A half-dozen state agency directors will host hearings this week in Cedar Rapids and Urbandale to let the public air their concerns or support for a wide variety of state tax credits.
Governor Culver ordered a review of all state tax credits this fall after problems in the state film office were revealed and questions were raised about the millions of state tax credits awarded to or requested for film and TV productions in Iowa.
“I directed all of our state agencies that deal with tax credits to do a complete review of how those tax credits are applied,” Culver says. “What’s the return on investment for every tax credit that we use? Are we getting a bang for our buck, or should we eliminate or cut back on these credits? Because a tax credit is an expenditure.”
State agency directors submitted their reports to Culver last Thursday, but the governor’s office will not release that data to the public until after the two public hearings are held. During a speech earlier this month to the Iowa Farm Bureau, Culver suggested getting rid of some tax credits will be politically painful for legislators.
“There’s a lot of special interests, a lot of powerful interests that like the various credits,” Culver said. “We’re all going to have to agree on which ones we want to keep, which ones we want to eliminate and which ones we want to reduce. Again, I’m going to need your help because people are pretty used to getting those credits whether they have a positive return on investment or not.”
Culver suggested the state gets a bigger return on investment when it advances low-interest loans or outright grants to projects, like the new Target distribution center in Cedar Falls.
“Why can’t we structure every one of these tax credits in that way?” Culver asked during his speech at the Iowa Farm Bureau’s annual meeting. “And if we’re not, we need to be or we should eliminate them.”
State tax credits are not repaid in the way forgivable loans are, however. Business groups tout the state’s research and development tax credit, for example, saying the state reaps economic rewards through the high wages of those employed in research. Critics of some of the tax credits say there’s a lack of transparency and it’s hard to determine whether the state benefits.
The two public meetings about state tax credits will be held at 9 a.m. on December 15th at Kirkwood College in Cedar Rapids and on December 16th at one o’clock in the Urbandale Public Library.
