CONDITION OF THE STATE
In his Condition of the State address before a joint session of the Iowa General Assembly, Governor Culver highlighted the resilience of Iowans in the face of the 2008 natural disasters to emphasize the resilience of the state as a whole. He talked about the rebuilding effort with hundreds of millions of state and federal dollars already committed to cleanup and rebuilding, with much more on the way. He asked the Legislature for an immediate $43 million appropriation from the state’s rainy day funds, to fill some immediate gaps in current relief efforts to individuals, families, nonprofits and cultural organizations; I predict it will be one of the very first bills we pass this session.
To deal with the national recession and storm recovery, Culver proposed a $700 million infrastructure plan, financed through bonding, to create jobs fixing all sorts of infrastructure, including roads, bridges, housing, wastewater treatment, energy infrastructure, flood control, and other projects. Culver’s plan is similar to the approach in Washington to reignite the national economy through a fairly aggressive strategy of investing in projects that put people back to work repairing or replacing the nation’s aging infrastructure. (We’re working closely with our federal delegation to monitor legislative action on a federal bailout package, which could include expanded federal funding for health care, infrastructure, education, and other areas.)
Looking at Iowa’s situation, critics argue that bonds create indebtedness and push the state’s problems into the future. But Iowa lawmakers — Democrats and Republicans working together — adjusted the state’s accounting system in the early 1990’s to balance the state’s budget based upon accepted national accounting standards, partly to prepare for a time when we would need to go to the bond market. Consequently our bond rating is stellar – AAA – and the state’s per-capita level of indebtedness is 46th out of 50 states, far below the national average.
Not to minimize the effects of the recession on the state’s economy, but it’s worth noting that the unemployment rate in Iowa is substantially lower than nationally, and next year’s projected budget shortfall — caused by the sudden downturn in revenue collections when the recession hit — is substantially more manageable than most other states. There’s no question that it will be a tough budget year, and we’ve got our work cut out for us. But if we work together — Democrats and Republicans — we’ll get through it and emerge stronger than before.
IBM EXPANDS TO DUBUQUE
With the national economy in a funk and unemployment on the rise, Iowa scored a major coup by landing a new IBM service center in downtown Dubuque, expected to bring 1,300 high-paying jobs to the area. One IBM official cited an impressive effort by the business community and government leaders, working cooperatively to seal the deal, as well as the availability of an educated and talented workforce. With salaries expected to average $45,000 per year plus benefits, the Dubuque IBM’s annual payroll is pegged at $58.5 million. Once fully operational in 2010, this will be the biggest single job expansion in the area since John Deere. This is huge for Dubuque and for Iowa, and it shows that our investments in business development, education and workforce development are paying dividends. I’m particularly pleased that the technology giant signed a ten-year lease to locate it’s Dubuque operation in an historic downtown building, the former Roshek’s Department Store.
While IBM gets ultimate credit for choosing Dubuque, closing this deal was an impressive joint effort among a number of organizations and individuals, including Governor Culver, legislative leaders, the Iowa Department of Cultural Affairs, the Iowa Department of Economic Development, the City of Dubuque, and the Greater Dubuque Development Corporation. The building will be leased from Dubuque Initiatives, a quasi-public nonprofit corporation. Total project costs are expected to surpass $100 million, including $22 million that the state is expected to approve next month for forgivable loans, tax credits, and funding for new job training. That’s a lot of money, but it will more than pay for itself over time, considering the impact of IBM’s payroll on the local and state economies.