GASB 77: Finally, Sonar for “Budget Icebergs”
As we await this year’s geyser of first-ever tax break data under GASB Statement 77*, Good Jobs First is especially keen to see how some “budget icebergs” will be revealed.
Michigan Economic Growth Authority (MEGA) tax breaks disrupted the state’s 2015 budget process when officials realized the true annual costs had been severely underestimated. It created a $325 million budget hole. The program was ended in 2011, but the costs lived on (because 15 years of prior deals were still claiming long-term tax credits). Even ahead of GASB 77, in its 2015 Annual Financial Report, Michigan began providing more detailed annual MEGA cost-accounting.
New Jersey’s Economic Redevelopment and Growth Grants (“ERG,” the state’s tax increment financing program) can capture as many as 25 revenue streams, far more any other state. No one knows (yet) what the actual annual costs are to the state and its local governments. Experts at New Jersey Policy Perspective suggest projections could only be the tip of the fiscal iceberg.
In Mississippi, Good Jobs First tallied subsidies awarded to Nissan in Canton. The package was popularly believed to have cost $295 million, but we found them to be more than four times higher: $1.3 billion. We expect GASB 77 will help Mississippi local governments and school districts better understand the plant’s true fiscal impact.
In South Carolina, Charleston County is home to a Boeing manufacturing facility, a major beneficiary of the county’s Fee-in-lieu of property tax (FILOT). The subsidy has been given to dozens of companies, but so far there have been no hints on the aggregate cost of the program to taxpayers.
When data centers receive subsidies, the terms are frequently hard to discern; for several internet giants, we found costs per job of almost $2 million. The problem is worst in those 10 states (out of 27 with data center-specific tax breaks) that don’t even disclose aggregate revenues lost to the cloud.
Yeah, we’re watching you on this Alabama, Indiana, Iowa, Mississippi, Missouri, Nebraska, Oklahoma, South Carolina, Tennessee, and Virginia.
Which tax-break price tags are you most curious about?
*For those still unfamiliar with the Governmental Accounting Standards Board (GASB) and its Statement No. 77 on Tax Abatement Disclosures, here is Good Jobs First’s explanation: http://www.goodjobsfirst.org/gasb-statement-no-77