Plans to subsidize growth of the renewable chemical industry with up to $10 million annually in state tax credits were overwhelmingly approved by the Iowa Senate on Wednesday, despite pleas from one lawmaker that it\u2019s a terrible idea.<\/p>\n
The legislation is aimed at attracting investment in renewable chemical manufacturing and\u00a0advanced biorefining.\u00a0The goal is to build upon Iowa\u2019s renewable fuels industry, which makes products like ethanol and biodiesel from farm crops and crop residue.\u00a0Iowa needs to\u00a0move swiftly because of competition for business from other states, lobbyists say.<\/p>\n
The Senate voted 46-3 to pass\u00a0Senate File 2300<\/a>, which is a priority of Gov. Terry Branstad, the Greater Des Moines Partnership, the Iowa Board of Regents, and farm and business groups. A companion bill,\u00a0House File 2288<\/a>, was also approved Wednesday by the House Ways and Means Committee, sending the measure to the House floor.<\/p>\n \u201cThis bill is about the future. We need to move to the next generation,\u201d said Sen. Rita Hart, D-Wheatland, the Senate bill\u2019s floor manager.\u00a0She urged support for the measure, saying it will capitalize on Iowa\u2019s abundance of biomass feedstock to turn products into higher-value building block chemicals.<\/p>\n Sen. Rich Taylor, D-Mount Pleasant, predicted the legislation will create Iowa jobs.<\/p>\n \u201cThese chemicals will be produced from waste that we are now throwing in our landfills\u00a0and that farmers are throwing in their fields. This is a pretty cheap investment by the state of Iowa to get rid of waste, if nothing else,”\u00a0Taylor said.<\/p>\n But Sen. Herman Quirmbach, D-Ames, an economics professor at Iowa State University, strongly opposed the bill, saying it\u2019s contrary to a free market, capitalist system. While there are appropriate roles for government, such as educating students and providing public safety services, \u201cgovernment is generally bad at picking winners and losers in the marketplace,\u201d he said.<\/p>\n Quirmbach pointed to Iowa\u2019s former program to administer state tax credits to attract movie productions to Iowa. In 2009 , Iowa suspended \u2014\u00a0and ultimately ended \u2014 its film tax credit program after a state audit uncovered $26 million in credits that were improperly issued by the Department of Economic Development.<\/p>\n \u201cWe aren\u2019t investing our own money. Mostly we are investing other taxpayers\u2019 money and we force them to chip in. We don\u2019t give them a choice,\u201d Quirmbach said.<\/p>\n But unlike other investors, Iowa taxpayers won\u2019t obtain an equity stake by offering financial incentives, Quirmbach said.\u00a0\u201cWe own the losses, but not the profits,\u201d he said.<\/p>\n But Sen. William Dotzler, D-Waterloo, defended the legislation. He said Iowa\u00a0has learned from its mistakes with tax credits and he pointed to the growth of Iowa\u2019s wind energy industry, which has also received tax incentives.<\/p>\n The new credit would equal to 5 cents per pound for qualified chemicals produced It would apply to individual and corporate income tax\u00a0and would be refundable.<\/p>\n State revenue officials estimate that over 10 years, 25 existing companies will produce eligible renewable chemicals totaling 1.25 billion pounds or more\u00a0and receive a combined $62.5 million in renewable chemical production tax credits. They also assume that six new companies will produce 600 million pounds, receiving a combined $30 million in tax credits.<\/p>\n