|
|
Openness on tax credits is needed, budget chief says |
| Posted: December 17, 2009 |
By Jason Clayworth
The Des Moines Register
A review panel will recommend ending the secrecy surrounding Iowa's tax credit programs, the panel's chairman predicted at a public hearing Wednesday.
More than a dozen speakers at the hearing called for greater transparency.
"I think we'll focus very seriously on transparency and also look at which tax credits should have returns on investments calculated," said state budget director Dick Oshlo, chairman of the Tax Credit Review Panel.
Some tax credits benefit low-income Iowans. But the most expensive tax credit programs benefit businesses. They can allow a company to forgo paying taxes; in some cases, the state issues millions of dollars in checks to companies.
Tax credits will cost Iowans almost $420 million in state tax revenue in the current fiscal year, according to estimates from the state's revenue department. That's up from $121.7 million in the fiscal year that ended in 2005. Lost revenue could reach $525 million by 2011, the Department of Revenue has projected.
In most cases, Iowa law prohibits information about tax credits from being made public, including information such as recipients' names and the amounts they were given. The law says such disclosure would "serve no public purpose."
Business groups for years have resisted efforts to release detailed information about tax credits, saying the data would harm Iowa's competitive business climate. Steve Evans, a board member of the Iowa Taxpayers Association, told the panel Tuesday that publishing such information would be "bothersome" to the businesses the group represents.
Illinois, Minnesota and Missouri reveal names of recipients. Some states, such as Rhode Island, prepare an annual public report published online that lists recipients, projects and award amounts for any person or business given tax credits, according to Good Jobs First, which claims to be the nation's leading grass-roots group to advocate for accountability for economic subsidies.
Culver convened the panel last month to review the state's tax credits in light of ongoing budget problems. The review was also prompted by a scandal earlier this year in which moviemakers, among other actions, allegedly used the full purchase price of luxury vehicles to qualify for tax credits. The film tax credit program is under criminal investigation.
"I believe the tax credit issue is a considerable contribution to the deficit we are facing today," Midge Slater of Des Moines said during the public hearing in Urbandale on Wednesday. "Unfortunately as taxpayers and as citizens of Iowa with a brain, we can't know how much that is because that is not transparent."
A review of tax credit programs was released Monday, but it included no documentation for the benefits of about half of the programs. Panel members said Tuesday at a hearing in Cedar Rapids that they had inadequate information to provide a fair analysis of many of the programs.
The panel is expected to recommend to the governor which tax credit programs should be cut or eliminated. It will also outline other suggested changes, including requirements that would allow the state to better document a program's accomplishments, Oshlo said. Those recommendations will be made around Jan. 1.
More than three dozen people spoke Wednesday during a nearly 4½-hour hearing. Many were business or tax credit advocates who said the credits have created thousands of jobs and billions of dollars in economic activity.
Dave Roederer of the Iowa Chamber Alliance told the panel that creating sunset dates for tax credits would hinder economic development because businesses couldn't plan far in advance as easily.
The programs that alliance members commonly use have helped launch 330 projects in 6½ years worth more than $12 billion, but they cost the state only $667 million, Roederer told the panel.
"These programs are doing exactly what they were intended to do to help business locate in Iowa and grow in this state," Roederer said.
Additional Facts
Culver pledges more transparency
Gov. Chet Culver and other Democratic leaders expressed support Wednesday for allowing the public more information about tax credit programs.
"The taxpayers have a right to know where their tax dollars are spent," Culver told reporters Wednesday at the Capitol. "I'm confident we will change the way we share this information, and I am going to work hard to require more transparency."
Senate Majority Leader Michael Gronstal, D-Council Bluffs, agreed. "I think it's abundantly clear that Iowans want, demand and need accountability in our tax credits, he said, noting that almost "every nickel" of other state expenses is a public record.
House Republican Leader Kraig Paulsen, R-Hiawatha, said he agrees that Iowa must do a better job of tracking the performance of tax credit programs, but he said he doesn't want the review to create an "opportunity to raise revenue."
Culver said he doesn't view curbing or eliminating some tax credits as raising taxes.
"I don't agree with that," Culver said in response to questions about whether eliminating a tax credit is the same as a tax increase. "These are tax credits. It's important that taxpayers get a return on investment and that this money is invested wisely.
|