Governor Chet Culver is in the midst of a scandal, the likes of which the state of Iowa has never seen in its history. The scandal involving the Iowa Department of Economic Development (IDED) will likely dwarf the CIETC scandal from 2006. The CIETC scandal centered on state employees who lined their own pockets with nearly $1.8 million dollars. The IDED film tax credit scandal deals with state government’s inability to manage a program. The Culver administrations incompetence could coast Iowa tax payers $300 million.
With a scandal of this magnitude unraveling on the heels of the announcement that the state employees retirement system (IPERS) has suffered huge losses (much of it due to fraud on the part of third parties), one might think that legislative Republicans, the GOP’s gubernatorial candidates, and the Republican Party of Iowa would be all over the Culver administration’s gross negligence and incompetence. However, besides being quoted in a handful of articles and TV news stories asking for their reaction, Republican leaders in Iowa have been invisible on the subject.
Not one of our gubernatorial candidates has sent out a press release about the Culver administration’s incompetence regarding the IDED film scandal. Maybe more disturbing is the fact that the Republican leaders in the House and Senate have also failed to comment on the trouble at the Iowa Department of Economic Development offices. One can always count on Sen. Paul McKinley to send out a press release when the unemployment rate goes up each month, but I’ve gotten nothing from him or Rep. Kraig Paulsen regarding IDED in the last five days.
The only thing that would be worse than not saying anything would be trying to change the subject. Sadly, that’s exactly what the Republican Party of Iowa, Rep. Linda Upmeyer, and Sen. David Johnson hope to do today when they roll out their Iowa Health Care Initiatives plan across the state. I’m sure the Republican Party of Iowa has been planning their health care roll out for some time, but in politics, you must remain flexible. I’m not saying that they should cancel the press conference, rather, they should change the subject that they are going to speak about.
Republicans need to join the media in asking the tough questions to try to figure out how this happened. They also also need to demand accountability and sound fiscal stewardship of our tax dollars. The scandal surrounding IDED is expansive and is likely to make the state’s budget crisis worse, which will cause the state government to cut services and/or raise taxes to make ends meet.
The fiscal note attached to the legislation (HF 892) that created the Film Promotion Program & Tax Credit program assumed that qualified film expenditures would equal $1.33 million per year, and qualified film investments would equal $1.50 million per year. The Legislative Services Agency (LSA) estimated that the Film Promotion Program & Tax Credit program would reduce net general fund revenue by $201,000 for FY 2008, $536,000 in FY 2009, and $786,000 in FY 2010.
According to Sunday’s Des Moines Register, Iowa’s investment in films will top $300 million after movie producers rushed to get over $208 million in tax credits before a new spending cap was put in place this past July. How does a program that the LSA thought will cost the state $786,000, multiply in size without anybody noticing? It is obvious that lawmakers and the governor knew that the program was costing the state more than expected. Why else would they have placed a cap on the tax credits during the past legislative session? Why did it take a scandal for this information to be unearthed?
The Register also points out that the $300 million that will go to help produce movies in Iowa equals the total amount of all other tax credits the state hands out in a year. Iowa is spending more money to help produce movies than it awards in tax credits to help those getting a higher education in our state. The state of Iowa could have eliminated all corporate income taxes for the same amount of money that it is going to end up giving the film industry. In these tough economic times, wouldn’t we be better off as a state to do something that will help all businesses rather than just one niche industry? The former Director of the Iowa Film Office admitted that not enough skilled laborers existed in Iowa to fill the needs that would be created under the new program, and the Iowa Motion Picture Association said that the film office was under staffed, yet they forged ahead anyway. Now Iowa taxpayers are left with a huge tab for money that is primarily benefiting lot of people who don’t even live in our state.
In addition to the unbelievable costs associated with this scandal, Iowans also deserve to know why the State Auditor’s office was left in the dark when the Culver administration sought a third party audit of the program. Not only do Iowans deserve to know who this third party auditing firm is and why it was selected, but we also need to know when the decision was made to audit the program. Governor Culver said yesterday that he received a full briefing from former IDED director Mike Tramontina a week ago Tuesday, but there were discussions about the movie producers purchasing luxury cars before that, and that is what triggered the audit. Yet, we still don’t have a clue about when the IDED knew that the costs of this program were spiraling out of control and that the funds were being mishandled.
Iowans demand answers, and Iowa Republicans should be doing everything in their power to help find them. Republicans should be demanding better accountability and stewardship of the taxpayers’ money, yet outside of a few quotes here and there, there is no Republican leading the charge against the complete incompetence of the Culver administration.
Iowans are desperate for competent leadership. However, thus far, there hasn’t been one Republican candidate who has stepped up and shown the people of this state that he or she is capable of leading on this issue. Who among us is willing to step up and demand that Governor Culver be held accountable for his administrations mistakes? Sadly, that is a question that remains unanswered.
If legislative Republicans fail to show signs of leadership now, their chances of making gains in the Iowa House and Senate are slim. If our gubernatorial candidates don’t think the IDED scandal deserves their attention, then they have no business being in the race. If our state Republican Party would rather spend the next few days talking about health care reform instead of the fiscal mess Governor Culver has created by his incompetent lack of leadership, then they are not interested in winning elections.
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