Largely because of our proximity to tax friendly South Dakota, we in northwest Iowa have a unique understanding of and appreciation for the importance of state economic development assistance.
In its 2013 State Business Tax Climate Index, the Tax Foundation ranks South Dakota number two in the nation; Iowa, 42. This ranking speaks volumes about the challenges our local and regional economic development professionals face each and every day with respect to growing the economy in our corner of Iowa.
Including state economic development assistance as part of a package of incentives was key to the $1.7 billion expansion by CF Industries of its Port Neal fertilizer plant and the $26 million, two-phase local expansion by Sabre Industries. From capital investment to job retention to job creation, including construction jobs, one cannot overstate the importance of these projects to our local economy.
“The city of Sioux City’s successful effort to retain Sabre Industries, in a hyper-competitive, multi-state selection process, is an outstanding example of how both local and state economic development incentives can be used to leverage private capital investment and create hundreds of new jobs,” Siouxland Chamber of Commerce President Chris McGowan told us.
McGowan said incentives typically are introduced to negotiations late in the process.
“When necessary,” he said, “they can be used to level the playing field and help bring jobs, capital investment, and economic opportunity to our communities.”
Understandably, large incentives for major projects grab headlines, but state assistance supports many smaller northwest Iowa projects, as well. One key tool for a border region like ours is the Targeted Jobs Program. Renewed by the Legislature in May for five years, it allows qualifying businesses to apply for state withholding tax credits if they plan to relocate or expand in Iowa, provided they are creating or retaining jobs. According to a December 2012 report by the Iowa Economic Development Authority, 39 projects worth $37.6 million qualified for the program statewide from fiscal year 2007 through fiscal year 2012. Sioux City had the largest total awards at $12.9 million and the highest number of projects at 27.