Good Jobs First recently released a report summarizing state and local tax abatement disclosures. The report, “Hidden Costs No More,” examines disclosures between 2017 and 2022 for all fifty states and a set of large cities, counties and school districts.
The report finds that total tax abatement losses across these jurisdictions have ranged from $13.3 billion to $17.1 billion per year over this period. The abatement amounts, of course, vary widely across jurisdictions. I encourage you download the report to see the figures for your state.
These disclosures exist because of GASB 77, which established guidance requiring state and local governments following generally accepted accounting principles (GAAP) to disclose certain financial information about tax abatement agreements starting in 2017.
Good Jobs First found that the disclosures are uneven, making it a useful but far from perfect source of information about tax abatements. We also find GASB 77 reporting to be helpful, but it has not been the game changer we and others expected for incentive practices. The public and media response to disclosures has remained pretty minimal. Our expectation that GASB 77 would lead to the repeal or modification of poorly performing or badly designed tax abatement programs also does not appear to have come to pass. On the other hand, we have seen continued improvements in up-front due diligence and better monitoring of costs and benefits associated with incentives over time. I’d say we were also correct in predicting that there would not been a significant decline in the overall use of tax abatement programs.
Nevertheless, improving transparency is an important aspect of smart incentive use. It’s always up to elected leaders to decide how they will design their tax incentive programs, but there now are more resources, like GASB 77 disclosures, than ever offering data and insights on the costs and benefits of their policy choices.
Photo by Nick Fewings on Unsplash
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