The Des Moines skyline viewed from near the Capitol. (Photo by Perry Beeman, Iowa Capital Dispatch).
Iowa’s business groups are largely in agreement on what they think lawmakers should do for commerce in the session that starts Jan. 13.
They are hungry for another round of tax cuts. They need workers, badly, and that means finding a way to coax potential employees of all ages to move to, and stay, in Iowa. To that end, business leaders say they are happy that Republican Gov. Kim Reynolds and lawmakers of both parties pushed through new scholarship money last year that fed the Future Ready Iowa efforts to expand the workforce by educating potential workers. They’d like to see a bigger commitment this year.
Some of the groups are pushing for quality of life actions, notably what is informally called IWILL. The special sales tax would generate $180 million a year or more for the constitutionally protected Iowa Natural Resources and Outdoor Recreation Trust Fund. The fund was approved by voters in 2010 but is still penniless today. The money would help fight runoff pollution while also expanding natural lands and helping build trails and the like.
The Legislature convenes with the GOP in control of the governor’s office and both chambers.
Here’s a look at some of the major planks in these business group platforms. You’ll find a group-by-group list at the end.
Workforce initiatives include ex-prisoners
“Workforce development continues to be a key issue for Partnership members,” said Andrea Woodard, senior vice president of government relations and public policy at the Greater Des Moines Partnership, at a legislative forum in December.
That priority returns after various organizations worked with lawmakers last session to come up with $13 million for Last Dollar Scholarships, which help pay for the gap in tuition left by state and federal programs for students in high-demand fields. An additional $1 million was appropriated for the Iowa Employer Innovation Fund which encourages employers to look for ways to educate workers.
Some expect a debate over encouraging employers to employ ex-felons who have completed their prison sentences.
The GOP, led by Sen. Dan Dawson of Council Bluffs, and others, have been “working extensively” on criminal justice reform for a couple of years, said Senate Majority Leader Jack Whitver.
A bill passed last session already has cleared the records of 600 ex-convicts, which should make it easier for them to get work, Whitver added. But he noted the workforce issue is bigger than one bill. “We’re not going to solve our workforce problems just by this stuff,” Whitver said. “When you talk to any business, they’re talking about how workforce is a huge issue for the state of Iowa. I applaud (the Greater Des Moines Partnership) and all Iowans to trying to do whatever we can to encourage more people to move here.
“We should always do that. But the reality is, for the last hundred years, our population has been the same. So we need to look at more ways to get more people into the workforce,” Whitver added.
That means looking at welfare reform, Whitver said. “We have continued to look at welfare reform to get people that are currently in our welfare system, that are able-bodied don’t have kids at home or not in school, get them into the workforce to help fill that need,” Whitver added. “We have over 50,000 jobs available in Iowa. We need to match the skills in those jobs with the people that can fill them.”
Gov. Kim Reynolds said Tuesday the state’s Future Ready Iowa goal of having 70% of Iowa’s workforce ages 25 to 64 have post high school education or training by 2025 is already helping.
“We are at 58 percent, which is actually ahead of many states,” Reynolds said. “But I think if we do a better job, connecting middle school and high school with our job creators with registered apprenticeship programs and some of the initiatives that we put in place and build relationships, they start to see the opportunities that are available within the state. It also means growing every corner of the state to empower rural Iowa and highlight why Iowa is a great place to live, work and raise a family.”
Child care seen as a workforce issue
Senate President Charles Schneider said Tuesday child care is one of the quality of life issues that feeds into the workforce debate. “We need to continue to strive to be better on workforce, and that is not a partisan issue,” Schneider said. “We need to find ways to get more people in the state to work in our workforce, and some of the other issues that have been mentioned, like child care” could be part of the answer, he added.
Schneider and other legislative leaders, as well as the governor, spoke to reporters Tuesday at a forum sponsored by the Associated Press.
House Minority Leader Todd Pritchard of Charles City said Democrats consider child care to be a workforce issue. “From the Democratic perspective, we want to see things that are going to provide access and opportunities for working Iowans to better their station in life, whether that is to gain jobs skills that are going to let them demand a higher wage and increase their household incomes — those types of things, I think, should and will find bipartisan support.”
Senate Minority Leader Janet Petersen of Des Moines said she was glad child care appears to be a bipartisan issue, and she is hopeful Reynolds will support added spending.
Lawmakers say state must address ‘cliff effect’ in welfare benefits
The “cliff effect” happens when person working a low-paying job, and getting government aid, loses it because of a modest raise or a promotion.
Whitver said it was a huge issue when he was elected in 2011, and it still is. He has told his GOP colleagues that he wants them to solve the issue. Complications with federal programs and rules haven’t helped, he said.
“If you’re making $13 an hour, you get your child care subsidy,” Whitver explained. “But if you make $14 or $15 or $16 or you get offered a promotion to management, you can’t take it or you lose your entire benefit. What that’s doing is putting the glass ceiling on how successful people can be in the state of Iowa, and that’s wrong.
“We need to have a system set up where we help those in need,” Whitver said. “And then they can take promotions that are offered and they can be successful in their life. That changes their life, and it changes their kid’s life, and that’s what we’re trying to do with that.”
Incoming House Speaker Pat Grassley said GOP lawmakers would like to begin working on the cliff effect, but he added there won’t be a simple, affordable tactic that would wipe it out quickly.
The issue is in play, however. “For example, one of the issues that we passed last year and have been having further conversation on is the child care tax credit, which is currently eligible to $45,000 of income,” Grassley said. “(In the House), we doubled the eligibility requirements for that. We’re still very supportive of that. And we’re in conversation with the Senate on how we may be able to get that bill worked through, whether we would have to tweak it to get it done or whether it’s the bill (that) just moves forward.”
Businesses call for tax reform
Several of the groups called for lower corporate and personal income taxes, and cuts in property taxes. The GOP majorities in the House and Senate have said they want to follow up on the 2018 tax cuts with another round, in addition to a series of cuts that could happen under the previous bill if the economy meets certain benchmarks.
Whitver said the state is on solid financial ground, leading to some serious discussions of giving some of that money back to taxpayers.
“We passed the tax bill two years ago in 2018. That is really a four-year implementation of tax policy changes,” Whitver told a Greater Des Moines Partnership forum. “We’re right in the middle of that.
“So far, that has, in my opinion, worked out very well. We have more revenue coming in than we have ever had. Our budget surplus is projected to be about $400 million this year, on top of the $800 million that we have in our reserve accounts, so we’re in a strong fiscal position to continue to look at tax reform,” Whitver added.
At Tuesday’s Associated Press forum, Schneider said the problem is clear. “We need to be more competitive,” he said. “As a state, and it’s not a partisan issue, that’s an issue of reality, we are not very competitive.
“When it comes to business climate, for example, we still rank in the 40s (among the states), after we passed our income tax reform bill a couple of years ago,” Schneider added. “We need to strive to do better. Workforce is an issue that is not a partisan issue; that’s a challenge for us as a state.”
Democrats have blasted the GOP for what they consider inadequate support of mental health programs, education, and programs such as IWILL.
Another big part of the tax reform debate has been a push by business organizations for workforce housing credits. “Tax credits have been kind of attacked by both the right and the left over the last couple of years,” Whitver said. “It’s programs like that that we have to take a look to decide if they are working. If they are, we keep them and if they’re not, we need to get rid of them.
“I think the role of government is we need to stop regulating the hell out of the industry,” Whitver said. “We pass regulations that add $10,000, $20,000, $30,000, $40,000, $50,000 to the cost of a house, and then we complain that it’s not affordable. Well, government created the problem” and government should fix it, he added.
IWILL debate will take time, GOP leaders say
You’ll hear lawmakers and advocates talk about IWILL this session. In the off-season, there was even talk that Reynolds wanted that to be the first bill she signed. But as the session approached, Republican leaders in the House and Senate seemed uncertain that a deal on how the money would be spent, and how a sales tax would be offset, was imminent.
IWILL refers to the Iowa’s Water and Land Legacy, an effort that began in 2006 and included a task force representing parties ranging from the Iowa Department of Natural Resources to the Iowa Farm Bureau Federation. They came up with a formula to distribute the proceeds of a 3/8ths of 1% sales tax. The idea was to support everything from conservation practices in crop fields to recreational trails.
Voters overwhelmingly approved that framework in 2010, setting up an account that lawmakers and the governor couldn’t raid for other purposes. (That had been a problem in the past with several accounts over the years while Gov. Terry Branstad was in office, including a fund in which fees on gas sales, reserved to help clean up leaking underground storage tanks, were sometimes diverted.)
Iowa law, unlike those of some other states, didn’t allow voters to consider a referendum actually raising the sales tax. That was left up to lawmakers, and they have been reluctant to raise taxes and risk angering some voters.
Leading into this session, Reynolds has been meeting with agricultural interests in part to update the formula. Farm groups have commonly lobbied to increase the money that would go to farmers, lower the amount going to trails, and to make it harder to use the money to buy land for recreational or habitat purposes. The farm groups have argued that land — much of it of marginal use for crops — should remain in private hands.
GOP lawmakers see IWILL as part of a broad tax reform debate that might include a penny sales tax increase to raise money for IWILL (which gets the first cut by law), as well as mental health and education efforts. Whitver said repeatedly as the session drew closer that he wants to see an income tax reduction and, at the minimum, a sales tax increase would have to be completely offset with cuts in other taxes. House Majority Leader Matt Windschitl, R-Missouri Valley, said at a couple of events recently that he would prefer to get rid of Iowa income taxes altogether — a goal he realizes is out of reach — so the state could more aggressively compete with South Dakota which doesn’t have personal income taxes.
Grassley said it’s a complicated debate but one thing is clear: the original formula spending sales tax receipts would need to be changed to emphasize water quality.
“This is going to be an issue that takes time to develop if there is a will within the Legislature to do something,” Grassley said.
Grassley added that the current spending formula came before passage of Senate File 512, which included financing for some water-quality work, and the creation of the Iowa Nutrient Reduction Strategy, which included requirements for sewage treatment plants and a menu of conservation practices that farmers could opt to use voluntarily to reduce runoff pollution from their crop fields.
“I think there’s a want within our caucus to have more emphasis on that issue,” Grassley said. “There’s some concerns with issues like land acquisition and other things in the current formula and I think … what we face right now is a little bit different. So I think you’re going to want to see from House Republicans perspective, more emphasis on water quality.”
At Tuesday’s Associated Press forum, Grassley said he left a caucus meeting a couple of weeks ago with a clear message that the IWILL spending formula would have to change for Republicans to support the bill, and that he expects the debate “to take a while to get done.”
Farm groups have pushed to ensure more of the money is available to farmers who want to voluntarily install conservation practices on their land under the state’s Nutrient Reduction Strategy.
One draft proposal obtained by Iowa Capital Dispatch would allocate less money to trails than the original formula would have and more to farmland conservation work in an effort to fight agricultural runoff — a large part of the state’s pollution in waterways.
The Iowa Farm Bureau Federation has long resisted adding to public lands, including state and local parks and trails — in part because they take land out of production and otherwise interfere with farm operations. At times, the organization has questioned taking land off the tax rolls, though in many cases the governments involved offer a payment in lieu of taxes, especially if federal funds or the Iowa Resource Enhancement and Protection (REAP) account is involved
That has been in opposition to the work of the Iowa Natural Heritage Foundation, the Nature Conservancy and other nonprofits dedicated to preserving natural lands.
Iowa ranks 49th in the amount of public land owned by state and local governments, ahead of only Kansas, according to the Natural Resources Council of Maine. Much of that land is rated by a state index as poor for crops because it is hilly or has poor soil. The state and federal governments own a combined 1% of Iowa’s land.
Reynolds said Tuesday she has been meeting with conservation groups, agricultural organizations and a “very broad-based group of stakeholders” to try to come up with a plan that will pass the Legislature. She declined to reveal her tax plan before next week’s budget proposal and Condition of the State address.
Republican legislators who control the two chambers also suggested that the debate over IWILL, 10 years old already, still has a long way to go.
Prichard, the House minority leader, said, “From the Democratic perspective, we obviously see the need and we’re open to the discussion, but as the old saying goes, the devil is in the details.”
Business groups tend to favor the sales tax for outdoor recreation and conservation. The Greater Des Moines Partnership, the regional chamber organization for the Greater Des Moines region, “supports passage of this permanent funding source to address water quality and conservation projects including funding for regionally transformative quality of life projects that can attract and retain talent.”
Woodard, the Partnership’s new senior vice president of government relations and public policy, said that last part refers to projects such as the $117 million Central Iowa water trails plan that includes whitewater courses in downtown Des Moines.
During the Partnership’s legislative action, lawmakers were asked about the likelihood of action on IWILL this session.
Whitver said that will depend on the whole mix of tax reform discussed. “Tax reform will be on the table again this year. I think whenever you look at IWILL we look at it in the broader scheme of tax reform.” Whitver noted that a Senate move to pass the sales tax increase just for the recreation and conservation fund failed a couple of years ago.
Senate Democratic Leader Janet Petersen of Des Moines said she isn’t sure where her caucus will land on IWILL because her party doesn’t have enough details about the private GOP negotiations on the bill. “Until we have a chance to see what that might look like, and what it would be like as far as an overall tax package, I’m hesitant to see whether Democrats will support it. I will say there’s a lot of enthusiasm with the idea of water trails and getting Iowans access to recreation on the water,” Petersen said.
Of course, backers of the water trails efforts have noted Iowa’s waterways need to be cleaned up as part of the effort. Though nitrate from farm runoff has caused issues with drinking water supplies — where treatment removes or dilutes the health-threatening compound — it is not a direct risk to swimmers or kayakers. What could be is bacteria, which can be found at high levels at times in many Iowa streams.
“I know people have said that they believe water quality is a controversial issue,” Petersen said “I don’t believe it is. I think Iowans in rural parts of the states and urban parts of the state believe they should have clean drinking water and a place to go fish and swim and recreate. So the more we can connect Iowans with watersheds, the better off we’ll be as a state.”
Windschitl said part of the challenge is that discussions have revolved around raising the sales tax a full penny. If that happens, lawmakers must decide how to spend the money not legally required to go to conservation and recreation. Whatever would be proposed would need bipartisan support, he added.
“I cannot sit here today on this panel and give you an absolute that it will pass or it won’t pass. I just don’t know,” Windschitl said at a Greater Des Moines Partnership luncheon.
Airports seek aid for expansion
The Greater Des Moines Partnership, in particular, is lobbying for state help — most likely from lottery receipts — to help with a $200 million shortfall for Des Moines International Airport’s $500 million overhaul that includes plans for a new terminal building. The current terminal serving the state’s largest airport was built in 1948 and is struggling both to accommodate record growth and to handle the larger planes airlines are using. Last year the Legislature appropriated $1.9 million for commercial airport infrastructure and $1 million aimed at infrastructure for general aviation, or small aircraft.
The Iowa Public Airports Association says that the State Aviation System Plan reports Iowa airports will need $816 million, or $43 million a year, through 2030 to address needs at commercial and general aviation airports. The association is asking lawmakers to approve $16.5 million a year for 10 years, from lottery revenues. The majority would be for commercial airports, with the money divided among the airports based on traffic. The airports would have to add a 5% match. Kevin Foley, who runs the Des Moines airport, has said the millions of dollars that the bill would generate for airports would greatly help with projects such as the new terminal in Des Moines.
In a recent interview, Whitver said the gambling receipts that often pay for infrastructure in Iowa are heavily committed, and he stopped short of suggesting there would be serious discussion of the airport funding this year. The airport project has been working through early environmental and design work.
Business group priorities
- Tax reform, with lower corporate and property taxes.
- Continued support of state incentives for economic development.
- “Strong fiscal prudence and spending restraint across all levels of government.”
- Planning, matching and careful allocation of funds to support critical infrastructure.
- “Predictable and responsive” regulations.
- Support for K-12 programs to prepare graduates for further education or a career.
- Additional spending on Workforce Housing Tax Credits, which the group wants tailored to meet varying needs of communities of different sizes.
- Iowa’s Water and Land Legacy: Supports passage of this permanent funding source to address water quality and conservation projects, including “transformative quality of life projects.”
- Angel Investor Tax Credit: Wants increased funding for this program to encourage innovation.
- Des Moines International Airport: Supports increased funding for Iowa airports for projects that increase traffic and support Iowa’s business growth.
- Talent: Seeks increased funding for the Future Ready Iowa initiative, policies that support the affordability and accessibility of child-care options and legislative efforts that reduce barriers to employment for those with a criminal history.
- Enhance Iowa: Supports increased funding for Enhance Iowa programs to fund recreational attractions, arts and culture that serve as economic catalysts.
- Workforce: Wants continued funding Future Ready Iowa, work-based learning opportunities, apprenticeship programs and other initiatives that will help train current and potential workers. ABI also supports legislation that would help remove barriers to employment, such as affordable childcare and adequate and available workforce housing. ABI wants state laws that help address drug and alcohol use on the job.
- Competitive business climate: Supports broadband expansion and tax reform.
- Regulatory reform: Calls for streamlined environmental permit requirements, modernized notification requirements for employment drug testing, and review of regulations that hinder small business expansion.
- Future Ready Iowa: IBC supports continued investment in the program, including continued support of the Last Dollar Scholarship and Employer Innovation Fund.
- Child care: Supports efforts to address the “cliff effect” when workers lose assistance needed for child care when they get a raise or promotion.
- Tax policy: IBC supports the tax reform efforts of 2018 and additional, related actions in 2020.
- Workforce housing: Supports the expansion of the workforce housing tax credit and additional spending on the state housing trust fund.
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