Tax Abatement Disclosures (GASB 77)
Politicians only want to brag about the benefits of subsidy deals, while obscuring the true costs. That all changed when we led the charge for GASB Statement 77, a government accounting first: it finally allows the public to see how much money they lose out on due to tax breaks given to corporations.
State governments and most local governments, including school districts, since 2016 have been required to report tax abatements in their annual financial statements, specifying, in particular, the amount of revenue reduced or foregone as a result of these tax abatements. Each taxing jurisdiction reports its own portion of the lost revenue, even when it loses revenue passively to other governments’ tax abatement programs.
This requirement is instituted via Statement No. 77 of the Generally Accepted Accounting Principles, set forth by the Governmental Accounting Standards Board (GASB). Despite the power of this new rule, too few jurisdictions are complying with it. We’re fighting to not only improve compliance, but strengthen the rule to make sure it captures a fuller and more accurate picture of the true costs of economic development subsidies.