$2 billion plan aims to rev up economy in Iowa

The Legislature on Wednesday took an important first step toward creating an unprecedented $2 billion plan to energize Iowa’s economy.

By:
Jonathan Roos
Des Moines Register

Key Republicans and Democrats working on the effort agreed that the proposed economic development fund should be $2 billion, which is four times the amount recommended by Gov. Tom Vilsack.

"We want to start under the assumption that we’re going to do something big," said Sen. Jeff Lamberti, an Ankeny Republican who heads the Senate Appropriations Committee.

Vilsack, a Democrat, signaled his support in a prepared statement Wednesday night but also indicated that differences remain.

He said he was encouraged that legislators were showing a willingness "to act boldly and begin the work of transforming our economy and creating opportunity for every Iowan. This comes as a welcome sign that we can work together."

The Legislature is still a long way from passing such a plan, which probably would take several years to implement.

Lawmakers and the governor face difficult decisions about how to raise such a huge amount of money through bonding or by other means. But leaders said setting a goal of having a $2 billion fund was a significant starting point.

Vilsack earlier proposed a $500 million Iowa Values Fund to address Iowa’s stagnant economy. He suggested that the state raise the money by issuing bonds and repaying the debt with gambling revenue.

"Instead of $500 million, the goal is $2 billion. But how you get to the $2 billion remains to be seen," said Sen. Bill Dotzler, a Waterloo Democrat who is involved the economic development talks. The state likely would issue bonds to raise most of the money, he said, although some of it could take the form of tax credits.

The $2 billion goal dwarfs the $225 million that was raised through bonding for Vision Iowa, the community attractions program that’s been used to help pay for museums, convention centers and other projects aimed at improving Iowa’s quality of life.

Lawmakers emphasized that a concrete plan on how to raise and spend the money has yet to be fleshed out, although Republicans have proposed some spending benchmarks.

Under the GOP’s preliminary proposal for using the $2 billion, the money would be spent in four areas: $1.12 billion for job creation, including seed money for biotechnology and other targeted industries; $400 million for school construction; $320 million for roads, utilities, parks and community attraction programs such as Vision Iowa; and $160 million for marketing Iowa.

Lawmakers also have suggested a different name for the new economic development fund: BIO, or the Bring it On fund. The name is a response to a recent newspaper ad by South Dakota Gov. Mike Rounds, which invited Iowa and Minnesota to "bring it on" in trying to compete with the economic advantages claimed by South Dakota.

"It kind of goes off the fight we had with South Dakota," Dotzler said. "We’re very serious about economic development and we want the country to know we’re serious about economic development efforts."

BIO also alludes to the emphasis that state leaders want to place on the growth of biotechnology and other types of "new economy" companies that they believe are key to Iowa’s future.

The $2 billion goal matches the amount suggested by the Iowa Farm Bureau in a proposal offered by the organization earlier this month.

The Farm Bureau said the state could borrow $2 billion for economic development and school infrastructure projects, then pay off the debt by taking a slice of property taxes from across the state that are now used for local development projects.

Lamberti said legislators are interested in the Farm Bureau’s proposal but have made no commitment to use that financing plan.