August 18, 2015
August 18, 2015
Local governments in Ohio and across the country will soon have to start reporting the cost of tax incentives they provide for economic development as part of their annual financial statements. This is a major step forward for transparency and corporate accountability, although the rule doesn’t go as far as Policy Matters Ohio and many other organizations had requested.
The Governmental Accounting Standards Board (GASB), which sets financial reporting standards, published a final rule Aug. 14 requiring both state and local governments to report how much revenue was lost to tax abatements for reporting periods beginning after Dec. 15, 2015. Importantly, the rule also requires governmental bodies such as school districts that passively lose revenue because other local governments approve tax abatements to disclose how much that is costing. Though local governments in Ohio report some information now on the costs of tax incentives, it is not comprehensive.
The new GASB rules don’t require governments to disclose how much revenue will be lost in future years from tax abatements. Nor do they mandate reporting of either the number of subsidy agreements or the identity of individual recipients. These gaps will make the data less useful.
Despite these shortcomings, the GASB rule for the first time will show “the true price tag for economic development,” noted Greg LeRoy of Good Jobs First, the group that took the lead in responding to the draft GASB proposal and actively publicized it. The Good Jobs First blog analysis provides more information on the new rule.
Zach is Policy Matters research director.
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