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The Financiers (Taxpayers) Have a Right to Know
The Values Fund Report is a Good First Step
Des Moines Register
June 22, 2006
[Note: This material is copyright by the Des Moines Register, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of the Des Moines Register.]
The first comprehensive report on Gov. Tom Vilsack's pet program of assistance to businesses gave a positive impression of the accomplishments since its inception in 2003, but some questions can simply never be answered.
How many of the 8,013 jobs claimed to have been created or retained by the program would have been created anyway, without state assistance?
Are recent gains in Iowa employment attributable to the program, or are they just Iowa's share of national economic growth?
Could Iowa's economy have been boosted even more by spending the $119 million spent so far in some other way? Perhaps spending it on infrastructure, worker training, lower taxes or quality-of-life enhancements would have given more bang for the buck.
We'll never know.
It's all but impossible to draw conclusions about the worth of programs that give public money to private businesses, but there is one big reason to have such programs anyway: because other states have them. Iowa has little choice but to play the game by offering incentives to businesses comparable to those offered by other states.
The programs, in effect, make taxpayers captive investors in private businesses without the benefit of becoming shareowners. That being the case, taxpayers at least have a right to expect that the programs be completely transparent.
The report issued by the Department of Economic Development this week is a good step in that direction. Available on the DED's Web site (www.iowalifechanging.com), it explains the program and lists the status of each grant from the Grow Iowa Values Fund as of Dec. 30. The department intends to ask every six months for progress reports from the hundreds of companies involved in the program in order for the department to continue making reports to the public.
The new governor and Legislature next year should take this spirit of transparency even further by requiring comprehensive reports of all assistance companies receive from public sources. The report on the Values Fund doesn't include other assistance companies may receive, such as special tax credits, local tax breaks or employee training subsidies.
The public is entitled to know the whole picture of what companies are given from the public till.
A model might be found in the Illinois Corporate Accountability Act, which took effect in 2004. It's not perfect. It doesn't include reports of tax-increment financing, for instance, but it is an attempt to give the public a complete picture of the grants, loans, tax credits and other assistance each company gets from all sources and make it available on a searchable database. The act also requires the state to make progress reports on efforts to recapture grants given to companies that didn't live up to their contracts.
The captive taxpayer/financiers deserve no less.