A report created by U.S. PIRG Education Fund and Frontier Group<\/strong>
\nR.J. Cross and Linus Lu, Frontier Group, and Andre Delattre, U.S. PIRG Education Fund
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What is an economic development subsidy and why should I care?\n<\/p><\/div>\n
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Economic development subsidies represent a large and growing form of public spending \u2014 totaling more than $70 billion<\/a> a year. These subsidies are awarded to private companies in an effort to stoke investment and job creation, and they come in a dizzying array of forms, from tax breaks for the filming of a movie on location to direct cash grant payments subsidizing the construction of a new sports stadium. These subsidies are often combined in mega-packages designed to lure large corporations to set up shop in an area.<\/p>\n
To prevent corruption and ensure government accountability, all public expenditures need to be transparent, and that includes spending to lure businesses to a city or state.<\/p>\n
The majority of states, however, struggle to meet even minimum standards of online transparency for economic development subsidies \u2014 leaving residents, watchdogs and public officials in the dark about how billions of taxpayer dollars are spent.<\/p>\n<\/div>\n
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How does our state compare when it comes to economic development transparency?\n<\/p><\/div>\n
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Following the Money 2019 shows that many states fail to disclose even basic information about economic development subsidies to the public in a timely manner, much less provide that information online in an accessible format. More than one-third of states received an \u201cF\u201d for their transparency efforts.<\/p>\n
\u2022 Only one state, Ohio, is a “Leading State<\/strong>” (\u201cA\u201d range) for economic development transparency, providing citizens with an acceptable and consistent level of information about economic development subsidies across a number of formats, with access to that information guaranteed by law.<\/p>\n
\u2022 Three states are “Advancing States<\/strong>” (\u201cB\u201d range). These states include itemized grant payments to companies in their online spending portals, and most publish an annual report detailing statewide spending on economic development grants.<\/p>\n
\u2022 Fifteen states are “Middling States<\/strong>” (“C” range). These states fulfill the most basic and important modern transparency requirement by including payments made by the primary economic development agency in the state\u2019s transparency checkbook portal. However, only seven of these states provide both the projected and actual benefits of subsidy payments and only nine publish an annual tax expenditure report.<\/p>\n
\u2022\u00a0Fourteen<\/span>\u00a0states are “Lagging States<\/strong>” (“D” range). Economic development subsidy reporting in these states fails to provide critical information to citizens in a readily accessible format.<\/p>\n
\u2022 Over a third of the states (17) are “Failing States<\/strong>” (“F” range) and do not meet even basic standards of online spending transparency for economic development subsidies. Only 10 of these states publish any kind of annual grants report, while only two include grant payments made by the primary economic development agency in the state\u2019s online checkbook.<\/p>\n<\/div>\n
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