Iowa Legislature Passes $503M Values Fund

Package Isn't All Governor Expected; Veto Possible

Changing mindsets within a state to embrace making significant public investments toward building an innovation economy can be a daunting task, particularly with the fiscal environment all state goverments are currently facing. With an aggressive series of town meetings and web forums, and strong vision and top-level leadership, Iowa succeeded to make its first big steps toward that goal with late-night votes by the State Legislature this week during a special session.

Iowa Governor Tom Vilsack began his second term in January with a call for the state to spend a record $500 million over five years for economic development <see http://www.ssti.org/Digest/2003/011703.htm#Govs>. With the passage of two bills at 2:00 a.m. Wednesday morning, the Republican-controled state legislature gave the Democratic Governor what he asked for — intertwined with several tax changes that he was much less inclined to support.

Calling for creation of a five-year, $503 million Iowa Values Fund to support economic development opportunities in the specific areas of life sciences, software and information technology, advanced manufacturing, and value added agriculture, the bills authorize and allocate funds for activities including:

• entrepreneurial and business assistance grants, including funding for business start-ups and expansions, modernization, and business retention and attraction ($178 million over four years - $45 million first year).
• university and college-based financial assistance for protein purification and extraction facilities, innovation accelerators, business parks, incubators, transgenic livestock facilities, FDA drug approval laboratories, advanced laboratory space and a national center for food safety and security. While grants may be awarded to public and private institutions, no less than $25 million is to be distributed among three state universities. The State Board of Regents would administer the program ($27 million over four years - $6 million first year).
• an economic development marketing fund to support a marketing strategy to promote Iowa "as a lifestyle, increase the population of the state, increase the wealth of Iowans, and expand and stimulate the state economy" ($20 million over three years - $2.5 million first year).
• loan and credit guarantees for productive equipment and machinery, working capital, R&D, marketing and other costs ($22.5 million - $2.5 million first year)

For fiscal years 2004-05, a total of $62 million and $66 million, respectively, is appropriated for the Iowa Values Fund.

The legislation calls for several specific indicators to be used to measure the effectiveness and impact of the state's investments through the Iowa Values Fund. Iowa's performance for each indicator is to be evaluated annually relative to the five Iowa geographic regions, the other seven states in the "upper midwest region" and to national averages.

Gov. Vilsack is quoted in the local newspapers as saying he will need to take some time to look at the fine print of the two pieces of legislation before determining if he can sign either of them. Republican legislators say he has to sign both to get what he wants. By law, the governor has 30 days to act.

House File 683, which outlines the appropriation schedule, and House File 692, which provides the enabling language for the Fund, are available under the link "Passed by Both Chambers" at: http://www.legis.state.ia.us/Mapper.html