A New Slate: Iowa Businesses Lay Out Priorities for the 2019 Legislative Session

The 2019 legislative session is fast approaching — the first day is Jan. 14 — and businesses and politicians are gearing up for a fresh five-month decision-making stretch.

Gov. Kim Reynolds — the first woman to be elected to the position — will be leading a Republican-controlled Legislature, which held its majority after the midterm elections in November 2018. During the past two years, the GOP-controlled Senate and House focused on “pro-business” legislation, emphasizing economic growth through tightening the tax code and other initiatives. That figures to be the case heading into 2019, as many Republicans continue to tout their pro-business ideas ahead of the session.

“Iowa has been going in the right direction,” said John Riches, community relations manager at Arconic, a metal manufacturing company with operations in the Quad Cities. “Gov. Reynolds and Gov. Branstad before her have been trying to make sure the rules and regulations in Iowa are not more restrictive than federal regulations, and I think that’s helpful.”

Iowa businesses have their own priorities to push in 2019 as well, with many bringing up a topic that has become all too familiar over the years: the need for a bigger workforce.

Workforce continues to be an issue

The Iowa Association of Business and Industry (ABI) again named workforce as its No. 1 priority for the 2019 session, and it’s no surprise. Unemployment has hovered above 2 percent in Iowa, marking some of the lowest rates in about two decades, and population in rural parts of the state continues to dwindle.

But in 2018, the Iowa Legislature took a big step in developing the workforce, passing the Future Ready Iowa Act. By 2025, the legislation’s goal is for 70 percent of  Iowa workers to have education or training beyond high school, focusing particularly in the science, technology, engineering and mathematics (STEM) and manufacturing industries. Many employers around the state are encouraging legislators to pour more funding into the program in 2019.

“Workforce is a tremendous challenge for us in northwest Iowa,” said Lesley Bartholomew, senior manager of corporate communications for Wells Enterprises in Le Mars. The company is best known for its Blue Bunny ice cream. “We are definitely supportive of the Future Ready Iowa initiative and advocate for full funding to help build Iowa’s talent pipeline.”

Wells Enterprises, which makes a variety of ice cream products, has been privately owned throughout its 105-year history and has made Le Mars the “Ice Cream Capital of the World.” The company employs more than 3,000 people throughout the country, with the majority of them working in the two manufacturing plants in Le Mars.

While Wells Enterprises is the largest employer in the area, they have seen workforce struggles, too. Bartholomew said Plymouth County, where Le Mars is the biggest city, hasn’t seen population growth in more than two decades. She encouraged businesses to do their part in making a difference, partnering with local and state governments in encouraging workforce development and interest. Wells Enterprises also works with schools in the area to expose students to new career paths: supervisors, corporate-level jobs and especially manufacturing.

Manufacturing is one of Iowa’s largest industries, representing 18 percent of the state’s gross domestic product and 215,000 employees, but it has perhaps been hit the hardest by the low unemployment rate. Students in high school typically don’t see technical or advanced manufacturing as a viable career path. In reality, employers across the state are in need of these types of workers, and a career in the field can be lucrative.

“People don’t realize there are more than 200,000 manufacturing jobs in this state,” Riches said. “There are good-paying careers in manufacturing, whether the companies are large or small. And they are critical to Iowa’s future economic success. That’s something people need to remember and understand just how important the industry is to the state of Iowa.”

Arconic, which is headquartered in Pittsburgh but has a sizable operation in Bettendorf, employs around 2,500 people in Iowa. In the Bettendorf plant, the company has invested close to $800 million in equipment and upgrades during the last few years.

But Arconic is still in need of workers, particularly mechanical, technical and industrial engineers. They are also looking for industrial electricians. To combat the low unemployment, Arconic uses an apprenticeship program to develop interest in STEM-related fields. The company is also a big supporter of the Future Ready Iowa Act and Elevate Iowa, an ABI-led program promoting advanced manufacturing.

“We’ve been a supporter of Gov. Kim Reynolds for a number of years now and encourage her focus on STEM education and workforce development,” Riches said. There’s also a push to continue funding for Enhance Iowa, a program run by the Iowa Economic Development Authority. The initiative aims to improve communities through recreational, cultural, entertainment and educational attractions. Bartholomew said it’s especially important in rural areas, where there isn’t the natural draw of bigger cities like Des Moines or Cedar Rapids.

“We know we have to build a quality of life in local communities in our state,” Bartholomew said. “That’s what attracts young people, so we need to continue to fund Iowa’s initiatives for trails, waterways, all of those things that are great for quality of life.”

Bartholomew is especially proud of a trails project in the works in Le Mars. The proposed PlyWood Trail is still in planning, but it would connectthe cities of Le Mars, Hinton, Merrill and Sioux City. The project could use a mix of public and private funding.

But even if population starts to grow in rural areas, there is a serious issue with affordable housing, particularly in rural areas. According to U.S. Census Bureau figures, almost 150 Iowa towns haven’t added new housing since at least 2010. That has certainly been the case in Le Mars, where Bartholomew has pushed for housing tax credits to promote new developments in the area.

“Affordable housing is definitely a challenge,” Bartholomew said. “Looking at how we can partner with the state, workforce housing credits are certainly helpful.”

Utility providers push for safety measures, clarity

The Central Iowa Power Cooperative (CIPCO) oversees 13 member utility organizations across Iowa, representing about 300,000 residential customers and 50,000 business customers, which makes it one of the biggest utility providers in the state.

Based in Des Moines, CIPCO echoed concerns about workforce needs but also added some industry-specific priorities for the 2019 session. A real concern for utility companies is the amount of vegetation growing around power lines, especially in rural areas. This can cause serious issues during bad weather, when trees blow over and knock out power lines, causing outages.

Bill Cherrier, CEO of CIPCO, offered a 2017 Missouri ice storm as an example. Up to 4,000 power outages were reported, and some of them lasted for weeks.

“There were a bunch of trees that came down around lines, and if the vegetation management would’ve been handled like utilities want it to be handled, there wouldn’t have been power outages,” Cherrier said. “These weren’t outages for a couple of hours. They were weekslong.”

The problem lies in private property. Typically, utility lines run across private property lines, taking wayward paths. Without easements — permission to access private property for a specified purpose — utility providers can’t venture onto private property and remove vegetation. CIPCO, along with other large power providers and the Iowa Association of Electric Cooperatives, hopes to make the process easier in 2019.

Another key priority for CIPCO in 2019 is clarifying rules regarding electric vehicle charging stations. With the rise of electric vehicles — about 1 or 2 percent of car sales are electric, but the sales numbers are expected to surpass traditional vehicles by 2038, according to Morgan Stanley projections — service companies and rest stops have begun building charging stations on interstates.

That has caused issues for utility companies, which are looking for clarity before growth explodes. The worry is that car charging services could enter a marketplace and undercut the existing providers in the community, violating Iowa Code. According to Iowa Code, utility providers have exclusive territories throughout the state. Car charging stations could be infringing on those rights in certain cases.

“The real issue is that the current utility companies have invested in all of the infrastructure,” Cherrier said. “What it does is place the burden on the members, the customers or the state to provide the power, and we could end up with higher rates as a result.”

There is a unique opportunity for Iowa to get ahead of this issue, said Kerry Koonce, manager of communications and public affairs at CIPCO. A current case before the Iowa Utilities Board — between the Iowa 80 Truckstop and Alliant Energy — raises the issue and may bring more clarity.

The leadership at CIPCO believes now is a good time to address the issue, before the electric car movement grows even larger.

“We’re hoping we can move some sort of legislation forward,” Koonce said. “We want everyone involved so we can come to an agreement and have peace and move forward with everybody. If we can be a leader in it, that’s even better.”

While CIPCO is trying to push ahead on the above priorities, it is also keeping an eye on any type of legislation affecting its reliability and safety.

“We’re always paying attention to that,” Koonce said. “It might not be introduced by the electric industry, but it might have an impact on us. Safety of our linemen and customers is important to us. And we have reliability that is second to none, and we don’t want to lose that.”

Cutting down rules, regulations

Some Iowa businesses are encouraging the Legislature to continue cutting down and simplifying regulations and taxes. They believe Iowa’s tax cuts in May 2018 — the largest in the state’s history — were a great first step.

But taking it even further is on the agenda for 2019.

“It was a great step forward when the Legislature tackled tax issues last year,” Bartholomew said. “We were extremely excited to see that. But we still have a pretty complex tax system. So how can we simplify those and create some clarity for businesses across the state? It’s just so complicated, and it’s hard to explain it when organizations recruit companies to come here.”

ABI agrees, and has made creating a competitive business climate — simplifying the tax code in particular — a priority for 2019.

General business deregulation is also on Arconic’s list of priorities for the upcoming session. Getting rid of red tape and roadblocks is important for businesses to grow and expand in Iowa, potentially leading to future prosperity in the state.

“For us, it’s holding the line on the cost of doing business, including rules and regulations that sometimes drive up costs,” Riches said. “If you get too far turned the other direction, it can turn businesses to other places.”