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Mismanagement: it's not just for film credits!

December 14, 2009

When the Iowa film tax credit scandal exploded in September, it raised an obvious question: were the other 30-odd Iowa economic development tax credits managed any better than the film credit?

The answer: maybe not. The Des Moines Register reports:

A Des Moines Register review of some of the state's biggest tax credit incentives found state leaders had reason to worry about runaway costs, lack of transparency and waste long before Iowa's botched attempt at using tax breaks to jump-start a film industry made international news.
That review found the state auditor had identified almost identical oversight problems in another tax credit program; state law required almost no outside oversight of some of the biggest credit programs; and authorities already knew that a portion of projects that tapped the most widely used programs had problems...

The report points out that the legislature and the state executive agencies have done little to monitor the credits:

Iowa's Department of Economic Development is the state agency responsible for administering the job-training and film tax credit programs, as well as several others. The auditor's report on the job training program identified some of the same sloppy record-keeping and oversight failings by IDED that were discovered four months later when mismanagement in the film office became public.

A state panel completed a report on Iowa's tax credits last Thursday, but the report has not been released to give the state time to ~~spin~~ "digest" it in advance of hearings on the credits that get underway tomorrow. (UPDATE, 12/14/09: the report was released today.)

The Register article goes on to discuss companies that have failed after taking tax credit money. The credits are budgeted to cost over $450 million this year -- an amount that will dwarf the $186 million in estimated corporation tax receipts for the year. While the Register's story has the obligatory "success stories" from folks who insist that it really does make sense for the state to tax the rest of us to give them money, it does a better job of detailing the problems of the state credits than anything the state has been willing to release so far.

Tags: Corporate welfare.Economic development.film credits.harold hill.Iowa tax policy.tax credits.