misleading claims about reducing the size of government. Chet Culver’s campaign released several news clips yesterday about Johnson and Branstad, including this one:

The Cedar Rapids Gazette reported that “Where Branstad claims a 16 percent reduction in the number of management employees in state government, for example, Johnson contends the reality is that jobs weren’t eliminated. Titles were changed. ‘The people and the payroll are still there.'” (Cedar Rapids Gazette, 6/4/1994)

I posted the Culver campaign’s release after the jump for those who want to stroll down memory lane about Branstad’s record on fiscal issues.

Speaking of Branstad’s accountability problem, the Des Moines Register reports today that he spoke out publicly for a racetrack in Cedar Rapids in 1984. Branstad recently criticized Governor Chet Culver for advocating approval of four new applications for casino licenses. He claims that unlike Culver, he never directly contacted members of the Racing and Gaming Commission to urge approval of the Cedar Rapids racetrack. I highly doubt that the commissioners were unaware of then-Governor Branstad’s opinion. Most governors make their views known to state commissions via backdoor channels.  

Yesterday the Iowa House State Government Committee voted down a Republican plan to cut state spending by $290 million in the coming year. State Representative and gubernatorial candidate Chris Rants offered the plan as an amendment to the government reorganization bill. He said his party was trying to “work in a bipartisan way” and make “tough decisions” to balance the budget for the coming year. All twelve Democrats on the House State Government Committee voted against the GOP amendment, while the nine Republicans voted for it. Later the same day, the committee approved the reorganization bill on a 20-1 vote, with only Rants opposed.

We are sure to hear more from Rants and other Republicans about how big, bad Democrats rejected their good ideas for spending cuts. A closer look reveals funny math in the Republican “plan.”

The biggest line item is “$92.3 million, end all state benefits to adult illegal immigrants.” The Iowa House Republican caucus claims this number comes from the nonpartisan Legislative Services Agency. The implication is that the state of Iowa hands out $92.3 million in cash to illegal immigrants.

But that’s not the case. From a report by the Legislative Services Agency on “Undocumented Immigrants’ Cost to the State” (pdf file):

The only government services that illegal immigrants are eligible for are elementary and secondary public education and emergency health care.1 Most citizens do not gain direct benefits from a majority of government spending. Instead, government programs are intended to benefit society as a whole through maintenance of a healthy economy, satisfying public health and safety concerns, providing basic infrastructure, etc. Although undocumented immigrants do not receive most direct benefits, the total benefit of State spending is assumed to accrue to undocumented immigrants at the same rate as legal residents.

The LSA divides total spending from the state general fund by the state’s total population to calculate roughly how much in “benefits” each Iowa resident receives annually. This isn’t a cash payment from the state to residents; it represents each individual’s share of benefit from the state paying for schools, roads, and so on.

Iowa House Republicans arrived at the $92.3 million figure by dividing total general fund expenditures by the number of undocumented immigrants currently estimated to be living in Iowa. They call the remainder “benefits” that illegal immigrants receive. But there’s no magic wand we can wave to make immigrants stop benefiting indirectly from what state government does. The same LSA report noted:

Undocumented immigrants qualify for few services at the State level, and those for which they do qualify are largely mandated by federal law or the Courts. Therefore, decreasing undocumented immigrant eligibility for State spending does not appear to be a viable policy option. Additionally, if the assumption that undocumented immigrants accrue benefits even without receiving direct services is considered valid, attempting to reduce direct State expenditures on undocumented immigrants would have a minimal effect.

By the way, proof of citizenship and identification are already required for Iowans participating in Medicaid and HAWK-I (the children’s health insurance program).

Scoring points against undocumented immigrants may be good for Rants politically, but that won’t help the state of Iowa save $92.3 million in the coming year. That one item represents nearly a third of the Republican-proposed spending cuts.

I’ve posted the full list of cuts after the jump. Some ideas may have merit, but most of them reflect skewed Republican priorities for state government. GOP legislators want to save $45 million by reducing access to pre-school for four-year-olds. They also want to invest less in renewable energy production and energy efficiency measures by eliminating the Power Fund and the Office of Energy Independence, which would $25 million. Many Republicans never liked the core curriculum, so it’s no surprise they’d like to save some money by delaying its implications. The Des Moines Register’s Iowa poll in November indicated that Iowans support higher spending on renewable energy research and development and are divided over whether to cut funds for expanded free pre-school.

Some of the smaller Republican-backed cuts would please conservative interests. The religious right would love to eliminate the family planning waiver. Rants has always been a good friend to tobacco companies, who would love to see the state scrap the “Just Eliminate Lies” anti-smoking campaign. There’s also $4 million saved by cutting “taxpayer-funded lobbyists,” which sounds great until you realize that would leave corporate groups unchallenged as they lobby for bills that might counter the public interest. Anyway, last year taxpayer money for lobbying totaled about $1.8 million, and a lot of that didn’t come from the state general fund. Municipalities, county agencies and associations like the League of Cities hire lobbyists too.

Governor Chet Culver addresses the Iowa House and Senate this morning. Kathie Obradovich’s latest column emphasizes that Culver has broken with tradition this year by not submitting his draft 2011 budget to lawmakers before the big speech. (The governor submitted a draft budget for fiscal year 2010 in late December 2008.) Obradovich concludes that Culver needs to be in the “spotlight” without focusing on the budget.

She doesn’t mention other factors that seem likely to have delayed the budget draft. The Tax Credit Review Panel, which Culver appointed after the film tax credit fiasco, only just submitted its recommendations on January 8. I can’t imagine how the governor’s staff would put together a draft budget without knowing which tax credits deserve to be continued, scaled back or eliminated. Another possible source of delay is the State Government Reorganization Commission made up of Iowa House and Senate members, which voted on a list of cost-saving measures last month. Those measures would affect assumptions on state spending in the coming fiscal year.

Republican former governor Terry Branstad bragged to Obradovich that he always submitted his budgets early, adding that state legislators now face a shorter session without having the budget in hand.

However, Senate Majority Leader Mike Gronstal told Radio Iowa this week that lawmakers will move a major bill on reorganizing state government before they start work on next year’s budget. It makes sense, because you can’t make accurate spending projections without knowing how state agencies will be restructured.

I’ll update this post later with more details of Culver’s speech.

UPDATE: The Burlington Hawk Eye posted the transcript. He asked legislators “to pass a supplemental appropriations bill early this session to restore some of the cuts to the Department of Public Defense” (Culver cut the current-year budget across the board in October.) For the fiscal 2011 budget, Culver asked lawmakers “to fully fund community college job training, and to adequately fund the Department of Workforce Development. And, to create more ‘green collar jobs,’ of the future, to fully fund the Iowa Power Fund.” Longer excerpts from the speech are after the jump.

Iowa voters handed Democrats the keys to run the state in 2006 and expanded the Democratic majority in the legislature this year. Now we have to prove that we are capable of governing well. Like almost every other state, Iowa is facing a deteriorating revenue base while demands for government services rise in a tough economy. Governor Chet Culver has already imposed two rounds of budget cuts, and more difficult choices will need to be made during the upcoming legislative session.

There is no perfect solution to the budget problem, but some proposals are so bad that they should be ruled out immediately.

Selling the Iowa Lottery is a terrible idea on every level.

I don’t often agree with Des Moines Register columnist David Yepsen, but he is right about this:

Why would anyone want to sell their seed corn? And why would Iowa want to do something that may lead to expanded gambling? […]

We should privatize those governmental functions that cost the taxpayers, not the ones that make them a profit. […]

Since 1985, the Iowa lottery has netted state government $1 billion. Why would we turn some of those profits over to the gambling industry? It’s short-term thinking to give up $50 million in annual lottery profits for a lump sum now.

Also, this idea breaks faith with the promise made to Iowans when we started down the path of expanded gambling: If Iowa was going to get into legalized gambling, it was going to be heavily regulated.

Now we’re going to invite casino owners and others in the gambling industry to run our lottery? I’m sorry; the history of the gaming industry is just too checkered to put people from it in charge.

I have never bought a lottery ticket, and I hate to see the state encouraging people to throw their money away on the lottery. But now that Iowa has a lottery, we should keep the profits in state hands. Selling the lottery would bring in cash this year, but we’d need to replace the lost revenue in future budgets. It wouldn’t solve the problem, and it would make Democrats look incompetent.

By the way, State Auditor David Vaudt described the idea as “a very short-term Band-Aid approach.” The plan he described would involve

a lease of the lottery for up to 50 years in exchange for a lump sum payment of $200 million and some annual lease fee.

The lottery generates more than $50 million a year in profits for the state’s budget, and Vaudt predicted the lump sum would quickly evaporate.

Of course it would.

Vaudt may be the Republican nominee for governor in 2010, and he was warning about budget problems long before Culver and the Democratic leadership in the legislature started talking about budget cuts. Do we want to hand him another talking point on Democrats’ alleged fiscal irresponsibility?

If selling the lottery is bad policy and bad politics, why would anyone consider it? Here is Yepsen’s theory:

[T]he fact that Culver is entertaining sale of the lottery is an example of how big gambling money and influence slosh around Iowa politics.

The delegation that called on him to promote the idea included former Iowa Attorney General Bonnie Campbell, who is a longtime friend, adviser and donor of Culver’s, and Jeff Link, a leading Democratic campaign strategist who also runs referenda campaigns for gambling interests.

Culver will need to show how selling the lottery is a good deal for taxpayers and not just his cronies and campaign contributors on the gambling industry’s payroll. Watch to see how much gambling money starts showing up in Culver’s re-election warchest – and in those of Democratic legislative leaders.

Democrats helped gambling interests last session by putting an unjustified exemption for casino floors into the smoking ban bill. If we care about workers’ health, why should casino employees be less protected than those who work in restaurants and bars?

Handing over the lottery would play right into Republican talking points about “special interests” controlling the Democratic Party.

Culver, House Speaker Pat Murphy and Senate Majority Leader Mike Gronstal should nip this speculation in the bud by ruling out any plan to sell the lottery for short-term gain.

What else, if anything, should be “off the table” in the context of balancing the budget? I agree with Culver that going into debt should be considered.

I also believe that shared sacrifice requires some kind of action on the revenue side, such as closing tax loopholes that primarily benefit the well-off. When middle-income and lower-income Iowans bear the brunt of cuts in services, wealthier Iowans should also be asked to help bring the budget into balance. Some economists have shown that during an economic downturn, raising taxes on the wealthy does less harm to the economy than cutting government spending.

I understand the political arguments against raising taxes in any form now. There will be plenty of time to debate that later. For now, Democrat leaders should make the easy call: keep the Iowa Lottery in state hands.