State Senator Jeff Taylor says his initial enthusiasm for a proposed southeast Iowa steel mill has given way to concerns about the state’s incentive package, leaving him unable to support the proposal in its current form.
Governor Kim Reynolds has called lawmakers back to Des Moines for a special session Friday, October 2, to consider changes to Iowa’s Major Economic Growth Attraction, or MEGA, program for Mesabi Metallics’ proposed $15 billion project in Lee County.
Taylor said he has long supported bringing manufacturing back to the United States. However, the details of Iowa’s involvement have changed his outlook.
“Initially I was very excited about it. But as I have learned more about the proposed deal, I will say that at this point I have serious concerns and really on two levels, but they’re both tied to the incentive package that the state of Iowa, specifically the Reynolds administration, has come up with.”
Questions About the State’s Commitment
Under the current MEGA program, companies can receive sales-tax rebates on construction materials, tax credits for full-time workers hired after a facility opens, and a refundable investment tax credit equal to five percent of the company’s investment. At that rate, the investment credit on a $15 billion project would total $750 million.
Taylor put the proposed overall state incentive package at $1.4 billion. He said lawmakers are being asked to change current law to accommodate the agreement negotiated by the Reynolds administration.
“Number one, we are facing a budget crunch in the state of Iowa. We will be okay in the short run, but this is a commitment of a substantial amount of money spread out over ten years. That is true. And also it’s conditional on the factory continuing to operate. And that is also true, but it’s an upfront commitment that we’re going to have to factor in for the next ten years. And $1.4 billion is a lot of money.”
Taylor also questioned projections that Iowa would recover its investment through increased economic activity. He said he understands why Lee County would welcome the project, but doubts the rest of the state would see a large positive impact in the short term.
Taylor also questioned providing substantial taxpayer support to a private company with foreign ownership.
At the time of the interview, Taylor said rank-and-file lawmakers had not received the bill language. He also said the governor had told legislators no amendments would be allowed and that the proposal would receive an up-or-down vote.
Taylor said he would like changes that provide additional safeguards before committing state money.
“I would like to be able to support it, but the way it’s written right now, no, I won’t be able to vote for it.”
Wheeler Emphasizes American Jobs and Oversight
State Representative Skyler Wheeler offered his perspective in a written statement to Sioux County Radio.
“It is an incredibly exciting opportunity for our state and our country. As long as we ensure these are jobs for Americans, and that we keep close tabs on this as a state, this can be a major game changer for Iowa.”
Project Background
Reynolds joined President Donald Trump and other Iowa officials at the White House Monday for the project’s announcement. The governor has promoted the project as a major economic opportunity and says Iowa has a memorandum of understanding outlining its partnership with Mesabi Metallics.
The company is a subsidiary of a family-owned business based in India. Its iron ore mine and processing plant in northern Minnesota would supply raw materials for the proposed Iowa facility.
Reynolds also said a Source Iowa program will be launched at the end of the week to give existing Iowa businesses opportunities to work with Mesabi Metallics.
The special session is scheduled to begin at 8:30 a.m. Friday.
