Governor-elect Terry Branstad today put Debi Durham in charge of job creation for his administration. She will start as head of the Iowa Department of Economic Development, which Branstad plans to convert into a public-private partnership. Durham’s work will be crucial for some of Branstad’s central campaign promises: creating 200,000 new jobs, increasing family incomes by 25 percent, and reviewing all state economic development programs to discard ones that don’t work. Branstad has said he will travel widely to sell Iowa to the business community, and Durham will be a partner in those marketing efforts.

Durham has worked for the Siouxland Chamber of Commerce for 17 years, and “chairs the board of the Iowa Chamber Alliance, a coalition representing the chambers of commerce in the state’s 17 largest metro areas.” She told reporters that leaving Sioux City was a hard choice. Outside economic development circles, she is best known as the Republican nominee for lieutenant governor in 2002, the year Doug Gross lost to Governor Tom Vilsack. Bret Hayworth wrote a good profile of her during the 2002 campaign. Incidentally, Gross also intended to remake IDED into a public-private partnership. Yet again, Branstad is following his former chief of staff’s playbook. David Roederer, who also headed Branstad’s staff in the past and will run the Department of Management in the new administration, has worked closely with Durham too. He was executive director of the Iowa Chamber Alliance during her time as board chair.

During this year’s campaign, Governor Chet Culver said IDED already has plenty of business input and has helped keep Iowa’s unemployment far below the national average. He also cited news reports showing that the Indiana Economic Development Corporation, which Branstad embraced as a model, touted “bogus” job creation claims and concealed information about tax credits some companies received. Iowa legislators should ensure that the revamped IDED doesn’t have similar transparency problems. Branstad can’t restructure economic development programs by government directive; he needs a new state law for that.

Culver appointed Durham to the Iowa Department of Transportation Commission and “spoke highly” of her during the September gubernatorial debate in Sioux City. Assuming the Iowa Senate confirms Durham (which should be no problem), she may need to give up her position on the transportation commission. If so, expect Branstad to appoint someone friendly to road-builders’ interests.

In related news, Branstad is raising money from private donors to help pay for the transition from Chet Culver’s administration to his own. Current Iowa law set aside only $10,000, clearly not enough to cover those costs. I look forward to seeing the list of donors. People looking to preserve certain business tax breaks or economic development incentives may be eager to help the new administration.

UPDATE: From Jason Clayworth’s blog at the Des Moines Register:

“Obviously when you hear private/public partnership that is the biggest question is the transparency,” Durham said. “What I can assure you and I’m going to take my lead from Gov. Branstad. Everything about Gov. Branstad and this administration is transparent  So anything that will have anything to do with any public funds or public funding will certainly meet that threshold of transparency.

One of Branstad’s key campaign promises is to create 200,000 jobs throughout the next five years. Durham acknowledged after today’s press conference that the goal is a tall order.

“I think it is a stretch goal but like I said will go to work every single day knowing that is the goal before us,” Durham said.

Iowa Citizens for Community Improvement criticized Branstad’s appointment of Durham today. Their statement is 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.”  

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.

The news keeps pouring in on the mismanagement of Iowa’s tax credit for film-making, which may turn out to be among the most expensive mistakes in our state’s history.

Lots of links are after the jump.

Governor Chet Culver announced on Tuesday that he has appointed Fred Hubbell to serve as interim director of the Iowa Department of Economic Development (IDED). Hubbell will start working there on October 5. He will continue to serve on the Power Fund board, only he will now be IDED’s representative on that body. Last month the rumor mill floated Hubbell’s name as a possible challenger to Senator Chuck Grassley, but he said he was not interested in running for Senate.

Culver picked Joe O’Hern, deputy director at the Iowa Finance Authority, to be the new interim deputy director at IDED, focusing on IDED’s flood recovery efforts. This press release from the governor’s office contains more background on Hubbell and O’Hern.

Culver spoke about the abuse of Iowa’s film tax credit program during a press conference in Cedar Rapids on Tuesday:

When information was first brought to my attention last week about Iowa’s film tax credit program, I was troubled. But as we began our investigation into this program, and more information has come to light, frankly, I am outraged – not only that a program involving millions of Iowa tax dollars was so mismanaged but that some companies were taking advantage of this situation.

This problem first came to my attention last week when I was traveling on Tuesday with former director Tramontina. At that time, I asked him to prepare for me a memo outlining problems with the program. And, after receiving that memo, I took immediate steps to protect the taxpayers of Iowa. […]

These actions are intended to protect the best interest of Iowans, and not to harm the growing film and television industry in our state. This program should continue only after we have the controls, oversight, and due diligence in place to assure that it operates properly.

But, while there were clearly not the controls and oversight in place at the Iowa Film Office, we need to make sure that the film and TV productions in our state are following the rules.

For example, projects must have commitments for at least 50% of their funding before even applying for assistance under the program.

In addition, projects are not to receive tax credits until after their work is complete and they have submitted invoices of qualified expenses.

And, we expect film and television productions to obey Iowa’s labor laws – which mean people get paid for the work they do. That does not mean they wait until after their tax credit has been approved.

Iowans will not be taken for suckers. While we need to make changes to strengthen management of this program, we are not going to be taken advantage of – and if we are, we are going to claw back and make sure any money wrongfully provided is returned.

If something good can come out of this scandal, I hope that all of Iowa’s tax credit programs will now receive greater scrutiny. Even if there are no other tax credits being abused, we may not be getting our money’s worth for all of these programs. In a weak economy that puts pressure on state revenues, wasteful tax credits need to be on the chopping block along with government spending.

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.

which has received the 2008 State Leadership Award from the American Wind Energy Association. This is from a press release that circulated on the Iowa Renewable Energy Association’s e-mail loop:

“Governor Culver and his team in Iowa have been extraordinarily effective in drawing wind power companies to their state – in the heart of America’s ‘wind belt,'” said AWEA Executive Director Randall Swisher.  “They have helped launch a new wave of clean-energy-based economic activity in the Midwest, attracting at least five major manufacturers to Iowa through innovative policy and aggressive, pro-business strategies.  We’re glad to recognize their leadership with this award.”

[…]

Iowa is number one in the nation in wind generation as percentage of total generation, with 5.5% (1,271 MW) of its total electricity generated by wind power facilities. The state’s strong manufacturing base, excellent transportation infrastructure and skilled workforce have made it attractive to manufacturers.  In addition, the Iowa Power Fund promotes the state’s burgeoning wind industry and provides a $100 million grant resource to companies and researchers in Iowa who are fostering renewable energy within the state.

This industry would grow further if we could get the Democratic leaders in our state legislature to pass an ambitious renewable portfolio standard (for instance, requiring that 20 percent of Iowa’s energy be generated from renewable sources by 2020).

The Iowa Department of Economic Development has been doing a lot of good things the past couple of years. It’s always nice when good work is acknowledged.

The full text of the AWEA’s press release is after the jump.