Monday, August 9, 2010

Our View - A price too high to pay for Iowa's close up

Printed in the Iowa City Press-Citizen, Sept. 22, 2009

Our View - A price too high to pay for Iowa's close up

Last month, we wrote an "Our View" explaining how Iowa's tax incentive program has worked well to put the state on the map for filmmaking projects. Roughly 50 new movie projects were in the pipeline before Iowa legislators decided to cap the credits at $50 million in July.

Some readers responded that the issue required more sophisticated analysis. It's not enough to say that incentives are "necessary" to attract such business; it's more important to demonstrate that incentives provide a good return to taxpayers. And given the increased number of states who have been implementing incentives for the film industry, we need to look beyond the flash and sizzle that comes with promises of bringing Hollywood to Iowa (Hawkeyewood?) and to provide substantial answers to questions such as:

• If this is a good investment for private industry, why does it have to be made by the public sector?

• And if a public investment is necessary because the private sector is not able to do what it normally would in better times, how does this incentive produce an actual public benefit? And are there better choices being passed up?

Now it seems that Iowa's film incentive program might have a more basic problem: There's not enough oversight to ensure that participants aren't abusing the program. The Des Moines Register reports an internal audit found that receipts were provided for only two of 18 movie projects. And the unfolding story is starting to sound more like the plot of "The Music Man" -- out-of-state hucksters coming to bilk small-town Hawkeyes -- than a viable economic development program.

On Friday, Iowa Department of Economic Development Director Mike Tramontina suddenly resigned after informing state leaders of a list of abuses in the program. And Tom Wheeler, the manager of the program, was placed on administrative leave.

On Monday, Gov. Chet Culver asked Auditor David Vaudt, Attorney General Tom Miller and Revenue Department head Mark Schuling to investigate abuses in the program. Burlington Sen. Tom Courtney, who heads the Government Oversight Committee, also announced Monday that his committee would investigate the matter.

Auditors have suggested movie producers and executives took huge advantage of an overwhelmed, largely one-man film office while state administrators paid little attention. But given the egregious nature of some of the alleged violations -- executives on one film project supposedly bought a new Mercedes-Benz and Land Rover that were not used in production of the film -- we think state leaders need to put a moratorium on providing tax credits to any future productions until Iowans can be assured the state isn't selling the farm for a mere 15 minutes of fame on screen.

We'd love to see a thriving film industry develop in Iowa, but not at the expense of fiscal responsibility and effective government oversight.

What do you think?

• What steps should state leaders take to add more accountability to Iowa's tax incentive programs for the film industry?

• Send letters to

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