Corbett asks Iowa lawmakers for $200 million for flood recovery

DES MOINES – Reaction from Iowa lawmakers' to a $200 million request for Cedar Rapids flood protection was generally positive Tuesday, but key lawmakers said it's not a done deal.

“I believe extraordinary times call for extraordinary means,” Sen. Matt McCoy, D-Des Moines, said after hearing Mayor Ron Corbett's plea for state assistance to protect the city – both sides of the Cedar River – from future flooding.

Corbett, the former speaker of the Iowa House, spent little time on the human tragedy that unfolded in June 2008 when the Cedar River flooded a five-square area of the state's second-largest city other than to thank lawmakers for the $125 million in state assistance the city has received. Instead, Corbett told the Senate Appropriations Committee and a joint meeting of the House and Senate Local Government committees about the economic impact of the food on the business community and the future impact on state revenues if flood protection isn't built.

In simple terms, he said, businesses will not invest in Cedar Rapids without flood protection. Without private sector investment there won't be job growth. Without job growth there won't be sales tax growth, Corbett said.

“Obviously we don't like to give up any revenue,” said Senate Appropriations Committee Chairman Bob Dvorsky, D-Coralville. However, he thinks Corbett presented a strong argument that if retail sales don't recover in Cedar Rapids the state stands to lose revenue. Cedar Rapids and Linn County generate $180 million a year in sales tax revenue – second only to Polk County.

“I think it's a case that you have to make sure that Cedar Rapids, Des Moines and other communities are viable or you don't get the state sales tax,” Dvorsky said.

Investing in the protection of the state's second-largest city is an investment in the state itself, Corbett said. “A strong Cedar Rapids is a strong Iowa.”

That argument makes sense to Linn County lawmakers, House Local Government Chairman Nick Wagner, R-Marion, said, but he's not sure everyone will jump at the opportunity to invest in Cedar Rapids. “Everyone thinks their community is the hub of the state.”

However, Wagner, who also sits on the House Appropriations Committee, thinks the sales tax diversion could be structured in a way to minimize the impact on the state budget.

“We're looking for innovative ways that local governments can recover,” he said. It's important that Cedar Rapids is looking for long-term funding – over 10 years or more, rather than a lump sum appropriation, Wagner said.

The city is looking at a $375 million system of levees, concrete walls, removable flood walls and pumps needed to protect the city's downtown core, major industries and neighborhoods.

The Army Corps of Engineers has signed off on a $99 million plan to protect the community on the east side of river, but Corbett said it is “morally imperative” to protect the community on both sides of the Cedar River.

If Congress approves Corps' plan, the sales tax diversion along with extension of the local option sales tax would be the state and local share of the projects.

There is a sense of urgency, Corbett said, because the Water Resources Development Act is likely to see congressional action this year. Federal agencies and members of Congress want to see a dedicated revenue stream before including the projects in their funding plans.

“I don't relish coming in here as mayor asking for a handout, but we did suffer a $6 billion disaster,” he said.

He pointed out that the community has stepped up by approving a local option sales tax and voters will be asked May 3 to extend it for 20 years to cover the city's $170 million share of the cost.

Corbett noted that Cedar Rapids is not the first to ask for a sales tax diversion. The plan is generally patterned after one the Legislature approved to help Newton build a NASCAR speedway.

“If a speedway is worthy of your investment, surely disaster prevention is as well,” Corbett said.

Sen. Jeff Danielson, D-Cedar Falls, said he supported the Newton plan “and I'm generally supportive of this.”

Others had reservations. Sen. Herman Quirmbach, D-Ames, noted Cedar Rapids received a “sizable share” of the state I-JOBS funds for flood-related infrastructure projects. He also pointed out that almost 50 percent of state general fund revenues go back to communities in the form of K-12 school aid.

“So some of any (sales tax) revenue increase is already going back to communities,” Quirmbach said.

That's true, Corbett said, emphasizing what he sees as the win-win nature of the proposal: that a stronger, more economically vibrant Cedar Rapids benefits the entire state if for no other reason than it will generate more sales tax and income tax revenue for the state to fund its priorities.

“This funding plan makes Cedar Rapids stronger and it makes Iowa stronger,” he said. “The time to do the right thing is now.”