Iowa Recommits $500M for Values Fund

After being struck down by the Iowa Supreme Court in 2004, the state legislature recently passed legislation re-creating a $500 million version of its Grow Iowa Values Fund. The bills commit $500 million over 10 years to support tech-based economic development and other economic development initiatives. Gov. Tom Vilsack signed the measures on June 10.

Passed late last month, House Files 809 and HF 868 authorize and allocate $50 million per year over the next 10 years to the newly resurrected Grow Iowa Values Fund, which was first proposed by Gov. Vilsack in 2003 (see the Jan. 17, 2003 issue of the Digest). The legislation allocates $35 million per year to the Iowa Department of Economic Development (IDED) for business start-ups, expansions, attraction and retention.

Universities will receive $5 million per year for capacity-building infrastructure in areas related to technology commercialization, entrepreneurship and business growth, and $7 million will support community college training and retraining programs.

In addition, HF 868 expands the state's R&D tax credit to allow up to $1 million in total credits for renewable energy generation, and allows for a 20 percent tax credit for contributions toward revolving funds to be established by new economic development regions. In lieu of tax credits, nonprofits contributing to the funds may receive state grants.

To help improve the state's ability to assist tech firms, the Economic Development Board must establish a Technology Commercialization Committee to be staffed by a new Technology Commercialization Specialist to be hired within IDED.

Included in the allocation is a requirement to support a business accelerator program at an undetermined level. IDED already supports several incubators, most recently announcing a $175,000 grant to the new Northeast Iowa Business Accelerator. The new incubator will be housed on the campus of Northeast Iowa Community College and draw on the college's staff and the staff of Clarke College, the University of Dubuque and Loras College, according to the Telegraph Herald.

On again/Off again/On again

New TBED initiatives with large price tags tend to draw unwanted attention in state legislatures, particularly when the governor and the House leadership belong to different political parties. The original Values Fund fell victim to that: A popular idea that everyone liked got bogged down with items only one side wanted.

During the 2003 regular legislative session, Democrat Gov. Vilsack and Republican leaders of the General Assembly were at odds over the original legislation of the Grow Iowa Values Fund bill and ultimately were unable to reach a compromise. The governor called a special session during which two separate bills were passed relating to the Values Fund. One of the bills, HF 692, created the fund and contained unrelated regulatory and tax policy favored by the General Assembly but opposed by the governor. In response, Gov. Vilsack vetoed many of the unrelated provisions, extending his line item veto authority into uncharted waters. The legal counsel for the legislature challenged the governor's move as unconstitutional.

The District Court ruled in favor of the governor stating that HF 692 was, indeed, an appropriations bill and therefore the line item vetoes were constitutional. However, the Supreme Court overrode the decision and the entire bill did not become law.

This time around, efforts to re-establish the Values Fund were led in partnership with key Republican members of the legislature, particularly Representative Clarence Hoffman, chairman of the House Economic Growth Committee.

More information about the Grow Iowa Values Fund is available at: http://www.iowalifechanging.com/ivfboards.html