C.R. business leaders question Democrats’ expectations

CEDAR RAPIDS - Business leaders like the sound of a commercial property tax relief package being pushed by Iowa Senate Democrats, but question whether the legislators' job creation expectations are realistic.

Democrats will make another try to get their plan approved when the Legislature convenes in January. It calls for exempting the first $340,000 of commercial property tax valuation, which could result in a $6,000 tax break for property owners.

The goal, according to Senate Ways and Means Chairman Joe Bolkcom, D-Iowa City, is relief for small business.

Those small businesses “create a lot of the jobs,” added Sen. Herman Quirmbach, D-Ames, who teaches economics at Iowa State University. “In this recession they have been pushed to the edge of extinction.”

Four out of five commercial property owners in Iowa would see a decrease of almost 45 percent when the $200 million plan is fully funded, Bolkcom said. That would help property owners across the state as opposed to plans offered by Gov. Terry Branstad and House Republicans that, Democrats say, would send millions of dollars of tax relief to out-of-state corporations. Under the Democratic plan, a mom-and-pop store would get the same $6,120 tax break as a Walmart store.

However, business community members at a meeting hosted Thursday by the Cedar Rapids Area Chamber of Commerce wondered whether the tax relief was misdirected if the goal is job creation.

Jon Dusek of Armstrong Development pointed to a study by Quirmbach's colleague, ISU economist David Swenson, that found job growth is more likely to happen in metro areas than rural Iowa and small towns. If it's job growth the lawmakers are seeking, he's not sure they'll get their money's worth.

Another property owner acknowledged the tax break would be an incentive for businesses with five or 10 employees to grow, but wondered what incentive there would be to stay in Iowa once they max outgrow the $340,000 property tax valuation.

Legislators noted their tax relief plan would not be the only economic development assistance available for job creation.