State and local governments have begun disclosing information about tax abatement agreements in their Comprehensive Annual Financial Reports (CAFRs) to comply with GASB 77.*
Good Jobs First is tracking disclosed data on its website via Subsidy Tracker 2, a free and searchable database. We offer three takeaways after spending some time with the data and Good Jobs First’s GASB 77 Coordinator, Scott Klinger.
1. Nearly $9.4 billion in FY17 tax abatements/revenue reductions have been disclosed.
- 33 states have reported revenue losses of approximately $5 billion. New York state accounts for $1.2 billion or about 25% of the total.
- A few states reported no or zero revenue losses, and the rest range from $4 million in South Dakota to $753 million in Michigan.
- 913 local governments reported their own tax abatements at $3.7 billion plus $687 million in lost local revenue due to other governments’ abatements.
- New York City alone skews the local totals, with nearly $2.9 billion in lost revenue reported.
2. The disclosure process is still evolving – and so is the data.
Several states and many local governments have not yet disclosed tax abatement information. Some are likely forthcoming (see state by state schedules here), a few have chosen not to disclose certain information, and others simply may not be aware of the GASB 77 guidance, according to Scott Klinger.
3. The public and media response to disclosures has been minimal to date.
So far there has been either muted or limited reporting on the disclosed data, in contrast to our own expectations. We’ve seen few articles at either the local or national levels citing the information provided in the CAFRs. We also have not heard much from bond agencies or others involved in state and local finance — who are really the primary audiences for the disclosed data. As more data is disclosed, we expect this dynamic to change.
* For background on this topic, see my article, “New Disclosure Rules and the Future of Incentives” from the Summer 2016 issue of the IEDC Economic Development Journal. You can access the article here.