Capitol Notebook: Iowa House passes tax credit to spur rural growth, job creation. Will businesses come?

DES MOINES — Rural Iowa continues to see shrinking populations and main street businesses unable to keep the doors open.

A bill unanimously passed by the Iowa House on Tuesday hopes to fix that.

House File 2674 creates a new rural development tax credit designed to encourage investment in new or expanding businesses in Iowa's 88 smallest counties. It allows up to $27 million in tax credits for investors and makes $45 million in growth capital available, such as loans or equity investments, for rural small businesses across Iowa to expand their operations and create quality jobs.

Eligible businesses must have fewer than 250 employees and must be outside the 12 most populous counties in Iowa.

The Iowa Economic Development Authority would begin accepting applications next January.

The bill would create certified rural business growth funds for investment in qualified businesses.

If all the money is not invested within 30 months, if the money does not stay invested for at least five years, or if enough jobs are not created, the fund managers would pay a penalty back to the state.

“Today, we have an opportunity to bring a truly unique solution to help save our rural communities — that we can make a statement that we as legislative body are all in on the challenge,” said bill manager Rep. Derek Wulf, R-Hudson. “ … We clearly know what comes first in this complex problem, and it's getting the quality jobs and businesses growing in rural Iowa. After all, you're not a true Iowan if you don't believe if we build it, they will come.”

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Rep. J.D. Scholten, D-Sioux City, said of the more than 3,000 counties across the country, “only 28 of them receive 80 percent of venture capital money.

“So when we look at the future and where economic development is happening, it's not happening in well over 90 percent of this country,” Scholten said in support of the bill.

Democratic Reps. Ken Croken, of Davenport, and David Jacoby, of Coralville, expressed concern over the exclusion of the 12 most populous counties in the state, which still contain rural areas that would lose out on the opportunity to grow business and be able to bring more employees into their communities.

“For instance, in Johnson County, we have the small town of Hills, Iowa. Hills, Iowa, is losing their school — losing the backbone,” Jacoby said. “ … But now, under the rural tax credit program, they will not be eligible to participate to help rebuild their town.”

The bill now heads to the Iowa Senate for consideration.

Senate approves proposed constitutional amendment on taxes

Iowa voters would be asked as soon as 2026 whether to enshrine in the Iowa Constitution a requirement that the state have only one state income tax rate under a proposal approved by Senate Republicans.

To amend the Iowa Constitution, a proposal must be approved by consecutive two-year meetings of the Iowa Legislature separated by an election, then by a public vote in a general election.

All Republicans voted for and all Democrats against Senate Joint Resolution 2004, which would amend the Iowa Constitution to declare that there may be only one state income tax rate above zero.

Four states — Colorado, Illinois, Michigan and Pennsylvania — have a flat tax requirement in their constitution.

Statehouse Republicans also are advancing a proposal to amend the Iowa Constitution to require a two-thirds vote of the Iowa Legislature to raise state income taxes.

State to pay nearly $50,000 in settlement with reporter

The state will pay for attorney fees and adjust House press policies as part of a settlement with liberal journalist Laura Belin, state officials decided Tuesday.

The three-member State Appeals Board agreed Tuesday to settle a lawsuit brought by Belin against Iowa House Chief Clerk Meghan Nelson after Belin was denied press credentials for the Iowa House of Representatives.

Belin sued Nelson in January, alleging the refusal to provide her credentials to the Iowa House violated her First Amendment rights. Press credentials allow reporters to sit on the House floor and afford easier access to state lawmakers.

Shortly after filing the lawsuit, Belin was given credentials to the House floor, and a policy requiring that credentialed journalists be “nonpartisan” was removed from the House press rules.

As part of the settlement, the state will pay nearly $50,000 for Belin’s attorney fees. Belin, the publisher and lead reporter for the liberal-leaning Iowa politics website Bleeding Heartland, was represented by the Institute for Free Speech.

Nelson agreed to update the House press credentials terms to state that a denial of credentials will be accompanied by a notice detailing the criteria the applicant failed to meet, and to not reinstate the requirement that credentialed reporters be “nonpartisan.”

The agreement also stipulated that Nelson admitted no fault over the lawsuit.

Moody's, Fitch give Iowa top credit rating

Two major credit rating agencies reaffirmed a AAA rating for Iowa this month.

Bond rating agencies Moody’s and Fitch both reaffirmed Iowa’s rating as AAA, signifying a high-quality credit rating and minimal risk. Moody’s report said Iowa has a diversifying economy and governing practices that “result in closely managed finances with healthy reserves,” according to a news release from Gov. Kim Reynolds’ office.

“Despite the challenges of the national economy, Iowa’s fiscal health is strong and stable,” Reynolds said in a statement. “Our conservative budgeting practices should continue to allow us to return tax dollars to the hardworking men and women of Iowa — where they belong.”