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A clean slate for economic development


Iowa Association of Business and Industry lobbyists are optimistic that Gov. Tom Vilsack may find room for a public-private partnership as he looks for ways to energize the state’s economic development efforts.

Increasing the role of the private sector in Iowa’s business development activities is one of the ABI’s top public policy priorities in the 2003 legislative sessions, which opens Jan. 13. John Gilliland, ABI’s vice president for government affairs, said both Vilsack’s nomination of Michael Blouin to head the Iowa Department of Economic Development and the governor’s pledge to make economic development his administration’s top priority make it more likely ABI proposals will be part of the state’s future approach to business development.

“I think he’s going to put a lot of trust and confidence in Mike Blouin, and maybe the governor recognizes that he hasn’t treated economic development as the priority he should have as we’re looking at growing Iowa,” Gilliland said. “In his first term, he didn’t make that as big a priority. I think he understands that now, and I think he seems more engaged and more willing to prioritize growing Iowa and growing wealth for its citizens.”

Blouin, the former president and CEO of the Greater Des Moines Partnership and the top executive for the Cedar Rapids Chamber of Commerce before that, was one of the architects of a proposal last year to make the IDED a public-private partnership led by an experienced CEO from the private sector. None of several versions of the proposed legislation, originally drafted by a group of the largest chambers of commerce in the state, made it to the floor, but supporters say there’s still room for debate – especially now that Blouin will be helping to chart the direction of the state’s economic development policies.

“The day we were meeting with legislators at the Capitol was the day Mike Blouin was named the new director,” Gilliland said. “It’s ironic we were beating that drum again the same day he was appointed to that position. We’re optimistic we can help Mike make that transformation in enhancing the public-private relationship in marketing our state.”

Vilsack appeared more open to the ABI’s legislative agenda than in years past, Gilliland said after he and other ABI executive committee members met with the governor last month. “In our discussions with him a year ago, there were clear differences of opinion on economic development and business climate issues in Iowa,” Gilliland said. “This year, our conversation was on a much higher level; it was a more engaging, productive and thoughtful conversation. I think the governor and our members came away from that meeting feeling we had a better opportunity to work together than we had a year ago.”

Under the current structure, the IDED board isn’t actively working on economic development prospects, but is bogged down in administrative functions related to the day-to-day operation of the department, Gilliland said. “We’d like to see either that board empowered, or another partnership created with private-sector business people to develop a broader, long-term, market-driven economic development effort,” he said.

The ABI also said any review of budgets, regulations and tax policy should include consideration on their impact on state and local economic development efforts.

Also in its economic development agenda for the state, the ABI supports increased support for the Accelerated Career Education Program and programs authorized under Chapter 260, Sections E and F, of the Iowa Code that promote growth, create high-paying jobs and increase economic activity in Iowa. Community colleges, which form alliances with business and community to provide training, should also be ensured adequate resources, ABI members believe. Gilliland said community college budgets have been cut disproportionately in comparison with Regents institutions and public schools. “We really see them as vital to industry in this state,” he said.

With budget shortfalls projected at between $260 million and $400 million, “it’s not a good day for anybody to ask the Legislature for more money,” Gilliland said.

“But we need to look at those programs where the state really does get bang for the buck,” he said. “By increasing the skills of the workforce, it pays dividends down the line to state revenues by increasing incomes and tax revenues. It’s all directly related.”

The ABI also supports measures to make it easier to eliminate or combine governmental entities or programs in Iowa, a state with 1 percent of the nation’s population but 6 percent of the country’s government. “We simply have more government in Iowa than our tax base can afford,” Gilliland said. “We’ve had two decades with little or no growth in population, but we still have the same kind of government structure the tax base has to fund.”

He said the issue of school and government consolidations is still emotionally charged, but proposals to merge governmental bodies and services are gaining support. “As Iowans, we’re all pretty parochial – I don’t want to lose my high school and you don’t want to lose your hometown – but I think folks are understanding it may be financially beneficial to start looking at ways to share the cost of delivering government services,” Gilliland said. “We’re not talking about taking away anybody’s identity by doing these things, but we’re making the delivery of government services more affordable, and I think taxpayers understand that.”

Other legislative priorities for the ABI include:

o The ABI opposes establishment of any health-care mandates on employers that would significantly increase the cost of health care. Legislation proposed last year that would have required employers to extend health insurance coverage to include mental health and substance abuse treatment would have cost Iowa employers millions of dollars in a climate of already escalating health-care costs, Gilliland said. In 2002, Iowans payed more than $1.5 billion for health insurance premiums, according to the Iowa insurance commissioner’s Web site, and full coverage for mental health, drug and alcohol treatment could increase those costs by 5 percent to 25 percent, Gilliland said, quoting experts from the insurance industry.

“It becomes more and more difficult for employers to provide coverage at all,” he said. “Ultimately, what we can’t afford is to have more and more Iowans not have health-care coverage.”

o The ABI supports coupling Iowa’s tax law with federal tax code changes that allow businesses and farmers a 30 percent bonus depreciation on new equipment as a way to jump start economic growth and job creation.

o The ABI opposes diverting user fees and taxes assessed for one mode of transportation to another mode of transportation or to non-transportation purposes. The group says reduction of those revenue streams would seriously jeopardize economic development opportunities for communities needing a modern transportation network and would compromise highway safety.

o The ABI opposes extension of an administrative surcharge of $7 per employee paid by employers to the Iowa Workforce Development office to fund 56 regional centers at a cost of about $7.25 million. The law authorizing the surcharge has a July 2003 sunset and has once been extended by the Legislature, but the ABI says its research shows that 16 federally funded regional workforce development centers in Iowa eliminate the need for the state offices.

o The ABI believes that employers who hire workers who were previously injured on the job should be liable only for the disability added by the current work injury for which a claim is made.  

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