State film tax credit gets more scrutiny

DES MOINES – The state's troubled film tax credit program took center stage again Wednesday with critics questioning its payback value and backers promoting its draw to keep and attract young workers.

“It's absolutely a complete boondoggle giveaway,” said Victor Elias of Child and Family Policy Center, who cited numerous studies indicating film tax credits in other states have produced a poor return on investment at pennies on the dollar. He said the money spent on moviemaking could have paid for 1,500 to 4,000 school teachers.

Neil Wells, a writer and filmmaker, countered that the program has been a windfall – directly from movies shot and produced in Iowa and spin-off spending, jobs and image benefits associated with those projects. He said recent state budgeting decisions, not “evil Hollywood people,” are responsible for the state's financial woes.

The comments were made during a Senate Ways and Means subcommittee meeting on a bill seeking to end the film tax credit. A separate subcommittee approved a measure to suspend the program at least through June 2011 while legislators revamp the credit.

Sen. Herman Quirmbach, D-Ames, an Iowa State University economics professor, said he sees no way to fix the film tax credit under a suspension that would make it pay.

“So many states have tried this in various ways and there seems to be broad-based failure,” he said. “I don't know how we can succeed when so many others have failed.”

Elias said Iowa could become the surf board capital of the world if it pays 50 percent of the production costs like the Iowa Film Office initially was doing with its “half-price” filmmaking promotion that overcommitted state outlays estimated at up to $38.5 million.

The Iowa Attorney General's Office has stepped in to deal with film projects currently under contract or that are registered for film credits and has interpreted the 25 percent credits for production or investments to be an either-or benefit, not a total of 50 percent.

“We're trying to sort out the mess that's been handed to us,” said Eric Tabor, chief of staff in the AG's office.

Dick Thornton, a lobbyist representing the Motion Picture Association of America, said Iowa likes to “brag” about movies like Field of Dreams or Bridges of Madison County, “but when difficulty comes, we like to duck.”

State leaders have indicated Iowa's troubled film tax credit program could be in limbo for some time while legal issues shake out and lawmakers get a better sense of the state's financial exposure for projects already in the administrative pipeline.

Film tax credit problems first surfaced publicly last September when two top state Department of Economic Development leaders resigned and former film office manager was fired amid allegations of lax oversight, mismanagement and other alleged abuses that led Gov. Chet Culver to suspend the program.

That move was followed by a state audit and criminal probe that resulted in a misdemeanor charge against Wheeler and felony thefts charges against two individuals and three companies involved in the making of a movie in Council Bluffs that drew down $1.8 million in state tax incentives.

Late last year Culver resumed the program for projects already under contract or registered with the state, but he kept in place the suspension on new projects pending legislative review.

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