Business legislative agendas
Along with the usual resolutions, you can also be sure that the new year brings with it updated legislative wish lists from business and economic development groups.
This year, the dominant themes are much the same as in 2003. On most groups’ legislative agendas are proposals geared toward strengthening Iowa’s business climate and streamlining local government. There is also continued support for established economic development programs such as tax increment financing and Vision Iowa, as well as a consensus that the Grow Iowa Values Fund needs a more consistent funding source.
The state’s budget difficulties looms as the biggest issue legislators must tackle in the upcoming session. Consequently, the Greater Des Moines Partnership and other economic development groups are concerned that state funding will be diverted away from programs such as Vision Iowa and the Values Fund to programs that don’t provide the same kind of return on investment.
Business growth and job creation are “the foundation that pays for everything else in the public treasury,” said Kent Sovern, the Partnership’s government relations director.
“I think we’re at a difficult point,” he said. “What we thought was going to be a short-term problem with state revenues falling off is not a short-term problem. … If we take our eye off the economic ball, it’s going to be very difficult to regain the momentum I think we’ve gained in the last few years.”
Making Iowa’s tax structure and business regulations more business-friendly and enabling local governments to consolidate services to operate more efficiently would help make the state more competitive, many of the groups say in their published agendas.
The Partnership, for instance, supports a reduction in Iowa’s income tax rates “to make Iowa more competitive in business attraction, expansion and retention.” Among its recommendations is for the Legislature to repeal deductibility of federal income taxes on state income tax returns.
The Iowa Chamber Alliance, meanwhile, proposes a simplified, income tax structure with just two tiers: a base rate and a higher rate for higher income levels.
In addition to cutting personal income taxes, the Iowa Association of Business and Industry advocates reducing the state capital gains tax and exempting pension and retirement income from tax. It also supports keeping a research and development tax credit in place.
Iowa’s numerous layers of local government is one reason the state’s higher property tax rates are higher than those elsewhere in the Midwest, said Bradley Hart, chair of the Government Relations Forum of the Cedar Rapids Area Chamber of Commerce.
“If we make it easier for communities to merge or combine their public services by changing laws regarding the process, we can make our towns, cities and counties more efficient and therefore more competitive,” he said in a release.
Among the Chamber Alliance’s recommended changes regarding government consolidation: Allow both elected and non-elected officials to serve on a charter commission; let local residents decide whether the new officials would run on a partisan or non-partisan basis and when to hold the election; shorten the consolidation process from 24 months to 12 months; and require the commission to make a recommendation at the end of the process.
At the state level, streamlining or consolidating state agencies could also reduce inefficiencies, duplication and unnecessary regulatory burdens on businesses, the Alliance said. It advocates the use of cost-benefit analyses to ensure that new laws don’t result in more expenses than savings, and an automatic approval process to regulatory requests by businesses if the agency doesn’t provide a timely response.
From the legislators’ perspective, it’s clear that budget issues will again dominate the session, said House Majority Leader Chuck Gipp.
“What we recognized last year was there’s no silver bullet toward fixing the economy in the state,” he said. “You have to address the income tax, the property tax climate. … That’s what we attempted to do last year, and you’re going to see more of that.”
WANTED: NEW FUNDING SOURCE
After seeing their share of revenues from the state cut in 2003, Iowa’s municipalities must find new funding sources, according to the Iowa League of Cities. Currently, Iowa’s cities already operate very efficiently, the league says, with a general fund cost per capita that’s about two-thirds the national average.
With cities and counties absorbing more than a 25 percent state funding cut in 2004 and needing to avoid even greater dependence on property taxes, the league is recommending the Legislature authorize several new revenue sources. Those sources might include new municipal fees, local income taxes, additional local sales tax levies, increased hotel-motel taxes and a public safety levy to help fund emergency services.