Arizona Given a ‘D’ for Transparency of Subsidies in New National Report

Arizona PIRG

Online disclosure of the names of companies receiving state and local tax breaks, cash grants and other subsidies for job creation is becoming the norm around the country, but Arizona’s performance is disappointing, according to a report published today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC.

“Arizona can’t afford spending big dollars on subsidies without tracking where they go and whether they deliver bang for the buck,” said Serena Unrein, Public Interest Advocate at the Arizona Public Interest Research Group (Arizona PIRG).  “When public dollars go to private businesses, we need the highest level of transparency.”

The report gave Arizona a ‘D’ for its transparency on subsidies, showing that the state has much room to improve the way it discloses economic subsidies.  Arizona provides very limited subsidy disclosure online.  Arizona’s Research and Development Income Tax Credit, for instance, doled out $43.8 million in 2007 – the most recent year when data is available – but no public information is available about the recipients of these funds.

“Besides creating an uneven playing field for some businesses, economic development subsidies are subject to abuse and error, which is all the more reason to be more transparent about subsidies in Arizona,” said Byron Schlomach, Ph.D., an economist with the Goldwater Institute, an independent government watchdog organization in Phoenix.  “Taxpayers shouldn’t be kept in the dark.  Greater transparency at all levels of government is needed so that taxpayers can see where their money is going.”

Controversy has erupted in the relatively rare cases when information about economic development subsidies has surfaced.  For instance, a $100 million local subsidy for the CityNorth complex in Phoenix drew public attention in 2007 when it was the subject of a legal challenge brought by the Goldwater Institute, which resulted in an Arizona Supreme Court ruling mandating stricter public-benefit requirements.  And in response to public dissatisfaction, the state enacted legislation in 2007 limiting local subsidies for retailers in the state’s largest counties.

“The outpouring of job-subsidy data is a breakthrough for state government transparency and accountability,” said Good Jobs First Research Director Philip Mattera, leader of the six-person team that produced the study and web tools. “Enhanced disclosure makes it much easier to monitor the tens of billions of dollars in taxpayer revenues that are being diverted to private parties each year.”

Show Us the Subsidies rates the reporting practices of 245 key economic development subsidy programs from around the country on the inclusion and access of information such as company-specific dollar amounts, job-creation and the geographic location of subsidized facilities. Each program is rated on a scale of 0 to 100 (with extra credit for including advanced features). Scores for the programs in each state are then averaged to derive a state score.

“Our findings tell two different stories,” Good Jobs First Executive Director Greg LeRoy said. “The first is one of the steady spread of transparency across the nation. The other is that some states still inexplicably keep taxpayers completely or partially in the dark.”

Good Jobs First today also released two new online tools: Subsidy Tracker, a searchable database on recipients of state economic development subsidies from numerous state governments; and Accountable USA, a set of webpages on each of the 50 states and the District of Columbia summarizing their track record on subsidies.  All resources are available at no cost on the Good Jobs First website.

Unrein concluded: “While Arizona’s current performance in disclosing economic development subsidies needs great improvement, we are hopeful Arizonans will at least be able to see some steps forward for transparency soon.”  Per legislation passed in 2008, Arizona is scheduled to launch a budget transparency website by January 1, 2011.  “Moving forward, the legislature should act to make sure that taxpayers can access information about subsidies and other governmental functions online.”

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