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State, cities and counties will report corporate welfare for first time this year

State, cities and counties will report corporate welfare for first time this year

Idaho Freedom Foundation staff
January 5, 2017

IdahoReporter.com has made it an important part of its mission to inform readers about the tax breaks Idaho state government hands out to businesses. Before long, state and local governments will be under pressure to tell you, too.

After years of intense lobbying, the Governmental Accounting and Standards Board is for the first time recommending that the more than 50,000 government entities, which subscribe to GASB principles, make tax breaks an identifiable part of their year-end Comprehensive Annual Financial Reports.

Though GASB’s Statement No. 77 is 50 dense pages of accountant-speak, its impact, which will begin to be felt by this spring, is undeniable. States and local governments offer an estimated $70 billion a year in tax abatement schemes in the name of economic development, according to the accountability resource website, Good Jobs First.

In one of GASB 77’s first big tests, city comptroller Scott Stringer toted up $3 billion in corporate and housing development tax breaks this past year in New York City alone.

Good Jobs First estimates the total amount of tax breaks for New York state at $25.7 billion, most of them handed out since 2007. Over the years, the state of Louisiana has doled out $16.8 billion; Michigan, $14.1 billion; Washington’s $13.8 billion; and New Jersey, $8.9 billion, according to the group’s subsidy tracker.

Idaho ranks 44th in the country in the total number of total subsidies, but the $310.7 million total tracked by Good Jobs First is misleading. In 2008 the Idaho Legislature approved by far its largest ever tax abatement promise -- $276 million -- to Areva, but the nuclear fuel manufacturing plant the French conglomerate intended to build near Idaho Falls has yet to break ground.

None of the other 230 or so Idaho subsidies tracked by Good Jobs First has ever appeared in the state’s Comprehensive Annual Financial Report. (A copy of the 2016 report is available here.)

Past reports never reflected deals like the one worth about $6.5 million that the Legislature gave in 2014 to out-of-state human resources company Paylocity. Despite putting homegrown companies like Employers Resource in Boise at a competitive disadvantage, as IdahoReporter.com reported in 2015, the state Department of Labor further tilted the field with up to $1.2 million in incentives to train Paylocity’s new workforce, highlighted by Idaho Reporter in July.

Because of GASB’s new recommendations taxpayers will be able to review each tax subsidy that had been granted to businesses that approach the state with their hands out. Such a business is Project Grand Slam, the mystery company that last month promised the state it would create 186 jobs at a Burley-area site in exchange for a waiver of sales, income and payrolls taxes worth $5.86 million over the next 15 years, as IdahoReporter.com reported in December.

Also expected to show up in Idaho’s financial report is the $1.37 million tax-break package for home audio company, leeds look listen, in Ketchum and $63,200 in abatements for an Australian company, Vie Active, to build a women’s activewear store in Ketchum.

Statement 77 isn’t perfect. Taxpayers across the country will not find tax subsidy numbers in a separate section or spreadsheet of their state’s financial report, rather, they will have to do a little hunting in the notes sections.

And states are under no legal obligation to disclose the names of the companies to which elected officials have chosen to grant their tax largesse. Taxpayers will, however, be able to take subsidy figures back to the granting agency to get the names, which are a matter of public record.

Still, as David Vaudt, chairman of GASB, said in August 2015 when Statement 77 was issued, the public is getting closer to knowing how and why governments hand out tax breaks.  

“Not only will this mean that they’ll have access to information that will allow them to better assess a government’s financial health,” Vaudt said, “but it will also make the impact of these agreements much more apparent.”

Idaho Freedom Foundation
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