Iowa governor defends incentives package to lure OCI

Des Moines — Iowa Gov. Terry Branstad on Sept. 10 defended the state’s multi-million dollar incentives package to lure Egypt’s Orascom Construction Industries (OCI) to southeastern Iowa’s Lee County for the planned construction of a $1.4 billion greenfield nitrogen fertilizer production plant (GM Sept. 10, p. 1). Iowa Fertilizer Co. (IFCo), a unit of OCI, announced on Sept. 5 that it will be building the plant near the Mississippi River in Wever, Iowa. The state is offering up to $100 million in corporate income tax credits, plus $1.6 million in loans that are half forgivable, a $1.65 million road construction grant, a $7.44 million refund of sales and use taxes, and a $60,000 research activities credit. The state is also making available nearly $1.2 billion in bonds that will be exempt from federal income taxes. In addition, Lee County has agreed to forfeit $133 million in property taxes it would have collected on the plant over 20 years. At a weekly news conference, Branstad said it was unrealistic in a global economy for Iowa to withhold state incentives to attract businesses, and that the state should not discriminate against foreign companies “because we are in a world economy and we are marketing a lot of products we make here in Iowa all over the world.” He said the project will also benefit Iowa farmers and provide good-paying jobs. Branstad’s defense of the incentive’s package came just days after he had penned an op-ed piece in the Des Moines Register criticizing President Obama for providing federal government aid that picks “winners and losers” in the marketplace. Branstad, a Republican, stressed that about half of the promised state incentives to OCI will only be extended if the state legislature fails to adopt reductions in corporate taxes and commercial property taxes that Branstad has proposed. In the event the legislature rejects his tax reform proposals, Branstad has promised OCI $50 million in state tax credits. Branstad also used the weekly news conference to make fun of Illinois, which lost out in the bid to lure OCI. “Illinois is the loser and Iowa’s the winner,” Branstad was quoted as saying. “That’s the point. Illinois is the loser and they’re the loser not just because of the incentives. They’re the loser because of the way they have mismanaged their state’s finances for too long.” Branstad said he told the head of OCI that Illinois has a history of corruption in state government. “You know how many of their governors have gone to prison,” Branstad said. “They will promise you the moon, and the only problem is that then they will pull the rug out from under you.”