The Business Record’s ramp-up to the next legislative session included meeting with legislative leaders, staging a Newsroom 515 session with business and government leaders, and reviewing the wish lists issued by major business organizations. 

Patterns emerge. If these folks have their way, lawmakers will spend considerable time this session looking at another round of tax reforms. Senate Majority Leader Jack Whitver has said he wants another cut in the income tax, and that is high on business leaders’ list. Gov. Kim Reynolds signed legislation setting up personal income tax cuts in 2018, with possible later cuts coming if the economy meets some fairly lofty goals. Now, Whitver said, there is talk of corporate tax cuts, tweaking property taxes, and maybe raising the sales tax a penny for conservation and recreation efforts — if the increase is offset by cuts. 

Many business interests also want to build on last year’s added support for Future Ready Iowa, which matches workers with training and education, but fully funding the program. They want more money to encourage the construction of workforce housing, a critical issue across the state, especially in rural areas, Newsroom 515 panelists said. 

Some of the groups cited the sales tax increase to fund the Natural Resources and Outdoor Recreation Trust Fund, a constitutionally protected account approved by voters in 2010 but sitting penniless until lawmakers approve the 3/8ths of 1% increase that goes with it. That sales tax increase would generate an estimated $180 million a year. 

If lawmakers raise the sales tax a full penny, as discussed, the first 3/8ths must go to the recreation and conservation fund. Much of the off-season discussion about the balance has focused on childhood mental health and education needs, and on offsetting other taxes. Reynolds has been meeting with agricultural groups who would like to see farmers get more money, with cuts in the amount set aside for trails. 

There also has been talk of increased spending on angel investor tax credits, finding money to help Des Moines International Airport with a $500 million overhaul that would include a new terminal and continuing work to trim regulations. 

Here are some takeaways from the Newsroom 515 session. On the panel were Joe Murphy, executive director of the Iowa Business Council; Andrea Woodard, senior vice president of government relations and public policy for the Greater Des Moines Partnership; Dustin Miller, executive director of the Iowa Chamber Alliance; Jen Schulte, director of government relations and communications for the city of Des Moines; and J.D. Davis, vice president of public policy for the Iowa Association of Business and Industry.

Tax reform

Murphy: “One of the things that is important to talk about is to do something substantive on tax policy, particularly on the corporate side. We are currently at a 12% corporate rate. That’s the highest in the nation. Some of my friends might point out that we did have a tax reform package a couple of years ago that will lower the rate to about 9.8%, so we go from 50th to 47th. As we talk about expanding businesses in this state and bringing businesses into this state ... that’s one piece of substantive policy that I think we’re expecting to have a conversation on, and you’ll see us being very active in that space.”  

Woodard: “On tax policies, we would like to see a decrease in those corporate rates, but we have been a big advocate of [the sales tax for outdoor recreation and conservation, known as IWILL for Iowa’s Water and Land Legacy] and will continue to be even at a stronger level this year. We would like to see the sales tax increased to help fund the natural resources and outdoor recreation trust fund. We’ll see what that full tax package looks like this year. 

Angel investor tax credit, which promotes innovation 

Woodard: “We’d like to see a slight increase in [the angel investor tax credit]. It’s a bill that didn’t quite make it to the finish line last year.” 

Workforce

Davis: “What we are hearing from our employers is something we’ve been hearing for a couple of years: ‘Please help us with our workforce. Anything. Anything on workforce.’ We continue to support Future Ready Iowa. But we see things becoming more granular now than just ‘prepare the workforce.’ Now it’s: Where does the workforce live? Where does the workforce put their children while they are at work? I expect to be very busy this session working on how we get workers into jobs. 

Murphy said Iowa needs to be as “welcoming and inclusive as possible.” Also, he called for work with licensing and other government regulations to make it easier to move from state to state. “We have some of the more stringent licensing requirements in Iowa, and that has a direct impact on people’s ability to move back or to get back into the workforce in Iowa.”

Miller: “Our number one overarching issue is talent. How do you get more people to this state? How do you reintegrate people? How do you reintegrate people who have been staying at home? How do you attract new Iowans and former Iowans who want to come back? That’s what we hear time and time again. We’re very supportive of and we work very hard on Future Ready Iowa. We’re just worried that you could create the best training program in the world but if you don’t have the people … it’s really worrisome.

“What we find amongst our members is poaching is what ends up happening — taking the best employees from other employers rather than getting new employees. Our population has been stagnant since 1987. We had 12 congressional districts in 1875. Now we have four. If we don’t do something to attract more people, those folks won’t be there to take those jobs.”

City needs

Schulte said the city is watching the “backfill” that the legislators have provided to make up for cuts in commercial and industrial taxes. There has been talk of phasing it out, which would pressure cities to increase property taxes. 

Sales tax for conservation and outdoor recreation

Woodard: “We definitely saw in our legislative forum a nod to changing the formula” for how the added sales tax revenue, perhaps $180 million a year, would be used in conservation and outdoor recreation projects. 

Miller: “What are you going to do out on the landscape? But you also want to be careful — $200 million a year is a lot of money. How do you spend that appropriately so the taxpayers get something out of it? For the chambers, for us it becomes a quality of life issue. It becomes a talent issue. That’s something we are going to be looking forward to — that there are resources available to put the kind of amenities that employees are saying that they want” into the community. 

Affordable housing 

Eric Burmeister, executive director of the Polk County Housing Trust Fund, asked what businesses could do to help communities work on affordable housing issues. 

Murphy said the Iowa Business Council and the Greater Des Moines Partnership have pushed for added spending on the trust fund and workforce housing tax credits. “I think our role in some of this is to trumpet the message that this is a workforce issue. It absolutely is. Our role is to try to be a thought leader to bring this to attention to let policymakers know that this is not just about tax policy and it’s not just about corporate tax credits. This is about barriers to workforce and barriers to entry into the workforce. If you can’t get a house that will support your family or will provide the support for your family that you need, that’s going to be an issue. Particularly in the rural parts of the state, that workforce housing is lacking. There needs to be a systematic approach to that. 

“We have a long way to go, but we need to address it now, because if we don’t, the housing situation obviously will just get worse.” 

Miller said part of the challenge comes down to the amount of money available. “One easy thing is getting rid of the backlog, but that takes money. One of the big issues is around here you can go build houses and probably not have a ton of incentives needed. And there are crews. When you start to get out beyond Des Moines, especially in rural parts of the state, those volume builds aren’t there. You might have someone who fixes houses and maybe builds a house a year or every couple of years, but nobody comes in and builds 10 a year. There is an interesting project out at Newton where they built 10 houses. The community said, ‘What can we offer a volume builder to come out and build 10 houses?’ Those are the types of programs you need because if you wait for piecemeal, it’s challenging.”

Miller added that some programs, like tax increment financing, are more easily applied in urban areas than rural. “It’s the little things that can get political, but the mechanics of how the [tax increment financing] law works” can be an issue, he said.  

  Schulte said the city, for its part, wants the state to spend more on housing tax credits and has retooled city codes on housing. (Some critics have suggested those changes have hurt affordable-housing efforts.)


Greater Des Moines Partnership priorities:

Iowa’s Water and Land Legacy (IWILL). This is a proposal to raise the sales tax to provide as much as $180 million a year for outdoor recreation and conservation projects, many of them expected to help improve water quality. Gov. Kim Reynolds has been meeting with leaders of agricultural groups to hammer out a new proposal for how the money would be spent — including how much would go to farmers — and to look for ways to offset the sales tax increase with reductions elsewhere. There has been talk of raising the sales tax by 1 percentage point, and the first 3/8 of 1% by law would go to a constitutionally protected, voter-approved state fund for the outdoor recreation and conservation projects. There have been proposals to use the rest of the new revenue for mental health and education services, and to offset other taxes. The Partnership said it supports permanent funding for water quality and conservation projects, including “regionally transformative quality of life projects that can attract and retain talent.” Yes, they are talking about the Central Iowa Water Trails project, a $100 million-plus plan to create whitewater courses, quiet canoeing areas, and fishing and swimming spots across Central Iowa’s rivers. 

Angel Investor Tax Credit. The Partnership supports an Iowa Economic Development Authority proposal to increase tax credits for entrepreneurs. 

Airport. Another priority is supporting increased funding for Iowa airports that support economic development, including Des Moines International Airport’s proposed new terminal. That project still awaits key federal action to increase a fee on airfares that would help pay for nearly $500 million in improvements, including the terminal. 

Workforce. The Partnership is looking for continued investment in the state’s Future Ready Iowa initiative, along with more-accessible child care options — including legislation to prevent parents from losing aid when they get a promotion or move to a higher-paying but still modest job, called the “cliff effect.” The Partnership also supports policies that make it easier for those with a criminal history to get a job.

Enhance Iowa. The proposal calls for changes in the Enhance Iowa programs to support larger recreational attractions that could help attract workers to the area.

The Partnership’s other priorities include, among many other things, alternative energy, tying education funding to a benchmark such as GDP, renovation of the State Historical Building, health care reform, transparency in setting prescription drug prices and setting up a regional water utility in Greater Des Moines.

Iowa Business Council priorities:

- Spending on Future Ready Iowa, one of the state’s main workforce development initiatives.
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Legislation to eliminate situations in which an employee loses child care assistance after getting a raise or promotion in a modest job.
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A simple, transparent and stable tax structure that is competitive.
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Expansion of workforce housing tax credits.

The nonprofit, nonpartisan Iowa Business Council represents 23 of the state’s largest employers.

Iowa Chamber Alliance priorities:

- Further tax reform with lower corporate and property taxes. 
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Continued state incentives for economic development.
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Full funding for Future Ready Iowa. 
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Support for K-12 programs that help make graduates ready for postsecondary education or a career.
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Added spending on Workforce Housing Tax Credits and changes to the program to adjust to different needs of various communities. 
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“Strong fiscal prudence and spending restraint across all levels of government.”
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Planning, matching and careful allocation of funds to support critical infrastructure.
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“Predictable and responsive” regulations.