CCI Members Sound The Alarm On Branstad’s Economic Development Agency

Legislation proposed by Economic Development Authority Director Debi Durham and her former employer, the Iowa Chamber Alliance, would make existing problems worse

 

A review of more than two years of public records concerning the Iowa Economic Development Authority by Iowa Citizens for Community Improvement has confirmed what Iowa CCI members warned would happen in March 2011:  Governor Branstad’s privatized economic development agency has been plagued with scandals including:

  • excessive CEO bonuses;
  • conflicts of interest;
  • misuse of taxpayer funds; and
  • pay to play.

Although some of the case studies detailed below have been reported in isolation previously, CCI members say that a comprehensive and broad-based analysis showing the full scale of abuses has never been done before, painting a disturbing picture of corporate corruption inside the Branstad Administration.

“Governor Branstad and Lt. Governor Kim Reynolds campaigned on bringing transparency to economic development, but the truth is they have made existing oversight problems far, far worse by turning decision-making wholesale over to unaccountable corporate interests and campaign donors,” said Aaron Jorgensen-Briggs, an Iowa CCI member from Des Moines.

“Now Director Debi Durham and her former employer the Iowa Chamber Alliance are trying to push corporate control of Iowa’s economic development even further – only this time with even more taxpayer money on the line.”

A major piece of legislation opposed by Iowa CCI members this session is a proposal to lift the cap on annual economic development spending from $125 million to $185 million a year.

Excessive CEO Bonuses

Economic Development Authority director Debi Durham has received more than $90,000 in bonuses in the last three years, pushing her total salary to above $185,000, almost 20 percent more than the current salary cap of $154,000 allowed by state law, according to the McClatchy-Tribune news service

Excessive bonuses for Durham and other Branstad appointees is happening at the same time the governor claims there’s not enough money in the budget to allow public employee wage increases to keep up with inflation.

Conflicts of Interest

According to a recent report by Iowa Watchdog.org, “a majority of the 11-member authority board headed companies that received loans and tax credits approved by the board. “ This report also found that 26 percent of all economic development prizes issued since 2011 have gone to companies the economic development authority’s board members work for.   That’s $49 million out of $189 million in total awards.

All that money produced only 21 out of a promised 1,388 jobs, the report concludes.

Mis-use of Taxpayer Funds

The Orascom deal worth tens of millions of dollars to bring an Egyptian fertilizer plant to southeast Iowa “was the worst economic development decision in state history,” said Senate Ways and Means Committee Chair Joe Bolkcom on the floor of the Iowa Senate on February 18.  

“Let’s consider Governor Branstad’s decision to give more than 200 million dollars in state and local tax credits and tax incentives to the Orascom Corporation. I think that decision was the worst economic development decision in state history….the worst economic development decision in state history. And I thought that before last week’s news that the feds are suing Orascom for lying about a $332 million contract.”

Critics of the “OraScam” deal say the Southeast Iowa site was the only proposed location that made the foreign corporation eligible for $300 million in the federal disaster bonds, casting serious doubt on Governor Branstad’s claims that Iowa was in stiff competition with Illinois to land the plant in-state.

Durham later admitted to a Senate panel that her agency’s staff knew that an Orascom subsidiary was being sued by the federal government during the negotiations for the state award package.

Pay-to-Play

Senate File 410 expands a corporate financing account that allows investors to become eligible for a special kind of state tax credit not available to other businesses.

Iowa CCI members say caps on economic development subsidies and tax credits should not be expanded until accountability, oversight, and transparency concerns are addressed first.

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