As he heads off to the “happy hunting grounds” of California to stalk economic development prospects, Gov. Terry Branstad says the $7.5 million owed the state by companies that failed to meet their job creation targets is a “relatively small amount.”
Still, the governor said Monday, the state will go after those companies in an effort to recover as much as possible. The state needs to use “common sense,” however, because some of those companies were start-ups that failed “and there’s no money to get,” Branstad said. In other cases, economic conditions beyond the control of state aid recipients have delayed development.
“We’ve had an economic downturn national over the last several years,” he said, “so instead of two years, it might take three or four years. We have to be reasonable and give them a little extension.”
An investigation by The Gazette found there are more than 50 companies owe Iowa taxpayers $7.5 million they received, but did not pay back since 2003 after breaking contracts to deliver jobs and capital investment.
However, Branstad defended the state’s use of those economic incentives, often relatively small low-interest or forgivable loans. The Iowa Economic Development Authority expects to offer more than $120 million in tax breaks and $8.3 million in direct assistance for the fiscal year that ends June 30.
Branstad considers the $7.5 million owed the state for assistance over the past 10 years – about 11 percent of assistance given businesses -- “a pretty small amount considering the fact we’ve had $5.3 billion in capital investment in the past two years.”
He has no intention of putting economic development efforts on hold. Tuesday and Wednesday he’ll be calling on companies in California where the prospects are good because of high taxes and the high cost of doing business.
Branstad will meet with companies already doing business in Iowa, companies familiar with “the benefits of the work ethic in Iowa and our competitive business climate that we’re always working to make it better.” He’ll also meet with prospects “we hope to encourage to expand here.”
On another front, Lt. Gov. Kim Reynolds will be leading a trade delegation to Vietnam and the Philippines. She’ll be accompanied by representative of the pork and beef industries as well as small manufacturers.
They will be encouraging international trade, including agricultural goods, as well as making the argument that Iowa is a great place to invest.
“Iowa is poised for tremendous economic growth,” Reynolds said.According to the Iowa Economic Development Authority, Branstad will be accompanied by two staffers and travel for all three will cost an estimated $2,500.