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New Report Highlights the Importance of Transparency and Accountability in State Budgets
Altaf Rahamatulla on December 16, 2010 - 1:27pm
The precarious economic and fiscal circumstances states confront merit a more detailed and scrupulous review of spending on economic development subsidies. Near double-digit unemployment, massive revenue shortfalls, and a slow recovery continue to batter state budgets and dim growth prospects. Even with this backdrop, states continue to give away millions of taxpayer dollars to corporations with little to no accountability in place. For example, earlier this year, the Missouri State Auditor discovered that from 2005 to 2009, the state spent over $1.1 billion in excess of the projected cost of 15 of the state’s largest tax credit programs. More recently, New Mexico state Sen. Tim Keller, describing the need for enhanced transparency mechanisms in his state, said, "right now [New Mexico's] tax policy looks like Swiss cheese. Every industry has a hole and we basically don't know which [tax credits and exemptions] are good and which ones are bad."
Without needed accountability reforms, states are placing taxpayers, budget sustainability, and economic recovery at risk.
Within this context, Good Jobs First released three key resources to track and evaluate state spending on job subsidies. The first is Show Us The Subsidies, a comprehensive analysis of the level of disclosure states employ for various subsidy programs and a rating of states on how well or poorly they disclose company-specific recipient information and other performance measures. The report’s findings are illuminating and point to the need for significant transparency reforms at the state level, which include disclosure of basic subsidy information, including cost, location, employment and outcome data, the recipient's history of compliance, and several other metrics. As the authors note, “[s]unshine is…the cornerstone of reform. Secrecy in economic development is no longer acceptable. The use of job subsidies remains a highly controversial practice, and taxpayers have every right to see costs and benefits.”
The other two resources are the website AccountableUSA, which features profiles of each state’s record of subsidy practices and a description of controversial deals, and Subsidy Tracker, the first online database to track company-specific subsidy recipient information in a single, searchable location.
Good Jobs First finds that a number of states, including Illinois, Wisconsin, North Carolina, and Ohio, offer notable subsidy disclosure. In total, 37 states offer “online recipient disclosure for at least one key subsidy program.” Unfortunately, 13 states and the District of Columbia provide no disclosure whatsoever. Nevertheless, the report additionally observes that in recent years, there has been substantial improvement in transparency in state budget processes. Just this past year, several states instituted meaningful reform. One of the most significant victories this past legislative session occurred in Massachusetts, with the passage of the Revenues and Expenditures Transparency Act, H 2972, which creates an online database that details state spending and revenue sources.
Dealing with the aftermath of the recession and continued shortfalls, states cannot afford to hand out enormous subsidies or award lavish contracts with nothing to show in return. To make sure that taxpayer dollars are being used in the best public interest, states must implement stronger accountability measures.
Full Resources from thisArticle
Citizens for Tax Justice – The Real “Out of Control” Spending
Good Jobs First – AccountableUSA
Good Jobs First – Show Us The Subsidies
Good Jobs First - Subsidy Tracker
Progressive States Action - Corporate Transparency in State Budgets
Progressive States Network – Budget Transparency Advances Across the Country
U.S. PIRG - Following the Money: How the 50 States Rate in Providing Online Access to Government Spending Data
This article is part of PSN's email newsletter, The Stateside Dispatch.
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