Iowans divided on views of state's economic development incentives, Iowa Poll finds

Copyright Des Moines Register & Tribune Co. 2018

Iowans are largely divided on their views of state economic development programs that offer tax credits to spur business growth, according to a new Des Moines Register/Mediacom Iowa Poll.

Forty-eight percent of respondents characterized state economic development incentives as "mostly a success." Another 35 percent described them as "mostly a failure" and 17 percent were unsure.

But on a separate question, a slim plurality said they favored cutting tax credits: 44 percent of respondents said they would favor an effort to "dramatically reduce the number of tax credits awarded to Iowa businesses." Another 41 percent said they would oppose such an effort and 15 percent were unsure.

The poll, conducted by Selzer and Co. of Des Moines, questioned 801 Iowa adults Jan. 28-31 and has a margin of error of plus or minus 3.5 percentage points.

More than half of Democratic respondents (54 percent) favored a dramatic reduction in business tax credits, while 36 percent of Republicans surveyed favored such a reduction.

Stacie Hargrave, a 41-year-old Oskaloosa independent who leans Republican, said the state must continue investing in economic development incentives.

"They need to do that," said Hargrave, who works at a local Sherwin Williams store. "They need to give them to keep their employees and to get more people employed with them. I'm thinking it will bring people on unemployment more opportunity to work."

The Iowa Economic Development Authority has recently been criticized for some of the financial incentives it awards to companies pledging to retain or grow jobs in Iowa. Democrats in particular railed against the Republican-controlled administration's $20 million award for an Apple data center in Waukee, which was announced in August 2017.

IEDA Spokeswoman Brooke Miller said the agency has about $16 million annually for direct cash incentives through its High Quality Jobs program. Some of that money is directed for other needs like regional and workforce marketing, finance administration and compliance. The agency also expects a retroactive cut in those funds this year, Miller noted.

IEDA also has a pool of about $105 million in tax credits that go to expanding businesses, workforce housing, brownfield projects and renewable chemical production tax credits, Miller said.

But IEDA isn't the only agency offering state tax awards. The Department of Revenue administers the Research and Development Tax Credit program, which each year cuts checks worth millions of dollars to companies that perform R&D work in the state.

The Revenue Department says the total value of state tax credits has grown from about $153 million in 2005 to an expected $427 million in 2018 — an increase of about 180 percent.

Those programs will likely be up for debate this spring as state legislators grapple with lower-than-expected revenues and consider sweeping tax reform.

More:Tax credits could be on chopping block amid tax reform talks

Poll respondent Sarah Schagt, a hospice case manager in Audubon, said the state should draw a more definitive line between small businesses and the largest companies when handing out tax credits.

A 30-year-old political independent who leans "pretty liberal," she said she wants to see more investment in small businesses and vocational education. And she wants to see more activity in rural areas, not just big cities.

"Our town is a dying town," Schagt said. "We even had a little coffee shop right up the street that couldn’t make it. It's just sad because I don’t know how much we’re going to have left."

But Judy Carnes, a 71-year-old retired nurse in Hiawatha, said the business tax credits help ensure the livelihood of Iowa communities.

"I’m very for it because if we don’t get some jobs in here the young people will leave," she said. "And therefore, the old people can't afford the taxes."

Carnes, a political independent, said the tax incentives "shouldn’t go on forever." But she says incentives seem to have worked in Hiawatha, which has recruited some firms from nearby Cedar Rapids.

"The growth is unbelievable," she said. "The only bad thing is that property taxes go up to support that because the businesses aren’t having to pay as much."

She said her annual property tax bill has increased by about $2,000 over the last decade.

Poll respondent Cindie Guthrie, 47, said the state needs businesses to pay more into state coffers now more than ever. She favors curbing business tax credits. That money, she said, could help make up for funding problems in mental health, education and veterans' programs.

"I believe the businesses should pay more taxes so it offsets the working-class people, the people who don’t make the big money," she said. "I want to see an increase in what (businesses) have to pay and a decrease in what the working class has to pay."

Guthrie, a Democrat who lives in Moorland, formerly worked in home health care, but has been disabled from a car wreck since 2015. She said she understands the importance of economic development programs, but worries they may not be spurring high-paying jobs that pay a livable wage.

"Iowa needs more jobs," she said. "But Iowa needs more jobs that don’t pay the minimum wage, that have benefits. That’s what I see as the major problem: The working class can’t make it right now."

About the poll

The Iowa Poll, conducted January 28-31 for The Des Moines Register and Mediacom by Selzer & Co. of Des Moines, is based on telephone interviews with 801 Iowans ages 18 or older. Interviewers with Quantel Research contacted households with randomly selected landline and cell phone numbers supplied by Survey Sampling International. Interviews were administered in English. Responses were adjusted by age and sex to reflect the general population based on recent census data.

Questions based on the sample of 801 Iowa adults have a maximum margin of error of plus or minus 3.5 percentage points. This means that if this survey were repeated using the same questions and the same methodology, 19 times out of 20, the findings would not vary from the true population value by more than plus or minus 3.5 percentage points. Results based on smaller samples of respondents—such as by gender or age—have a larger margin of error.

Republishing the copyright Iowa Poll without credit to The Des Moines Register and Mediacom is prohibited.