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CBS 2 TOP STORIES VIDEO
A CBS 2 investigation uncovers that the state squandered nearly 2 billion dollars. Many believe smoke plays a big role in Iowa politics. But CBS 2 uncovered, over the past few years, politics really is all smoke and money being shifted around.
“What we do is we put up this smoke screen and make it look like we balanced the budget,” says Republican, State Auditor, David Vaudt. “We present the numbers to the public that we want the public to know but not necessarily what they need to know,” he admits.
What many do not realize though, is the state has racked in more than a billion dollars because of smoking. The money comes, not just from the tobacco tax, but the tobacco settlement. Iowa, along with 45 other states, sued the tobacco companies on the grounds they are partly responsible for the state’s health care costs. The states won. So if the state has billions to pay for tobacco related health care costs, why is there currently a $1.36 tax on a pack of cigarettes?
“Well it's because we never used those tobacco settlement funds for health care costs related to smoking,” explains Vaudt.
Auditor Vaudt sat down with CBS 2 and helped us understand all of the complicated fiscal reports and numbers. What CBS 2 found is the trail of money rarely goes to where it was supposed to go.
“As soon as we put moneys in the account, we would take it out and use it for other purposes,” says Vaudt as he explains the tobacco endowment fund originally set up by the state.
It was agreed Iowa would get $1.98 billion over a period of 23 years. That money was earmarked to pay for Iowa’s health care costs. The cash started being spent in 2002. Millions of dollars were projected to come in each year. But then there were concerns the tobacco companies would fail to make payments. So Iowa sold three-quarters of its tobacco settlement proceeds to bond holders, the bond holders took the risk and the state took the money upfront. However, by doing things this way there were restrictions. Iowa law only allows money from investors to go towards capitol projects. The money was not allowed to go towards tobacco relief. Because of this, the state created an endowment fund, specifically for tobacco related health care costs. The plan was to set the other quarter of the tobacco settlement aside and over time that money would grow in interest to $1 billion by 2030.
That projection though, is never going to happen. CBS 2 looked at the books. In the 2002 budget, just as quickly as $55 million went into the endowment fun, $40 million was transferred out to pay for K-12 schools. It happened again in 2003. Money was put in and then $9 million went to the state’s general fund. Another $20 million went to school aid appropriation. $16.8 million went towards tuition replacement. Every year this continued. Another $20 million was taken out of the endowment and put into the general fund again. In 2005, almost $11 million went to Rebuild Iowa. In 2007, the Senior Living Trust Fund received $25 million. $5 million went to a watershed project. With so much money given out, eventually there was nothing left.
"And we have nothing to show for what we were going to do for our endowment fund," says Vaudt.
CBS 2 confronted the senate majority leader, democrat, Mike Gronstal about this issue.
“I don't think anyone ever expected that we were ever going to set the money aside in perpetuity,” Gronstall explains.
The independent arm of the legislature says that is not true. CBS 2 found warnings issued to the state from the Iowa Legislative Fiscal Bureau. The warnings state: “If the 40 million dollars is not reimbursed to the endowment, the 30-year projection will be significantly reduced, perhaps by as much as $300 million.”
“As I remind people, there is no such thing as republican numbers, or democrat numbers, or independent numbers. There are just Iowan numbers,” explains Auditor Vaudt.
And Governor, Chet Culver says those numbers are good.
“The good news is that 80,000 people in Iowa have quit smoking,” says Governor Culver.
Perhaps, though, that is because of the tobacco tax.
"Newports and American Spirits are each like seven bucks," explains one smoker trying to quit.
"I think it's a form of extortion," explains another.
But many Iowans say if the state is going to tax to make smokers quit, at least be honest about it, enough with the smoke and money transfers.
Auditor Vaudt tells CBS 2 this is leading up to a much bigger issue. He says the state continuously balances the budget with one-time dollars like the tobacco settlement. That money, as the tobacco settlement did, runs out. Vaudt worries next year, without one-time dollars, there will be massive layoffs, many unpaid days off and large budget cuts across the board.
Below is a list of some of the capitol projects purchased with the tobacco settlement.
2002 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $11.5 Million
Capitol Interior Renovation – $1.7 Million
DEPARTMENT OF CORRECTIONS
Fort Madison Prison Expansion – $6.4 Million
DEPARTMENT OF EDUCATION
IPTV – High Definition TV Conversion – $2.4 Million
DEPARTMENT OF NATURAL RESOURCES
Restore the Outdoors Program – $2.5 Million
STATE TREASURER
County Fairs – $1,060,000
Attorney Litigation Payments - $10,617,000
Attorney Litigation Payments supplemental – $944,880
BOARD OF REGENTS
Regents Tuition Replacement – $600,860
UNIVERSITY OF IOWA
Biology Building Renovation – $7.3
Art Building – $4,453,000
IOWA STATE UNIVERSITY
Gilman Hall – $2.5 Million
Business Building – $4.2 Million
UNIVERSITY OF NORTHERN IOWA
McCollum Hall – $5.8 Million
Steam Distribution – $3,990,000
2003 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $15,750,000
Capitol Interior Renovation - $2.7 Million
Capitol Interior Renovation Quadrant – $5 Million
DEPARTMENT OF NATURAL RESOURCES
Restore the Outdoors Program – $2.5 Million
DEPARTMENT OF PUBLIC DEFENSE
Waterloo Armory – $612,100
DEPARTMENT OF CORRECTIONS
Fort Madison Prison Expansion – $2 Million
STATE TREASURER
County Fairs – $1,060,000
Attorney Litigation Payments – $14,924,000
Attorney Litigation Payments Supplemental – $646,076
BOARD OF REGENTS
Regents Tuition Replacement – $10,503,733
UNIVERSITY OF IOWA
Biology Building Renovation – $3 Million
Art Building – $7,910,000
School of Journalism Building – $2.6 Million
IOWA STATE UNIVERSITY
Gilman Hall – $2.5 Million
Business Building – $6.7 Million
Classrooms and Auditoriums – $2,112,100
Livestock Research Facility – $2,797,000
Plant Sciences – $4,148,000
UNIVERSITY OF NORTHERN IOWA
McCollum Hall – $8.4 Million
Steam Distribution – $4,320,000
Teaching Center Building (East Gym) – $1,730,000
2004 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $11.5 Million
Capitol Interior Renovation (N.E. Quadrant) – $6,239.000
DEPARTMENT OF NATURAL RESOURCES
Restore the Outdoors – $2.5 Million
Lewis and Clark Rural Water System – $1.5 Million
BOARD OF REGENTS
Regents Tuition Replacement – $10,610,409
UNIVERSITY OF IOWA
Old Capital Improvements – $350,000
School of Journalism Building – $7.2 Million
Art Building – $3,653,000
IOWA STATE UNIVERSITY
Classrooms and Auditoriums – $10,177,300
UNIVERSITY OF NORTHERN IOWA
Teacher Center Building (East Gym) – $6,490,000
Steam Distribution – $4,390,000
STATE TREASURER
County Fairs – $1,060,000
Attorney Litigation Payments - $700,000
ICN – Debt Services – $13,039,378
Community Attraction/Tourism – $12,500,000
2005 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Capital Interior Renovation – $3.5 Million
INFORMATION TECHNOLOGY DEPARTMENT
Integration Information for Iowa System – $2,450,000
DEPARTMENT OF NATURAL RESOURCES
Lewis and Clark Rural Water System – $2,450,000
BOARD OF REGENTS
Regents Tuition and Replacement – $10,437,174
IOWA STATE UNIVERSITY
Classrooms and Auditoriums – $1,949,100
UNIVERSITY OF IOWA
School of Journalism Building – $3,575,000
UNIVERSITY OF NORTHERN IOWA
Teaching Center Building (East Gym) – $9,880,000
STATE TREASURER
ICN – Debt Services – $13,039,778
Prison Construction Debt Services – $5,413,324
2006 FISCAL YEAR
DEPARTMENT OF ECONOMIC DEVELOPMENT
Accelerated Career Education (ACE) Program – $1.5 Million
TELECOMMUNICATION AND TECH COMMISSION
ICN – Equipment Replacement – $1,704,719
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $3 Million
Capitol Interior Renovation – $4.5 Million
West Capitol Terrace Restoration – $2.3 Million
DEPARTMENT OF NATURAL RESOURCES
State Park Infrastructure Renovations – $1 Million
Lewis and Clark Rural Water System – $2.5 Million
DEPARTMENT OF PUBLIC SAFETY
Dubuque Fire Training Facility – $100,000
DEPARTMENT OF CORRECTIONS
Anamosa Dietary Renovation – $600,000
Anamosa Dietary Renovation ANAMOSA – Supplemental – $1,840,000
BOARD OF REGENTS
Tuition Replacement – $10,329,981
STATE TREASURER
Prison Construction Debt Services – $5,422,390
2007 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Terrace Hill Roof Restoration – $700,000
DHS – Toledo Juvenile Home – $1,521,045
DHS – Toledo Education and Infirmary Building – $5,030,668
Capitol Interior Restoration – $6,830,000
New Office Building – $37,585,000
DEPARTMENT OF CORRECTIONS
Cedar Rapids CBC Mental Health Facility - $1 Million
DEPARTMENT OF EDUCATION
Community College Infrastructure – $2 Million
DEPARTMENT OF PUBLIC DEFENSE
Iowa City Readiness Center – 1,444,288
Waterloo Aviation Readiness Center Addition – $1,236,000
2008 FISCAL YEAR
DEPARTMENT OF CORRECTIONS
Anamosa Dietary Renovation - $1.4 Million
2009 FISCAL YEAR
DEPARTMENT OF ADMINSTRATIVE SERVICES
Major Maintenance – $195,484
Accelerated Career Education (ACE) Infrastructure – $4.6 Million
BOARD OF REGENTS
UNIVERSITY OF IOWA
Institute of Biomedical Discovery – $10,550,000
IOWA STATE UNIVERSITY
Biorenewables Building – $11,277,000
“What we do is we put up this smoke screen and make it look like we balanced the budget,” says Republican, State Auditor, David Vaudt. “We present the numbers to the public that we want the public to know but not necessarily what they need to know,” he admits.
What many do not realize though, is the state has racked in more than a billion dollars because of smoking. The money comes, not just from the tobacco tax, but the tobacco settlement. Iowa, along with 45 other states, sued the tobacco companies on the grounds they are partly responsible for the state’s health care costs. The states won. So if the state has billions to pay for tobacco related health care costs, why is there currently a $1.36 tax on a pack of cigarettes?
“Well it's because we never used those tobacco settlement funds for health care costs related to smoking,” explains Vaudt.
Auditor Vaudt sat down with CBS 2 and helped us understand all of the complicated fiscal reports and numbers. What CBS 2 found is the trail of money rarely goes to where it was supposed to go.
“As soon as we put moneys in the account, we would take it out and use it for other purposes,” says Vaudt as he explains the tobacco endowment fund originally set up by the state.
It was agreed Iowa would get $1.98 billion over a period of 23 years. That money was earmarked to pay for Iowa’s health care costs. The cash started being spent in 2002. Millions of dollars were projected to come in each year. But then there were concerns the tobacco companies would fail to make payments. So Iowa sold three-quarters of its tobacco settlement proceeds to bond holders, the bond holders took the risk and the state took the money upfront. However, by doing things this way there were restrictions. Iowa law only allows money from investors to go towards capitol projects. The money was not allowed to go towards tobacco relief. Because of this, the state created an endowment fund, specifically for tobacco related health care costs. The plan was to set the other quarter of the tobacco settlement aside and over time that money would grow in interest to $1 billion by 2030.
That projection though, is never going to happen. CBS 2 looked at the books. In the 2002 budget, just as quickly as $55 million went into the endowment fun, $40 million was transferred out to pay for K-12 schools. It happened again in 2003. Money was put in and then $9 million went to the state’s general fund. Another $20 million went to school aid appropriation. $16.8 million went towards tuition replacement. Every year this continued. Another $20 million was taken out of the endowment and put into the general fund again. In 2005, almost $11 million went to Rebuild Iowa. In 2007, the Senior Living Trust Fund received $25 million. $5 million went to a watershed project. With so much money given out, eventually there was nothing left.
"And we have nothing to show for what we were going to do for our endowment fund," says Vaudt.
CBS 2 confronted the senate majority leader, democrat, Mike Gronstal about this issue.
“I don't think anyone ever expected that we were ever going to set the money aside in perpetuity,” Gronstall explains.
The independent arm of the legislature says that is not true. CBS 2 found warnings issued to the state from the Iowa Legislative Fiscal Bureau. The warnings state: “If the 40 million dollars is not reimbursed to the endowment, the 30-year projection will be significantly reduced, perhaps by as much as $300 million.”
“As I remind people, there is no such thing as republican numbers, or democrat numbers, or independent numbers. There are just Iowan numbers,” explains Auditor Vaudt.
And Governor, Chet Culver says those numbers are good.
“The good news is that 80,000 people in Iowa have quit smoking,” says Governor Culver.
Perhaps, though, that is because of the tobacco tax.
"Newports and American Spirits are each like seven bucks," explains one smoker trying to quit.
"I think it's a form of extortion," explains another.
But many Iowans say if the state is going to tax to make smokers quit, at least be honest about it, enough with the smoke and money transfers.
Auditor Vaudt tells CBS 2 this is leading up to a much bigger issue. He says the state continuously balances the budget with one-time dollars like the tobacco settlement. That money, as the tobacco settlement did, runs out. Vaudt worries next year, without one-time dollars, there will be massive layoffs, many unpaid days off and large budget cuts across the board.
Below is a list of some of the capitol projects purchased with the tobacco settlement.
2002 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $11.5 Million
Capitol Interior Renovation – $1.7 Million
DEPARTMENT OF CORRECTIONS
Fort Madison Prison Expansion – $6.4 Million
DEPARTMENT OF EDUCATION
IPTV – High Definition TV Conversion – $2.4 Million
DEPARTMENT OF NATURAL RESOURCES
Restore the Outdoors Program – $2.5 Million
STATE TREASURER
County Fairs – $1,060,000
Attorney Litigation Payments - $10,617,000
Attorney Litigation Payments supplemental – $944,880
BOARD OF REGENTS
Regents Tuition Replacement – $600,860
UNIVERSITY OF IOWA
Biology Building Renovation – $7.3
Art Building – $4,453,000
IOWA STATE UNIVERSITY
Gilman Hall – $2.5 Million
Business Building – $4.2 Million
UNIVERSITY OF NORTHERN IOWA
McCollum Hall – $5.8 Million
Steam Distribution – $3,990,000
2003 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $15,750,000
Capitol Interior Renovation - $2.7 Million
Capitol Interior Renovation Quadrant – $5 Million
DEPARTMENT OF NATURAL RESOURCES
Restore the Outdoors Program – $2.5 Million
DEPARTMENT OF PUBLIC DEFENSE
Waterloo Armory – $612,100
DEPARTMENT OF CORRECTIONS
Fort Madison Prison Expansion – $2 Million
STATE TREASURER
County Fairs – $1,060,000
Attorney Litigation Payments – $14,924,000
Attorney Litigation Payments Supplemental – $646,076
BOARD OF REGENTS
Regents Tuition Replacement – $10,503,733
UNIVERSITY OF IOWA
Biology Building Renovation – $3 Million
Art Building – $7,910,000
School of Journalism Building – $2.6 Million
IOWA STATE UNIVERSITY
Gilman Hall – $2.5 Million
Business Building – $6.7 Million
Classrooms and Auditoriums – $2,112,100
Livestock Research Facility – $2,797,000
Plant Sciences – $4,148,000
UNIVERSITY OF NORTHERN IOWA
McCollum Hall – $8.4 Million
Steam Distribution – $4,320,000
Teaching Center Building (East Gym) – $1,730,000
2004 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $11.5 Million
Capitol Interior Renovation (N.E. Quadrant) – $6,239.000
DEPARTMENT OF NATURAL RESOURCES
Restore the Outdoors – $2.5 Million
Lewis and Clark Rural Water System – $1.5 Million
BOARD OF REGENTS
Regents Tuition Replacement – $10,610,409
UNIVERSITY OF IOWA
Old Capital Improvements – $350,000
School of Journalism Building – $7.2 Million
Art Building – $3,653,000
IOWA STATE UNIVERSITY
Classrooms and Auditoriums – $10,177,300
UNIVERSITY OF NORTHERN IOWA
Teacher Center Building (East Gym) – $6,490,000
Steam Distribution – $4,390,000
STATE TREASURER
County Fairs – $1,060,000
Attorney Litigation Payments - $700,000
ICN – Debt Services – $13,039,378
Community Attraction/Tourism – $12,500,000
2005 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Capital Interior Renovation – $3.5 Million
INFORMATION TECHNOLOGY DEPARTMENT
Integration Information for Iowa System – $2,450,000
DEPARTMENT OF NATURAL RESOURCES
Lewis and Clark Rural Water System – $2,450,000
BOARD OF REGENTS
Regents Tuition and Replacement – $10,437,174
IOWA STATE UNIVERSITY
Classrooms and Auditoriums – $1,949,100
UNIVERSITY OF IOWA
School of Journalism Building – $3,575,000
UNIVERSITY OF NORTHERN IOWA
Teaching Center Building (East Gym) – $9,880,000
STATE TREASURER
ICN – Debt Services – $13,039,778
Prison Construction Debt Services – $5,413,324
2006 FISCAL YEAR
DEPARTMENT OF ECONOMIC DEVELOPMENT
Accelerated Career Education (ACE) Program – $1.5 Million
TELECOMMUNICATION AND TECH COMMISSION
ICN – Equipment Replacement – $1,704,719
DEPARTMENT OF ADMINISTRATIVE SERVICES
Major Maintenance – $3 Million
Capitol Interior Renovation – $4.5 Million
West Capitol Terrace Restoration – $2.3 Million
DEPARTMENT OF NATURAL RESOURCES
State Park Infrastructure Renovations – $1 Million
Lewis and Clark Rural Water System – $2.5 Million
DEPARTMENT OF PUBLIC SAFETY
Dubuque Fire Training Facility – $100,000
DEPARTMENT OF CORRECTIONS
Anamosa Dietary Renovation – $600,000
Anamosa Dietary Renovation ANAMOSA – Supplemental – $1,840,000
BOARD OF REGENTS
Tuition Replacement – $10,329,981
STATE TREASURER
Prison Construction Debt Services – $5,422,390
2007 FISCAL YEAR
DEPARTMENT OF ADMINISTRATIVE SERVICES
Terrace Hill Roof Restoration – $700,000
DHS – Toledo Juvenile Home – $1,521,045
DHS – Toledo Education and Infirmary Building – $5,030,668
Capitol Interior Restoration – $6,830,000
New Office Building – $37,585,000
DEPARTMENT OF CORRECTIONS
Cedar Rapids CBC Mental Health Facility - $1 Million
DEPARTMENT OF EDUCATION
Community College Infrastructure – $2 Million
DEPARTMENT OF PUBLIC DEFENSE
Iowa City Readiness Center – 1,444,288
Waterloo Aviation Readiness Center Addition – $1,236,000
2008 FISCAL YEAR
DEPARTMENT OF CORRECTIONS
Anamosa Dietary Renovation - $1.4 Million
2009 FISCAL YEAR
DEPARTMENT OF ADMINSTRATIVE SERVICES
Major Maintenance – $195,484
Accelerated Career Education (ACE) Infrastructure – $4.6 Million
BOARD OF REGENTS
UNIVERSITY OF IOWA
Institute of Biomedical Discovery – $10,550,000
IOWA STATE UNIVERSITY
Biorenewables Building – $11,277,000
CBS 2 LOCAL NEWS
BC-IA--Iowa Air Guard-Jets, 2nd Ld-Writethru,129
February 03, 2012 23:37 GMT
Air Force proposals could affect 2 Iowa units
DES MOINES, Iowa (AP) -- The Air Force recommends retiring 21 F-16 fighter jets from an Iowa Air National Guard base in Des Moines and cutting the number of refueling tankers at a base in Sioux City.
Guard spokesman Col. Greg Hapgood says Friday the Air Force has proposed replacing the F-16s with remotely piloted aircraft at the 132nd Fighter Wing in Des Moines. The Air Force would cut the number of KC-135R Stratotanker aircraft from nine to eight at the 185th Refueling Wing in Sioux City.
The proposals are part of a plan to trim $8.7 billion from the Air Force budget in fiscal 2013.
Sen. Tom Harkin has requested a meeting with the secretary of the Air Force about the recommendations. The Iowa Democrat says the proposal is "not a final decision."
Information from: The Des Moines Register, http://www.desmoinesregister.com
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