Vilsack’s office says contracts will be honored somehow

Luke Jennett

The Iowa Values Fund is no more.

Two bills signed into law last year are now nullified, after a ruling by the Iowa Supreme Court found in favor of members of the Iowa Legislature who claimed Gov. Tom Vilsack exercised his line-item veto power unconstitutionally.

Moreover, the court ruled, since the proper bills were therefore never signed into law, the $500 million fund created to entice economic growth in the state, particularly in biotechnology, no longer officially exists.

Matt Paul, press secretary for Vilsack, said the state intended to honor all contracts that have already been made with companies across the state. But the question of how to acquire the funds was still being considered, he said.

Reversing the decision of the Iowa District Court for Polk County, the Iowa Supreme Court voted unanimously in favor of a lawsuit brought against Vilsack by leaders of the Republican-led Legislature.

“After carefully scrutinizing the Governor’s exercise of the item veto power in this case, we determine that his power was impermissibly exercised because the Governor attempted to veto items that were not part of an appropriation bill and thus were not subject to his item veto power,” said the official opinion released by the court Wednesday. “As a result of the Governor’s unconstitutional action, his attempted disapproval of portions of the bill have been rendered a nullity and ineffective.”

Legislators on both sides of the argument expressed surprise at the court’s decision.

“It sounds like everyone was surprised,” said Jane Greimann, D-Ames. “This wasn’t really a possibility we considered, that the whole thing would be declared null and void.”

Similar sentiments were expressed by Sen. Jeff Lamberti, R-Ankeny, who said the actions of the Republican legislators were aimed only at controlling the powers of the executive branch.

“We are surprised by the Court’s decision to nullify the entire bill,” Lamberti said in a statement to the press. “As a result, it is unclear what impact today’s actions will have on the Grow Iowa Values Fund. It was never the intent of the Republican legislators to derail the Values Fund. Legislative Democrats who say claim Republicans are against economic development seem to be having a John Kerry moment; they claim they are for economic development but they all voted against this bill.”

This decision brings uncertainty to the future of the Iowa Values Fund, a $500 million economic development project that has been in effect for nearly a year. According to statements released by Vilsack, Iowa has profited greatly from the fund in the 12 months of its existence, with more than 11,000 jobs created and $1.4 billion in investments brought in.

“We have just completed the greatest year of economic development in Iowa history,” Vilsack said. “Now that the chapter of this litigation has been closed, it’s time to focus on our future.”

Five of the 28 businesses in Iowa to receive a portion of the $19 million in funds from the state were Ames businesses, said Sen. Herman Quirmbach, D-Ames, mostly dealing in technology studied and advanced by Iowa State. In February, the Values Fund board awarded $6 million to NewLink Genetics Corp., 2901 S. Loop Dr., and $3.5 million to Phytodyne Inc., 2711 S. Loop Dr.

Jon Leafstedt, president of Phytodyne, expressed some regret at the court’s decision, but said the company would likely be able to continue without aid from the state, should it be necessary.

“Obviously, I’m very disappointed in the news,” he said. “The state has been an important partner in the growth of Phytodyne. Nonetheless, we have had significant interest in our technologies from others in the industry, and we will continue on.”

In the aftermath of the court’s decision, no one seems sure of the future of the two bills, or the Iowa Values Fund itself.

“I’m hoping we can find a way to continue with the Iowa Values Fund program, but the legal structure under which it was set up has been knocked down in response to the Republican lawsuit,” Quirmbach said.

House Speaker Christopher Rants, R-Sioux City, said in a statement that the repercussions of the decision are still unknown.

“It is too early to say with certainty what the future holds for the Values Fund,” he wrote. “We are still examining the ruling, and the tie between H.F. 683 and 692. We remain committed to our efforts to improve Iowa’s economy and we will continue to work towards a resolution of this very important issue.”

Greimann said there had been discussion among those still within the Capitol of calling for a special session if an agreement between Democrats and Republicans can be reached.

“I know that my party would like to have that happen,” she said. “I’m not sure what the Republicans feel right now.”