Let’s say it’s Friday night, 11:30pm. You stayed in to Netflix and Chill with Bae. But then you bolt upright in bed, wide awake because, like, “Exactly what kind of tax abatements DID my city give out to attract that out-of-state manufacturing company, anyway? And also, how many jobs does my city expect and what’s the average salary for those new jobs?” Darn it, now there will be no sleeping for hours.
I’m being a bit flippant but now please forgive me if I go too far the other way. The Washington Post’s new adopted tagline captures, at least for me, why citizens need to be able to see economic development subsidies whenever the question occurs to us. Because “Democracy Dies In Darkness.” You have to be able to follow the money. We should all be sleepless if we can’t figure out which private companies enjoy our public subsidies, because the opportunity for mischief is too great.
If you live in San Antonio and Houston, you need to wait weeks, at least, to get answers to your subsidy question, if you even know how to request them, which you probably don’t. If you live in Austin, however, you’d have answers on your laptop by approximately 11:34pm, through their online searchable database. Then you can fall right back to sleep.
In March 2017 a think-tank named Good Jobs First published an excellent report titled “Show Us The Local Subsidies” grading the country’s 50 largest cities on the quality of their economic development program disclosures for subsidies like tax abatements. Meaning, if somebody wants to know which private companies received city or county tax breaks or investments, this report described how a citizen could, or could not, access that information on the web. The report included the largest Texas cities and counties, and the results were quite mixed.
Austin scored 95 and 90 points out of 100 for two of its programs, best in class. Fort Worth earned an underwhelming 50 and 55, Houston scored a middling 45, and Dallas County a 30. Other Texas governments scored zeros for web-based disclosure – include the City of San Antonio and Bexar County (San Antonio), City of Dallas, City of El Paso, Harris County (Houston), and Tarrant County (Fort Worth). To be clear, these scores do not indicate anything about the effectiveness of their economic development subsidies, but rather how easy it is for someone to get data online on the economic development deals cut by governments for private companies.
Scoring zero means that specific information about tax abatements for private companies is not available, at all, on the web. For the purposes of the Good Jobs First report, a perfect score requires not only that information be online, but that it be conveniently searchable through a database, including the value and type of subsidy, the private recipient’s name, the date of the subsidy, and the estimated number of jobs to be affected, including average expected salaries. In addition, a perfect score would require multiple years of data for comparative purposes.
David Marquez, Executive Director of Economic Development for Bexar County, takes exception with the report’s characterization of his program as not transparent. He points out that his office is in the habit of sending a spreadsheet of information whenever a reporter requests it.
“It’s the accessibility, not so much the transparency,” says Marquez. “It’s clearly not hidden. That’s not the case. There’s a nuance there.”
Gwen Tillotson, Deputy Director of Economic Development for the City of Houston, notes that all tax abatements awarded under a program called Chapter 380 agreements are posted online in PDF format, usually between 40 and 70 pages of text. In addition, she notes, public meetings notes are posted on a separate website, but “if somebody wanted to go deeper, people could contact us, and we could help them.” Her office also told me that once a year they send a report to the Houston Chronicle on all the subsidies they awarded throughout the year.
Rene Dominguez, Director of Economic Development for the City of San Antonio, also assured me that once a year his office sends a spreadsheet of his office’s transactions to the San Antonio Express News. His office also responds to requests from the public, as needed.
What has worked as a minimum standard of public disclosure in past years, however, is shifting.
Aiding the positive trend toward transparency, this year – for the first time – the Government Accounting Standard Board Rule 77 (GASB 77 for you cool kids) requires cities and counties to disclose the total amount of subsidies and tax abatements awarded to private companies for economic development. Although disclosure is voluntary and does not name individual beneficiaries, nor does it need to be detailed beyond a single total number, a failure to disclose could affect pesky things like bonds ratings and official annual financial audits.
The State of Texas, through the office of Comptroller Glenn Hegar, instituted a “Transparency Stars” program last year to encourage best practices in local government financial reporting, specifically including economic development programs. The comptroller’s criteria for a star closely resemble Good Jobs First’s requirements, including disclosure of data over multiple years, and data visualization. Local governments may apply to the Comptroller’s office for a review and eligibility for a star. So far five cities in Texas have earned a star in economic development.
Says San Antonio’s Dominguez, “I think we as a city strive to be a leader in transparency. Transparency in economic development has become a critical issue,
GASB 77 is a clear example of that, and we’re going to provide additional disclosures. That’s meant to increase transparency.”
Although all of the officials I spoke with expressed a sympathetic interest in greater disclosure, a zero score (San Antonio and Bexar) or even a 45 out of 100 (Houston) is not a good look. I’m throwing down the gauntlet now because I hope to call everyone back in 2018 to congratulate them that they all scored at the top of next year’s Good Jobs First report.
Please see related post:
We deserve more transparency on economic development programs – Part 2
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