GASB 77: a New Municipal Finance Safeguard

Transcription

1 GASB 77: a New Municipal Finance Safeguard Greg LeRoy ~ Good Jobs First Southern Municipal Finance Society September 29, 2017 ~Dallas

2 Good Jobs First: Since 1998, a Fiscal-Policy Resource for Policymakers, Grassroots, Journalists Independent, non-partisan, non-profit Model Research and Publications 50-state report card studies Subsidy Tracker & Violation Tracker Testimony, Training and Speaking

3 >$70 Billion per Year! Property Tax Abatements Tax Increment Financing (TIF) Districts Corporate Income Tax Credits Personal Income Tax Diversions Sales Tax Exemptions & Diversions Tax-free Loans Enterprise Zones Training Grants Dedicated Infrastructure

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6 Paying Taxes to the Boss

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9 Memphis Budget Erosion

10 TIF vs. Chicago Schools

11 Detroit MSA Shutdowns

12 MEGA Deals

13 Intergovernmental Free Lunch School boards usually powerless against abatements, TIFs, EZs

14 $1.2B and Counting

15 And Right Behind at $1.1 Billion

16 Born in the South, Now Affecting Budgets Everywhere Boeing $8.7B Washington State Tesla $1.3B + Faraday $334M/Nevada Intel $2 billion/oregon Foxconn $3 billion/wisconsin Cerner Corp $1.6 billion/missouri Sempra Energy $2.2 billion/louisiana 9 and Counting/New Jersey Amazon HQ2 $??/Location?

17 363 Megadeals $658,000/job

18 Data Centers: How Costly? 10 states with specific cloud tax breaks fail to disclose even aggregate cost! Alabama, Indiana, Iowa, Mississippi, Missouri, Nebraska, Oklahoma, South Carolina, Tennessee, & Virginia

19 Florida Megadeal, Gone Awry

20 North Carolina Megadeal Dell Winston-Salem Record state package of $242M, plus $37M local, after state-sanctioned intraregional competition Jobs lasted less than four years

21 But What s the Total Cost? ~$70 Billion per Year = Old Estimate, Based Mostly on Extrapolations

22 Enter GASB! (Governmental Accounting Standards Board) Determines that tax abatements are of sufficient prevalence and magnitude to merit a Statement Exposure Draft late Oct 2014 draws ~300 comments from non-profit, tax & budget, academic, labor and public officials. 120 substantive, >2/3rds pro-disclosure

23 Subsidy Tracker Company-specific and searchable 50 states + DC + localities + federal deals

24 August 2015: Statement No. 77 Issued Covers GAAP-compliant budgets calendar 2016 and beyond ~50,000 state & local government bodies will newly report CAFR Note: how much revenue was lost to each tax abatement program

25 Tax Abatement 3 Elements 1) Agreement between government and taxpayer (not broad exemption) 2) Government agrees to less revenue 3) Taxpayer agrees to perform quid pro quo

26 Data Will be Crude For abating governments, one dollar figure per program per year For passive income losers (e.g., school districts), one dollar figure per tax, per source Missing: # of deals, names of recipients, future-year losses

27 But Data Will be Broad GASB study finds GAAP usage by: ~80% of counties ~71% of school districts ~76% of cities and towns

28 Intergovernmental Disclosures Hypothetical $1,000 Bernalillo County property tax abatement UNM Hospital, $150 CNM (community college), $80 State of New Mexico, $30 Bernalillo County, $210 Albuquerque Public Schools, $250 City of Albuquerque, $280

29 Associated Obligations Example: new infrastructure promised to abated project

30 Compliance to Date: One Hot Mess Some localities missed the memo Some go above and beyond Some don t look right Ohio ruling: a precursor?

31 Tiff over TIF Tax Increment Financing (TIF) was flagged by many commenters GASB clarified in April 2017 Implementation Guide 2 of 3 kinds of TIF covered Problems persist

32 New! Subsidy Tracker 2 Unveiled two days ago -- for GASB 77 data Standardized template Go-to hub Now seeking partners!

33 51 State Roadmaps Available Who collects CAFRs? Are CAFRs posted online? Are CAFRs stress-tested? Who else commented pro or con? When do first big cities, counties, school districts report?

34 A Cottage Industry is Born! Journalists Non-profits Ratings Agencies Academics State Agencies

35 Learn

36 Contacts Scott Klinger x 212 Greg LeRoy goodjobs@goodjobsfirst.org x 211