The surprise resignation the state's economic development director apparently stemmed from questions about the use of tax incentives lawmakers approved to stimulate the film industry in Iowa.
The resignation of Mike Tramontina as director of the Department of Economic Development (DED) was announced by Gov. Chet Culver's office late Friday afternoon. The resignation was effective immediately and the department will report to Richard Oshlo, Culver's interim director of the Department of Management.
Also, Culver aides released documents confirming that the film office administrator had been placed on paid administrative leave while state officials probe "reported irregularities" in the handling of an incentive program that has seen "explosive growth."
In a letter to Robert Bocken of Fort Dodge, the chairman of the DED board, Culver said he was "very troubled" by information "that there have been insufficient procedures in place to assure a full and accurate accounting of expenditures" through the DED's film, television and video project.
Two days earlier, Tramontina issued a memo indicating an internal audit of the film incentive program found inadequate project files and receipt documentation, amendments made to contracts with filmmakers - often increasing credit amounts - after they received DED approval, and vague or overly broad ledger sheets. Many vendors clearly resided outside of Iowa and the purchases of two luxury vehicles not used directly on a film were judged to be abuses of the tax credit program guidelines, according to Tramontina's memo.
Currently, there are four projects being filmed in Iowa - three in Des Moines and one in Council Bluffs. From July 1, 2007, to June 30, 2009, a total of 20 film projects were awarded $31 million in state tax credits.
From May until August, about $100 million in projects have been induced by the DED board. Of those, about $33 million would be applied toward the new cap on DED-issued tax credits. For the current fiscal year, the DED Board established a $185 million cap for all its tax credit programs, including a $50 million cap for the film incentives.
Tramontina's resignation was announced a day after DED heard complaints that few jobs were being created for Iowans despite the $50 million a year in state film industry tax credits.
"This is Iowans' tax money and was all about creating jobs for Iowans," Sen. Tom Courtney, D-Burlington, said. "We passed this to create jobs for Iowans. Apparently that part got left out."
Courtney, chairman of the Government Oversight Committee, rejected the argument the jobs were too technical to be filled by Iowans.
"We may not have directors and producers, but we have people who can, if you will, lift barge, tote that bale and do those kinds of jobs," Courtney said. "Those are jobs for Iowans, for electricians and carpenters and all the kind of people we have here. In my view, they were bypassing that and bringing people in from out of state and from other countries."
Overall, however, Courtney had been pleased with Tramontina's leadership.
"Apparently there was more that I didn't know about," he said.
Bocken also was surprised by the resignation.
"There wasn't any problem," Bocken said Friday afternoon.
He declined to comment further because he hadn't discussed the move with the governor.
Before being named economic development director, Tramontina, a Democratic Party activist, directed the federal Housing and Urban Development regional office, served as a deputy state treasurer, directed the Iowa Finance Authority and worked as an investment banker.