Branstad wants business strategy to “strike while the iron is hot”

DES MOINES – Gov. Terry Branstad told a business conference Thursday he wants to “strike while the iron is hot” to entice economic growth with the lure of reduced tax and regulatory burdens.

Branstad said Iowa stands on the cusp of an “economic comeback and resurgence” but it will require legislative agreement yet this session to revamp the state's property tax system to bring down commercial rates and to cap residential and agriculture rates to head off a “roll up” that could result in a $1.3 billion tax spike over the next five years.

The Republican governor, who started his fifth term in January, said he already has taken steps to end project labor agreements that drive up cost of construction projects, require job impact statements on all new state rules and regulations, and to conduct a systematic “sunset” of state rules and regulations with an eye on balancing health and safety protections for citizens while removing impediments to business development and growth.

But he said a key component to meeting his goals over creating 200,000 jobs and raising Iowans' income by 25 percent over five years will be approval of a property tax relief package that he hopes will lower commercial property rates by 60 percent for new business startups and phase down rates for existing commercial property by a like amount over five years. He also wants to slow the growth of residential and agricultural property classes by capping yearly increases at 2 percent to bring “equilibrium” to all property classes over time.

He said the plan that he is negotiating with the Legislature also would provide $250 million over five years to local governments to “hold them harmless” without providing them a windfall during the phased changes in property tax collections. House GOP leaders said Thursday they are moving forward with elements of the governor's plan and concepts they support while majority Senate Democrats have taken a different tact by looking at a tax credit approach that would avoid a shift of tax burdens to residential homeowners.

“This is the ideal time to do it,” Branstad said of the proposed property tax reforms and changes that are pending in the Legislature. He told several hundred Smart Conference attendees that Iowa's current commercial property tax system “is not fair, it puts us at a competitive disadvantage, we've got to get rid of it”

Doing so, he said, would “send a very clear signal to business decision makers at a very critical time that Iowa is a state on the move, Iowa is a state open for business and this is a good place to locate. I believe we've got to strike while the iron is hot.”

Branstad told reporters after the conference that he did not believe his proposal to cut state corporate income tax by half – from 12 percent to 6 percent – was dead for this session, but the idea is not on any priority list in the House or the Senate and legislators have rejected the governor's proposed graduated tax increase for state-licensed gambling casinos as a way to offset the lost revenue due to a business tax decrease.

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