Iowa's tax breaks come under scrutinyOctober 12, 2017With an election for governor coming up and with courts, universities and the state’s natural resources agency, among others, reeling from steep budget cuts and freezes, Iowa’s generosity in forfeiting tens of millions of dollars to lure more jobs is coming under the microscope.
Some state lawmakers are wondering whether Iowa is giving away too much to businesses — giveaways some state economists say often are unnecessary anyway.
But at the local level, economic development officials say the programs are vital and have provided a return on the investment to taxpayers who are footing the bill.
“At the end of the day, you do have to compete for projects,” said John Stineman, executive director of the Iowa Chamber Alliance and a principal consultant with Strategic Elements in Des Moines. “We’re not about to lay down arms in that fight over academic principle. ... There is a competition taking place and we’re going to do the best we can.”
The focus on the propriety of offering public incentives to private businesses intensified with construction of a $3 billion fertilizer plant in Lee County. The Southeast Iowa project, completed last spring, was awarded more than $100 million in state tax breaks and has generated 165 permanent jobs.
Then late this summer, Iowa officials announced they were offering tech giant Apple $20 million in state tax relief to build a data center in suburban Des Moines, part of an overall $200 million assistance package with local aid. The project is expected to create temporary construction jobs, then roughly 50 permanent jobs.
While the state incentive for Apple was not as large as the break awarded the fertilizer plant, the announcement coincided with more troubling news for the state budget.
State officials were forced to make a third downward adjustment to the budget year that ended June 30, bringing the total in spending cuts and IOUs to $262 million.
Critics suggest Iowa should not be foregoing millions of dollars in future tax revenue while the state is cutting money for its vital operations and borrowing more to make ends meet.