When It Comes to Tax Incentives, How Transparent Is Your City?

03/13/2017

A new report highlights major holes in local governments' online disclosure of how economic development dollars are spent.

BY  | MARCH 13, 2017

When it comes to tax breaks for economic development, following the money has never been easy.

Thanks to new accounting rules, states and localities have to disclose how much revenue they lose to such deals. But a new report finds that most of the nation’s largest local governments fail to reveal other basic information online, like what companies are benefiting, how much money they receive or whether they deliver on promises to create jobs.

The Washington-based watchdog group, Good Jobs First, reviewed disclosure practices for 50 of the largest cities and counties and assigned scores based on how much information was made available on public websites.

Just 35 of the 85 economic development programs identified the companies receiving incentives, while only 19 listed dollar amounts paid to or claimed by businesses.

Researchers also assessed programs’ disclosure of jobs and wage data -- a crucial component in evaluating the return on investment. Only 21 of the 85 programs reported numbers of pledged jobs, while 18 disclosed actual jobs created. Even fewer local governments reported wage data for recipient companies.

Meanwhile, 27 jurisdictions -- just over half of those reviewed -- failed to disclose basic information about any of their incentive programs. These local governments, listed below, include some of the nation’s most populous cities and counties. Another five cities published incentive data for only one of two economic development programs reviewed.

Compared to state governments, large localities have made significantly less progress in promoting online transparency. Good Jobs First’s 2014 scorecard assessing state incentive programs found nearly all of them -- 46 states -- met basic transparency standards.

The group last examined online disclosure of local economic development incentives in 2013. The new report card suggests marginal improvements, with 41 percent of programs meeting basic transparency standards -- up from 33 percent.

New York City’s Industrial Incentive Program was the only one that earned a perfect transparency rating. New York’s counties, including Nassau and Suffolk, similarly received relatively high scores, which Good Jobs First attributed to the state’s strong disclosure practices for locally administered programs.

However, the report singled out Austin as the most transparent city overall. Its economic development department manages a detailed database that includes links to city ordinances authorizing incentives, company compliance reports and other documentation.

The release of the report comes at a time when governments are preparing to begin disclosing long-sought-after data around incentive programs in their annual financial reports. The Governmental Accounting Standards Board recently adopted a rule mandating reporting of aggregate economic development program costs. However, the rule doesn’t require disclosure of totals specific to individual deals or more detailed information.

Of course, not posting economic development information online doesn’t mean it’s off limits to the public. Citizens might find information disclosed in city council meeting minutes, or they could obtain it via public records requests.

But the Good Jobs First report argues that citizens shouldn’t have to do that much digging to see how their taxpayer dollars are spent.

“Although freedom of information requests remain important tools in obtaining public data, we believe that public expectations of government data in the digital age require governments to post deal-specific information about subsidy programs online,” the report states.