A new report lists Iowa’s state government pensions as more than 80% funded. (Photo by Perry Beeman/Iowa Capital Dispatch)
As the coronavirus pandemic rages on, legislative leaders and the governor’s office support more aid for businesses and lower corporate taxes, they told the Iowa Chamber Alliance on Tuesday.
Buoyed by falling unemployment and still-healthy state reserves, the leaders are willing to discuss adding to the 2018 tax cuts that are still rolling out, House Speaker Pat Grassley, R-New Hartford, told the business organization.
“We hope that this is an opportunity this year to really build on the tax reform that came out of the 2018 session,” Doug Neumann, executive director of the Cedar Rapids Metro Economic Alliance, said at an alliance news conference. “There is more that needs to be done, more that should be done.”
A key issue is a tax structure that continues to leave Iowa sidelined because prospects don’t take the time to weigh various incentives, focusing entirely on the base tax rate, Neumann said.
“We are faced with marketing a state that has one of the highest published corporate tax rates,” Neumann said. “When we’re trying to make economic deals and work with business, we still are saddled certainly with commercial property tax rates and an over overall climate that is at best middle of the road. We would encourage the Legislature to make progress in that area.”
Jay Byers, CEO of the Greater Des Moines Partnership, said the chamber alliance is supportive of “preserving and strengthening responsible incentives” for businesses, continued tax credits, broadband expansion, and programs such as Empower Rural Iowa that strengthen the economy statewide.
Joel Anderson, Gov. Kim Reynolds’ policy adviser, said the governor will continue to work with the Iowa Economic Development Authority and other parties to make sure businesses get needed pandemic aid. He said another federal aid package is expected to be discussed this week or next.
Anderson staffed the governor’s Economy Recovery Advisory Board and is updating data for the final report.
In a separate matter, the October Revenue Estimating Conference projections showed signs of economic recovery, but the latest figures to be released this month will guide the governor’s budget. Anderson added that while other Midwestern states are discussing how to increase revenue, Iowa is in a position to at least discuss tax cuts.
“We’ve had some more economic trends going upwards” since October, Anderson said. “And this governor is very committed to making sure we can grow business, recover from (the pandemic) and get on the other side of 2020 as fast as possible.”
Grassley said GOP lawmakers want to make sure businesses have liability protection from COVID-related lawsuits. He noted that with the economy rebounding and unemployment falling, the state will be able to discuss tax reform again.
“We have strong fiscal management,” Grassley said. “We look for every opportunity to try to reduce tax and regulatory burden.”
Improved child care assistance and legislation to help prevent low-income workers from losing assistance when they take a part-time jobs will be a key issue, he added.
Republican Senate President Pro Tempore Brad Zaun of Urbandale said the state budget is in “really good shape” with nearly $800 million in reserves. But lawmakers will be limited by the Revenue Estimating Conference’s projections later this month, “and we really don’t know right now” how revenue will fare in the new year, Zaun said.
The state’s earlier decision to tax internet sales in Iowa has been a huge help as many Iowans shopped online during the pandemic, Zaun added.
Zaun also mentioned the need to find ways to increase revenue for road projects normally financed with gas taxes. “I’m very concerned about the Road Use Tax fund, because people are driving a lot less,” Zaun said.
Sen. Zach Wahls, the Democratic leader in the Senate, said his caucus supports efforts to “build back better” as the pandemic eventually wanes with the help of new vaccines. “Our top priority must be that ‘build back better’ agenda,” said Wahls, of Coralville. “Too many businesses and their employees have been dealt a body blow by this pandemic.”
Democrats want to ensure continued support for food banks and community centers that have been key parts of addressing the pandemic’s economic fallout. Wahls said. His party also wants to join the many Republicans looking for ways to expand broadband and affordable housing, and to support quality of life improvements in rural areas, Wahls added.
Rep. Jennifer Konfrst of Windsor Heights, one of the House Democratic leaders, said her caucus is especially interested in legislative support of programs to lure workers to Iowa. Democrats also want improved child care, she added.
The chamber alliance said it will support legislation broadly in these areas: recovery and resiliency, talent, economic development, business climate, and infrastructure.
Specifically, the alliance supported:
— The recommendations of the governor’s Economic Recovery Advisory Board.
— Funding for “placemaking,” including quality of life and the arts.
— Development of immediately deployable resources for large-scale disasters when budget reserves are full.
— Favorable policies and additional funding for broadband priorities.
— Fully funding the Future Ready Iowa Initiative.
— Addressing barriers to employment such as student debt repayment or access to child care.
— Support for education.
— Incentives for targeted industries.
— Extension of programs to redevelop polluted sites.
— Long-term financing for the Road Use Tax Fund, which lost revenue as Iowans drove less during the pandemic, and also because a small number have bought electric vehicles. The fund is filled primarily with fuel taxes.
— Gov. Kim Reynolds’ Invest in Iowa Act, which would use a sales tax increase to fund mental health programs and water quality, conservation and outdoor recreation projects. That proposal was sidelined by the pandemic, but also drew political opposition from Reynolds’ GOP colleague running the House and Senate.
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