Tax credit fallout and lessons

The state's scandal-ridden film tax credit program is on the ropes. Whether it can be rescued and turned into an effective, responsible initiative any time soon is doubtful.

That would be a shame for the movie, television and video producers who want to play by the rules. And it could sidetrack indefinitely potential job opportunities and other economic benefits for Iowa.

An audit of the program released Monday essentially confirmed reports that erupted last month. Lax oversight, shoddy record-keeping and questionable practices in the Iowa Film Office may have violated state law. The record-keeping was so bad auditors said they couldn't do a thorough examination. For example, vendor receipts required for documentation were available for only two of the 22 projects that received $32 million in tax credits. Inexcusable.

The case also is under criminal investigation.

The Iowa Film Office operates within the Iowa Department of Economic Development. Its director, Mike Tramontina, resigned when the controversy broke. Gov. Chet Culver suspended the program and dismissed Tom Wheeler, who supervised the film division.

This flap has led to calls by some legislators, media (including The Gazette) and others to review the oversight and effectiveness of all state tax credit programs, which are used to spur a variety of business developments.

Meanwhile, there's fallout.

Vaughn Halyard hoped to use tax credits toward his “The Science of Thrill” television project - an innovative education series that uses an entertainment approach. Now, tax assistance is in doubt.

Halyard, who operates StoryLounge Media Group in Cedar Rapids, told us Tuesday that “the irony of the tax situation is that ‘Science of Thrill' is based here, staffed here by Iowans who leave to shoot and bring the content back to Iowa for editing, finishing and ultimately to export as nationally distributed ... commerce.”

Halyard believes his project fits the original intent of the tax credit program: helping companies like his prosper and bring economic benefits to the state that offset the tax credits awarded.

Halyard said his project was approved for credits but no certificate has been forwarded. How long that might take is anybody's guess right now, but fortunately “The Science of Thrill” has generated enough support and interest to move ahead without tax credits.

However, other promising film or video projects around the state may be on hold or will leave for other states where incentives are in place. They can't or won't wait for the wheels of Iowa government to turn. That's disappointing.

But state leaders must apply these painful lessons. All tax credit programs must be accountable and produce positive results for Iowa if they're to continue.