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Sunshine Week: Poor transparency plagues local tax abatement programs

By   /   March 13, 2017  /   News  /   No Comments

Part 2 of 6 in the series Sunshine Week 2017

Most cities and counties do not disclose online the names of companies that receive property tax abatements and other economic incentives, and less than one-fourth reveal the number of jobs created by their incentive programs.

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TAX BREAKS: Good Jobs First found that most economic incentives programs don’t make recipient information available online.

The recent report “Show Us the Local Subsidies” by economic incentive watchdog group Good Jobs First found that while governments continue to dole out subsidies, the transparency tied to those dollars continues to lag.

“Localities spend tens of billions of dollars annually on subsidies, yet most make it difficult for residents to learn which companies receive that assistance,” said the report’s author, Good Jobs First research Analyst Kasia Tarczynska. “And even fewer provide information on the effectiveness of the awards.”

Good Jobs First examined the 50 biggest cities and counties and chose one or two programs per local government, favoring programs that are more costly, more often used or more controversial.

The report rates 85 programs overall; only 35 reveal some company-specific subsidy data online. And what’s revealed varies. For example, only 11 of the economic incentive programs listed the approved subsidy dollar value, while 15 showed the actual or projected wage information.

Only 13 showed the number of jobs created.

“We hasten to add that just because a program is transparent, that says nothing about its effectiveness,” Tarczynska said. “But transparency is a prerequisite for evaluating effectiveness.”

There was a great discrepancy in reporting even within governments, the research found. For example, New York City’s industrial incentive program was the only program evaluated to get a perfect score, while the city’s industrial and commercial abatement program got a zero because it did not disclose recipients.

Transparency has mildly improved since the first such report in 2013, with 41 percent meeting basic standards for transparency in 2017 compared with 33 percent in the initial study.

Transparency should continue to improve due to new standards. More than 50,000 state and local governments will begin over the next few months disclosing the total costs of their economic development incentives programs under Governmental Accounting Standards Board Statement No. 77, noted Good Jobs First executive director Greg LeRoy.

Those disclosures will now include:

  • Descriptive information that includes the tax being abated, the authority under which those tax abatements are provided, the eligibility criteria, the mechanism by which the taxes are abated and provisions for recapturing the abated taxes.
  • The gross dollar amount of taxes abated.
  • Any commitments made by the government as part of the tax abatement agreement.

The GASB says on its website the improved disclosures will help taxpayers “be better equipped to understand how tax abatements affect a government’s future ability to raise resources and meet its financial obligations and the impact those abatements have on a government’s financial position and economic condition.”

“That statement does not require the disclosure of recipient names, but we expect many taxpayers will want to know which companies got subsidized, and how much, when they see total program price tags,” LeRoy said.

Part of 6 in the series Sunshine Week 2017

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Johnny Kampis is National Watchdog Reporter for Watchdog.org. Johnny previously worked in the newspaper industry and as a freelance writer, and has been published in The New York Times, Time.com, FoxNews.com and the Atlanta Journal-Constitution. A former semi-professional poker player, he is writing a book documenting the poker scene at the 2016 World Series of Poker, a decade after the peak of the poker boom. Johnny is also a member of Investigative Reporters and Editors.