Tax Expenditure Reporting – An Essential Policy Tool

April 21, 2009

According to a new report by the

Center for Budget and Policy Priorities

, nine states are leaving lawmakers in the dark by failing to publish any sort of tax expenditure report. This group includes: Alabama, Alaska, Georgia, Indiana, Nevada, New Jersey, New Mexico, South Dakota, and Wyoming. The report notes that even among those states that do publish tax expenditure reports, most have major gaps in information.

CBPP explains how a well designed and properly implemented tax expenditure report is an essential policy tool. It recommends that all state taxes are included, and stresses that reports should be published regularly, incorporated into the budget process, and available online. Armed with a better understanding of the true cost and effect of tax expenditures, lawmakers can make more informed spending decisions.

In Georgia, one of the nine states failing to publish a tax expenditure report, the House of Representatives is currently

considering a bill

that would lead to greater transparency and accountability in state tax policy. Senate Bill 206, which passed the Senate in early March, would require tax expenditure review as part of state budget reports. The

Georgia Budget and Policy Institute (GBPI)

, a member of both the

SFAI

and

EARN

networks, supports this bill. According to GBPI Executive Director

Alan Essig

, “The bipartisan support for SB 206 shows that the principles of good government are held by both political parties…Although there may be honorable disagreements over policy, there is agreement that policy decisions should be made based on accurate and timely information. SB 206 gives policy makers such information.”

The Georgia Department of Audits and Accounts and the Pew Center of the States (PCS) also support SB 206. PCS, a division of the Pew Charitable Trusts, has

partnered with the state of Georgia

for a year-long program to strengthen government policy and performance by building a system to analyze state spending data.