User's Guide to Tax Break Tracker

USER’S GUIDE TO TAX BREAK TRACKER

 

Database description

Corporate tax breaks result in foregone tax revenue that may have been better spent on improving public services. TAX BREAK TRACKER collects government disclosures of these yearly reductions in tax revenue due to tax abatement agreements with private entities, which are an important subset of all economic development incentive programs. Governments that comply with the generally accepted accounting principles (GAAP) set forth by the Governmental Accounting Standards Board (GASB) are required to provide this information in the notes section of their Comprehensive Annual Financial Reports (CAFR) per Statement No.77 (hereafter referred to as GASB-77). For more information about this accounting rule, visit our GASB-77 Resource Center.

From each CAFR, staff members at Good Jobs First extracts key fields to the extent they are made available, including program name, statutory authority, clawback provisions, and the amount of taxes abated. Each individual data entry is uniquely identified by program name, reporting jurisdiction, and fiscal year. Individual entries are then summarized for states and localities. GASB-77 was widely implemented starting in 2017, although some jurisdictions started reporting earlier. 2018 data is being continually added to our dataset and will be uploaded online once every three months. Currently, 2018 data includes disclosures from the 50 states, 100 largest cities, and localities from select states.

 

How to use

On the main page, use the drop-down menu to select a state. You can then either click search to get to the state summary page – a list of state programs and a list of localities in that state – or refine by locality to get to the locality summary page with a list of local programs. While on these pages, you can switch between years for which data is available. Some localities lose revenue passively due to agreements entered into by other government entities; this is indicated by the “type of loss” column on the locality summary page. Clicking on each program takes you to the individual entry page which gives the details about the program and its cost as reported by the jurisdiction in question. 

If you do not see a locality in the drop-down menu, either we have not yet retrieved the data, or it failed to disclose revenue losses in accordance with GASB-77. You can access the list of non-reporting jurisdictions here: Download the list of non-compliant localities (xlsx, 823 KB).

Because of the uneven disclosure among local governments, the revenue losses reported by local jurisdictions are generally NOT comparable across states. It is recommended that any comparison be done using weights, such as the percentage of local jurisdictions that disclosed (here is an estimate). Keep in mind that the definition of "tax abatement" is loose and subject to interpretation, so the quality of disclosure varies even among compliant jurisdictions. 

 

Notes on the individual entry pages

Program purpose: The definition of economic development is broad, and within the part of it that targets the private sector, there is much overlap between objectives such as attracting capital investment, creating jobs, and incentivizing businesses to relocate or expand, as these are all part of the package. The field “program purpose” displays the most emphasized or explicitly stated objective as reported in the CAFRs. For example, if the stated purpose is to encourage businesses to relocate without explicitly mentioning job creation, the program purpose field would display “business incentive”. If no specific objective is provided, the field will display “economic development”.

Provisions for recapture is also known as clawbacks, which authorize a jurisdiction to revoke incentives, exact penalties, and/or terminate agreements should companies fail to meet the targets specified in the agreement.

Gross revenue loss is the amount of taxes abated. Reimbursement/offset typically take the form of pilot payment and state aid. Net revenue loss is the difference between gross revenue loss and reimbursement/offset.

In some cases, a jurisdiction with multiple programs report just a single dollar figure for reimbursement/offset – usually from the state government. Tax Break Tracker displays this figure under the costliest program in this jurisdiction and mentions it in the notes of other programs. If the reimbursement is larger than the cost of the costliest program, the “spillover” is displayed under the second costliest program, and so on.

Type of loss displays either active or passive. Active losses happen when the reporting jurisdiction is the same as the abating jurisdiction. Passive losses happen when the reporting jurisdiction is different from the abating jurisdiction (i.e. when reporting jurisdictions lose revenue due to agreements entered into by other government entities).

Reduction in tax revenue for a jurisdiction due to agreements entered into by the Industrial Development Agencies affiliated with that jurisdiction is considered active loss.

For passive losses reporting, applicable tax(es) refers to the type(s) of tax revenue (property tax revenue, sales tax revenue, etc.) that was reduced for the reporting jurisdiction. For active losses reported, applicable tax(es) refers to the types for which tax credit, rebate, or abatement can be applied against.

For passive losses reporting, only the dollar amount of abated taxes is required, which means that many fields will display (not specified) to denote that information is not provided.

 

Supporting resources

Good Jobs First obtains CAFRs mainly through a centralized library hosted by Center for Municipal Finance and also through government websites. If you are concerned about the low disclosure rates in some localities and would like to find out why, please check out our GASB-77 ROADMAP Project where you will find, for each state, who is responsible for enforcing compliance. We frequently publish summaries and analyses based on GASB-77 data collection on our GASB-77 Resource Center. If you are interested in government transparency and accountability more broadly, be sure to visit our ACCOUNTABLE USA Project to find state profile pages which contain all the data collection and analysis we have done up to this point.

 

If you have any additional questions or concerns, please contact Christine Wen at chris@goodjobsfirst.org

 

 

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