The Cedar Valley Investor Report gives a snap shot of the activities of the Alliance & Chamber, news from our investors, and informative articles selected for their relevance to economic growth in the Cedar Valley.
The persistence of Iowa commercial and industrial property owners finally paid dividends in a reduction in your property tax burden! After several tries over the last decade, the legislature and Governor came to agreement on the start to property tax reform, and provided modest tax reduction at the same time.
We appreciate those of you who contacted your legislators, encouraging them to finally act on an inequity in the tax system that has persisted – and has been an impediment to economic growth – for far too long.
While not all was achieved that we were looking for – the rate of rollback is much less than the original proposal – it is a start. Beyond this, it may provide the motivation for a reform of the entire system in years to come.
The Greater Cedar Valley Alliance & Chamber, through its Government Relations Committee and our director of governmental relations Steve Firman, collaborated with a coalition that included the Iowa Chamber Alliance, Iowa Association of Business & Industry, Professional Developers of Iowa, and Iowa Taxpayers Association to continually impress upon our elected officials the need for this change.
Conference Committee Report for SF 295 – Property Tax
Division I—Business Property Tax Credit (“Senate Plan” element)
- Creates a Business Property Tax Credit for property taxes due and payable in fiscal year 2015.
- $50 million is appropriated in fiscal year 2015 to the Business Property Tax Credit Fund
- $100 million is appropriated in fiscal year 2016
- $125 million is appropriated in fiscal year 2017
- $125 million every year thereafter
- Each person who wishes to file a claim will obtain a form from the County Assessor.
The form does not have to be filed again until the property is sold or transferred.
- The state will use the money appropriated into the Business Property Tax Credit Fund to reimburse local governments the amount of credits issued.
- When fully phased in, at least $145,000 of property value on every business would be equal to the residential rollback
- Total Fiscal impact to local governments is $16 million when fully phased in.
Division II —Property Tax Assessment Limitation and Replacement (“House Plan” element)
- Assessment growth limitation moves from 4% to 3% on Ag and residential immediately.
- Commercial and Industrial will assessed at 95% of valuation starting January 1, 2013; at 90% starting January 1, 2014; and is frozen at 90% thereafter.
- The State will appropriate money for replacement of the lost revenue. Payments will be made by IDR to county treasurers:
FY 15 $78.8 million (includes multi-residential)
FY 16 $162.8 million (includes multi-residential)
FY 17 $154.1 million (does not include multi-residential and capped at this level
Division III—Multi-residential Property Classification
- Creates a new property classification: Multi-residential
- Multi-residential will include apartments, nursing homes, assisted living facilities , and certain other rental property
- The existing classifications are Residential, Agricultural, Commercial, Industrial
- Multi-residential properties will eventually equal the residential rollback after 10 years.
- Total fiscal impact to local governments is $85.3 million when fully phased in.
Assessment Year 2013 95%
Assessment Year 2014 90%
Assessment Year 2015 86%
Assessment Year 2016 82%
Assessment Year 2017 78%
Assessment Year 2018 75%
Assessment Year 2019 71%
Assessment year 2020 67%
Assessment year 2021 63%
Assessment year 2022 and thereafter: Residential rate
Division IV —Telecommunications Property
- Determining the taxable value of each company stays the same
- Each telephone company will receive a partial exemption from taxation on the value of the company’s property. This is phased in, with half in assessment year 2013 (FY 15), and the remainder being added in assessment year 2014 (FY 16)
- Department of Revenue is directed to complete a comprehensive study of the telecommunications industry and report recommendations for change to the General Assembly
Assessed value $0-$20M $20-$55M $55-$500M >$500M
Exemption 40% 35% 25% 20%
Division V – Iowa Taxpayers Trust Fund Tax Credit
- Each year, beginning July 1, 2014, the balance of the Taxpayers Trust Fund exceeds $30 million a tax credit will be issued to Iowa taxpayers
- The tax credit will be issued to Iowans with a tax liability
- $60 million is the maximum amount that can flow into the taxpayer trust fund each year
- $60 million equals a $27 credit per filer. $120 million would equal $54
Division VI -Property Assessment Appeal Board
- Five year sunset – July 1, 2018, lower salaries, adding another appraiser to the board (replacing the finance profession with state and local tax policy experience, allowing for a speedier hearing process.)
Division VII—Earned Income Tax Credit
- Increases the Earned Income Tax Credit from 7% to 14% in tax year 2013; 15% in tax year 2014
- The credit remains refundable.
- The increase is effective retroactively to January 1, 2013.
- Fiscal impact: $30.8 million in FY 14 , increasing to $34.5 in FY 15
View the three part video of Steve Dust, CEO of the Greater Cedar Valley Alliance & Chamber on KWWL’s Steele Report.
View the three part video of Steve Dust, CEO of the Greater Cedar Valley Alliance & Chamber, on KWWL’s Steele Report here.
We have posted the Iowa Chamber Alliance’s bill tracker for the week of March 11, 2013. This document shows all of the bills under consideration in the current legislative session that are important to business and are being followed by the Alliance. The Iowa Chamber Alliance is strong partner with the GCVAC in the Legislature; we work very closely with their lobbyists throughout the session. You will find the bill title, bill number, an abbreviated bill history and the ICA position on the bills. (Reference: FR= for; UK=undecided/monitoring. )
In a recent Courier article Steve Dust, CEO of the Greater Cedar Valley Alliance & Chamber and chairman of the Iowa Chamber Alliance commented on a recent study performed by Deloitte Consulting LLP.
The study was commissioned by ICA in hopes to provide the Legislature and policy makers current information about where Iowa lines up competitively with the study’s benchmark states. Read the entire Courier article by Jim Offner here.
The study rates Iowa’s competitiveness with its neighbors and other highly competitive states in economic development programs
Des Moines, Iowa – The Iowa Chamber Alliance, a non-partisan coalition representing the 16 largest chambers of commerce and economic development organizations throughout the state, released today a new study examining Iowa’s relative competiveness in its economic development efforts. Deloitte Consulting LLP was commissioned to examine the competitiveness of Iowa’s state-level economic development incentives.
“This study confirms Iowa’s approach to economic development incentives is on the right track, but it also demonstrates that Iowa does not resource its economic development incentives at a competitive level,” said John Stineman, Executive Director of the Iowa Chamber Alliance.
The Deloitte study found that Iowa lags only behind Texas in the “usability” of its economic development incentives – an important factor in how a state measures up in competing for economic development investments. Texas is widely considered one of the most aggressive states in economic development in terms of its incentive funding, its programs and its business-friendly tax and regulatory climate.
However, on the financial value side of economic development – the ability to impact projects through financial incentives – Iowa lags significantly behind its neighbors as well as other leading economic development states.
“It is clear Iowa punches above its weight class in economic development. The approach and programs we have are working and the proof is in the projects. The question is, how many projects are we missing out on because we simply do not resource economic development efforts at a competitive level?” said Stineman.
The study examined Iowa’s economic development programs and funding compared to five other states: Minnesota, Nebraska, South Dakota, South Carolina and Texas. South Carolina and Texas are consistently ranked as highly competitive states for economic development.
Other key findings of the study include:
- Iowa is at a competitive disadvantage in the availability of discretionary funds to help close deals as well as in offering corporate tax exemptions.
- Iowa performs at peer level in property tax exemptions, sales and use tax exemptions, and research and development tax credit programs.
- Iowa has a competitive advantage in its workforce development incentive programs.
- Other states have caught up to and begun to pass Iowa in data center and technology incentive programs – an area where Iowa was considered a leader previously.
“Iowa has a solid base of state-level economic development incentives tools upon which to build. However, to become more competitive, Iowa may wish to increase the funding level and flexibility of some of the State’s key incentive programs” states Darin Buelow, a Principal with Deloitte Consulting LLP.
- The recommendations from Deloitte Consulting include:
- Consider increasing the cap on Iowa’s economic development tax credits
- Evaluate options to offer a “Deal Closing Fund” or more discretion to the Iowa Economic Development Authority in awarding direct financial assistance
- Consider allowing the sale, refund or transfer of economic development tax credits
- Consider expanding the Brownfield/Grayfield Redevelopment Tax Credit program
- Consider augmenting Iowa’s data center incentives.
“The opportunity is there for Iowa. We are well positioned to compete – if we resource our economic development efforts at the right level. We also need to review our programs to ensure we have usable and valuable incentives to help Iowa continue its economic growth in the future,” said Stineman.
For more information about the Iowa Chamber Alliance’s positions and legislative agenda, please visit www.iowachamberalliance.com. Copies of the study will be made available upon email request to firstname.lastname@example.org.
About the Iowa Chamber Alliance
The Iowa Chamber Alliance’s mission is to put forth and enact an agenda to grow the state’s economy through support of proactive programs that stimulate economic growth opportunities for the entire state and its residents. The Alliance members include chambers and economic development organizations in: Ames, Burlington/West Burlington, Cedar Rapids, Council Bluffs, Des Moines, Dubuque, Fort Dodge, Iowa City, Marshalltown, Mason City, Muscatine, the Quad Cities, Sioux City and Waterloo/Cedar Falls.
By John Stineman, Executive Director, Iowa Chamber Alliance
The 2013 legislative session presents many opportunities for business — property tax reform, economic development incentives, transportation infrastructure to name just a few issues that perennially top the agenda of Iowa’s businesses and economic development community. Standing atop these important issues is education reform.
Yes, business considers education reform to be at least as important as the other core issues within our policy agendas.
The fact of the matter is that Iowa’s once vaunted public education system is no longer as competitive as it was just half a generation ago.
It’s not so much that Iowa has gone backward as much as it is that the rest of the country has improved at a far greater pace. We used to be at or near the top and now dwell in the lower end of the middle of the pack.
From a strictly business perspective, we must address education reform because of Iowa’s growing skills gap. Today in Iowa about 18% of available jobs are considered to be “low skill,” but about 38% of the available Iowa workforce is classified as “low skill.” Middle skill job openings represent half of all open positions in Iowa, but only one-third of available workers are considered to be middle skill.
The skills gap is real, it is growing, and, unfortunately, our education system today is not geared to address it.
Beyond the immediate workforce needs, consider our education outcomes today. 36% of the “Class of 2012” that went on to higher or vocational education after high school required some sort of remedial education after high school. This is stark evidence we are not systematically equipping our kids with the knowledge and skills they need to succeed after high school.
Of course, it’s not just about the skills gap or what kind of access employers need to qualified workers.
It’s about Iowa’s kids. It’s about our kids and grandkids.
We’ve all chosen to live in Iowa, to raise our families here. Making sure our kids have access to a quality education that will help prepare our kids to compete in a global economy and pursue their dreams is among our most important duties.
That’s why education reform is so important.
The reforms proposed by the Governor and now being vetted by the Iowa House of Representatives are a solid start on turning the tide for Iowa’s schools. The reforms bring with them substantive changes that will fuel teacher leadership from mentor teachers and teacher leaders to drive innovation and energy into subject matter teachers.
The proposal elevates the profession of teaching – increasing first year pay and providing a longer student teaching period so new teachers can hit the ground running when given their own classroom.
The reform proposal expands online learning opportunities by bringing students from across Iowa together to learn online from Iowa teachers in districts that offer subjects not offered in other districts.
Teacher accountability is also important. A statistic often cited at the Capitol is that 98% of Iowa teachers receive favorable reviews. While there are many, many quality teachers across Iowa, it is simply not realistic to believe that only two in every 100 are in need of improvement. Evaluations must include student performance as well as peer reviews and other measures.
The Iowa Chamber Alliance is supportive of the reforms proposed and interested in other ideas that will help improve Iowa’s schools as well. We are hopeful partisan differences and political arguments can be set aside so that meaningful reform can be achieved.
There is simply too much at stake for us not to succeed in improving our schools. It truly is the most important thing we can do this session.
For more information, please contact Iowa Chamber Alliance Executive Director, John Stineman, at (515) 226-1492 or email@example.com.
The Greater Cedar Valley Alliance & Chamber is an active member of the Iowa Chamber Alliance. Alliance & Chamber CEO Steve Dust is the current Chair of ICA board of directors. Steve Firman, Alliance & Chamber Director of Gov’t Relations is also on its board.