Governor Kim Reynolds

(music)

Big decisions ahead as some of the bills lawmakers passed still await the Governor's signature or veto pen. We'll sit down with Governor Kim Reynolds on this edition of Iowa Press.

Funding for Iowa Press was provided by Friends, the Iowa PBS Foundation.

(music)

The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure.

(music)

Across Iowa, hundreds of neighborhood banks strive to serve their communities, provide jobs and help local businesses. Iowa banks are proud to back the life you build. Learn more at iowabankers.com.

(music)

For decades, Iowa Press has brought you political leaders and newsmakers from across Iowa and beyond. Celebrating more than 50 years on statewide Iowa PBS, this is the Friday, May 23rd edition of Iowa Press. Here is Kay Henderson.

(music)

[Henderson] Two important dates to mention about our guest today. May 24th, 2017 is the day that Kim Reynolds became Iowa's Governor. And June 14th of this year is the day by which she must take action on all the bills that passed the 2025 legislature. Governor Kim Reynolds, welcome back to Iowa Press.

[Reynolds] Oh, it's good to be here. Thanks, Kay.

[Henderson] Joining our conversation, Katarina Sostaric of Iowa Public Radio and Erin Murphy of the Gazette in Cedar Rapids.

[Murphy] So, Happy 8-year Anniversary, Governor. We wanted to start with talking about one of the bills that passed out of the legislative session that is awaiting your decision now before that deadline that Kay mentioned that would deal with property rights, eminent domain, hazardous liquid pipelines. You've had a little bit of time now to look at that. Have you reached a decision on whether you're going to sign or veto that bill?

[Reynolds] So, as you know, we have 30 days to sign any legislation that has passed both chambers and is sent to my desk to either veto or enact that piece of legislation into law. And so, there's a whole lot of passionate advocates on both sides of this issue. So, I have been meeting with stakeholders on both sides. We started that this week. We'll continue that next week. We're going to continue to meet with stakeholders, listen, we're doing research. My team does this with all of the bills. When a bill passes both chambers and is sent to my office, the policy person does the review, we sit around the table, go through it, ask questions and make decisions on what action we're going to take. And so that is the process that we're going through right now. And then based on the information that I've heard I'll make an informed decision based on the conversations that we've had. But we're still in the midst of doing that.

[Murphy] Yeah, what are you hoping to learn? What will help inform this decision you have to make?

[Reynolds] Well, I want to hear from them. I want to hear the impact. I want to hear why they support or why they don't support the bill. What does that mean? And I'm asking some questions but really, they have reached out and we've reached out to some individuals to have them come in. So, I'm getting a good view of both sides of the issue. And just talking to me about what the impact of the bill means to them. And so, it's really more listening. There is some interaction, some questions that we've been able to ask. And then sometimes based on what I've learned or what I hear, then we have to do some additional research on top of that to really verify or to understand better some of the issues or concerns that they brought up. So, almost every meeting has led to some additional research. On my team I have legal counsel looking at it. And so, it has been a really good process and we're going to continue that through at least the next week. So, I want to make sure that I have given individual stakeholders the opportunity to weigh in so that I can, again, make the best informed decision that I can based on the information that I've heard.

[Sostaric] There's a lot going on with Medicaid right now. The U.S. House of Representatives just passed cost cutting measures that include work requirements. You have Medicaid work requirements in the works for Iowa. This is all expected to lead to fewer people having Medicaid benefits and a higher uninsured rate. Rural hospitals have historically relied on Medicaid funding. What do you make of concerns that this will all hurt rural health care access?

[Reynolds] Well, no, we're doing what we can and that was a focus of my legislative session this year and one of my top priorities to make sure that we really have access to high quality health care in rural Iowa. So, not only rural health care but maternal health care as well. We're $38 trillion in debt and we can be better and we're way out of scope on how we utilize Medicaid. And we want to make sure that those dollars are there to support the people that really need it. And this is a small percentage of our population. It's the expansion population. It's about 117,500 individuals that are a part of that cohort. These are able-bodied individuals that the work requirements would apply to, so it's not everybody. Again, it's a very narrow component of the overall Medicaid population. And right now, there's about 100,400 able-bodied adults that are not working that are receiving no income. And so, what the work requirements require is that if you are 19 to 64, you are able-bodied, that we would expect you to participate in 100 hours per month -- 100 hours per month and either in a job or education or job training. It's about building a healthier lifestyle. It's about being able to take care of yourself. We want to work with these individuals to help them either get a job, work on their resume or get a skill that would allow them to get a job that would hopefully allow them to take care of themselves. And also, there are significant exceptions. So, if you have a high-risk pregnancy, if you're a mom that has a child that is six and under or a dependent family member you're exempt. If you're on unemployment you're exempt because on unemployment we're working with individuals through our case study program to help get them the skills to get back on the job. And I'm proud to say right now the average time that an Iowan is on unemployment is 9 weeks. So, these processes work and we're going to work with individuals and help get them the skills they need to hopefully have a healthy, happy life and be able to take care of themselves.

[Sostaric] And you mentioned your rural health care bill, which aims at increasing the number or providers in rural areas. But does that really make up for, I mean, if those federal cuts come into play, does that really make up for the funding for providing those services?

[Reynolds] Well, pretty soon we're not going to be able to take care of anything because we're $38 trillion in debt. So, at some point nothing becomes sustainable at this rate. If we can get them healthy and back in the workforce and able to take care of themselves, that reduces their reliance on Medicaid. They'll have insurance maybe with the company that they are employed at. So, that reduces the reliance on Medicaid. And we want to make sure, especially when you're looking at the debt that this country is carrying, that we are able to provide Medicaid to the individuals that truly need it, those that are physically unable to work. I mean, it is a safety net for people that can't, can't work and be able to take care of themselves. It's not and never was meant to be a subsidy for able-bodied adults. The expectation is if you can work, you should work. And it will make them healthier in the long run. And so, we're not saying we're going to leave you hanging out there. We're going to help. We're going to help connect you with a job. We're going to help you get an education that maybe would lead to a great career. Or we're going to provide job training so that we can get you back in the workforce. It's not 160 hours a week, it's not a 40-hour work week, we're saying 100 hours for the month. We give them six months to comply, so it's not tomorrow. They've got time to adjust working with HHS. So, we're trying to put all those safeguards in place so that we can help individuals. But we have to remember what the core function of that intentionally, what that was. And if we can get people employed and have health care, I think that takes care of that problem too.

[Henderson] This week you learned that the USDA is giving you a waiver for the supplemental nutrition program, which is sometimes called food stamps. The guidelines that you have developed as the Reynolds administration are different than the guidelines that had been talked about but not passed the legislature. Compare and contrast those and why your guidelines are better in terms of what may be purchased with SNAP benefits?

[Reynolds] From the federal government?

[Henderson] Mm-hmm.

[Reynolds] Well, we'll have to watch and see how it aligns. But it's a demonstration waiver and so we're saying here is what we think we can do in the state of Iowa. I think it's a really good first step. They're saying right now that 40% of students have at least one, kids have at least one chronic illness. 1 in 6 children nationally are obese. We're not a healthy population. And again, we'll get back to the original intent of SNAP and that was to help supplement low income families with nutritious foods. And so, we believe that you shouldn't be able to use those SNAP dollars for -- right now it's for taxable items. So, we're working with retailers, Kay, this is part of it too, so that we make it easy to take those initial steps forward and then we might expand it down the road. But right now, it really focuses on salty snacks, candy, sweetened drinks. 20% of SNAP right now are being used for those three things that I just mentioned. And so, we are an unhealthy population. We want to -- that contributes to some of the other issues that we've talked about and we think this really lines up with the intent of what SNAP was designed for in the beginning. And they can use those dollars to purchase healthy foods and help supplement their family income.

[Henderson] The other waiver the USDA granted several weeks ago deals with the summer food program. Other states have lined up for an EBT program where each family that has school aged children that has qualified for free or reduced price lunch gets $120 in the summer. That would cover about well over 200,000 kids in Iowa. Your waiver covers far fewer, about 65,000.

[Reynolds] No, no, no, it's about 244,000 is the eligible cohort.

[Henderson] You're not getting as much money as --

[Reynolds] Well no, it's $40 per child is what it is. So, if you're a family of three they would get $120. So, it's $40 per child. It allows them to work with the food banks and the distribution network that the food banks have in place and they would be able to go in and purchase $40 worth of food, culturally designed, if you have dietary needs, they have the ability to work with that as well. But I think if you remember DMARC even said that they can buy six times the food that you can at a retail store because they can buy in bulk. And, again, it restricts it to nutritious food. So, I hope you're starting to see a pattern. We're driving healthy outcomes, healthy behaviors in the state so that we can help families provide the kids nutritious food during the summer. Where you go in with an EBT card, plus it was $29 million for that program, we're able to provide families and students nutritious food. Again, they have access to $40 per child to select the food that they want. And the cost of our program was about $9 million. So, it's a waiver, it's a proof of concept. I know when I talked about it on the phone the Colorado Governor was very interested in looking at doing something similar. So, it's a good start. We'll see where we need to adjust. But the pilot program that we did without the state help we actually reached more kids with healthy food at a lower cost. And so, I think we can build on what we've done an accomplish what we're all trying to do and that is making sure that kids have access to healthy food over the summer as well as having some eyes on them and their family as well.

[Murphy] Another bill that is in that big stack on your desk right now deals with 911 services and I know you're hearing from emergency groups that are concerned about a provision that they are worried could ask local services to have to foot more of the bill versus the state. Have you heard from those groups directly? And what is your thought making process on that provision?

[Reynolds] Same process applies. We're doing the same thing. So, we've had people reach out, we've had people send in letters, again, asking if we could at least veto that portion of the standing bill. I will tell you that there were multiple conversations that -- it's our understanding, this is one of the things that we're verifying -- that there were multiple conversations throughout the legislative session. We believe that there were a couple of different proposals that were put forward. Of course, they didn't go anywhere. So, I know that this was something that was talked about throughout the legislative session, so we'll continue to take a look at that, verify, take a look at what some of those proposals were. It's a critical system. We want to make sure that we sustain it. It's really important to keep Iowans safe. A component of this also is that they are sitting on $66 million surplus. So, we have to take all of that into account and make sure we understand what their concerns are, what Homeland is looking at and find a compromise that works for everyone, but most importantly that keeps that system sustainable and make sure that we are taking into account the safety of Iowans. But those are the things that we're looking at and those are the conversations that we're having with all those that are impacted.

[Sostaric] Turning to the state budget that just passed the legislature, you're expecting to use about $900 million of one-time money to cover that budget gap that was caused be a decline in revenue due to tax cuts. How long will it take for revenue to catch back up to where it can cover the state budget without using those reserves?

[Reynolds] Well, first of all, that's what it was intended for. So, the Taxpayer Relief Fund was always set up to smooth out the tax cuts. That's what it is there for. It is to help Iowans keep more of their hard-earned money. So, whenever we propose a bill to reduce the tax burden on Iowans, we always run a five-year projection and factor in what that looks like and if we have to dip into the Taxpayer Relief Fund. And actually, the last three times that we projected we might need to dip in, we didn't. So, this is the first year, but this is the most significant drop that we took only taxing Iowans' individual income rate at 3.8%. And so, if you remove the cost of that tax cut, we actually still saw growth with some pretty significant challenges from the Biden administration when you look at the high cost of inflation and what we were dealing with four years of the Biden administration. So, that is what it is there for. It's to help kind of spread out the impact of the tax cuts and we're several years out before that would even be an issue. And we're very conservative when we do the runs to make sure that we can sustain the tax cut. But that is the reason that one of my top priorities this year was fiscal discipline. The way that you sustain the tax cuts that you have put in place and lay the groundwork to continue to reduce the tax burden on Iowans is the growth that you experience from cutting taxes by keeping spending in check. And then another component of that that I believe will allow us to continue to be, sustain the tax cuts and to go even lower is by streamlining government and we're going to continue to look at ways we can be more efficient in how we serve Iowans. It has already saved Iowa taxpayers $250 million over 18 months and there's more savings to be found. So, we're excited about continuing to work down that path to not only sustain the tax cuts but to look for opportunities to do more. And I think it's quite hilarious the democrats were like, spend that money, spend that money, spend that money, you're sitting on $4 trillion. So, we actually lowered the tax rate to 3.8% and now they're screaming that we're in a financial crisis when I think for three years in a row The Cato Institute has named me the most fiscally responsible governor in the country. So, I do know how to balance a budget and keep spending in check.

[Sostaric] So, it sounds like you're confident that those reserves will not run out before the revenue catches back up?

[Reynolds] Yeah, I am, for all of the reasons that I just listed is why I feel confident, for all of the policies that we have put in place to do that. We are not going to cut taxes to turn around and raise them.

[Henderson] A couple of years ago at a Republican Governor's Association meeting you said your goal was to completely eliminate Iowa's income tax by the end of your current term, which would be December of '26, January of 2027. Yet when you issued a statement, a written statement when the legislature adjourned, you said you look forward to working on property taxes. So, are you going to do both? Have you abandoned the idea that you can get rid of the income tax by the time you leave office?

[Reynolds] That would be aggressive. So, it was a hard decision for me to make, first of all. I seriously was considering running for another term. I love what I'm doing. I love serving Iowans. It has been an honor of a lifetime and just an incredible journey. And so, with that landscape, yes, I thought we could significantly bring individual income tax rates down. I want to create a foundation that when I do leave the next republican governor that sits in that chair will be able to continue to reduce the individual income tax rate. But I do need to focus on property taxes. That is what we hear about all the time, Kay. And I was hopeful that the legislature, they had kind of asked to take the lead on that this year so we let them, I worked on other things. And it's hard, it is really, really hard and so I am going to spend the entire interim working on that. And I am going to be out in the state and I Am going to be talking to Iowans and stakeholders and laying out what it looks like. We have to think differently about how we deliver services to our citizens. We can't continue to have the level of government that we have and expect the property taxes to go lower. It's just not feasible. The math doesn't work. And so, everything needs to be on the table. We need to talk about what that looks like and how we move forward. And what is their priority? Do they want to operate like we've done for the last 40 years? Or do they want to really significantly take a look at reducing those property taxes and thinking about how we can take advantage of those differently? I mean, services differently.

[Henderson] Just real quickly, a couple of elements of the bill that had been developed over the past four months or so, limiting the growth of budgets at the local level. Is that something that is necessary?

[Reynolds] Well, I don't know. We'll have to put all of it on the table. I really have to -- 40% of property taxes is education. So, we have a school funding formula that is crazy. It's so complicated. It's like property tax formula, crazy complicated. School funding formula, crazy complicated. Tax credits, should we maybe reduce some of those and plug that into property tax savings or to individual income tax savings? Sales tax, what do we do with that? So, we'll do like we did with alignment, we'll look at what other states are doing. I've asked the Iowa DOGE committee, I said, take a look at this, help as an entrepreneur, as a small business owner, give us some ideas on how government should operate that would really make us stronger and more competitive. But that is the one thing that we hear about all the time from Iowans is just the increased evaluations exceeding inflation since 2020, I think a 27% increase over inflation since 2020 and just the cost of owning a home.

[Henderson] And finally, one element of the plan was to have the state pick up $400 million of local property tax payments and have the state cover that. Is that --

[Reynolds] I don't think that's really, I don't think you can shift everything to the state. We have to think about -- and there was an offset on that, they just couldn't make it work. So, that's why. It's all so connected that if you fix it here, if you just operate within the existing formula, you fix this, well it has an impact over here. And so, the state can't -- it's still taxpayer dollars. I always say, it's local, federal, state. It's all coming out of the taxpayer's pocket. So, we have to figure out how that system, how we holistically look at the package moving forward. And that just, it's disruptive. But that means people are going to probably be a little uncomfortable. But we'll have the conversation. And I'm not going to wait until January to have it. We're going to have it all summer as we're working on it.

[Henderson] Lots more to discuss. Erin?

[Murphy] Yeah, including one bill that you don't have to take action on because it didn't make it your way. But I am curious to hear about the bill that has been passing the Senate, not the House, that would deal with the ag chemical glyphosate, Roundup weed killer. So, there's people who the bill would add some legal protections that the people, farmers who use the product think is important to keep it in the market. There's others who have concerns about that because they feel people should have the legal recourse to express concern about possible health impacts. Secretary Kennedy mentioned it in his healthy America, Make America Healthy Again report this week and expressed concern about that specific product. Would you have liked to have seen that bill?

[Reynolds] I would because it's based on common sense. The FDA said that in the labeling requirement that it wasn't a carcinogen. So, our own FDA has said that it's not. And if they have said that they've not, I think the bill was just a common sense bill that said if the FDA says that it's not then we shouldn't be sued for using that product. And so, if they change the parameters on the labeling then that's a different story. But right now, and I think even in the report that he laid out he went on to say that there were several, he highlighted that also in that same report that the FDA had in their labeling requirements said that it wasn't a carcinogen and that was part of that report as well. So, we make 70% of that in the state of Iowa. We have about 500 employees that work at that plant making it and it has a significant impact on what we can grow. But if there is science based that would prove that it is an issue then we need to look at it. But there are a lot of other factors that need to be taken into account. So, my reasoning for supporting that bill is FDA has already signed off on it and therefore it shouldn't be subject to the lawsuits that we're seeing as a result of that.

[Murphy] Sorry to jump in, we're down to our last couple of minutes already.

[Sostaric] You got the $1 million from the legislature you requested for cancer research looking at the potential causes of cancer. What are the next steps for you on the issue of Iowa's high cancer rates?

[Reynolds] Well, so this is where we start, right? So, we are doing a partnership with the University of Iowa that really has the expertise and access to the data. So, they'll be partnering with Kelly. I believe the bill says, or else it's in the contract that we've set with them, that a year from now they will come back and hopefully start to give us some information on what they have discovered through their research. And then I think honestly working with the federal administration they are taking a look at a lot of things. We can start to identify maybe what some of the issues are in Iowa. Is it geographical? Is that having some impact on our cancer rates? All of that hopefully will be in some of the information that we'll gather from the University of Iowa working with Director Garcia and Health and Human Services. But I'm very grateful to the University of Iowa for stepping up and agreeing to be a partner in this endeavor. And I thought a million dollars was really fair for them to agree to do it with that allocation. So, hopefully when I'm back here next year we'll see what that results. But I'm not going to speculate until I see what they find out.

[Henderson] We have 15 seconds left. There's been some discussion of the Federal Emergency Management agency being disbanded and states taking over. Given what happened in Iowa last year, could the state take that over?

[Reynolds] I think it still needs to be a partnership. But I'm telling you, it takes way too long, it's way too bureaucratic. We've got people on the ground that can act quickly. We were able to stand up some really unique programs because they gave us the flexibility to do that. That's what states do. That's what we could do. So, I think it really is something we need to take a look at.

[Henderson] I have no more flexibility, we are out of time. Thank you for joining us on this edition of Iowa Press.

[Reynolds] Thank you, thanks.

[Henderson] You can watch every edition of Iowa Press at iowapbs.org. For everyone here at Iowa PBS, thanks for watching today.

(music)

Funding for Iowa Press was provided by Friends, the Iowa PBS Foundation.

(music)

The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure.

(music)

Across Iowa, hundreds of neighborhood banks strive to serve their communities, provide jobs and help local businesses. Iowa banks are proud to back the life you build. Learn more at iowabankers.com.