A critical Democratic primary contest is taking place in House district 66, where Clair Rudison is challenging two-term State Representative Ako Abdul-Samad. I discussed this race here. A Bleeding Heartland reader who lives in the district sent me images of direct-mail pieces Rudison’s campaign has sent out during the last week or so. I’ve posted the images after the jump. One says marriage is a “building block of our community,” noting that Clair Rudison wants to “let the people vote” while Ako Abdul-Samad “has consistently voted against allowing the Iowa House to bring this matter to the people.” Another points out that Ako voted for increasing vehicle registration fees. A third says Ako voted for creating the Iowa Film Office and therefore “opened the door for your tax money to be stolen by Hollywood producers.” The fourth piece draws a contrast between Ako and Rudison on all of the above issues (Iowa Film Office, vehicle fee increases, and allowing Iowans to vote on marriage).

Rudison implies that “a majority of Iowans” oppose Ako’s stance on marriage equality, but the latest KCCI poll suggests a majority favor same-sex marriage rights. House district 66 contains some of the most gay-friendly neighborhoods in Des Moines (Drake area, Sherman Hill, “East Village”), so it’s far-fetched to portray Ako as out of step with his constituents.

Rudison unfairly alleges on one mailer, “Instead of tax dollars being spent to fight crime, improve education or increase access to health care, Ako gave our money to Hollywood.” During Ako’s two terms in the Iowa House, Democrats have allocated lots of money to fighting crime, improving education and expanding access to health care, especially for children. I’m no fan of the film tax credit, but the money we wasted on that program didn’t stop Democrats from expanding children’s health care and voluntary preschool for four- and five-year-olds. I was amused to read that Rudison claims to have “opposed creation of the Film Office.” Is there a public record of that? Only one member of the Iowa House and two members of the Iowa Senate voted against creating the film tax credit. Rudison was a pastor in Fort Dodge at the time.

In an overview of this race at Iowa Independent, Jason Hancock noted that Rudison “has focused his campaign on issues like education and the state budget, pointing to the Forrest Avenue Library’s decision to close on Fridays and Saturdays due to budget cuts […].” Although Rudison hasn’t said much about gay marriage, the Iowa Family PAC (which is connected to the Iowa Family Policy Center) is supporting his campaign. Activists on the religious right have reason to support Rudison because no Republican has a prayer of winning House district 66. In addition, the only House Democrat who has consistently voted with Republicans on marriage issues (Dolores Mertz) is retiring. House Republicans would love to have Rudison join the Democratic caucus so they can continue to claim bipartisan support for their efforts to bring a constitutional amendment on marriage to a vote.

Ed Fallon represented House district 66 for 14 years and knows the area well. I share his assessment that Ako “should win this [primary] easily, but he’s not taking anything for granted, which is smart.” Ako has strong roots in the community, and he won a seat on the Des Moines School Board before running for the state legislature. He’s been making lots of voter contacts and has the endorsement of AFSCME. One Iowa’s political action committee, the Fairness Fund, has an organizer working in the district too. However, Rudison has been campaigning actively, and I don’t doubt there are many voters upset about budget cuts affecting their families, schools and local library. If you or any of your Democratic friends live in this district, please do what you can to get out the vote for Ako on Tuesday.

Mismanagement of Iowa’s state film tax credit program has led to more personnel changes at the Iowa Department of Economic Development this week. On Monday three longtime employees of the department were dismissed: general counsel Melanie Johnson, Jeff Rossate, and Amy Johnson. The Des Moines Register reported,

Rossate, as division administrator for business development, was the direct boss for film office manager Tom Wheeler. Johnson was Rossate’s No. 2 as the coordinator of the business development division.

The Des Moines Register reported on Saturday that e-mails showed those officials were privy to some of the worst problems facing the film program in the two months before it was suspended.

Amy Johnson had been serving as interim director of the film office before she was dismissed. IDED announced Tuesday that attorney Jessica Montana will be the new interim director of the film office. Montana has worked on IDED’s regulatory assistance team since 2007.

I wonder whether the latest dismissals will complicate the criminal case against Wheeler and two film producers. Wheeler was fired from IDED shortly after the scandal broke, and earlier this month the Iowa Attorney General’s Office charged him with non-felonious misconduct. His defense attorney will now be able to claim that Wheeler’s boss and others knew about problems with the film tax credit program.

No matter what happens with that case, I don’t envy IDED director Bret Mills, who needs to sort out this mess. Mike Tramontina resigned as IDED director when the film tax credit scandal broke, and Fred Hubbell served as interim director of the department until Governor Chet Culver appointed Mills in late December. The Iowa Senate confirmed Mills unanimously this month.

Here’s hoping state legislators will put the film tax credit program out of its misery. A bill is pending to suspend the tax credit until July 2011, but the program was ill-conceived from the beginning and doesn’t deserve to be revived. There are a lot better ways for the state to spend up to $50 million a year.

Meanwhile, the Des Moines Register reports today,

Eleven film companies are suing Iowa’s Department of Economic Development, saying they believe certain documents that have not been released since the scandal broke – including expenses and budgets they reported to the state – should be kept confidential.

Scott Brennan, an attorney for the film companies, said Tuesday there is a difference between public curiosity and public interest in the ongoing probe. His clients believe they were guaranteed “by contract and by statute” that certain trade secrets would be kept secret.

The attorney general’s office and the Register argue that the records – first requested last fall – are public under state law and should remain so because they are of significant public interest. The two sides met in court for the first time Tuesday.

According to a brief filed Tuesday by Michael Giudicessi, the newspaper’s lawyer, “Whether evidenced by the very requests of the Register and other news organizations for access, the suspension of the film tax credit program by the governor’s office, the conducting of an independent audit by the department, the vast and increasing amount of taxpayer dollars involved or the ongoing terminations … it is clear that the public interest is not served by any degree of continuing secrecy.”

The Iowa Legislature has been moving at an unusually fast pace during the shortened 2010 session. It’s time to catch up on what’s happened at the statehouse over the past three weeks. From here on out I will try to post a legislative roundup at the end of every week.

February 12 was the first “funnel” deadline. In order to have a chance of moving forward in 2010, all legislation except for tax and appropriations bills must have cleared at least one Iowa House or Senate committee by the end of last Friday.

After the jump I’ve included links on lots of bills that have passed or are still under consideration, as well as bills I took an interest in that failed to clear the funnel. I have grouped bills by subject area. This post is not an exhaustive list; way too many bills are under consideration for me to discuss them all. I recommend this funnel day roundup by Rod Boshart for the Mason City Globe-Gazette.

Note: the Iowa legislature’s second funnel deadline is coming up on March 5. To remain alive after that point, all bills except tax and appropriations bills must have been approved by either the full House or Senate and by a committee in the opposite chamber. Many bills that cleared the first funnel week will die in the second.  

Republicans have complained for years about Democrats allegedly spending too much on “big government,” but a majority of Iowans think state government is about the right size, according to the latest poll by Selzer and Co. for the Des Moines Register. The poll surveyed 805 Iowa adults between January 31 and February 3 and has a margin of error of plus or minus 3.5 percent. Respondents were asked, “In general, do you think the size of state government is too big, about right, or too small?” 52 percent said “about right” and only 39 percent said “too small.”

The Des Moines Register poll also indicates that Iowans would rather tap into the state’s tax reserves, raise fees and perhaps even raise taxes than impose massive service cuts or lay off hundreds of state workers.

The poll tested eleven options for balancing the budget and asked whether that option should be considered, strongly considered or taken off the table. The largest majority (76 percent) said consolidating some state government services should be considered or strongly considered. The Iowa legislature will pass a government reorganization bill this session, but the savings won’t be large enough to avoid other painful budget decisions.

The next largest majority (61 percent) supported considering taking up to $200 million from the state’s cash reserves. But even that probably wouldn’t be enough to balance the 2011 budget.

The other three options that at least half of respondents said should be considered were “increase fines, license fees and other user fees” (53 percent), expand gambling by allowing casinos to host large poker tournaments (51 percent) and raise the sales tax by 1 percent (51 percent).

The Register reported that several political observers found the sales tax numbers most surprising. I was more surprised to see the public evenly divided on raising the income tax. Some 48 percent of respondents said “lawmakers should consider raising state income taxes by a half percentage point; 50 percent said that idea should come off the table.”

The Register’s poll found much less support for “cutting services to thousands of Iowans” (just 33 percent favored considering that option, while 60 percent said it should be taken off the table). Only 42 percent favored considering laying off hundreds of state employees or consolidating school districts. Only 43 percent said legislators should consider eliminating all business tax credits. Just 45 percent said reducing the number of Iowa counties should be on the table.

My point is not that politicians should put blind faith in the wisdom of crowds. I don’t agree with every finding in this poll. I’d rather reduce the number of counties and scrap many business tax credits than raise the sales tax, and I find Iowans’ support for the film tax credit baffling.

The larger message from this poll is that Iowa Democrats should not cower in fear when Republicans bash “big government.” Offered a range of choices for balancing the state budget, most Iowans would prefer not to see services slashed. The Register’s November 2009 poll pointed to the same conclusion, finding broad support for spending increases Democrats have adopted in recent years.

Republicans will be cheered by the portion of Selzer’s latest poll that found one-third of Iowans called themselves supporters of the “tea party” movement, and a majority believe state government is spending too much money. To me that suggests the framing of the budget issue will be critical for this November’s elections. Democrats need to convince voters that they did all they could to find efficiencies in state government without cutting priority areas. If Republicans object, for instance, that the state could have saved tens of millions of dollars by ending the preschool initiative started in 2007, Democrats must point out that doing so would have cut off early childhood education for about 13,000 Iowa kids.

The latest Iowa poll by Selzer and Co. for the Des Moines Register finds Governor Chet Culver’s approval rating at a new low of 36 percent. Only 34 percent of respondents said Iowa is headed in the right direction, while 57 percent said the state is on the wrong track. The poll was in the field from January 31 to February 3 and surveyed 805 Iowa adults, with a margin of error of plus or minus 3.5 percent.

Culver’s approval rating fell to 36 percent, with 53 percent disapproving. The Des Moines Register’s Iowa poll from September had Culver in positive territory, with 50 percent approval and 39 percent disapproval. The Des Moines Register’s November poll had Culver with 40 percent approval and 49 percent disapproval.

The Des Moines Register noted that since September, Culver’s approval among Democrats has fallen from 72 percent to 57 percent, while Senator Tom Harkin’s approval among Democrats was measured at 77 percent in both polls.

The economic recession is probably a major factor in Culver’s slide. Although the state’s eight leading economic indicators were measured in positive territory in December 2009 (for the first time since April 2007), employment remains weak. Iowa’s seasonally adjusted unemployment rate was 6.6 percent in December 2009, and Iowa Workforce Development found,

Compared to last December, the Iowa economy has lost 40,100 jobs. Manufacturing still leads all sectors in terms of losses, down 19,900 over the year. Trade and transportation and construction followed with losses of 7,900 and 7,700, respectively. Education and health services remained the most resilient sector, adding 2,600 jobs since December 2008.

The slow economy has caused state revenues to fall below projections, which prompted Culver to make a 10 percent across-the-board cut in current-year spending in October. Spending cuts are rarely popular with anyone.

Side note: I wondered last fall whether the scandal surrounding Iowa’s film tax credit, which broke in September, would hurt Culver. I was surprised to see that 61 percent of respondents in the Des Moines Register’s poll think the film tax credit is “good for the state.” The poll question didn’t mention how much the film tax credit has cost compared to the economic impact. I agree with economist Dave Swenson, who thinks the program was flawed from the start.

The latest Register survey also polled Culver against the four Republican challengers. (This portion of the poll, like the approval numbers, is in the print version of the Sunday Des Moines Register but hasn’t appeared on the website yet. I will update this post with a link when that becomes available. UPDATE: Here is the link.) The hypothetical matchups come from a subset of 531 “likely voters,” producing a slightly higher margin of error: plus or minus 4.3 percent.

Former Governor Terry Branstad remains the strongest challenger, beating Culver 53 percent to 33 percent. Bob Vander Plaats leads Culver 43 percent to 40 percent. Strangely, Culver trailed Branstad and Vander Plaats by slightly larger margins in the Register’s November poll, even though his approval rating was a little higher then. Culver barely beats the other Republicans, who are less well known. He leads State Representative Chris Rants 41 percent to 37 percent and State Representative Rod Roberts 41 percent to 36 percent.

Needless to say, it’s never a good sign when an incumbent governor is below 40 percent approval and barely breaks 40 percent against any challenger. Culver needs to make up ground this year in order to be re-elected. The right direction/wrong track numbers show that voters under 35 were more likely than the overall population to think things are going in the right direction, but most of the electorate in November will be over 35.

Culver has chances to improve his standing this year. If the state’s leading economic indicators continue a positive trend, the job market may improve. Also, spending on infrastructure projects supported by the I-JOBS state bonding initiative will pick up in the spring and summer. So far nearly $600 million in I-JOBS money has been awarded, but only $20.7 million has been spent. As the projects take shape, more Iowans will be employed and more people will see the benefits to their communities.

On the political side, Branstad hasn’t received much scrutiny from the media yet, but when the gubernatorial campaign heats up, his accountability problem may become more apparent. A hard-fought Republican primary will exacerbate the rift between moderates and conservatives. Some conservatives have already vowed not to support Branstad if he is the GOP nominee. More focus on the inconsistencies between candidate Branstad and Governor Branstad may help Culver’s standing with Democrats and independents.

Share any relevant thoughts in this thread.

UPDATE: The Des Moines Register’s Kathie Obradovich says Culver may as well start shopping his resume around, but John Deeth argues that Culver is not dead yet.

SECOND UPDATE: The latest poll commissioned by The Iowa Republican blog and the Republican Concordia group found Branstad leading Culver 57 percent to 29 percent and Vander Plaats leading Culver 43 percent to 39 percent. I don’t know much about the firm that conducted that poll, and I would put more stock in Selzer’s numbers for the Des Moines Register.

THIRD UPDATE: The Iowa Democratic Party’s statement on this poll is a bit odd. More on that after the jump.

To depressed Democrats out there, I offer six silver linings of a Branstad candidacy.

FINAL UPDATE: This poll prompted Swing State Project to change its rating of this race from tossup to lean Republican.

The Iowa Attorney General’s Office filed the first criminal charges in connection with the film tax credit scandal today.

Tom Wheeler, who stepped down in September as manager of the office, faces a charge of non-felonious misconduct in office. Wheeler, 41, is accused of failing to verify the eligibility of applicants for the state’s film tax credit program.

Also charged is Wendy Weiner Runge, who was executive producer of a 2008 film, “The Scientist.” Runge is charged with first degree theft and is accused of taking property belonging to the state of Iowa by unlawfully reporting inflated values on applications for tax credits.

UPDATE: A later version of the Des Moines Register story noted that charges have also been filed against “Matthias Alexander Saunders, another business owner and photography director; and three limited liability corporations tied to the movie [“The Scientist”].”

The Attorney General’s Office press statement is here, and on that page you can download documents related to the charges filed. Governor Chet Culver fired Wheeler shortly after the scandal broke last September. Iowa Department of Economic Development Director Mike Tramontina and deputy director Vincent Lintz both resigned.

It sounds as if Wheeler’s attorney will be Gordon Fischer, a name familiar to many Iowa Democrats. WHO-TV journalist Dave Price posted a statement from Fischer at the Price of Politics blog. Excerpt:

We are disappointed with the Attorney General’s decision to file criminal charges under the facts and circumstances of the situation as we know them. The state has decided to pursue a novel theory of criminal liability and it is our position that their decision is a mistake that is not supported by the facts or the law. However, because they have chosen this path, Tom’s focus must now necessarily shift from trying to help the state develop a functional, and economically beneficial, tax incentive program to defending against the criminal charges. Because of this shift in focus, we will need time to review the state’s charging documents before anyone can make specific comments about the facts underlying the Attorney General’s allegations.

UPDATE: The Des Moines Register published more comments from Wheeler’s advocate:

Gordon Fischer, whom Wheeler hired shortly after a multi-agency investigation began in September, said the state was making Wheeler the fall guy for poor oversight of a program overrun with applications.

“It’s really, really disappointing that they made the decision to try to criminalize this,” Fischer said. Wheeler, he said, “continually raised to his supervisors that the workload was very heavy (inside the firm office), and he was doing the best he could with limited resources.”

The Iowa legislature is likely to eliminate the state film tax credit this session. Last week Iowa State University economist Dave Swenson wrote a good column at InsiderIowa.com about why this program was flawed from the start:

An ad hoc cabal of arts boosters, state and local economic developers, impressionable legislators, and an uncritical me-too response to other states’ attempts in this extremely iffy arena led to what was proudly billed as half-price film making in Iowa.  That is, incredibly, 50 percent of qualifying in-state film-making expenditures could be claimed as state income tax credits.  And even if you didn’t generate enough economic activity to use the credits, you could sell them on the secondary market to some other Iowa company that wanted to lower their state taxes.

It was a fiasco on three fronts. First, the grant of a fully-refundable credit on 50 percent of costs was fiscally unsustainable, legislatively irresponsible, and set the stage for the documented abuses that occurred. Second, Iowa does not have the population, talent, geography, climate, visual amenities, and the whole array of agglomerations that would support a meaningful and sustainable year-round film industry. It never will. And third, the creative economy, as in arts and entertainment, will not be a leading driver of the Iowa economy because they all had it backwards:  arts and entertainment clusters of the kind described by Mr. [Richard] Florida [author of The Rise of the Creative Class] are a result of other economic growth not the cause.

Iowa does not have a Hollywood, Nashville, Taos, Santa Fe, Austin, Memphis, or even Branson to build from.  Iowa is farms, biotechnology research and development, manufacturing, finance and insurance, health care, and universities.  Those are Iowa’s key industries, and the creative content of many of those industries is quite high.  They are full of biologists, agronomists, actuaries, mathematicians, chemists, engineers, computer scientists, and other physical, medical, and social scientists.  That is Iowa’s creative economy, and that is the portion of the state that will drive most job growth and innovation in the next decade.  It has art and cultural centers, but no art and cultural centers that are driving regional or statewide growth in other industries.

The film tax credit will end up costing Iowa taxpayers tens of millions of dollars. It’s a costly reminder that consensus ideas aren’t always good ideas.  

Governor Chet Culver submitted his draft budget to the Iowa legislature last Wednesday, but with the State of the Union and other news of the day, I didn’t have time to write up the story.

The complete budget document can be downloaded at the governor’s official website, and you can view Culver’s press conference on the budget here.

For more links, reactions and commentaries, follow me after the jump.

Following up on my review of news from the first half of last year, I’ve posted links to Bleeding Heartland’s coverage of Iowa politics from July through December 2009 after the jump.

Hot topics on this blog during the second half of the year included the governor’s race, the special election in Iowa House district 90, candidates announcing plans to run for the state legislature next year, the growing number of Republicans ready to challenge Representative Leonard Boswell, state budget constraints, and a scandal involving the tax credit for film-making.

On Monday Governor Chet Culver appointed Bret Mills as the new director of the Iowa Department of Economic Development. Mills will replace Fred Hubbell, who agreed to serve as interim IDED director this fall after Mike Tramontina resigned due to problems with Iowa’s film tax credit.

Up to now, Mills has been director of the Iowa Finance Authority. Also on Monday, Culver appointed Joe O’Hern to replace Mills as IFA director. For the last three months, O’Hern has been interim deputy director of IDED.

In addition, Culver announced plans to move the HOME Investment Partnership program from IDED to the Iowa Finance Authority: “This not only will help streamline our housing efforts, but it will ensure that IDED is staying true to its mission: attracting new businesses, growing current companies, and retaining and creating jobs statewide.”

The press release from the governor’s office contains more background on the HOME program and short official bios of Mills and O’Hern. Given their qualifications, they should have no trouble being confirmed by the Iowa Senate.

The film tax credit fiasco sparked the turmoil at IDED, and the department won’t issue new credits under that program for the remainder of this fiscal year. However, film credits already awarded will cost taxpayers tens of millions of dollars.

The upside is that all state tax credits are being subjected to much more scrutiny. Debates about scrapping or scaling back some of the business tax credits will be among the most contentious issues of the 2010 legislative session. Ordinarily, I would not expect legislators to defy any well-funded corporate interests, but this year the budget is so tight that I see no way they can continue with the status quo. Lee Rood reported for the Des Moines Register earlier this month:

Iowa’s incentives for filmmaking may have been the most generous in the country, but they were not the first of the state’s tax credits to skyrocket in cost.

Over the years, other carrots offered by the state to stimulate job creation, development and research have grown dramatically – while sometimes being subject to limited oversight.

A Des Moines Register review of some of the state’s biggest tax credit incentives found state leaders had reason to worry about runaway costs, lack of transparency and waste long before Iowa’s botched attempt at using tax breaks to jump-start a film industry made international news.

That review found the state auditor had identified almost identical oversight problems in another tax credit program; state law required almost no outside oversight of some of the biggest credit programs; and authorities already knew that a portion of projects that tapped the most widely used programs had problems […]

In yesterday’s Register, Rood reviewed five tax credits that “could cost the state more money over the next five years than the film-making tax incentives […] for research, job training, historic preservation, development in distressed areas and high-quality jobs.”  

Shortly after the film tax credit scandal broke in September, Governor Chet Culver promised a “comprehensive review” of all tax credits. On Thursday we learned more about how this review will be conducted. Recommendations are likely before the state legislature convenes in January 2010.

Join me after the jump for additional details and analysis.

Iowa Senate Majority Leader Mike Gronstal discussed the film tax credit fiasco on this weekend’s Iowa Press program, and it sounds like defenders of the tax credit will be fighting an uphill battle during next year’s legislative session:

“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.  […]

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 also defended Governor Chet Culver, saying “once he found out about [problems with the film tax credit] he acted quickly and put the program on hold and got people to investigate.”

Gronstal expressed surprise that a flood of applications for film tax credits this spring allowed producers to get around the $50 million annual cap the legislature approved for the program. (Note to legislators: next time you cap a tax credit, make the law go into effect immediately on being signed by the governor.)

Culver has ordered a comprehensive review of all Iowa tax credits, and Gronstal made clear that legislators will subject these programs to additional scrutiny in the coming year:

“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.

A critical analysis of Iowa’s tax credits is overdue, but better late than never. State revenues continue to lag behind projections because of the recession. Repealing wasteful tax credits could reduce the size of state spending cuts during the 2010 fiscal year. Iowa Republicans would like to plug the budget gap entirely through spending cuts, but they forget that deep spending reductions by state and local governments can also be a drag on the economy.  

We won’t know the full story on Iowa’s film tax credit for weeks, as investigators look into lax oversight and other problems at the Iowa Department of Economic Development. It may be months before we learn whether Iowa taxpayers will end up paying around $110 million or as much as $300 million in exchange for some temporary jobs in the film industry.

One thing is already clear, however: the original bill creating the film tax credit laid the ground for this costly mistake. Todd Dorman isn’t buying state legislators’ effort to pin all the blame on IDED, with good reason:

One common theme in this week’s legislative dodge-fest is that the Department of Economic Development pushed through rules governing the program on an “emergency” fast track in July 2007. Lawmakers insist that left them no chance to review the rules before they took effect, including allowing credits for the purchase of aircraft, vehicles, furnishings, hairstyling and makeup.

There’s one small problem with that argument: Much of what was in those rules was also spelled out in the bill they approved by overwhelming bipartisan majorities. The cars, the planes, the hair. All there.

You also have to wonder why lawmakers approved a tax credit program with the authority to hand out tens of millions of dollars but provided only enough money for a one-person office to administer it. A recipe for trouble.

And last spring, when legislators prudently decided to cap dollars flowing from the program, why did they delay screwing on that cap until July 1? In the meantime, a flood of credit applications exploded the program’s potential cost.

The film tax credit received little attention when it was created, probably because it was uncontroversial (approved 95-1 in the Iowa House and 48-2 in the Iowa Senate). Journalists covering the statehouse and political junkies like me tend to notice action and partisan warfare.

Unfortunately, a lot of bad laws glide through the process with little controversy. Some of them give the appearance of solving a problem without accomplishing anything. The sorry excuse for campaign finance reform the legislature approved unanimously this year comes to mind. So does Iowa’s 2002 law establishing residency restrictions on sex offenders. Every legislator but Ed Fallon voted for that bill, but such laws do nothing to protect children from predators, in the opinion of groups representing county attorneys, corrections officers, prosecutors, and advocates for missing and exploited children. (Legislators fixed some of the problems with that bill during the 2009 session.)

Sometimes consensus politics ends up constraining the rights of individuals. The 1998 Defense of Marriage Act sailed through the Iowa legislature with only Fallon voting no, but the Iowa Supreme Court unanimously held this year that “the exclusion of gay and lesbian people from the institution of civil marriage does not substantially further any important governmental objective. The legislature has excluded a historically disfavored class of persons from a supremely important civil institution without a constitutionally sufficient justification.”

During the 2009 session, the little-noticed House File 233 unanimously passed both the House and Senate. It changed the rules so that citizens have only ten days (as opposed to the 12 months previously allowed) to file a lawsuit challenging a school board’s decision on disposition of property. As a result, Iowans will in effect have no legal recourse against future decisions by school boards.

Let’s not forget the nursing home bill that Iowa legislators also approved unanimously this year. That bill eliminated fines for the most common causes of neglect in nursing homes. Advocates for the elderly warned that the bill would make it easier for nursing home operators to violate Iowa law.

Federal laws approved with huge bipartisan majorities can turn out to be unwise as well. Some are merely useless, such as the 1996 Health Insurance Portability and Accountability Act, which failed to curb unfair practices by private health insurance providers.

Others are harmful. Banking deregulation laws (like this one) passed Congress with large majorities during the 1980s, contributing to the Savings and Loan crisis that eventually cost taxpayers more than $150 billion.

No one person could keep track of all the bills pending in Congress or even the Iowa legislature, but the film tax credit debacle should remind us all that the most significant bills aren’t always the ones that generate heated debate. By the same token, getting everyone to agree to do something doesn’t make it worth doing.

Governor Chet Culver took more steps on Monday to deal with the scandal surrounding Iowa’s tax credits for the movie industry:

Culver fired Iowa Film Office manager Tom Wheeler, who was in charge of coordinating tax-credit deals with moviemakers, who flocked to Iowa during the past year.

Vince Lintz, deputy director of the Iowa Department of Economic Development, which oversaw the film office, turned in his resignation. […]

On Monday, Culver asked state Auditor David Vaudt, Iowa Department of Revenue director Mark Schuling and Attorney General Tom Miller to assist in reviewing the program.

Culver said he was “very troubled” by reports of abuses in the tax credit program, which reportedly included purchase of two luxury vehicles by unidentified movie executives, and lax oversight.

“I’ve made it very clear from the very beginning that we would like to continue the program,” Culver told The Des Moines Register. “But not until we have all of the controls in place, the oversight, the due diligence that is necessary to run any program involving taxpayer money.”

Surely we’ll be hearing a lot more about this mess, which already prompted the Department of Economic Development director’s resignation last Friday.

Naturally, Republican legislative leaders are blaming the “governor’s lack of oversight and failure to properly manage the film tax credit” for the problems. Several people I’ve spoken with share Bleeding Heartland user American007’s view that this scandal is going to become a major headache for Culver, like wrongdoing at the Central Iowa Employment Training Consortium was used to attack Governor Tom Vilsack and other Democrats a few years ago.

It’s not clear to me how Culver could have or should have micromanaged the film tax credit program. Upon learning of problems, he has acted promptly and appropriately. If the governor were resisting change to this program, protecting the officials who screwed up, or blocking an investigation, that would be a different story.

In addition, as you can see from this CIETC scandal timeline, the CIETC abuses became public knowledge during the spring of 2006. The scandal didn’t stop Iowa Democrats from making big gains that November. Mike Mauro was elected secretary of state that year, even though he shared a surname with one of the CIETC board members (I remember some fretting over that at the time).

Culver should brace himself for more bad news about the film tax credits when investigators have completed their reviews, but I don’t see this issue being salient with voters more than a year from now.

Share any relevant thoughts in this thread.

Talk about a bolt from the blue:

A memo from auditors investigating irregularities in a state tax-credit program for filmmaking paint a picture of movie producers and film executives taking personal advantage of the program and state administrators paying little attention.

The director of the Iowa Department of Economic Development, Mike Tramontina, abruptly resigned Friday after allegations of mismanagement of the program surfaced. The department oversees the Iowa Film Office. The manager of that office, Tom Wheeler, was placed on paid administrative leave.

The departure of Tramontina, who was appointed to the post by Gov. Chet Culver in 2007, came after preliminary findings from auditors looking into allegations that filmmakers had purchased luxury vehicles for themselves.

According to the memo obtained by The Des Moines Register, auditors found a long list of bookkeeping lapses and poor oversight in the program, which has spent $32 million on tax credits for 20 film projects since its inception in 2007. The program was aimed at promoting filmmaking in Iowa as a way to contribute to the local and state economy.

The governor’s office announced Tramontina’s resignation at 4:56 pm on Friday. Culver also suspended the tax credit program until auditors complete a review of it.

State Senator Tom Courtney, a Democrat from Burlington, told the Des Moines Register “he talked to state officials about problems with the movie tax credits about a month ago, when labor officials complained that few Iowans were getting hired to work on the movies.” Courtney raised those concerns again in a meeting with the Iowa Economic Development Board the day before Tramontina resigned:

“I’m hearing nothing but complaints that workers are being brought in from other states” during film productions in Iowa, Courtney said. “I don’t imagine we have a lot of Clint Eastwoods running around, but with a little training, we could be doing many of those jobs.”

Michael Tramontina, the state’s economic development leader, said he couldn’t put a number on how many jobs are created, since many are temporary – from contractors used to build sets to caterers and “extra” actors.

“Anecdotally from the film industry, it ranges from 20 to 60 percent Iowans” employed on films produced in Iowa, Tramontina said. […]

Tramontina said the agency is working to develop “employment thresholds” for a film, but hitting a number is complicated.

Employment requirements should depend on the kind of film being made – whether it’s a feature film being made over three to six months or a TV series that might run for years. […]

Courtney said lawmakers might need to address closing what he called “an open door” in film tax credits if Tramontina’s agency is unable to do it. He said most Iowa economic development incentives carry job-creation requirements. “Iowa has a bright future in the film industry, but we have to help the people who live here.”

While Republicans harp on the need to cut spending further, it’s equally important to subject every tax credit to scrutiny. The Iowa Policy Project has found that expenditures on tax credits for business have “skyrocketed” in recent years, far outstripping the rate of increase in spending from Iowa’s general fund. These tax credits should be on the table as legislators look for ways to balance the budget.