State Business Subsidies Lack Transparancy

Member Group : Center Square

(The Center Square) – State governments routinely offer tax incentives, subsidies, and other benefits for businesses in an effort to attract investment. However, transparency can be difficult as the public tracks spending.

A new report from Good Jobs First, a research center that promotes accountability in economic development, rated states on their disclosures.

Few states did well; the average score was 22 out of 100, and Pennsylvania scored 18.4.

“Most states rate poorly on giving advance notice of proposed deals, and only 4% of the 250 programs rated post the full incentive details ahead of a public hearing so that residents can knowledgeably oppose, support or suggest improvements to them,” Good Jobs First noted in its report summary.

States have improved in recent years in announcing these deals, but only 62% offer details about the deals online.

As of 2020, Pennsylvania offered $222 million annually in economic development incentives across film production tax credits, innovation zone and opportunity zone offerings, grants, and a research and development tax credit.

Yet, as the report details, the Commonwealth rarely gave advance notice of these incentives and few opportunities for the public to offer any input. In many cases, details about the recipients of tax credits and subsidies weren’t revealed.

“If you cannot even see who got the money and what they said they would do with it, you can’t answer the most basic questions about return on investment or equity,” said Kasia Tarczynska, senior research analyst and lead author of the study.

Governors often tout major deals and say how many jobs they will create, but the details aren’t touted as much, such as how much in public money it costs per job.

The report recommends that states create subsidy transparency portals so that the public can review the deals and see where tax revenue goes. The portals could educate the public and give them time to comment before the deal is green-lit.

“Before a subsidy is approved: all applications (including cost-benefit studies) should be posted on an agency website at least 60 days before they will be subject to final approval,” Tarczynska wrote.

Staff Reporter

Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.