The Iowa House this week approved a bill that outlines a groundbreaking approach to economic development. The bill would establish pilot projects in four Iowa counties along the state’s borders.
Businesses in an urban renewal area that add at least 10 new jobs or make at least a half-million dollar capital investment in things like machinery or equipment would then figure out what is three percent of the income taxes their employees pay the state. The state, then, would pay that amount to the city, and the city would use the money to do things that would benefit the business — like fix the surrounding street or upgrade the sewer system.
House Speaker Christopher Rants, a Republican from Sioux City, touts the plan, partly because the bill is written in such a way that Woodbury County would wind up as one of the places where this method is tested. “In the border areas, we are a little bit unique,” Rants says. “People are moving those businesses back and forth across the river and so we are trying to look at ways to help those folks.”
But Representative Don Shoultz, a Democrat from Waterloo, says there’s no valid reason to give a tax break to a business merely based on its geographic location. “There are communities all over the state that have unique problems,” Shoultz says. Shoultz calls the bill pork. Shoultz says it will give some communities advantage over others, and the rest of the state will end up paying for what’s given to the four communities.
Rants says that’s the wrong attitude. “I certainly hope we don’t degenerate into a my-district-versus-your-district kind of attitude, otherwise nothing gets done,” Rants says. “We all need to pull together to grow this state economically.” Rants says the bill starts by targeting Iowa’s border areas because that’s where a lot of competitive pressure exists.
Rants says counties along Iowa’s borders are trying to keep businesses from moving into neighboring, lower-tax states and rather than always trying to hand out grants, this is a way to get the businesses involved in the process. If the bill becomes law, one of the pilot projects would have to be a county that borders South Dakota and another would have to border Nebraska. Senate Co-Leader Mike Gronstal is from Council Bluffs and he favors the legislation, which now sits in the Senate.