EDITORIAL

Dec 27, 2009 — Waterloo-Cedar Falls Courier

Dec. 27, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Tax credit programs can be an integral part of economic development efforts. But they can only be a positive force when accompanied by responsible management and proper oversight.

That hasn't been happening with some of our programs, most notably the fiasco that has been exposed through the film tax credit, which is aimed at luring more filmmakers to the state to make their movies.

Where large sums of taxpayer money are found, a scurrilous sense of entitlement often follows. That's been the case with the state's film tax credit program, which is now the target of a criminal probe. Three top officials in the economic development department have lost their jobs after revelations that the tax credits were used to purchase luxury vehicles for executives on one film.

In addition, filmmakers were allowed to claim payments for themselves for multiple production jobs, producing large payments to individuals and family members.

Receipts were provided for expenses related to only two of 18 film projects reviewed, and contracts were changed to substantially increase the amount of tax credits sought after they were officially approved. Film producers also were allowed to claim credit for expenses on purchases made outside of Iowa.

In responding, Gov. Chet Culver has ordered a review of the state's 32 tax credit programs. The panel will make recommendations to Culver by Jan. 1, addressing oversight, accountability, transparency, public reporting, cost-benefits and which of the credits should be continued, curtailed or eliminated.

All of the above need some adjustments. In the case of transparency, we need a total turnaround.

In most cases, Iowa law prohibits information about tax credits from being made public, including information such as recipients' names and the amounts they were given. Business groups have traditionally resisted efforts to release details about tax credits, believing that information could harm the state's competitive business climate.

Unfortunately, greed often takes hold, so the days of keeping details under wraps should be over.

Evidently, the more eyes on the state's tax credit program, the better.

Indeed, a state with as many budget problems as Iowa has a duty to be more transparent.

According to Department of Revenue projections, tax credits will cost the state nearly $420 million in tax revenue in this fiscal year. That's up from $121.7 million in 2005. If we're going to continue to increase the investments, we need to tighten up our oversight, ensuring a maximum payoff.

There's no doubt that tax credit programs can help in economic development efforts, so we don't want to do away with them. It comes down to a pretty simple rule: Be wise with the taxpayers' money.

We are all painfully aware that the state of Iowa could use all the help it can get in the economic development department.

When it comes to transparency, tax credit programs should be treated the same as virtually every other state expense -- above the board and in plain sight.

Newstex ID: KRTB-0150-40798917