The top Democrat in the Iowa Senate says there’s only a 50-50 chance the state tax credit for film makers will survive.
An audit may be released later today, revealing more details of the problems in the Iowa Film Office. Senate Democratic Leader Mike Gronstal of Council Bluffs says regardless of the details, it’s “very much an open question” as to whether the tax credits for the film industry will continue.
“I think it remains to be seen,” Gronstal says. “I think we’re going to get this investigation from the Attorney General and from the State Auditor. I think we’re going to do a good evaluation of the program and if we can’t show a real benefit to the state of Iowa — and not just a few part-time jobs, but a real long-term benefit to the state of Iowa — I think it’s 50-50 as to whether this program continues.”
According to Gronstal, he and other legislators right now “see very little in terms of potential benefits” to the state from the film tax credits which have been awarded already. This past spring legislators enacted a cap or limit on the amount of tax credits which could be awarded.
“We understood we had caps on tax credits in the state of Iowa that went into effect July 1 and I think we were surprised that those caps were avoided by doing a whole bunch of activity before July 1,” Gronstal says. “So I think there are some real reservations about what happened there.”
Gronstal says he may regret having voted to create the program and he expects some political fall-out from this episode.
“People will be disappointed in that, but I think it’s the responsibility of the legislature — we try things in economic development. Everything we try doesn’t work and it’s perfectly o.k. to occasionally decide, ‘You know, we’ve (gone) down a road and that road doesn’t make as much as sense as we thought it made,'” Gronstal says. “And so we’re going to go back and change that.”
Gronstal is defending fellow Democrat, Governor Chet Culver’s handling of the situation.
“I’m disappointed these things happened. I don’t know that anybody can stop them from happening and, to his credit, once he found out about it he acted quickly and put the program on hold and got people to investigate,” Gronstal syas. “I think that’s the appropriate action. I think the governor moved quickly. I think that was the right thing to do.”
The governor has said all 28 tax credits offered by the state should be reviewed. Gronstal says there are “some tax credits which work to the benefit of Iowa,” but he says all business tax credits will be scrutinized.
“If you can show that a tax credit creates a climate, for instance, the research activities tax credit — if you can show that that keeps an industry here in the state of Iowa and builds long-term jobs and high-wage, high-skills jobs in this state where there’s a net benefit to the state by having that set of jobs come along with it, yeah, that makes sense,” Gronstal says. But Gronstal says if you can’t show that, then the tax credit should be repealed.
Gronstal made his comments this morning during taping of the “Iowa Press” program which airs tonight on Iowa Public Television’s digital 11.3 channel.