DES MOINES — Iowa’s troubled film tax-credit program could be in limbo for some time while legal issues shake out and lawmakers get a better sense of the state’s financial exposure for projects already in the pipeline, officials said Tuesday.

A Senate subcommittee approved a measure that would bar the state Department of Economic Development from registering any new projects until July 1, 2011, and Senate Majority Leader Mike Gronstal,

D-Council Bluffs, said that probably was the best-case scenario.

“I think there is some interest in suspending the program until all of the legal issues are resolved,” Gronstal said. “Unless there’s a whole lot of plea bargains real fast, I don’t think we’ll know by the end of this session. The best outcome for people who like film credit is that it will be suspended for a year.”

The Senate leader said there continues to be a “50-50” chance the Iowa Legislature will abolish the program altogether as all state tax credits come under scrutiny this session.

Representatives of the film, television and video industry appealed for lawmakers to make revisions to the current program while staying the course with one proponent calling a suspension “a slow death” for efforts to build a movie industry in Iowa.

John Busby of Des Moines said Iowa was the darling of the film industry for a time and the attractive tax-credit program was importing production money, but he said “that honeymoon blew up in September” when Gov. Chet Culver suspended the program.

That move was followed by a state audit and criminal probe that netted charges Monday against the former manager of the Iowa film office and several individuals and companies involved in the making of a movie in Council Bluffs that drew down $1.8 million in state tax incentives. Late last year, Culver resumed the program for projects already under contract or registered with the state, but kept in place the suspension on new projects.

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Currently, Jeff Thompson of the Iowa Attorney General’s Office said 22 film companies are under contract with the state’s tax-credit program and another 105 projects registered with the state — representing a potential financial exposure of more than $150 million.

Thompson and Eric Tabor, chief of staff at the attorney general’s office, recommended legislation to suspend new registrations effective upon enactment while they work through issues with projects already in place or being negotiated before lawmakers reshape the program.

Kent Newman, president of the Iowa Motion Picture Association board, said the tax credits initially meant tens of millions of dollars in benefits for Iowa, but the current uncertainty is resulting in lost opportunities. Busby worried Iowa would lose what momentum it built in the creative economy if lawmakers “break the continuum.”

David Roederer of the Iowa Chamber Alliance said the film tax credit initiative has been “a net positive,” but he was concerned about the impact of this limbo stage, noting the legislature did not stop job training when the Central Iowa Employment and Training Consortium, or CIETC, salary scandal came to light.

 

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