Legislature has an opportunity to be historic
The Iowa Legislature, like the U.S. Congress, has perennial issues that are never fully addressed for one reason or another. At the national level, tough issues like Medicare, Social Security and tax reform are known as the third rail — named for the rail on a subway that carries the electrical charge and can kill you if you touch it. These are issues that can kill a politician’s career.
Here in Iowa, we might relate better to a lightning rod or electric fence than to a third rail on a subway, but our Legislature also has certain controversial issues that have been off-limits politically. They have typically been topics such as property tax, income tax, road use tax and school consolidation. These issues are highly complex and intertwined and require serious study of the options and their consequences.
Year after year, politically charged issues have been ignored, dropped or deadlocked. But other states are marketing aggressively and making themselves business friendly, and Iowa cannot afford to fall further behind. Consider the following rankings for our state:
– 28th in business competitiveness
– 31st in per capita income
– 37th in employment growth (1993 to 2003)
– 43rd in corporate income tax
– 44th in population growth
The Iowa Chamber Alliance has put together a six-point plan to move Iowa forward. Other core business and economic development groups are calling on legislators to address many of the same critical issues. Some of those groups are the Iowa Association of Business and Industry, the Iowa Business Council, Iowans for A Better Future, the Iowa League of Cities, the Iowa State Association of Counties, Iowa Taxpayers Association and Professional Developers of Iowa. Gov. Vilsack has also presented a proposal for reforming property taxes and removing federal deductibility of income tax, so prospective businesses won’t presume Iowa is a high-tax state and rule it out before investigating further.
One issue that cannot be ignored any longer is property tax reform. It’s one of the most controversial and complex issues, but it has the potential to make a substantial positive impact on the future health and wealth of our state. It becomes a lightning rod because public school funding relies heavily on property tax revenue.
In Iowa, commercial and industrial businesses pay 29 percent of property taxes, more than in many other states. Removing some of this property tax burden would help existing businesses grow and help attract prospective companies. However, to maintain education funding at the same level, that portion of property tax revenue would have to come from another source. Since nearly half of the residential property in Iowa that could be taxed is “rolled back” or not assessed for taxation, with even more scheduled to be exempt in 2006, one possible solution is to reduce the residential “rollback.” It would make the tax system more equitable, but it would require a great deal of education, discussion and compromise among our elected state senators, representatives and executives.
The 81st Iowa General Assembly convenes with the Senate evenly divided between the two parties and the House nearly even, with an ever so slight Republican margin. We challenge this body to work together in a nonpartisan way to create consensus and address the major issues that can make Iowa a contender for jobs and new residents.
Every General Session is recorded in Iowa’s history, but not every one is historic in making a difference for future generations. This year, instead of drawing battle lines, arguing and hitting a stalemate, the new Legislature has an opportunity — and an obligation — to courageously take hold of the lightning rod issues and make this year historic, not just history.
Ron Corbett is chair of the Iowa Chamber Alliance and president and chief executive officer of the Cedar Rapids Area Chamber of Commerce.