By Margie Manning, August 17, 2015
The Governmental Accounting Standards Board has issued its first-ever rule requiring state and local governments to disclose information about tax abatement agreements.
The disclosure requirements are designed to provide financial statement users with essential information about these agreements and the impact they have on a government’s finances, GASB said in a statement.
Governments often agree to abate or reduce the taxes of individuals and entities to promote economic development, job growth, redevelopment of blighted or underdeveloped areas, and other actions that are beneficial to the government or its citizens, the statement said.
There were 31 such deals in the Tampa Bay area in 2014, according to a database compiled by Good Jobs First, a Washington, D.C.-based national policy research center. The largest local deals last year included a $2.9 million tax credit for United Services Automobile Association to create 1,215 jobs with an average annual wage of $53,668, and a $2.8 million tax credit for Bristol-Myers Squibb (NYSE: BMY) to create 579 jobs with an average annual wage of $65,000.
Both were part of the Qualified Target Industry program and the awards only take effect after the jobs are created.
States already publish tax expenditure budgets that often include tax abatement data, so the new standard will have the greatest impact on local governments, including cities, counties, townships and school boards, Greg LeRoy, executive director of Good Jobs First, said in a statement.
The new standards do not require company-specific recipient disclosure, or disclosure of how many tax break agreements are behind the aggregate program costs, LeRoy said.
The rule takes effect for budgets that begin after Dec. 15, 2015, and the new data will begin to appear in 2017.