Film program may be scrapped unless benefits proven, Iowa lawmaker says

A key legislative leader today said a film tax credit program has to show a cost-benefit to the state in creating high-skill, high-wage jobs or it has a 50-50 chance of surviving.

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said he expects lawmakers to take a hard look at the film incentives and other state tax credit programs next session with an eye on scrapping ones that don't produce positive financial results for taxpayers.

To date, the state Department of Economic Development has paid about $32 million in tax credits to 22 film projects that completed production in Iowa. Another 26 projects have signed contracts with the state and 109 projects have applied for incentives that provide a 25 percent tax credit to investors and a 25 percent tax credit to producers for projects that spend at least $100,000 in Iowa. The program was amended effective July 1 to place a $50 million yearly cap on taxpayer outlays and to require filmmakers to have at least a four-year presence in Iowa – but many applications were filed before those changes took effect.

Appearing on Iowa Public Television's “Iowa Press” show, Gronstal said the state will make good on its obligations to the film tax credit program regardless of whether lawmakers choose to impose stronger controls or phase out the program altogether once a thorough analysis had been conducted.

DED officials are slated today to release results of a review by a West Des Moines accounting firm that was hired to examine potential abuses after details surfaced of lax oversight, potential mismanagement, poor recordkeeping and questionable purchases with taxpayer-funded credits – such as two luxury vehicles.

“There was a lack of internal controls and not enough attention to protecting taxpayers' dollars,” said Dick Oshlo, who has been serving as acting DED leader since Mike Tramontina and Vince Lintz, resigned last month as the agency's top directors.

The internal audit by the Clifton Gunderson firm is expected to turn up expenditures that should not have been allowed and lead to stronger program controls, officials said. The report also will form the starting point for a larger comprehensive review by Attorney General Tom Miller, State Auditor David Vaudt and Culver administration officials.