Bill shuts Iowa's largest counties out of economic development funds for 3 years

Yahoo

19-03-2025

Reps. John Wills, left, Derek Wulf and Elizabeth Wilson considered legislation March 19, 2025 that would impose a three-year moratorium on Iowa Economic Development Authority programs and funding for Iowa's four most populous counties. (Photo by Robin Opsahl/Iowa Capital Dispatch)
Iowa's four most populous counties would not be able to access state economic development programs and their funds for three years under a bill advanced Wednesday by an Iowa House subcommittee.
The legislation, House Study Bill 310, would impose a three-year moratorium, from July 1, 2025 through June 30, 2028, on all programs administered by the Iowa Economic Development Authority (IEDA) and funding available through these programs for the four counties in the state with the highest population. The four counties impacted would be Polk County with a population of more than 505,000, Linn County with a population of nearly 229,000, Scott County with 174,000 and Johnson County at 157,000, according to U.S. Census data from 2023.
The IEDA oversees a number of programs throughout the state focused on economic and community development. Some programs work with businesses directly, while others work with local governments on community projects including infrastructure and disaster recovery efforts.
Rep. Derek Wulf, R-Hudson, said the measure was necessary because efforts by the Iowa Legislature to revitalize rural Iowa have not worked.
'It has not worked, folks, and what we need to do is have transformational change,' Wulf said. 'Is this the perfect answer? I don't know. We'll continue to have that discussion, but something has to happen.'
At the subcommittee meeting, advocates for business groups and local governments were largely against the measure. Dustin Miller with the Iowa Chamber Alliance said he understood the intent of the bill was to aid rural communities, but the measure would harm areas of the state that are often 'drivers' in the state's economy that will benefit surrounding counties.
He said the four counties targeted by this legislation have a gross domestic product of $85 billion, representing 42% of the state's total real GDP of $200 billion. Those counties also make up large proportions of the state's collected taxes — 36% of the general fund revenue raised for personal income tax in 2022 and 43% of the sales tax.
Miller also pointed to IEDA data showing a majority of awards were given to communities with populations between 5,000 and 30,000 — a total of 156 awards.
'Happy to talk about what is the best way to try and incentivize differing development, but at the same time, just want to be cognizant of the fact of, 'don't kill the golden goose,'' Miller said.
IEDA data shared by Wulf showed that in fiscal year 2024, 21.7% of award funding went to Polk, Linn, Johnson and Scott counties. Polk received an award total of $17,323,827; Linn, $17,937,281; Scott, $792,193, and Johnson $5,312,133. Linn and Polk counties were among the top 10 counties receiving IEDA assistance in FY2024, with only Boone County at $20,930,981 above them.
Wulf told reporters after the meeting that this funding could be better utilized in smaller communities. He said IEDA funding of up to $10 million going toward projects in Des Moines often only represents a portion of the total funding needed to complete the project.
'I'll tell you what, you send $5 million to Iowa rural communities, and it can mean the matter of whether the town survives or not,' he said.
Doug Struyk, representing the City of Des Moines, said this moratorium could take Iowa out of the running for many projects and businesses to consider coming to Iowa. In cases of new construction or large businesses, he said, many projects in cities like Des Moines are pulling workers from the surrounding areas.
'We have one benefit, which is we have a population of workers — a lot of projects need bodies to be able to fill the slots,' Struyk said. 'We believe, removing the largest four counties from the ability to receive these incentive funds removes the ability for many projects to even consider Iowa. When they're considering Iowa — they're not just considering Des Moines, they'd be considering many other areas in the state. So we believe … the intent is short-sighted and not in the best economic interest for the state.'
Rep. Elizabeth Wilson, D-Marion, said she supported advocates' points that economic development investments should be considered using a regional lens instead of being based on county populations.
'I think this idea of regionalism is actually … I think it's a really good idea, and I think it has a lot of merit,' Wilson said. 'And for that reason, the way that it stands, I would have to be a no.'
Wulf said figures on the economic impact of these four counties 'make the exact case for this bill,' saying that more attention and investment needs to go to rural areas.
'More importantly, as we went around the room, you know who's missing from this room?' Wulf said. 'Our rural representatives, our people with dirty pants, boots on the ground that aren't here, stating their case for why the money needs to be going to those areas for revitalization and growing their particular main street businesses. … So for them today, I will be their voice, and we'll be moving this legislation forward.'
The legislation next goes to the House Ways and Means Committee for consideration.