Subsidies and Sunshine

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This being Sunshine Week, there’s a lot of discussion going on about open government. One of the things government should be open about is the dubious practice of giving subsidies to companies in the name of economic development.

Each year, state and local governments in the United States award tens of billions of dollars in tax breaks, cash grants and other financial assistance to business, with the lion’s share going to large corporations ranging from Google and Facebook to Wal-Mart and Boeing. Much of the money goes to companies that don’t need it and often provide little return to taxpayers in terms of creating quality jobs.

The good news is that it is easier than ever to discover which companies are getting the giveaways. A decade ago, only a handful of states disclosed the names of subsidy recipients. That number is now up to 43 states and the District of Columbia. Data from those 44 jurisdictions—along with previously unpublished data from five other states—can be found on Subsidy Tracker, the database created by my colleagues and me at Good Jobs First. The only states with no data currently available are Mississippi and Nevada, but we’re seeking unpublished info from them as well.

A glance at the inventory of data sources that have been fed into Subsidy Tracker makes it clear that there is a great deal of variation in the depth of available information from state to state. We have entries for two dozen programs in Washington and Wisconsin, yet only one each for Alabama, California, Idaho, Massachusetts and Tennessee.

There are also significant differences in the types of subsidies for which recipient information is available. A major dividing line is between those states that have disclosure relating to corporate tax credits (or other business tax breaks) and those that keep that information secret even while revealing data on other categories such as grants. According to our latest tally, 31 states plus DC provide online disclosure of corporate tax break recipients. The ones with the most extensive tax subsidy reporting include Missouri, North Carolina and Rhode Island.

Among the states that are aggressive promoters of corporate tax breaks but which decline to reveal which companies are benefiting from that largesse are Alabama, Georgia, Kansas, Mississippi, New Mexico and Tennessee. A few states—including Maryland and South Carolina—disclose the names of companies but not the value of the credits they are receiving.

Subsidy disclosure is an issue addressed in Following the Money 2012, a new report by USPIRG, the third in its series of report-card studies on state spending transparency. USPIRG provides a thorough assessment of the Google-government portals that have proliferated in recent years. The report does a good job when it comes to general state spending, but we at Good Jobs First have a friendly disagreement about its treatment of subsidies. (I am graciously cited in the acknowledgements for having reviewed drafts of the report, but the disagreements I expressed to USPIRG are not mentioned).

Despite the fact that company-specific reporting on subsidies is missing from the core content of nearly all state transparency portals, USPIRG gives many of those portals high grades for subsidy transparency. Quite a few of the sites have links to other webpages with the subsidy data, and we have no objection if USPIRG wants to awards points for that practice.

The problem is that USPIRG’s scoring category on subsidies also covers grants, some of which are economic development subsidies but many of which are not. The distinction is not made clear, and in numerous cases it appears that the data treated by USPIRG as subsidy disclosure is actually information relating to other kinds of grants to non-governmental entities. For example, the Massachusetts transparency portal (which is given 8 of 10 points in the subsidy category) lists grants to non-profit organizations for providing social services, but it does not cover the state’s job creation programs. The latter include tax credits that will soon be disclosed, thanks to the efforts of groups such as PIRG’s Massachusetts affiliate.

It is understandable that USPIRG, in its effort to promote the march of government openness, would want to take a flexible position about what constitutes transparency. But the fact of the matter is that most online subsidy disclosure is still fragmented, occurring through far-flung webpages and obscure PDF reports. That’s precisely why we at Good Jobs First created Subsidy Tracker, which brings all those disparate sources (plus unpublished data) together in one national search engine.

Centralized state transparency portals are certainly a welcome development, and we salute USPIRG for promoting them, but they are not yet an effective means of educating the public on big giveaways of tax dollars.

Cross-posted from the Dirt Diggers Digest.

2 Responses to “Subsidies and Sunshine”

  1. Fernando Centeno Says:

    Great job as it gives me hope that greater progress on this front can still be made. I’d like to know if you could list local or regional networks of like-minded organizations. I live in San Antonio, and I don’t know anyone who would follow your lead, and, I’m not currently affiliated with any group.

    I’ve worked in this field many years and have recently published articles in planning journals involving “economic development” practices; I’d like to send you a copy of one which I believe will resonate with your readership.

    All the best!

  2. Brent Pittman Says:

    Both the Republican and Democrat parties are going in the wrong direction. To SAVE the US entrepreneurial ranking, credit rating, stock market, the $, Medicare, Social Security, Medicaid and the police, fire, k-12 public school, library, military, defense and homeland security budgets while CUTTING government spending, debt and present tax rates without causing inflation or high interest rates; both State and Federal parties would be winners if they would compromise with the following strategies:

    Create good paying American jobs with good benefits for American citizens by repealing all sales taxes and replace the lost revenue with an import tax/tariff on imported labor (India) & manufactured goods (Mexico and Communist China, North Korea & Vietnam). Repeal IN tax cuts for corporate/business income(25%), inventory, property and inheritance. Increase the federal income tax deduction from $5700 (2010) to $15000 for American citizens. Increase the IN state income tax exemption for non-dependent adults from $1000 to $5000, up to $15,000; depending on disabilities and age. All standard deductions and exemptions should be adjusted for inflation. Collect an export tax on natural resources/commodities such as coal, oil, natural gas & grains.

    Repeal all wealthy individual, business and new development/construction tax incentives such as tax abatement, tax increment financing, grants, deductions, credits, tax free bonds, earmarks, loopholes and other corporate welfare that are shifting business costs and taxes to other taxpayers, exporting American jobs or creating poverty wage American jobs. OR, require these corporate welfare kings to pay a living wage, minimum wage of $15/hour with good benefits; adjusted for inflation. Repeal IN “right to work legislation”. Collect mandatory impact fees (IN code: 36-7-4-1300, only infrastructure today); but, expand the code to collect impact fees for schools, libraries, parks, police and fire. Search for Brent Pittman Brownsburg, IN at flyergroup.com, LinkedIn.com and google.com for more information and details.

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