Stimulus could limit job growth for one business - KWWL - Eastern Iowa Breaking News, Weather, Closings

Stimulus could limit job growth for one business

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WATERLOO (KWWL) -- New jobs coming to eastern Iowa may be temporarily put on hold thanks to the federal economic stimulus package.

The CBE Group in Waterloo says it was poised to create as many as 200 new jobs thanks to a new government contract.

However, the elimination of an IRS contract will cause the company to rethink those plans.

Since 2006, the CBE Group in Waterloo has collected delinquent taxes on behalf of the Internal Revenue Service.

The IRS told the company Thursday, it's ending the contract because it wants to take back control.

Company officials say it's a political move that will hurt job creation and lose money.

The CBE Group is one of the Cedar Valley's largest companies, employing nearly 700 workers at two buildings in Waterloo.

It has contracts to collect debt in the public and private sector.

Company leaders say the federal stimulus package won't stimulate job growth for them.

"The stimulus package is supposed to hire people and here you have a stimulus package that's laying people off," said company President/CEO Tom Penaluna.

Penaluna says CBE Group got caught in a political move when the IRS cancelled its contract to recover delinquent taxes.

"The program just got to the point where it's beginning to turn profitable where the money we bring in can pay for itself," said Penaluna.

Penaluna says the IRS created the program to outsource collection of outstanding tax bills of $25,000 or less because the government couldn't handle it.

He says it's not clear whether those bills will be collected after the program ends.

"We brought in over $80 million in the last 3 years that there may be nothing coming in simply because they ended the program because the IRS does not have enough staff to work those accounts," said Penaluna.

The CBE Group plans to shift about 100 workers to other jobs.

The company is hiring after being awarded an education department contract that starts this summer.

But instead of hiring 200 people to do that work, it may only have room for 100.

The company is one of two in the country to lose that IRS contract.

The other is in New York.

Representative Bruce Braley and Senators Charles Grassley and Tom Harkin are urging the Treasury Department to reconsider that decision.

Online Reporter:  Bob Waters

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