Washington, DC — Most small-and medium-sized cities name the companies to which they are considering giving incentives and then approve such deals in public hearings. But only one in nine such cities has an economic development process that actively encourages residents to participate in their local economy and also allows people to see whether incentive deals succeed over time.
Those are the key findings of “Seeing Is Engaging: Economic Development Transparency in Small- and Medium-Sized U.S. Cities,” a new study published today by Good Jobs First. The study covers 229 cities with populations between 50,000 and 350,000 in 45 states.
The report and related research are funded by the Robert Wood Johnson Foundation. Views here do not necessarily reflect those of the Foundation.
“We found that 69% of the cities name the recipient company ahead of time and 85% of the deals are approved in public hearings,” Good Jobs First Senior Research Analyst Kasia Tarczynska said. “Those are exemplary practices. But only 8% disclose actual jobs created and only 1% report actual wages paid.”
“We began rating state governments on subsidy transparency in 2007,” said Good Jobs First Executive Director Greg LeRoy. “Over time, all but one state has moved to having some incentive disclosure and many have greatly improved. Now that cities see that transparency won’t hurt their ‘business climate,’ we are confident they will also up their games.”
The study puts the cities into four groups based on the quality of their disclosures. At the top are 11% of cities with robust online reporting both before and after the incentives are formally approved. At the bottom are 14% of the cities that don’t disclose at any stage of the process.
In between are 26% of the cities which reveal at least the company’s name both before and after awarding the incentive, and 49% which disclose either before or after, but not both.
The study includes an appendix listing all 229 cities and detailing their transparency practices. It also reports how commonly the cities practice many specific forms of disclosure, such as:
- Enabling people to sign up for emails notifying them of upcoming hearings;
- Advance disclosure of the incentive application, project details, and related materials such as cost-benefit studies; and
- Online reporting of past incentive awards; what the recipients promised by way of jobs, wages, and capital investment; and how well the companies are doing fulfilling those promises.
“After sharing our findings with the 229 cities, we will soon turn our attention to promoting best transparency practices,” Tarczynska said. “We spoke with many economic development officials who are keen to learn from each other.”
“We will also be focusing on how to make incentives more equitable,” LeRoy added. “Another tranche of our research on the 229 cities remains unpublished and will inform our technical assistance and training curricula the next two years.”
Read the full report in a PDF.
Editor’s Note: Good Jobs First is a nonprofit, nonpartisan research organization founded in 1998. It is home to six unique databases, including Subsidy Tracker, Tax Break Tracker, Amazon Tracker, and Violation Tracker. Many of its 150+ studies are first of their kind in analysis of economic development subsidies.
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