• Summer unofficially starts next week, and that means it’s time for our annual word cloud. New this year to the top ten terms are tax and data, reflecting our efforts to share information about tax abatement disclosure guidelines from GASB as well as several posts addressing tax increment financing (TIF). We’ve also had a heavy emphasis on data collection and management for compliance monitoring and program evaluation. Goals, benefits as well as business and investment continue to be leading themes. We've been focusing on state programs and evaluations, but look for...

  • The short answer: the public believes tax expenditures cost less than direct spending. What is a tax expenditure? The US Government Accountability Office explains that: Tax expenditures are reductions in a taxpayer’s tax liability that are the result of special exemptions and exclusions from taxation, deductions, credits, deferrals of tax liability or preferential tax rates. Similar to spending programs, tax expenditures represent a substantial federal commitment to a wide range of mission areas. . . .Tax expenditures are often aimed at policy goals similar to those of federal spending programs....

  • Two recent reports explain how states are tackling different aspects of incentive program management. Better Incentive Information This Pew Charitable Trusts brief addresses strategies for using economic development data effectively when administering incentives and measuring their effectiveness. Major topics covered are: Obtaining and sharing access to data Ensuring data are high quality Analyzing data to determine program effectiveness This brief is part of the Business Incentives Initiative, a joint project of the Center for Regional Economic Competitiveness (CREC) and the Pew Charitable Trusts. The Initiative is designed to “improve decision-makers'...

  • The City of Lawrence, KS, offers a good example – and sets a high standard – for economic development incentive reporting in its 2015 Annual Report: Economic Development Support & Compliance. This post is part of an occasional series examining state and local reports assessing economic development incentive programs. Compliance in context In the Smart Incentives 4x4 framework, we emphasize data, analysis, transparency and accountability throughout the incentives process and distinguish between compliance and evaluation in the reporting phases. Compliance emphasizes monitoring whether incentivized companies have fulfilled the terms of their...

  • As a follow-on to last week's blog post describing 3 steps economic developers should take to prepare for GASB 77 tax abatement disclosures, I want to share a set of recommendations from the Government Finance Officers Association (GFOA) that complement our suggestions for economic development groups. GFOA is concerned, as we are, that the tax abatement disclosure guidelines will not provide complete information to citizens and other users of government financial reports because they do not include "the justification and expected long-term benefits of tax abatements." GFOA offers several helpful recommendations...

  • State and local governments will soon begin disclosing financial information about tax abatements in their annual financial reports. As a reminder, the Governmental Accounting Standards Board (GASB) last year approved Statement No. 77, Tax Abatement Disclosures, which establishes guidance requiring state and local governments to disclose certain information about tax abatement agreements for periods beginning after December 15, 2015. Economic development organizations should consider taking these three steps now to help their communities comply with disclosure rules. 1. Determine which tax incentives meet the criteria for disclosure This rule applies only to tax...