The Biggest Transparency Story of 2015

October 8, 2014

Most Americans take it for granted that their state and city governments should reveal how they are spending tax dollars. Many states and cities meet this expectation by putting information about budgets and spending  online. But oddly, one of the fastest growing areas of local government spending is usually hidden from public view, and is often effectively hidden from state legislators. In New York State, state business tax credits have tripled in the last decade to $1.7 billion each year, and this does not include credits provided by local governments. Watchdog groups are enormously concerned about this secretive spending and the risk of corruption and pay-to-play.

The good news here is that this shadow spending may be getting a massive dose of sunlight. In a move with huge implications for local government transparency, the obscure but very powerful Government Accounting Standards Board (GASB) is inching towards new rules that will require that states and local governments disclose the cost of all “tax abatements” starting after December 15, 2015. Under GASB’s definition, this would include business tax credits and economic development subsidies.

According to the national subsidy watchdog group, Good Jobs First, GASB will have a three month comment period on the new policy starting in November 2014. Good Jobs says it appears that GASB will propose giving governments the option of disclosing individual deals or overall program costs. Transparency advocates should be asking GASB to mandate the most specific possible reporting on individual deals. Disclosing overall program costs is not particularly informative or useful, and will allow states to spend billions without identifying who the beneficiaries are or what they have done with their subsidies.