Report:

Revealing Tax Subsidies 2014

An Analysis of the Third Wave of Reports Under Oregon's Transparency Requirements for Economic Development Tax Subsidies
Released by: OSPIRG Foundation

EXECUTIVE SUMMARY

The ability of the public to see how their government uses the public purse is fundamental to democracy. Transparency in government spending checks corruption, bolsters public confidence in government and promotes greater effectiveness and fiscal responsibility. When public subsidies are given to private companies to advance goals related to economic growth, the public should see a timely and full accounting of the results of its investment.

In 2011, 2012 and 2013, through a bipartisan effort, the Oregon State Legislature adopted new measures (ORS 184.484) intended to shine a spotlight on nineteen economic development tax expenditure programs estimated to cost Oregon taxpayers over $670 million in the 2013-15 biennium. 

The purpose of the law is to allow taxpayers and policymakers alike to adequately evaluate the effectiveness and efficiency of these programs on Oregon’s Transparency Website. If implemented properly, lawmakers and the public would be able to see the recipients of economic development tax expenditures, what recipients of these subsidies are expected to deliver in exchange for public dollars, and whether or not recipients fulfill their requirements. 

This study examines the third annual update of the reports made available by the law on the Oregon Transparency Website in 2014. It evaluates how well the law is being followed and the degree to which the new information helps the public determine the value of these programs.

Findings

1. Complete information was provided for five of the nineteen programs covered by the law, accounting for nearly $417 million of the $671 million in total subsidies. 

2. Fourteen programs, accounting for the remaining $254 million covered by the law, lack certain types of required disclosure or provide no information at all.

• Six programs provide only partial reporting; two because legal prohibitions prevent public disclosure of certain data, and four for unexplained reasons.

• At least three programs provide no information because the state lacks any tracking and accountability systems. 

• At least one program has no information available because it is currently inactive.

• Four other programs withheld reports, for unexplained reasons.

Recommendations

To ensure that transparency is hardwired into the administration of these subsidy programs for the long-term, Governor Kitzhaber should issue a formal directive to all state agencies that administer corporate tax subsidies that includes the following:

1. As stewards of taxpayer dollars, state employees should prioritize transparency and accountability as a way to demonstrate that public dollars are used appropriately. Transparency should be the first order of business when administering a subsidy program, not an afterthought.

2. State agencies charged with administering economic development subsidies should provide the public with key information, including: the list of recipients of economic development tax expenditures, the value of subsidies received by each recipient, the economic output required of recipients in exchange for tax incentives, and proof that each recipient is fulfilling its requirement. Chief executives at these agencies should be required to regularly certify that they have provided full information.

3. While it should be a goal to make information as user-friendly as possible over the long run, state agencies should presently disclose all available information in whatever format it exists, such as spreadsheet, PDF document, and scanned image files. This includes:

• All approved/certified applications for every economic development program that requires certification.

• All annual reports for every economic development program that requires one. 

• All contracts between the state and a company regarding a subsidy, where appropriate.

4. Economic development programs that currently lack an annual reporting requirement should institute one immediately.

5. The details of any future economic development subsidy program should be disclosed, not just the ones listed in the current transparency law.

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