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2011 Legislative Session in review |
| Updated: August 17, 2011 |
This legislative session, your Chamber advocated for important initiatives:
Comprehensive Property Tax Reform: to provide equity to Iowa businesses and stability to local government and the state of Iowa. The current system places a tremendous burden on commercial and industrial businesses and properties.
State Economic Development through a Public/Private Partnership: to utilize expertise in both the public and private sector, developing a business model focused on seizing opportunities and implementing programs that provide a greater return on investment.
Enhanced Passenger Rail Service: to build a transportation infrastructure for the future and increase well-paying jobs.
Continuation of Economic Development Incentives: through Vision Iowa Community Attraction and Tourism and River Enhancement Community Attraction and Tourism programs.
Angel Investor Tax Credits: to provide the capital, connections and guidance needed in the early-stage development of projects.
Educational Innovation: for K-12 students to prepare our future workforce.
Below is a summary of the Iowa Chamber Alliance’s 2011 Iowa Legislative Session Report:
Government Spending/Fiscal Restraint:
A bipartisan appetite for spending reductions and fiscal restraint defined the 2011 Session. The House started the session with HF 45, a broad-reaching “de-appropriation” bill that reduced current year (FY 2010-11) spending. Only a few elements of this bill were agreed to by the Senate, but it did set the tone for spending for the session.
The Senate was open to some spending reductions, but fiercely defended increased spending in education. Much more scrutiny was brought to program spending. Most notably:
Reduced Spending. State government spending was limited to 96-97 percent of revenues with significantly less use of “one-time” funds to pay for programs and to align ongoing spending with ongoing revenue sources.
Biennial Budgeting. For the first time in three decades, at Governor Branstad’s insistence, the Legislature passed a two-year budget.
Education Funding. FY 2011-12 was allotted zero percent allowable growth, while two percent allowable growth was passed for FY 2012-13.
Pre-School. The pre-school program survived, though the funding level for the program was reduced.
Legislative Initiatives
Iowa Partnership for Economic Progress (HF 590). The Iowa Partnership for Economic Progress will replace the current Iowa Department of Economic Development with a public entity and private not-for-profit designed to encourage more private-sector involvement in economic development.
Property Tax Reform (SF 522). The issue of property tax reform was hotly debated in 2011, but ultimately, compromise between two competing methods to achieve relief was not reached and the issue died for the year.
Economic Development Incentives
Fundamental disagreement with state-based incentives by elements of the House Republican caucus, and downward pressure on spending with a $5.99 billion spending cap, non tax-credit based incentives were a tough sell.
The Governor fought hard to ensure there were enough incentive dollars appropriated – and perhaps more importantly, not de-appropriated, which would have had a disastrous effect on already approved projects. That said, funding levels for incentives ended up significantly lower than in the recent past.
Tax Credits
Angel Investor Tax Credits & Innovation Fund (SF 517). The tax credits for innovation and for seed capital funds were passed in the Economic Development budget bill.
Brownfields/Grayfields Tax Credits (SF 514). SF 514 requires the Department of Economic Development to allocate up to $5 million in tax credits for the Redevelopment Tax Credits program.
Endow Iowa Tax Credits (SF 302). The Endow Iowa Tax Credit Program was expanded by providing an $800,000 increase to the base of Endow Iowa, providing approximately $4.5 million in tax credits annually. This allows the leverage of more than $18 million per year in permanent endowment contributions with community foundations.
Historic Tax Credits (SF 521). SF 521 changed and expanded the Historic Preservation Tax Credit program by: 1) Allowing up to 60 months for project completion; 2) Allowing all qualified rehabilitation expenses to be incurred. This is especially helpful for disaster-related projects; and 3) Eliminating the $100,000 per residential unit cost limit.
Defense of…
TIF. Despite discussion in Ways & Means Committees in both chambers by legislators of both parties and bills filed to undermine Tax Increment Financing, no legislation directly affecting TIF was passed by either chamber this session.
R&D Tax Credits. Early in the session there was media attention brought to the amount of Research & Development Tax Credits being received by Iowa business, however, no action was taken on the matter.
Passenger Rail. House Republicans were intent on defunding the previously appropriated dollars for passenger rail service, which would have effectively killed the program. Persistent lobbying efforts by the Iowa City Area and Quad Cities chambers along with the Passenger Rail Working Group and steadfast support from Sen. Bob Dvorsky buoyed passenger rail through no less than four attempts to de-fund it in the House.
Click here to review the complete Iowa Chamber Alliance report.
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