ABI to Build on Successes of 2022 Legislative Session

“It’s a hobby of mine,” said Mr. Bywater. “We’re very pleased with the legislative success ABI had last year, as well as the outcomes with the Legislature in general.”

Following legislative sessions is something of a family tradition for Mr. Bywater, president and general manager of Bankers Advertising Company Iowa City. The fifth-generation family-owned company’s 90 employees provide promotional and marketing products to customers “in all sorts of different fields” across the Midwest. 

“My great-great grandfather who started the company also helped start ABI,” he said. “We think it’s important to have and to advocate for us.”

Priorities may shift between legislative sessions, but Iowa businesses’ focus remains familiar to longtime members as ABI plans to build on the successes of the ‘22 session.

ATTRACTING AND RETAINING WORKERS

“Those are all key to making sure large and small businesses can operate as they want to, as well as to make the state even more attractive,” said John Riches, communications and public relations manager for Arconic. The Pittsburgh-based company employs about 2,500 at its plant in Riverdale, where they produce aluminum sheet and plate for customers in aerospace, defense, automotive and other industries.

“We are recruiting all around the country, so anything we can provide that gives Iowa an edge” represents progress, said Cindy Dietz, associate director of state government relations for Raytheon Technologies. “We’re always looking for ways to make us stand out.”

Raytheon’s Cedar Rapids-based Collins Aerospace subsidiary employs about 9,000 Iowans, mostly in Cedar Rapids, with manufacturing and assembly plants in Coralville, Manchester, Decorah and Bellevue. Raytheon’s power and controls unit also has facilities in Carroll and West Des Moines.

COVID’s workplace and supply-chain disruptions only heightened the top challenge facing Iowa business: attracting and retaining qualified workers.

“It’s the one that probably everybody mentions,” said Ms. Dietz. “We’re all in the race for talent, especially after COVID, and in Iowa with our very, very slow population growth.”

“It’s probably top priority for us this year,” said Brad Hartkopf, director of public policy. “There are more jobs available than there are people unemployed in Iowa right now. We’re pleased with the progress the governor and the Legislature have made on this issue.”

Mr. Bywater noted the pandemic prompted workers to reassess what they want from their work, further complicating recruitment and retention.

“As an economy we’re struggling a little bit with some shifts in what we do, shifts in what people are available and what their priorities are,” Mr. Bywater said. “People want to retire a little sooner, and there’s some quality of life issues. We have to create a situation where people want to work in the environment we have.”

“The effort to improve our workforce situation is key,” Mr. Riches said. “We continue to struggle, as we have for decades, in the skilled trades.”

REDUCING COSTS

Iowa’s business climate remains a work in progress as ABI builds on past accomplishments. Legislation passed last year should produce an estimated $366 million in reduced costs in taxes, unemployment insurance, and health care.

Changes to Iowa Workforce Development programs adopted last session were designed to get earlier assistance to laid-off workers and return them to the workforce sooner. 

“We think it will keep individuals attached to the workforce, and bring meaningful savings for employers,” Mr. Hartkopf said.

“We really saw that as an extension of some workforce needs, trying to help us with retention and skill development,” Mr. Bywater said. “IWD is trying to change itself from simply supporting the unemployed to looking at, how do we get people back in the workforce faster?”

Future Ready Iowa and Elevate Advanced Manufacturing, two relatively recent state programs, are intended to address workforce needs.

Future Ready seeks to connect residents with the education and training to land new jobs and careers.

The issue’s importance prompted Arconic’s own workforce development efforts, including a new program with Pleasant Valley High School, in Bettendorf, that brought two apprentices into its plant this year. The company has also supported CNC training programs in Davenport and Bettendorf schools.

“It’s early, but we’re starting to see results,” Mr. Riches said. 

IWD’s 2023 unemployment tax table will show a reduction in unemployment insurance rates paid by employers, saving them about $107 million over the year.

The new UI rates are the state’s lowest since 1999, according to Mr. Hartkopf.

“We’ve already seen some improvements (in cost),” Mr. Riches said. 

“That’s something we’ve advocated acting on for a number of years,” Mr. Hartkopf said. “It was time to take a look at that system that hadn’t been modernized in a number of years.”

The 2022 session also produced a reduction in the state’s top corporate income tax rate from 9.8 to 8.4%, with estimated savings for 2023 of $150 million. When last year’s legislation is in full effect in 2026, the rate on individual returns will drop to 3.9 percent as surplus tax receipts are used to lower rates.

“It will eventually get down there, but (corporate rates) may take a little more time than the individual side,” Mr. Hartkopf said. “We’ll be one of the most competitive states in the country for states that tax income.”

“The income tax has been worked on, and the property tax they’re going to be working on,” Mr. Riches said. “It will be beneficial to both residents and businesses.”

“Because we make a lot in Iowa but we don’t sell a lot in Iowa, it has less of an impact on us, but it has a big impact on the businesses we work with,” Ms. Dietz said. “We have over 400 suppliers in the state, and we spend over $200 million (annually) in the state.”

Iowa’s tax policy, workforce development, and other factors are especially apparent to larger companies doing business across state lines.

“We have other facilities that roll aluminum,” Mr. Riches said. “There could be cases where a plant in Tennessee might get a project because they were able to respond more quickly than we were.”

“We have independent contractors we work with in other states,” Mr. Bywater said. “We pay close attention to the business climate in the Midwest and the other states we operate in.”

The state’s property tax system remains an ABI priority for this year’s session. With local governments, school districts, and other entities collecting property taxes, it’s a more complex matter than the income tax, which is paid directly to the state. 

“There are several hundred levying authorities in the state,” Mr. Hartkopf said. “It’s not like the income side, where you can move the rate down. We want to be a resource for legislators — we want to ensure that commercial and industrial (properties) see relief as the individuals do.”

REGULATORY AND TORT REFORM

On regulatory and tort reform, “we’re taking a holistic view,” Mr. Hartkopf said. “Whether you’re trying to attract doctors to the state or people to work in the trucking industry, we think it’s crucial.”

Regulatory changes should be “all about cutting the red tape and shortening the (permitting) process,” Mr. Riches said. “Those kinds of things if they slow a project down too long, those projects may go somewhere else.”

“Whenever we can make it more attractive again for recruits from out of state to come to Iowa, that’s a win,” Ms. Dietz said.

Priorities vary across different industries, but Mr. Bywater hopes for some clarification in regulations governing workplace drug testing. The law currently requires businesses that test to test all employees, regardless of their job description.

“If we’re looking at either state or national legalization of marijuana, it’s really hard to maintain a drug- testing program under our current rules,” Mr. Bywater said. “We need to manage by risk. If we’re talking about someone who’s plowing our snow we (now) have to test them the same as the receptionist.”

QUALITY OF LIFE

Maintaining Iowa’s traditional advantages can help in the competition for workers. 

“We always tout the quality of our schools and the safety of our communities, the low crime rate,” Ms. Dietz said. “Even the place-making activities the state has been doing, we tie into those efforts and put those on various job boards as resources for potential employees.”

“We can’t talk about workforce while shorting our schools,” Mr. Bywater said. “We need to pay attention to the formula for education, and make sure the balance is maintained. We need to make sure we’re paying close attention to that.”

“Place-making” projects such as Davenport’s riverfront improvements have a role, Mr. Riches said.

“Having the amenities that draw people in, whether it’s for visits or if they’d like to live in an area like that,” he said. “Those things continue to make the area desirable from the standpoint of what people can do and what people can see.”

Mr. Hartkopf cited the federal government’s initiative to expand reliable broadband internet to rural communities, and the need for affordable housing in many of those same areas. In December, the Treasury Department announced a $152 million grant that should extend broadband coverage to an estimated 18,972 residential customers, about 16% of Iowa locations still lacking high-speed internet.

“A lot of progress is being made, but it’s something we’ll continue to work on because it’s the biggest concern we hear from our members,” he said.

For Mr. Bywater, workforce development extends to such domestic quality-of-life matters as the availability of child care and health care.

“Something that’s near and dear to me is the health care arena and what it costs families to participate in our health-care system,” he said.

Whatever unforeseen issues arise, tracking the legislative process remains critical for Iowa businesses.

“We’ll be supporting efforts to have government work better for business, whatever that looks like,” Mr. Hartkopf said.

“Each business you talk to is probably going to have a different take,” said Mr. Riches. “They all have different cases.”

“We’ve got so many new legislators this year,” Mr. Bywater said. “It’ll be interesting to see what evolves out of that collective conversation.”