Rants blasts agency for 'roadblocks' to growth
By Dave Dreeszen | Posted: Thursday, October 30, 2008
SIOUX CITY -- House Republican Leader Christopher Rants on Wednesday accused the Iowa Department of Economic Development Board of "throwing up roadblocks" to economic growth in Sioux City.
At a hearing in Des Moines, Rants and leaders from other border cities voiced opposition to proposed rule changes that they claimed would curtail a state tax incentive program aimed at creating jobs in Iowa, rather than in neighboring states like Nebraska and South Dakota.
"It's frustrating that at a time when we're facing a severe economic challenge in this state and nation, our economic development department is looking to tie our hands," Rants said. "It's absolutely insane."
At issue is the Targeted Jobs tax credit, a five-year pilot program the Legislature approved in 2006. Sioux City leaders, facing competition from business-friendly tax climates in neighboring South Dakota and Nebraska, were instrumental in passing the legislation.
Targeted Jobs allows new or expanding businesses in designated urban renewal areas in five border cities -- Sioux City, Council Bluffs, Keokuk, Burlington and Fort Madison -- to divert a portion of their state income taxes for new construction, equipment or other expenditures. The program permits the withholding of taxes equal to 3 percent of gross wages for each new or retained job.
In Sioux City, 16 Targeted Jobs programs have been approved, fueling $39 million in capital investment, 447 new jobs created and 510 jobs retained.
"It's been a great tool for Sioux City; we'd like to see it continue," said Sioux City economic development director Marty Dougherty, who also testified at Wednesday's hearing.
Dougherty and other border city leaders are particularly concerned about one rule change proposed by the DED. If enacted, it would require cities to match, dollar-for-dollar, 10 percent of the total state tax credits awarded. A 10 percent match is included in the existing rules, but can now come from the state, business or a third party, such a local economic development group, Dougherty said.
Because many projects, such as the construction of a new manufacturing plant, generate additional property taxes, Dougherty said the city usually could generate sufficient funds for the 10 percent match.
But the proposed rule change could create a major hardship for some projects. For instance, if an existing business creates jobs at an existing location by investing in new equipment and machinery, the city would not collect any additional revenue because machinery and equipment in Iowa is exempt from property taxes, he noted.
Another worrisome rule change, Dougherty said, would change the accounting method in which qualifying capital investments are valued.
Rants contends the DED is trying to rewrite the 2006 Targeted Jobs law.
"The DED is not following the law and it will cost our city jobs because of it," he said.
Kaye Synder, a spokeswoman for the Department of Economic Development, said state DED director Mike Tramontina was in a meeting late Wednesday and not available to comment on the proposed rule changes.
Sioux City Targeted Jobs project
Total number of projects: 16
Total investment: $39 million
Total new jobs created: 447
Total existing jobs retained: 501
At a hearing in Des Moines, Rants and leaders from other border cities voiced opposition to proposed rule changes that they claimed would curtail a state tax incentive program aimed at creating jobs in Iowa, rather than in neighboring states like Nebraska and South Dakota.
"It's frustrating that at a time when we're facing a severe economic challenge in this state and nation, our economic development department is looking to tie our hands," Rants said. "It's absolutely insane."
At issue is the Targeted Jobs tax credit, a five-year pilot program the Legislature approved in 2006. Sioux City leaders, facing competition from business-friendly tax climates in neighboring South Dakota and Nebraska, were instrumental in passing the legislation.
Targeted Jobs allows new or expanding businesses in designated urban renewal areas in five border cities -- Sioux City, Council Bluffs, Keokuk, Burlington and Fort Madison -- to divert a portion of their state income taxes for new construction, equipment or other expenditures. The program permits the withholding of taxes equal to 3 percent of gross wages for each new or retained job.
In Sioux City, 16 Targeted Jobs programs have been approved, fueling $39 million in capital investment, 447 new jobs created and 510 jobs retained.
"It's been a great tool for Sioux City; we'd like to see it continue," said Sioux City economic development director Marty Dougherty, who also testified at Wednesday's hearing.
Dougherty and other border city leaders are particularly concerned about one rule change proposed by the DED. If enacted, it would require cities to match, dollar-for-dollar, 10 percent of the total state tax credits awarded. A 10 percent match is included in the existing rules, but can now come from the state, business or a third party, such a local economic development group, Dougherty said.
Because many projects, such as the construction of a new manufacturing plant, generate additional property taxes, Dougherty said the city usually could generate sufficient funds for the 10 percent match.
But the proposed rule change could create a major hardship for some projects. For instance, if an existing business creates jobs at an existing location by investing in new equipment and machinery, the city would not collect any additional revenue because machinery and equipment in Iowa is exempt from property taxes, he noted.
Another worrisome rule change, Dougherty said, would change the accounting method in which qualifying capital investments are valued.
Rants contends the DED is trying to rewrite the 2006 Targeted Jobs law.
"The DED is not following the law and it will cost our city jobs because of it," he said.
Kaye Synder, a spokeswoman for the Department of Economic Development, said state DED director Mike Tramontina was in a meeting late Wednesday and not available to comment on the proposed rule changes.
Sioux City Targeted Jobs project
Total number of projects: 16
Total investment: $39 million
Total new jobs created: 447
Total existing jobs retained: 501
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Kevin Johme wrote on Oct 30, 2008 6:13 PM:
ConcernedToo wrote on Oct 30, 2008 9:25 AM: