Iowa's approach to economic development is on the right track, but the state lags significantly behind competing states in its ability to offer financial incentives to companies seeking to expand, according to a new study released today by the Iowa Chamber Alliance.
The alliance, a coalition of the state's 16 largest chambers of commerce and economic development organizations, commissioned Deloitte Consulting LLP to conduct the study, which compared Iowa's economic development incentives with those of five other states: Minnesota, Nebraska, South Dakota, South Carolina and Texas.
"Iowa's programs tend to be user-friendly compared to the other states, but in terms of financial value, other states have the ability to offer more meaningful money," said Josh Timberlake, a Deloitte consultant in the firm's Chicago office, in a conference call with reporters.
The study found that Iowa lags only behind Texas in the "usability" of its economic development incentives, an important factor in how a state measures up in competing for economic development investments. Texas is widely considered one of the most aggressive states in economic development in terms of its incentive funding, its programs and its business-friendly tax and regulatory climates.
"It is clear Iowa punches above its weight class in economic development," said John Stineman, Iowa Chamber Alliance executive director, in a release. "The approach and programs we have are working and the proof is in the projects. The question is, how many projects are we missing out on because we simply do not resource economic development efforts at a competitive level?"
The study made five policy recommendations:
- Consider increasing the cap on Iowa's economic development tax credits.
- Evaluate options to offer a "Deal Closing Fund" or more discretion to the Iowa Economic Development Authority in awarding direct financial assistance.
- Consider allowing the sale, refund or transfer of economic development tax credits.
- Consider expanding the Brownfield/Grayfield Redevelopment Tax Credit program.
- Consider augmenting Iowa's data center incentives.