Real World Perspective

From Republican Leader Kraig Paulsen:
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The House Economic Growth Committee concluded its final committee meeting of the session by inviting Iowa businesses to testify on Iowa’s business climate. This idea was included in the House Republicans’ job creation plan rolled out last fall. The meeting marked the first time the Economic Growth committee engaged in an in-depth discussion with the private sector on the struggles facing Iowa businesses as they work to jumpstart the economy and create jobs.

The panelists participating in the meeting were Flora Schmidt of the Home Builders Association of Iowa and Mark Hanawalt of United Equipment Accessories, Inc. Schmidt is the Executive Officer for a state wide trade association comprised of 2200 small, independent business owners representing the construction, development, supplier and subcontractor industries. Hanawalt is the President and CEO of a manufacturing and distribution firm specializing in products utilized by the wind energy industry and various other sectors.

Ms. Schmidt focused her comments on regulatory mandates and the costs associated with complying with regulations adopted by state and local governments. She indicated that whenever a new code or regulation is adopted a substantial investment of time and money is spent in complying with it, and the costs are almost always passed onto the consumer. In the homebuilding industry, this means the cost is passed onto the homebuyer and is realized on the price tag of the house.

Ms. Schmidt also highlighted a number of state legislative issues and government hurdles that will increase the cost of doing business on Iowa’s employers and further exacerbate Iowa’s cloudy business climate including too many regulations versus voluntary compliance programs.

Mr. Hanawalt told a story of how his business started and walked legislators through the expansion process. He also spoke to the issues he believes will enable him to expand further and create additional jobs. A member of the committee asked him about the one thing Iowa can do, or not do, to help his business. His answer? “To put it bluntly, get out of my way. I am going to grow with or without you.”

Mr. Hanawalt spoke about the need to “leave money in the people’s pockets” or in other words, keep taxes low. He suggested that if Iowa truly wants to keep existing businesses here and attract new industries, the state must reorganize its tax code in an effort to reduce taxes across the board. He also emphasized on the importance of predictability in the tax code. Specifically, he said that implementing a long-term business plan is difficult when the state makes a decision to give businesses bonus depreciation in one year and then takes it away in the next.

Other controversial legislative proposals pending in the Iowa House, including labor bills, were discussed. Hanawalt said that every time the state discusses changing Iowa’s Right to Work status or implementing prevailing wage laws, economic development directors in Nebraska and South Dakota contact him asking if he is willing to pick up and move his operations to their state. A stark reality legislators must take into consideration when deciding whether or not to support such proposals.

The message of the meeting is consistent with what I’ve been saying….in order to turn the economy around and put Iowans back to work, the legislature must focus their efforts on policies that foster a positive economic climate. House Democrats must move away from talking about bills that deter business activity such as the bill to repeal Iowa’s right to work law. They must also stop balancing budgets on the backs of Iowa taxpayers.

As always, if you have any questions or concerns, please don’t hesitate to contact me via email at kraig.paulsen@legis.state.ia.us or call my office at (515) 281-3521.

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