One of the unresolved issues of the 2005 Iowa legislative session is what state economic development policy to pursue. Governor Tom Vilsack, a democrat, has endorsed the Republican idea of providing tax credits to companies that create jobs. Vilsack, in return, is hoping Republicans accept his call for recreation of the high-dollar Iowa Values Fund to hand out huge state grants to businesses that promise to expand in Iowa. Senate Co-Leader Stewart Iverson, a Republican from Dows, says it’s clear the state’s economic development strategy should have some variety, and will include some state grants to expanding businesses. “We know we need a combination because…some people need help with infrastructure especially, and that’s where those dollars can be used,” Iverson says. He says Republicans are pleased the governor has endorsed their tax credit idea. “It costs nobody a penny unless something happens,” Iverson says. “We’re not funding a promise. We’re actually funding results.” But Iverson says lawmakers are a long ways from agreeing on how much money to put into the Iowa Values Fund — to give grants to businesses promising to create jobs. A House Committee has suggested the state should spend 50 million every year on Values Fund grants for businesses. “Where does the money come from?” Iverson asks. He says lawmakers could dip into the state’s cash reserve for the next couple of years, then it would be depleted and they’d have to find another source for the money. Iverson doesn’t believe the new state gambling licenses will bring in enough tax money to cover that 50 million either. The Iowa House is tackling the economic development issue first; the Senate — as has been the case in the past — is seen as the tougher road for the proposals. Senate democratic leader Mike Gronstal of Council Bluffs says he wants the tax credits targeted to certain kinds of jobs. Gronstal says the difficulty is targeting scarce economic-development resources, and he says the Values Fund aims to target jobs in “a set of industry clusters”…that would be life sciences, advanced manufacturing and information solutions. He says we should target those jobs, as they fit well with the character of Iowa and the state’s strengths. Gronstal says there’s only so much money to go into the fund, so it should be used to ensure the jobs that are created fit those criteria. Gronstal points out the state doesn’t have unlimited resources. “If this was 1996 and we had 800-Million dollars sitting in the state treasury, there would be other, broader things we could do,” he notes, “But… you can’t be everything to everybody. ” Governor Vilsack is urging legislative democrats to approve a republican proposal to offer tax credits to companies that create jobs. Meanwhile, legislative republicans are wondering how to pay for the grants and loans to companies. Senate GOP leader Stewart Iverson of Dows says one idea being “floated” at the statehouse is earmarking the gambling revenue from any new riverboats that win approval. Iverson says we could take fifty-million out of the state’s cash reserve, at least this year and next, but he wonders where funding would come from after that. He says there are a lot of great ideas out there, but someone has to work out an ongoing funding stream, as “a lot of these ideas take money.” If there are five gambling licenses, he says, it would bring in about 30-million dollars. But it would be a couple years before the revenue begins, and he says even with that thirty-million, more would be needed. Despite the hurdles, leaders of both parties remain confident some sort of economic development package will be approved before the session ends.
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