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Oregon Legislature Unanimously Approves Subsidy Transparency Legislation
Altaf Rahamatulla on May 26, 2011 - 11:41am
This month, the Oregon Legislature unanimously approved a bill to provide increased transparency of state spending on economic development subsidies. The legislation, HB2825, would require the Department of Administrative Services to publish detailed information regarding the amount, purpose, and intent of tax incentives directed to corporate entities on the state's transparency website. State Rep. Phil Barnhart (D), who sponsored the bill along with State Rep. Kim Thatcher (R), commented that “spending on tax breaks should be treated the same as spending on programs,” and that “by putting this information online, as is currently the case with other areas of the budget, we move one step closer to that goal." The bill now awaits Gov. John Kitzhaber's signature.
The bill garnered bipartisan legislative support, approval from Oregon businesses, and brought together advocacy organizations from across the ideological spectrum. The primary champion of the legislation was the Oregon State Public Interest Research Group (OSPIRG), which was instrumental in moving the bill and framing transparency as a means to protect taxpayers and provide safeguards against waste. Jon Bartholomew, a Policy Advocate at OSPIRG, notes that the bill “will prevent fraud and waste of our public resources and ensure that Oregonians get the greatest return on our investment possible."
The victory in Oregon mirrors legislative movement across the states to increase transparency of state budgets.
In the 2011 session alone, lawmakers in several states, including Colorado, Hawaii, Maine, New Mexico, Vermont, Washington, and West Virginia, have spearheaded initiatives to augment accountability in the state budget process, evidence that policymakers are placing a greater level of scrutiny on corporate tax breaks, subsidies, and contracts as states continue to experience the lasting impacts of the economic downturn. For instance, earlier in the year, Evergreen Solar declared that it would close its Massachusetts-based operation and move to China, after the state doled out $58 million in tax incentives to the company. Lawmakers failed to include accountability requirements as terms of the subsidy and, as a result, 800 people are out of work and the state will not be able to recoup the full amount of the subsidy. A similar instance occurred this year with Fidelity Investments, prompting legislators to act. Massachusetts State Sen. Jamie Eldridge (D) introduced S153, which would strengthen the state's economic development subsidy accountability mechanisms.
The revenue pressures states confront merit a more detailed review of state spending. States direct hundreds of millions of dollars annually to corporations in the name of economic development, usually with little to no transparency, economic benefit, or job creation. As Good Jobs First documents in a recent publication, Slashing Subsidies, Bolstering Budgets (an examination of some of the most costly, unaccountable, and inefficient subsidies in different states), eliminating or reducing ineffective corporate subsidy programs can make a significant contribution towards addressing state revenue shortfalls.
Lawmakers must make sure that entities receiving public dollars are creating jobs, saving their state money, and best serving the public good. Dealing with continued shortfalls, states cannot afford to hand out enormous subsidies or award lavish contracts with nothing to show in return. Without needed accountability reforms, states are placing taxpayers, budget sustainability, and economic recovery at risk.
Full Resources from this Article
Center on Budget and Policy Priorities – Promoting State Budget Accountability Through Tax Expenditure Reporting
This article is part of PSN's email newsletter, The Stateside Dispatch.
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