Beginning in 2017, those interested in incentives and tax abatement expenditures spending will likely have access to significantly more data than is currently available. The Governmental Accounting Standards Board (GASB), the independent organization which “establishes financial accounting and reporting standards for state and local governments,” is asking for public comments on a proposed change to current standards for property and tax abatement agreements. The new rule would require disclosure of:
- The tax being abated
- Criteria that must be met for the taxpayer to be eligible for the abatement
- Provisions for recapturing abated taxes
- The types of commitments made by tax abatement recipients
- Number of tax abatement agreements
- Dollar amount of taxes abated
- Other commitments made by a government, such as to build infrastructure assets
Extensive analysis by Good Jobs First found that the proposal will “enable massive new bodies of analysis and reform policy-making” by “scholars concerned with state and local finances, tax policy, government transparency, economic development, regionalism and sprawl, public education finance, and contracting and privatization”.
The new requirements would also make data more uniform. As it currently stands, states and municipalities have significantly disparate reporting practices. Requiring state and local governments to conform to one standard will allow analysts to compare programs across states and regions. Statewide and regional trends will become more apparent, allowing public and private entities to better respond to problems before they occur.
Whether these changes create significant backlash from public and private entities is yet to be seen. The GASB has come under fire before for expanding its reporting requirements. As recently as 2007 the Government Finance Officers Association called for the GASB to be abolished.
This proposed rule change will provide significant quantities of data, offering a chance for fresh and incisive analysis on the impact of incentives spending. For an overview of current state incentive program offerings and economic development spending, check out the C2ER State Business Incentives Database and the C2ER State Economic Development Program Expenditures Database.
Image Source: GASB