Legislation could revive Iowa’s film tax rebate program

by Robin Opsahl, Iowa Capital Dispatch
March 26, 2024

The Iowa House passed a measure Tuesday that could revive a tax rebate program for filming movies in Iowa in an effort to bring moviemakers back to the state.

Rep. Jane Bloomingdale, R-Northwood, said she felt like “this is one of the best bills that we’re going to pass this year.” House File 2662, approved by the House 87-8, would create the Iowa film production incentive program and fund within the Iowa Economic Development Authority.

The fund would be used to provide tax rebates to qualified production facilities filming in Iowa — starting with a pilot program offering a 30% tax rebates for the gross amount of qualified expenditures to produce a movie — excluding sales, use and hotel and motel taxes — of up to $10 million per fiscal year.

Bloomingdale said the program will create incentives for film productions to come to Iowa for their projects.

“One of the things that is not mentioned is the millions of dollars we have missed out on because films have gone to other states that have tax credits,” she said. “This is a lot of money in the state of Iowa that we’re missing out on, jobs we’re missing out on.”

One of the reasons why Iowa has missed out on that money is that a previous film tax incentive program by the state, ended following reports of massive misuse of government funds through the film program. A 2010 report by former Iowa Auditor David Vaudt found that nearly $26 million of the $32 million awarded through the Iowa Film Tax Credit program was improperly issued. The program ran from May 2007 to September 2009, when it was shut down by former Gov. Chet Culver after information about the improper spending was discovered.

The bill seeks to avoid these problems with the new program, outlining more specific details on qualified facilities and the expenditures that would be covered by the tax rebate. Before the rebates would be disbursed, production companies would be required to have a certified public accountant (CPA) complete an examination of qualified expenditures to ensure they are in accordance with the outlined requirements.

Rep. Chuck Isenhart, D-Dubuque, introduced an amendment requiring the state auditor to conduct audits on the rebates disbursed when half of the money in the fund has been distributed. Isenhart said the provision would ensure that “yellow” or “red flags” on expenditures are identified in the program before additional funding is given to a production.

Bloomingdale said the measure was unnecessary as oversight is provided for by CPAs in the bill, and that the legislation does not prohibit the state auditor from auditing film productions in the program. Isenhart argued that state oversight was needed, citing the scandal over improper spending in the earlier program as well as the state’s long court battles that followed.

“I’m not suggesting that anything we’re doing today is gonna put us on a path towards anything like that,” Isenhart said. “And one of the things we could do today to make sure it doesn’t, is to give our state auditor — make him aware that funds are being dispersed, and that he has an opportunity to look into any potential issues that may exist to make those corrections.”

The amendment failed in a 34-61 vote.

Though the previous film tax incentive program resulted in misuse of government funds, Bloomingdale said this measure had oversight provisions to prevent history from repeating — in addition to boosting Iowa’s economy. She said not only will film productions bring money to Iowa during filming, but will boost local economies throughout the state for years, or decades, after.

“The other focus on this would be the possible film tourism,” Bloomingdale said. “The tourism that’s been created by movies such as ‘Field of Dreams’ and ‘Bridges of Madison County,’ these have become destination vacations. That’s after the movie, after the money’s all been spent, we still have income from these movies.”

The bill heads to the Senate for further consideration.

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