Monday, August 9, 2010

Printed in the Iowa City Press-Citizen, Dec. 17, 2009

Our View - Tax credits need more openness, caps and sunsets

If there is any good that can come from this year's film tax credit scandal, it's that the state government now is paying much closer attention to the dozens of tax credits offered in Iowa -- tax credit programs that too often have been run under minimal financial oversight at best. And given the extensive mishandling of the film tax credit program, we weren't surprised to learn that a report from the governor's office, released Monday, found no clear documentation that the state gets any return on its investment for more than half of 32 active tax credit programs.

The lack of evidence of any return is especially problematic at a time when the state faces falling revenues and massive budget cuts. If legislators and other state leaders are serious about recovering some lost state revenue, they need to the report carefully -- especially the parts that explain:

• How there is no clear proof of economic benefit to the state for at least 18 of the programs -- including the credits for young farmers, biodiesel-blended fuel, retail dealers of E85 gas and research by Iowa companies.

• How a $45 million training program for new jobs, which is very popular with employers and Iowa's community colleges, has provided very little evidence that it is a benefit to the state despite costing more than $10,000 per job.

• How some programs have never gathered the appropriate data to demonstrate what kind of bang the state gets for its buck.

And as a newspaper, we are particularly disturbed with the report's documentation of:

• How state law often keeps much of the information about the credits from being public -- making it difficult, if not impossible, for the public to know who is applying for the credits and how much gets paid out.

The report did note benefits for some of the tax credit programs. But those modest benefits seem nothing like the grand promises being offered by the industries-- from film makers to research and development companies -- that receive millions diverted from the state coffers.

Spokesman for those industries were out in force Tuesday in Cedar Rapids and Wednesday in Urbandale as a Tax Credit Review Panel held hearings.

We can only hope that state lawmakers pay more attention to the report than they do to the people who stand to loose money if the state start to staunch the bleeding of tax credit money from its coffers.

We agree with state Sen. Joe Bolkcom, D-Iowa City, that the state needs to switch off its current "automatic pilot" oversight of many of these credits and, at the very least:

• Create a comprehensive database of all incentive recipients to compare all the incentives received.

• Create a permanent joint appropriations subcommittee to regularly review them like other expenditures.

• Add regular sunsets for all incentives tied to job creation and development.

• And add caps so that the credits' impact on the state budget never again gets out of control.

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