Fred Hubbell: 2017 Session was My Tipping Point

Apr 27, 2018

Fred Hubbell is an Iowa businessman who was also tapped by Democratic Governor Chet Culver to chair the Iowa Power Fund and be interim director of the Iowa Department of Economic Development amid the film tax scandal. He has been active in Democratic politics for years, donating to many campaigns and candidates. But, he says listening to Republicans talk about the success of the 2017 session after defunding Planned Parenthood, rolling back collective bargaining rights and privatizing Medicaid was the tipping point that pushed him to become a candidate himself.

He recently sat down with IPR's Clay Masters to talk about fixing Medicaid, expanding access to mental health services, improving water quality and other issues. A transcript of that conversation follows:

I'm just asking all of the candidates who are running for governor to tell me simply why they think they want this job. Why are you running?

Thanks for the question. You know my wife and I have been spending most of the last 30 years here in Iowa working on helping to improve and support the values and the quality of life that have historically made Iowa a great place to live and raise a family. And unfortunately you know this last legislative session, with the misguided priorities from this legislature and the fiscal mismanagement of this governor I think we're just starting to run our state into the ground. The tipping point for me actually was last session, not this year but in 2017, you know the legislature defunded Planned Parenthood. They stripped collective bargaining rights from working families all across the state. They continue again to underfund education and job training. And you know in the meantime they've done very little for healthcare-- privatization of Medicaid is a failure-- and they've underfunded mental health care and they've continued to prioritize and fully fund wasteful corporate giveaways. So I didn't think the session was very good. And then at the end of the session Governor Reynolds said repeatedly it was the best legislative session we've ever had. And that was my tipping point. That's when I decided I need to step up and run for governor because I don't want Iowa to become Kansas or Oklahoma.

You've spent a lot of your past, you've contributed to campaigns, you've no doubt seen what it's like for people to run. Did you have any reservations for running for governor knowing what you know?

Well you've done your research. That's good. Yes, my wife and I have been very active in the Democratic Party and Iowa politics, supporting candidates that we thought could do a good job for our state. And you know, people asked me from time to time about whether I was interested in running for governor or why don't I run for governor. But frankly, you know, this year was different. You know, all those things I just mentioned that she's [Reynolds] changed with the support of Republicans in the legislature which I think is going to make it much more difficult for Iowa to recruit and retain good quality businesses, much more difficult to recruit individuals to want to move to Iowa and families to move to Iowa to go to work in our businesses and support our communities to put their kids in our schools. And I said that the tipping point was when she and Republicans said "this is the best legislative session ever," and it was the worst. It was absolutely the worst. And so that tipped me over. I mean I'm a father. I'm a grandfather, a fifth generation Iowan, and I don't want to see our state get run into the ground. So this experience was much more demanding in terms of my sense of someone needs to step up and try to make a difference in our state and stop this direction.

Background and Experience

You have not had a career in politics prior to this. What does your background in business bring to the table? What do you see as your strengths from your past in running for governor?

Actually I think I have a pretty broad background. I mean I used to run the Yonkers department stores back in the 1980s during the farm crisis. So you know we helped to fix that business and restore it to where it became a very successful company in the 80s. And then you know I left Yonkers in 1992 and then I was involved running the Equitable Life Insurance Company of Iowa across our state for over 20 years. So I've proven in a private sector that I know how to get results and help communities and help employees be successful. But I've also worked twice in state government. Governor Culver asked me to chair the Iowa Power Fund board for four years, making renewable fuel and new renewable energy investments all across Iowa. So that was a four year commitment. You know working in state government, trying to help the future of our economy grow investments in wind and solar and bio diesel ethanol, and then in the middle of that we had a film tax credit scandal in Iowa. The governor asked me to come in and fix that because he had to fire the previous director and needed somebody he could trust, somebody who knew how to fix fiscal mismanagement. And I worked for the attorney general's office and we saved Iowans tens of millions of dollars. You know, so I've got experience in the public sector and the private sector delivering results and getting things done for Iowans. But as I said earlier, my wife and I have also been very active in the nonprofit world and the quality of life.

I used to chair the Iowa Planned Parenthood board and I served on it for eight years in the 1980s. I served on the Simpson College Board and the Iowa College Foundation Board, helping expand access to higher education. And my wife and I have worked in other areas to help health care and particularly mental health care. Broadlawns Hospital came to us, to my wife really, six years ago and said look we've got mental health patients in emergency rooms. We have no place to put them, they're in a hallway in beds. We need help. So my wife got involved with that and then I did, and a bunch of other people did, and ultimately we helped Broadlawns add a 50 percent increase in their mental health beds and 200 psychiatrists which is a huge improvement in the state of Iowa because we lack beds and we lack psychiatrists. And we've also been very active in trying to help improve air and water quality in our state. So I think I've got a background in the public sector and a private sector delivering results and helping to build quality of life and the values that Iowans depend upon, which is hard work, commitment to family, commitment to communities, and commitment to a good place to raise your kids.

Medicaid and Health Care

Let's dig into a couple of these issues- you brought up Medicaid in 2016. Former Governor Terry Branstad handed over the management to for profit companies. This was something he did not need legislative approval to do. We've even seen Gov. Kim Reynolds say that there are problems with the privatization of Iowa's Medicaid. How do you make something sustainable when there are many that say the former fee for service model, that was what it was before it became privatized, is not sustainable. How do you make it work?

Well first of all we have to admit that what Branstad and Reynolds have now done is a failure and it's not getting any better and in fact they don't even want to have very much transparency about it anymore, because the reports that DHS is putting out they don't want to produce them publicly as much as they've done in the past. They want to hide the information about what's going on. They can't even settle the negotiations with the managed care companies. You know they were supposed to be done in January, now here we are in almost May and they're not done. And why is that? You know, is that connected? They don't want Iowans to know how much more expensive it's going to be this year just like it was a lot more expensive last year. I mean they're not being open with Iowans. The Ombudsman came out recently and said look, you know the managed care companies are treating Iowans very poorly. They're ignoring their appeals even though the appeals are successful. They're not hearing the appeals. We need to admit it's a failure and fix it. Now what I would do is bring it back under state management, get rid of these managed managed care companies. All they're doing is focusing on their profit margin and trying to manage their responsibility to their shareholders. They don't have a particular vested interest in Iowans. I want people making these decisions who do have that vested interest.

Now that doesn't mean it has to be a fee for service model. You know, there's plenty of other models around the country. Many other states have different models than just fee for service or pure managed care. The fact of the matter is Branstad and Reynolds chose a bad approach and it's not working and they refuse to change it. What I've been doing is I've looked at Connecticut, I've looked at Minnesota, I've looked at Oregon, Massachusetts, there are a lot of other models that are working much better than this state. And let's look at those.  We've got time between now and January 1 when I'm going to, as governor, change this and bring in its place an approach that's not fee for service, not management care, but it's going to put Iowans in charge of making these decisions to make sure Iowans have access to quality affordable health care.

Mental Health

Sticking with health care issues there was bipartisan support for a mental health bill that got signed into law. This was one of the few things that gained statewide attention during this legislative session as having bipartisan support, more funding. Do you think it does enough? Do you think there is enough teeth in that bill or is it a bad thing?

Well you know, I've told you earlier I've been traveling all across Iowa, I've been in all 99 counties. Large meetings, small meetings, everywhere in between, and farms, and businesses, and restaurants, coffee shops, homes, and everywhere we go mental health and substance abuse comes up everywhere, without exception. And that's been since last May. In fact we had a big forum here in Des Moines in December focused on mental health.

You know, I guess Governor Reynolds’ calendar didn't allow her to be there. She sent a video basically saying we're doing a good job. You know we've got some things to improve but we're OK. Well, she was wrong then and she's still wrong. This bill has a lot of nice language in it but unfortunately it's just like a lot of what this governor and this legislature do. They say things that sound good and then you look at the funding and there's no money. Nothing gets done unless you put the budget behind your priorities. If mental health or substance abuse is truly a priority of Governor Reynolds and the Republican legislature they would have allocated money in that bill to fund it at the local level and at the state level. And instead there is no money. So nothing is going to happen. You don't get results without funding initiatives. And you know we put out a plan in early December to address the mental health substance abuse crisis in our state. Based upon meetings that we held all around Iowa with county sheriffs, mental health professionals, county attorneys, drug courts, mental health courts, mental health patients, substance abuse individuals, trying to figure out what is working and what's not working. And so we put out a plan to address it. As governor, one of the first things I'm going to do is I'm going to be a leader to address it. I'm going to make sure the budget has money in it so we can actually make progress for people.

State Budget and Economy

Bringing up the state budget, this is something that the Revenue Estimating Conference regularly was coming back with projections that were less than they had been before. How do you get a hold of what's going on with the budget? I mean right now a lot of concentration at the State House has to do with cutting taxes. How do you make sure that the funding levels are there to sustain mental health programs, public education? How do you get it in control when we look at the current state of Iowa's economy?

Well, I mentioned earlier the fiscal mismanagement of this governor and the misguided priorities. And just let me give you an example: when I was at economic development I was asked by the governor to sit on a tax credit review panel. We look at every corporate individual tax credit, tax exemption, tax deduction, all of them. And we have a lot of them in Iowa, much more than most other states. And we did an analysis based upon a fiscal impact analysis of each one of those. So if the state was giving away a dollar and a credit or a deduction, what was the state getting back? We'll be getting back 50 cents or $1.50. And those who were getting back less than a dollar we said they should be reduced or eliminated. Why should we continue giving away a dollar and getting back 50 cents? And some are producing more than a dollar. So you want to encourage and support those. We also said we should have caps on all these so they don't just keep growing automatically and they should have sunset provision. So the legislature has to actually look at them and determine do we want to continue these or not.

None of that has ever taken place. Those were valued and assessed at the time of 2010. If they had implemented all those recommendations the state of Iowa could save on an annual basis $160 million a year. So that's one of the first things I want to do as governor. I want to put caps in place. I want to put sunset provisions on all these credits, exemptions, deductions and I want to apply an updated analysis of the fiscal impact and we're going to find a lot of money that instead of giving away every year and not getting value for Iowans, we should be putting out on education, job training and in health care and infrastructure across our state because that's how you grow the economy. Not by giving away wasteful corporate tax credits. So that's the first thing we need to do in the tax area. The second thing I think we need to do is look, we got a $900 million surplus in 2013. That's gone. And now the governor owes $144 million. This is a debt to the reserve fund. It needs to be paid back. It was supposed to be paid back. This year they've paid back none of it and they don't have a plan yet that they've announced to pay back in the future. So that needs to be paid back because we're looking at serious needs for rainy day reserve funds. With all the tariffs that are out there, already affected our livestock producers $400 million in value, maybe more tariffs, renewable fuel standards.

I mean we may wake up six months from now, nine months from now, and we're going to have serious challenges to our economy. We're going to need all the reserve funds we get. So that needs to be paid back before anything happens. And I don't understand. You're right about the Revenue Estimating Conference, every time they come up with an estimate it changes. Every time they come up with an estimate on the federal deductibility and the impact of the federal tax law changes, that number changes too. We don't know what the managed care organizations are going to cost us to be able to renegotiate those contracts. How can we be talking about tax reductions now when we haven't paid back the debt, we don't know what the MCO is going to cost, we're looking at tariffs and renewable fuel standards, we're not funding education and health care, we're giving away $160 million a year that we shouldn't be giving away. Those things should be known and addressed before we talk about further tax cuts. I agree, we have a complicated convoluted tax system that doesn't work fairly for all people in Iowa. It needs to be addressed but it needs to be addressed in a way where we are fiscally responsible, not taking too much risk which I think is what the legislature's doing today.

Water Quality and Environment

One of the bills that got signed early on was a funding bill and it had to do with Gov. Kim Reynolds, what she said in her condition of the state, wanted to be the first bill that she signed to be a water quality bill and that's what she did. Do you feel like that water quality bill will make an impact in Iowa?

No I don't. I don't think that water quality bill will make an impact and I don't think anybody will ever know because the money that's being spent there doesn't have any measurements. So if the Iowa Department of Agriculture and Land Stewardship gives a farmer some money to do something on their farm from that bill there's no monitoring, there's no testing, so that farmer and the taxpayers, the governor, nobody will know whether it's worked or not. So how are we going to know whether there's any benefit. You know I told you earlier, I want to invest in the Natural Outdoor Resources Trust Fund which was approved in 2010. That got more votes by the Iowa voters than Governor Branstad did that year. It's about time that legislators and Iowans came together. Urban and rural together it's not an urban-rural issue it's an Iowa issue. Let's all go together and fund that, because that puts money- it’s going to produce somewhere around $150 million. Well 60 percent of that, roughly $90 million, will go towards implementing nutrient reduction standards which are already well known and those things not only improve water quality, they protect and preserve the soil.

And we're talking about different things that farmers can do on their land, cover crops, that list goes on and on--

Buffer strips and all those things. But the beauty is it helps the farmer and it helps improve water quality. So we protect our topsoil. We're losing- I think it's five tons an acre of topsoil every year. Five tons per acre. You know if we don't change that path you're looking at 30, 40, 50 years from now we're not going to have hardly any topsoil. We've already lost over half of it. So funding that Outdoor Resources Trust Fund is very important to the future of our agricultural economy as well as our water quality.

Let's get together, let's fund it, and let's make sure there are measurements for the water quality and the topsoil impact before, during, and after to make sure the farmer understands what's going on. And let's have transparency around it so local farmers can see what happened on their neighbor's farm and they can then determine whether it makes sense for my farm too. The taxpayers should be able to see whether they're getting a return with less nutrients, less nitrates in the water, and the farmers are getting better soil, then let's know that so taxpayers know their money is being well spent.

Rural Issues

In the last election, 2016, it was a presidential election. We saw the current president Donald Trump do really well in many states including Iowa with many rural working class people who felt like they had been left behind. How do you reach out to those people? What is the message that they need to hear from a candidate running for governor?

Well my message is first of all, as I said I've been to all 99 counties. And I go out and meet with people, talk to people, listen to people in their farms and their businesses, in their homes, the coffee shops, and just listen and find out- look, what's working in your community, what's working on your farm, what's working in your coffee shop, you know, what can the state do to help your community, your business, your family be better. And then I tell them, look, I used to run the Yonkers department stores, 19 stores all across Iowa. Urban stores, rural stores. We looked at 400 projects for the Iowa Power Fund all across our state, invested in like 60 of them, and almost every vote we took at the Power Fund was unanimous. And we had Democrats and Republicans elected and not elected on that board. So I know how to get results. I know how to get things done. And I want to help every community in our state. And I want to help all the businesses in our state be successful. So when I listen to them and I tell them you know, what I'm hearing from them, and what I'm hearing from their neighbors in the next community, which is lack of support for education and job training, lack of support for their local healthcare provider because of the privatization of Medicaid. And we talk to them about the suicide rates among farmers in rural Iowa, and we talk to them about substance abuse. You know they want to know somebody understands the issues, and somebody cares about and wants to make changes. And when I talk about incomes I'm sure what I'm hearing about incomes in rural Iowa, they like that. They want to know that a Democrat understands those issues and we've got a Democrat here who wants to fix them and has proven he knows how to get those things done.

Local Control and Minimum Wage

Wasn't one of the things that you brought up when you were talking about the reasons that you wanted to run from the last legislative session… There was a bill that was passed that capped how much municipalities could set the minimum wage. This took away local control for cities to set that. Do you favor giving local control to setting minimum wage? Do you think that the federal minimum wage should be bumped, the state minimum wage, where do you fall on that issue?

Well our campaign is focused on raising incomes for all Iowans all across our state. You know last year for 2017 Iowa had the second lowest personal income growth in the country. That's a dismal performance. And I think I may have mentioned it earlier when I was in Independence, Iowa in December a gentleman in our meeting said, look we haven't seen any personal income growth in our community for five or six years. And when I share that story with people around the state everybody's head nods. Not in Des Moines and not in Cedar Rapids but in smaller communities in rural Iowa. Everybody has that same feeling. So my focus is on trying to attract higher quality jobs that pay higher incomes. We have very low unemployment but a lot of that low employment is because we have $15 an hour jobs or $16 an hour jobs which are not livable wages. We need to focus on recruiting higher quality jobs. So to do that, we've got to make sure people have the education and job training that they need to qualify for higher quality jobs.

We need to make sure that health care is better out there for everybody in our state so people can get up in the morning and go to work. They don't have to worry about whether they're going to have this kind of medicine available to them or this kind of supervision and support. We need to make sure that that we're investing in infrastructure in our state. Every county in Iowa has an affordable housing problem, a lack of affordable housing. We don't have high speed Internet in a good part of our state. So how are we going to attract new jobs to Iowa when we don't have-- we used to be number one in education and now we're average-- so if we don't have the best education, if we don't have the kind of job training necessary to qualify for better jobs, the health care is spotty, we don't have high speed Internet, we don't have affordable housing around our state, how can we attract better quality jobs? So we need to invest in those things. Part of the $160 million I mentioned earlier, it's wasteful corporate giveaways. Let's put it into those things. Let's restore collective bargaining rights for school teachers and statehouse employees and let's raise the minimum wage. That's part of it too. I would raise a state minimum wage but I would let local communities and local towns go higher if they want to. I'm in favor of giving local communities more local control in that kind of an issue.

All right Fred Hubbell, thank you.

Thank you Clay. I appreciate it.