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Online disclosure of the names of companies receiving state and local tax breaks, cash grants and other subsidies for job creation is becoming the norm around the country, with Massachusetts being the most recent state to adopt some of the critical transparency reforms, according to a report published today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC.
While the report noted that Massachusetts currently lacked reporting on subsidy recipients, it was also noted that Massachusetts was the latest state to adopt some tax subsidy transparency reforms in June. Illinois, Wisconsin, North Carolina, and Ohio were found to have the best economic development disclosure.
In June, Massachusetts passed legislation to adopt critical transparency reforms, including the development of a comprehensive, detailed state budget website which will also include the names of the companies who receive certain tax breaks in addition to the amount of the tax break. The law goes into effect in January, though the tax subsidy information will not be available until May 2012.
“The Governor and the Legislature should be commended for adopting the important reforms; however, that is just a first step. The new law still needs to be strongly implemented and the report shows we should do even better by outlining ‘best practices’ already in existence across the country,” said Deirdre Cummings, legislative director for MASSPIRG. “The bottom line is that meaningful transparency will improve the efficiency of all our programs, including economic development programs. In addition to knowing who is receiving tax breaks and for how much, we must also be able to evaluate and compare the success or failure of each of the tax breaks and hold the recipients accountable to commitments made in order to receive them. Massachusetts can’t afford to spend big dollars on subsidies without providing the proper tools to allow the public, lawmakers, and local officials to track and evaluate whether they deliver bang for the buck. When public dollars go to private businesses, we need the highest level of transparency.”
“With states being forced to make painful budget decisions, taxpayers expect economic development spending to be fair and transparent,” said Good Jobs First Executive Director Greg LeRoy. “Claims that sunshine would hurt a state's business climate have been discredited, trumped by people's rising expectations about government information being online.”
“The outpouring of job-subsidy data is a breakthrough for state government transparency and accountability,” said Good Jobs First Research Director Philip Mattera, leader of the six-person team that produced the study and web tools. “Enhanced disclosure makes it much easier to monitor the tens of billions of dollars in taxpayer revenues that are being diverted to private parties each year.”
Show Us the Subsidies rates the reporting practices of 245 key economic development subsidy programs from around the country on the inclusion and access of information such as company-specific dollar amounts, job-creation and the geographic location of subsidized facilities. Each program is rated on a scale of 0 to 100 (with extra credit for including advanced features). Scores for the programs in each state are then averaged to derive a state score.
The report’s key findings are as follows:
• Thirty-seven states disclose online the recipients of at least one key subsidy program.
• The states with the best scores for open information about subsidies averaged across their programs are: Illinois (82), Wisconsin (71), North Carolina (69) and Ohio (66).
• Thirteen states and the District of Columbia currently have no disclosure at all, although one of those states, Massachusetts, is slated to come online as enacted legislation takes effect. All our scoring is based on what was available online as of November 26, 2010.
• Since 2005, half a dozen states have enacted legislation mandating subsidy recipient reporting in one or more programs, the most recent being Massachusetts. Several other states have moved toward transparency through administrative action alone.
• Four states provide recipient reporting for all the key programs examined: Missouri, North Carolina, Ohio, and Wisconsin.
• Of the 245 subsidy programs examined, 104 of them (42 percent) report recipients online.
• The average program score across the country is 25, but rises to 59 when ignoring those with no disclosure. Nineteen programs score above 75, including three that score over 100, thanks to extra credit. The top-rated individual programs are in Illinois and Texas.
“Our findings tell two different stories,” LeRoy said. “The first is one of the steady spread of transparency across the nation. The other is that some states still inexplicably keep taxpayers completely or partially in the dark.”
“Every dollar spent on subsidies means a dollar less available for programs like schools or a dollar more that citizens must pick up the tab for in higher taxes,” concluded Cummings. In March MASSPIRG will again issue a 50-state scorecard on overall state spending transparency, Following the Money: How the 50 States Rate in Providing Online Access to Government Spending Data.
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