A flash of tax break transparency: New rule not being used to its fullest potential
Posted January 17, 2018 in Press Releases
For the first time, governments across Ohio and the country are reporting the cost of tax abatements they grant for economic development. The information is required under a new rule by the nonprofit that sets national financial reporting standards for governments, the Governmental Accounting Standards Board (GASB).
Policy Matters Ohio reviewed disclosures made by 59 counties and 84 cities, villages and townships to start the process of learning from this new tool, known as GASB Statement No. 77. The 10 largest counties reported a total of $25.8 million in abatements for 2016 under the new rule; more than half of that was in Franklin County, the state’s largest.
Some local governments, such as the Village of Silverton, went beyond the requirements and reported the specifics of individual abatements. Some governments don’t mention the standard at all in their financial statements, and some elements of the rule have been widely disregarded. This includes the requirement to disclose provisions for recapturing abated taxes, often known as clawbacks. So far, Auditor Dave Yost has not seized the opportunity to spur local governments to provide the maximum transparency the new standard can help achieve or to make the data widely and easily available.
“Ohioans should demand that local government provide all the information GASB requires,” said Zach Schiller, Policy Matters Ohio research director and author of the report. “Local governments should emulate those like Silverton that already have gone beyond requirements. That includes naming individual recipients of each abatement and describing how long each abatement lasts.”
The report recommends that the Auditor of State publicly announce a commitment to the fullest possible disclosure of tax abatements and adopt practices to achieve that. Those include ensuring all official full-year financial statements have a clear section on abatements, providing every local jurisdiction required to report under the GASB standard with a spreadsheet to complete and submit, encouraging local governments to go beyond the minimum requirements, and posting all local government reports on the auditor web site in easily downloadable form. Candidates for auditor in next November’s state-wide election should discuss their intentions for strengthening tax abatement disclosure.
“So far, the newly required reporting provides just a taste of what Ohioans should expect from this new rule,” Schiller said. “Ultimately, this new tool will be useful to the degree public officials make it so.”