Special Session, Special Incentives
Barely a week ago, when we were at the National Cattle Congress Fair, there was chatter about a special legislative session being called to address incentives concerning a steel mill coming to Iowa. That was on a Thursday.
By the next Monday, the scene was the Oval Office of the White House, with the President announcing the largest steel plant in history to be built in Lee County. The next day, the Governor called the legislature into special session on Friday. And after a full day, changes were made to Iowa’s MEGA law, right down to immediate signature by the Governor. MEGA stands for Major Economic Growth Attraction law, and provided for big incentives—projects of a billion dollars. The law was changed because a $15 billion project, like this one, needed different guidelines.
Some wonder what the hurry was, since a new legislature takes over in January. But a new Governor will take over in January, as well…so the only way to make sure the deal was done was to do it quickly. Whether it’s a good deal for the state and its people or not will obviously play out over the next decade. But by the numbers, according to a third-party assessment relied upon by lawmakers, when completed the project will lead to an estimated $9.4 billion in annual economic output, $4.8 billion added annually to Iowa’s GDP, and some $744 million in annual labor income, with the average pay being $48/hour plus benefits.
And for those concerned about the changes in Iowa’s individual income tax, the project will lead to an estimated $228 million in state and local government revenue. Iowa’s revised tax structure was cited by company officials as a reason why this state was more attractive than blue-state Minnesota, where the company has its mine to supply material for the plant.
And as economists have noted, such a project brings additional investment in local infrastructure, including natural gas, electricity, road and bridge improvements. Of course, someone has to pay for all that, so the earlier numbers about revenue are not all profit.
There are plenty of examples across the country of major projects that never took off, with taxpayers on the hook. Iowa officials assure us that there are targets and guardrails built into this deal, to protect taxpayers. So as with all business dealings, it’s a gamble. We’ll have to hope this one pays off, for all concerned.
