Tax breaks are secret, Georgia says in defying new disclosure rule

Credit: Lois Norder

How much tax money is Georgia giving up to attract and keep businesses? With the state and local governments dangling tax breaks to lure Amazon's second headquarters, you might want to know about the amount of tax breaks Georgia already has granted.

But for three of Georgia's most potent business recruitment incentives, the state of Georgia says it can't tell you -- despite a new rule that requires all state and local governments to disclose details of certain tax abatements.

The state says its own laws ban it from reporting such "confidential taxpayer information."

Other states apparently don't have such restrictions. So far, 30 have disclosed details about tax abatements, including the amount of money given up, says Good Jobs First, a critic of state incentives. Georgia stands alone in refusing to disclose the information, says the organization, which has been compiling disclosures for all states.

Two of those three incentives that Georgia won't disclose -- one pegged for job development, called a "Mega Project Tax Credit" and the other for competitive projects of regional significance -- could be used to attract Amazon.

The Government Accounting Standards Board decided to require the disclosures because state and local governments weren't always providing information necessary so the public could assess how much tax revenue was being given up and what companies promised in return. Many state and local governments are having to disclose the breaks for the first time with their 2017 financial reports.

Governments don't have to detail which company got how much of a tax break. The information can be reported in aggregate.

But the state says that "given the limited number of recipients under each of its three programs," disclosing the amount of money and other details could reveal confidential taxpayer information.

In describing the three abatement programs in its latest Comprehensive Annual Financial Report, Georgia does note that if companies that get the tax breaks don't live up to terms of the agreement, they have to repay the money the state gave up.

But the state hasn't been keen on enforcing such provisions in the past. Could that be why Georgia is reticent now about telling the public how much revenue it is giving up?

The AJC five years ago took a look at whether companies given grants under two state "deal-closing funds" lived up to their promises about the number of new jobs they would create. Half the companies failed to deliver the number of full-time jobs they promised, the AJC found.

But the state rarely required the companies to pay back the public's money, the AJC reported.

The public isn't entirely in the dark about tax abatements. Good Jobs First notes that every year Georgia State University publishes a Tax Expenditure Report using data from the Georgia Department of Revenue. That report puts price tags on "hundreds of tax credit and abatement programs, both corporate and personal, and not just those for economic development," the advocacy group says.

And some local governments in Georgia have begun disclosing their tax breaks in latest annual financial statements. Here's what the AJC found when the first of the disclosures came out:

 Georgia state Sen. John Albers wants the state to evaluate tax credit and tax break programs. Photo: Bob Andres/
Georgia state Sen. John Albers wants the state to evaluate tax credit and tax break programs. Photo: Bob Andres/

Credit: Lois Norder

Credit: Lois Norder

But some Georgia lawmakers say even they can't get enough information about whether a slew of state incentive programs are worth the loss of tax revenue. To examine the costs and benefits, the Senate last year created a Study Committee of Special Tax Exemptions, led by Sen. John Albers of Roswell.

It wants a schedule for evaluating all scores of tax credit and tax exemption programs. One committee member also has suggested that companies that benefit from a tax exemption should give up their right to protect tax information. Stay tuned.

Here are the three state tax abatement programs that Georgia says it can't provide details about:

The Mega Project Tax Credit provides corporate income tax credits to encourage job creation. The credit is worth up to $5,250 per job per year, for the first five years a job is created. In order to receive the tax break, projects must hire at least 1,800 full-time employees, pay at least average wages within a county, and meet other requirements, the state says.

Program 2, the Tourism Development Act, grants abatements of sales and use taxes to encourage creation or expansion of tourism attractions.

Program 3 is for development deemed a "Competitive Project of Regional Significance." Get that abatement, and sales and use taxes from the state won't apply to sales of personal property used for the designated projects.

Under the GASB rule, state and local governments are supposed to disclose:

  • the purpose of the tax abatement program
  • the tax being abated
  • the dollar amount abated
  • provisions for recapturing the money
  • the types of commitments made by the tax abatement recipients
  • other commitments a government makes in connection with the tax break deals, such as agreeing to build roads or other infrastructure.

Read more: Good Jobs First has a "subsidy tracker," which purports to show how much a state or community spends on economic development tax breaks. You'll find it here:

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