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HighRoadNow > State Best Practices > Democratic Accountability > Fiscal Accountability
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  Fiscal Accountability Sample LegislationMessage CenterMedia KitIssue AnalysisBackground StrategyAsk Alice |
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Fiscal Responsibility -- Tracking Government Subsidies
Every year, state and city governments spend more than $50 billion on subsidies—mostly tax incentives for businesses. Tax breaks costing more than $100,000 per job created are not unusual.
Many states continue to hand out taxpayer monies in the form of subsidies and contracts to corporations without holding them accountable for playing by the rules. These “no-strings attached” subsidies and contracts are bad for states, bad for taxpayers and bad for working families.
With over 40 states facing serious budget shortfalls, it’s crucial that taxpayer dollars be used wisely. State legislatures must make sure we get our money’s worth by establishing requirements to hold subsidy recipients and contractors accountable for the way they spend taxpayer dollars. It’s time to make sure that companies who receive subsidies raise—not lower—the living standards of working families.
ALICE is pleased to offer sample legislation from Good Jobs First to make sure our scarce taxpayer dollars are spent wisely and to require the corporations that receive subsidies and contracts from states to live up to their promises. In short, if they say they are going to create new jobs, then they have to fulfill their promise or pay the money back.
The following Best Practices are put out by Good Jobs First:
Model Legislation
Model Legislation (Microsoft Word doc)
FAQs about model legislation
Job Quality Standards
State and local governments are increasingly demanding that subsidized companies create high quality, living wage jobs. Many jurisdictions have attached wage and benefit requirements to economic development subsidies.
Disclosure
The foundation of an effective accountability strategy is public disclosure about economic development spending. By disclosure, we mean annual, company-specific reporting of both the subsidies received and the benefits produced including jobs created, wages, and benefits. Reliable data collection and reporting are essential to measuring the effectiveness of subsidies and monitoring the performance of individual subsidized companies.
Monitoring and Enforcement
Monitoring is an important component because without effective monitoring, communities may never know whether a company has kept its side of the bargain. Many observers believe that monitoring must be done by an independent agency in order to be effective.
Penalties for non-performance or a shortfall in job creation or other promised benefits can come in many forms: a company may be prohibited from reapplying for an incentive program; or a company may be required to return all or part of the money received. This latter option is called a clawback and a number of states and municipalities have written these provisions into their subsidy laws.
An important part of monitoring and enforcement, therefore, is public disclosure of the agreements and the company's progress in those agreements.
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