Article by Aaron Hepker, about Brilliant Lugernor Culver

Culver Doesn’t Plan to Restart Film Tax Credits for New Projects
By Rod Boshart, Reporter



By Aaron Hepker

Story Created: Sep 3, 2010 at 5:38 PM CDT
DES MOINES, Iowa – Gov. Chet Culver said Friday he does not plan to restart the state’s troubled film incentive program for new applicants once the obligations have been met for projects that received initial approval for tax credit awards before he halted the program nearly one year ago.

“As far as I’m concerned, they had their opportunity. It was exploited and I’ve got no interest and I don’t think the Legislature has much of an appetite for doing anything beyond what we’ve already committed to do,” Culver said in an interview.

“Iowans aren’t going to be taken for suckers and we’re going to hold those individuals accountable that did try to exploit the program.

But we’re moving on,” he added. “That has never been a focus that really makes a difference in terms of job creation and economic development.”

Also, State Auditor David Vaudt, a Clive Republican who Culver asked to scrutinize the film program last year, said he expects to issue his findings by the end of the month or early October – a drawn-out process that Culver, a West Des Moines Democrat facing a tough re-election battle against Republican Terry Branstad, says may carry political motivation as the Nov. 2 election approaches.

State officials announced last week they have resumed issuing tax credits to qualifying film projects, awarding financial incentives to two films from the Iowa Department of Economic Development using a revised process that includes a full audit of the project before state tax credits are issued.

The latest projects are part of a pool of applicants that received initial DED approval for tax credit awards before the program was suspended in September 2009 by Culver after an internal review found incomplete and inaccurate recordkeeping, altered contractual terms, questionable expenditures, use of pass-through entities, and broker fees in the management of a program.

The suspension was partially lifted last November for projects that had contracts with the state or had registered under the program. The program isn’t taking new applications, but those that had been approved before Sept. 18, 2009, are being allowed to negotiate contracts with the Iowa Film Office. The Legislature suspended any new applications until July 1, 2013.

Iowa’s tax credit program provides a 25 percent tax credit for production expenditures made in Iowa and a 25 percent tax credit for investors for projects that spent at least $100,000 in Iowa. But the Iowa Attorney General’s Office has clarified the program to indicate that producers could qualify for a maximum 25 percent credit for qualified expenditures made in Iowa.

Culver halted the state’s film tax credit program last September following revelations that some of the credits were used in the purchase of luxury vehicles and other potential abuses. Five people lost their jobs due to problems associated with the administration of the film tax credits, including the resignations of the state’s two top economic development officials and the dismissal of the director of the state’s film office.

Criminal charges since have been filed against the office’s former director, as well as production company officials for allegedly inflating expenses.

The criminal investigation began after Culver asked Iowa Attorney General Tom Miller, a Democrat, and Vaudt to look into troubled program last September.

In an interview, Vaudt said this week that his office has completed its fact-finding activities and is working on a draft report that could be issued by the end of this month.

“We’re working hard and as fast as we can,” he said. “We’ve gotten through the records and now we’re accumulating the findings and the results and drafting a report. I would hope maybe by the end of September or so we might be ready to issue a report. We are making good progress.”

However, Culver questioned the timing by Vaudt, who endorsed Branstad’s candidacy before Branstad won a three-way GOP primary in June.

“I’m sure he’ll wait as long as he can so it’s as politically sensitive as he’d like it to be,” Culver said Friday. “He has clearly demonstrated, especially in the last couple of months, that he is much more interested in partisan politics. I think the people of Iowa regret the fact that we have a rabidly partisan auditor who for three and a half years has had one goal in mind and that is to discredit in a partisan way our administration and I’m sure he’ll try to do that again but people won’t pay any attention to him because he’s got no credibility.”

Branstad has taken aim at the state Department of Economic Development in recent weeks, calling it “dysfunctional and scandal-ridden” and hurling allegations of government corruption at the Culver administration in likening the situation to Illinois rather than Iowa.”

Culver went on CNBC-TV Friday to tout Iowa’s success in attracting wind-energy projects and jobs to Iowa, its favorable ratings among national business measures and financial houses, and its balanced budget with $300 million in reserve.

The governor later said his administration has worked with 251 companies in the last 36 months to bring 20,000 jobs and $5.2 billion of economic development activity to Iowa, but Branstad’s negative portrayal on the campaign trail is hurting Iowa’s image among business interests.

“Terry Branstad is personally attacking me and my administration. The idea that there’s any culture of corruption is out of bounds and flat-out wrong and he needs to be careful about what he says. When he says that our economic development efforts aren’t working, that is tearing down the state of Iowa and that is wrong,” Culver said.

“Terry Branstad would like people to think that the film office is 98 percent of the Department of Economic Development, and he’s just flat-out wrong. It’s about 1 percent of everything they do over there,” Culver said. “In a political way, he and his campaign are trying to overstate the impact that that has had on our economic development efforts. It’s had zero impact on our state’s ability to recruit companies to create jobs and I would put our record of 20,000 jobs and 251 companies and $5.2 billion investment in our state up against any governor in America in the last 36 months.”