Majority Democrats in the Iowa Senate are taking a go-slow approach but eventually expect to agree with Gov. Terry Branstad's call for converting the state's economic development agency into a public-private partnership this legislative session.
"I think we'll come out with something that works for everyone," said Sen. Steve Sodders, D-State Center, chairman of the Senate Economic Growth Committee, which currently is revamping House File 590 at the subcommittee level. "We want to work with the governor and the director to do something to make some positive changes in the department, but it may not be exactly what you see here today."
Branstad has proposed replacing the current state Department of Economic Development (DED) with the Iowa Partnership for Economic Progress that will include a newly formed state authority and a separate nonprofit corporation that will be able to raise money from private-sector interests, industrial revenue bonds and other sources to incent and help finance innovative, job-creation projects.
Current DED Director Debi Durham worked to assure lawmakers Tuesday that the new approach will be open, transparent and accountable - probably more so than now - but she said she is open to changes being suggested by senators to shift some functions internally and provide more safeguards for accountability in trying to craft an effective model in pursuit of Branstad's goals of creating 200,000 jobs and raising Iowans' personal income by 25 percent over the next five years.
"I believe it will happen, but I'm the eternal optimist," Durham said. "I think we're making progress. It's definitely a vetting and a review process. From where we started weeks ago to where we are today, it's a much better piece of legislation. It's more transparent."
Not everyone who attended Tuesday's subcommittee hearing was convinced.
Judge Lonning, a retired teacher and member of the Iowa Citizens for Community Improvement, said she and her organization have serious concerns about privatizing Iowa's economic development efforts, saying the change would weaken legislative oversight, move decisions behind closed doors out of the public reach, and expose Iowa to potential scandals that have beset other states that have tried the proposed model - problems with misused taxpayer funds, excessive executive bonuses, conflicts of interest and questionable subsidy awards.
"There is absolutely no evidence that this proposed model will be better at creating high-quality, good-paying jobs than the existing model," Lonning said. "This proposal has nothing to do with job creation. It's a power grab by the governor and big-money corporate interests to privatize what should remain a public institution."
Durham said CCI has raised legitimate issues about transparency that have been addressed and she noted that a provision dealing with employee bonuses has been stripped from the bill. She said the new public-private model will allow more public scrutiny that what currently exists and create a long-term legacy that will lead to high-end, quality jobs in the state's targeted areas.
"I have been quick to push back when I believe that legislators are creating something that perhaps is an unintended consequence that makes it more difficult for us to operate this in a way we need to operate it. I do not believe that any of the changes that we've made today does that," she said.
Sen. Sandy Greiner, R-Keota, said she had concerns that the new PEP would operate under a proposed pay structure similar to one being used by the Iowa Lottery Authority that allows key employees to be paid competitive salaries similar to private entities to attract top candidates, saying that approach represented a "slippery slope" that she worried more state agencies would request to go down. Others worried the PEP might pose similar problems that led to an excessive pay scandal within the Iowa Association of School Boards.
"We want to know how all these people get paid and what the structure is," said Sodders, who scheduled another subcommittee meeting Thursday.
Sodders said public-private partnerships have worked well at local and regional levels, but he noted that problems have developed "every time you see this explode out into a statewide program."
"We know other states have had problems. I'm trying to figure out what was the disconnect" to be able to avoid repeating similar missteps," he said.
"This is a big bill. This isn't a small change, a little tweak to a state office," Sodders said. "This is an overall fundamental change of economic development in the state. We want to make sure we have everything rearing to go when we submit that to our caucuses. We've got a ways to go. It's our goal to try to give the governor something he can work with, but oversight and transparency is the key."