The People's Business

DES MOINES – Iowa lawmakers promised that they would work tirelessly to transform the state’s economy.

And they will. Right after they finish arguing about the cigarette tax, declaring war on deer, learning about civility, debating whether the state’s universities are run by monkeys, locking up cold medicines and carefully weighing the merits of daylight savings time, spinner hubcaps, secret compartments and channel catfish.

They swear it’s the very next thing…hey, is that free ice cream in the cafeteria?

OK, to be fair, groups of lawmakers have been working very hard behind the scenes to craft an economic development strategy. They’ve come up with all sorts of ideas for creating quality jobs, training workers and sparking lucrative university research. And much of the work has been bipartisan.

The only problem is no one seems to have any idea how to pay for it all.

Gov. Tom Vilsack wants a revived $800 million Iowa Values Fund that would provide incentives for top-shelf businesses as well as dollars for research, cultural attractions, state building projects and water quality initiatives. But he has yet to say exactly where he’d find the dough.

House Republicans and Democrats are touting a $500 million values fund. But when House GOP leaders unveiled their budget blueprint last week, there was no mention of a values fund spending strategy.

Senate Republicans say they’d rather spend $50 to $80 million each year for the next decade on economic development, including their plan for awarding tax credits to companies that create jobs. But again, the dog ate the financing plan.

Amid this era of indecision, the values fund’s critics are on the offensive. Senate GOP leaders, never big fans of a big values fund, floated a poll showing just eight percent of Iowans surveyed believe “borrowing $800 million’’ is the best way to grow the economy. The poll was commissioned by Iowans for Tax Relief, which also opposes the values fund.

But the senate’s tax credit idea fared far better in the survey. Imagine that.

Critics also leaked a phantom, two-year-old state report claiming that values fund awards for Wells Fargo in West Des Moines and Trans Ova Genetics in Sioux Center would result in a net loss for taxpayers. They didn’t mention a recent and more sophisticated analysis that shows net gains for the state.

Mike Blouin, director of the Iowa Department of Economic Development, has traveled far and wide seeking to counter the critics. He argues Iowa’s growth prospects have brightened considerably since lawmakers first embraced the values fund concept. Where once just a handful of firms were interested in Iowa, now more than 300 prospects are knocking on the door.

But even his Statehouse friends acknowledge that Blouin’s political prospects are an obstacle. Blouin has yet to make up his mind about seeking the Democratic gubernatorial nomination, and Republicans aren’t about to hand a big legislative victory to a potential rival.

But regardless of whether lawmakers like big corporate giveaways or Mike Blouin’s politics, they know deep down that Iowa can’t opt out of the incentives race as long as scores of other states stay in.

Pella Corporation recently announced that it would build its latest plant in Macomb, IL, creating 750 jobs. The state of Illinois promised the Iowa company $7 million, or nearly $10,000 per job.

Even Iowa’s much-maligned $10 million values fund award to Wells Fargo only spends $5,000 for each of the 2,000 new jobs created by the project.

Lawmakers will approve a values fund or something like it, but the question remains how to pay for it. Some want to sell bonds financed with revenues from new casinos. But that revenue won’t flow in until 2007 and no one knows yet how to fill that nearly two-year gap.

Senate Republicans hate bonding and would rather use existing tax revenues. But they have yet to find an extra $80 million lying around. Maybe the cigarette tax will start looking better after all.

But not as good as that ice cream. Wow, extra sprinkles.

Todd Dorman is Statehouse bureau chief for Lee Enterprises newspapers. He can be reached at (515) 243-0138 or todd.dorman@lee.net