For Immediate Release
Contact: Greg LeRoy [email protected] or 202-494-0888
Audits Fail to Disclose Key Revenue Losses
Cincinnati’s Residential Tax Abatement program has cost the city’s public school system at least $41.5 million since 2017. And even though those losses meet the functional definition of “tax abatement,” Cincinnati Public Schools has not been disclosing them as such in its Annual Comprehensive Financial Reports (ACFRs).
Those are two major findings contained in a soon-to-be released study by Good Jobs First, a non-profit, non-partisan group that tracks economic development incentives. The study has been commissioned by the Cincinnati Federation of Teachers. It will cover multiple abatement programs.
Good Jobs First was the leading advocate for the adoption of Governmental Accounting Standards Board Statement No. 77 on Tax Abatement Disclosures, which requires most state and local governments, including school districts, to report how much revenue they’re losing to tax abatement programs. These disclosures appear in ACFRs, which are audited spending reports.
“In our opinion, Cincinnati’s Residential Tax Abatement Program clearly meets GASB’s definition of a ‘tax abatement’,” said Good Jobs First Executive Director Greg LeRoy. “It requires an application, a certification, and a beneficial act by the taxpayer in exchange for the tax abatement. That is precisely the kind of ‘quid pro quo’ GASB uses to define ‘tax abatement’.”
“Even though CPS does not grant the residential tax abatements, it suffers revenue losses passively when the City grants such abatements,” LeRoy explained. “Statement No. 77 has explicit provisions covering such situations because school districts in many states suffer passive revenue losses.”
School districts in Ohio rely heavily on property taxes, so residential and commercial property tax abatements place a greater burden on residents and small businesses, which must make up the difference or suffer poorer public services, or both.
Editor’s note: For more on GASB Statement No. 77, go to https://goodjobsfirst.org/tax-abatement-disclosures/