This completes our third week of the legislative session.  I am still under the belief that we need to grow our state's economy, continue to look for the inefficiencies that seem to manifest themselves in all of the different levels of bureaucracy, and appropriate the state's revenues in an equitable fashion.

On Wednesday, January 28, the House approved HCR 104, a resolution calling on the Governor and state employee unions to go back to the table and negotiate a pay freeze for FY 2005.

In his FY 05 budget recommendations, the Governor did not include $69 million for salary increases already negotiated, instead expecting the departments to pay for the raises without added funding.  This will mean the departments will be forced to layoff their most recent employees in order to fund the raises for the veteran employees.

This resolution calls on the unions and the Governor to go back to the table and agree to a wage freeze for FY 05.  An amendment was added to call on the unions to call for a vote of their members on whether or not to accept a pay freeze.  If the unions would agree to a pay freeze, non-union employee pay would also be frozen and it would save the general fund a total of $69 million and prevent most layoffs.

Over the course of the past six years, Iowa has seen a 40 percent increase in the salary cost of its employees.  That is an average annual increase of more than 6 percent in wages, which is not sustainable even in the best of times - let alone during tough times like these.

This pay freeze will ensure that the state does not have massive, across-the-board layoffs where hard-working Iowans will lose their jobs altogether.  Layoffs will only lead to even more serious problems serving the most needy and vulnerable in our society.  Also, those who will lose their jobs will likely be younger workers with less seniority.  These are exactly the type of people who may feel forced to pick up their families and leave the state to find opportunity elsewhere.  As the state looks to grow its population, this is the wrong way to go about it.

Iowa is not alone in suggesting a pay freeze for its employees.  Minnesota has successfully worked with its public employee unions to prevent layoffs and ensure the delivery of services in this way.  Local bargaining units in Iowa have done the same.  The time has come for everyone to come to the table and negotiate a fair solution for the union employees as well as the taxpayers.

Government should not grow at a faster rate than the economy can sustain.  One of the reasons that we are in the budget shortfall today is that government has grown faster than the economy has.  In 1993, the state collected just over $4 billion in various taxes.  In 2003, the state collected $5.9 billion.  Various lobby groups contend that the Legislature has enacted somewhere between $800 million and $1 billion in tax cuts over the last 10 years leading to a lack of revenue for education and other needs.  Even if that were true, what has happened to the other $900 million?

If you just look at income and sales taxes, the state is collecting about $1.5 billion more now than it did in 1993.

On a more positive note, According to a report released Tuesday (1-27-04) by the Bureau of Economic Analysis (BEA) in the U.S. Department of Commerce, personal income grew in every industry nationwide in the third quarter of 2003.  It is the first time in two years that personal income grew in every industry nationwide.

Personal income nationwide is up for the fourth straight quarter.  Iowa ranked 2^nd nationally in personal income growth, ranks first in our region and outpaced every one of our bordering states.

The economy nationally and here in Iowa is clearly gaining momentum.  I think I can safely speak for all, in saying let’s hope it continues.

Until next week,