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December 09, 2010 02:05 AM UTC

Colorado gets a D+ for tax subsidy transparency

  • 16 Comments
  • by: COFPI

(Does anyone seriously think we shouldn’t even know–just know–how much the state is giving away? – promoted by Colorado Pols)

Colorado grants tens of millions of dollars in tax subsidies annually but provides only minimal information to taxpayers about who receives the support.

That’s among the findings of a report and online research tools issued today by Good Jobs First. Researchers gave Colorado a “D-plus” grade for the state’s disclosure of tax subsidies, finding the vast majority of subsidies have no online disclosure of recipients.  

Certainly, tax subsidies can be beneficial.  They can encourage job creation or promote green energy, for example.  But we need to confirm that dollars spent through tax subsidies are achieving their goals and are not just a giveaway.  We need to hold tax subsidies accountable.  

Tax subsidy transparency is particularly relevant at a time when we are cutting hundreds of millions of dollars from K-12 education, higher education and health care services.  Not to mention the legislature faces a rather large budget gap again this year (about $1 billion).  Every dollar that is spent on a tax subsidy, is, in effect, a dollar that is being cut from K-12.  We should at least know where those dollars are going.

For example, Colorado’s Enterprise Zone Program, which designates areas where companies may qualify for up to nine different tax credits and other abatements/exemptions, cost state taxpayers $46.7 million in 2008, but it provided no disclosure of who received the subsidies. Other programs, such as the Job Creation Performance Incentive Fund, which cost $6.1 million in Fiscal Year 2009, had higher degrees of disclosure.

We can do better. There are a number of solutions the state could pursue to move that grade to passing.  In fact, in times like this, when tough choices are being made by legislators and sacrifices made by families, we must ensure every dollar spent or cut is carefully considered. We can’t do that without knowing where the dollars go and why.

More analysis of government transparency and accountability is available on the Colorado Fiscal Policy Institute’s website. The report issued today, called Show Us The Subsidies, includes looks at all 50 states and the District of Columbia. Colorado was one of seven states to receive a “D-plus” grade. Thirteen states and the District of Columbia currently have no disclosure at all and received “F” grades.

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16 thoughts on “Colorado gets a D+ for tax subsidy transparency”

    1. I can’t quite remember the amount, but I recall that Encana Corp. received big bucks from the Enterprise Zone Program for operating in western Colorado.

  2. explain the difference between a tax credit and a subsidy? Is it just that one is applied on tax returns, whereas the other is a check that gets mailed out and cahsed by the benficiary?

    1. Which is a subsidy.  I’m going to guess they’re all tax credits, as governmental agencies tend to do that rather than write checks (make direct payments.)  

    2. Tax subsidy is typically broadly used – and credits are a type of tax subsidy.  Basically, when you use the tax code to give something or someone an advantage. A simple way to think of it: Credits= income tax subsidy (child tax credit) Exemption=sales tax subsidy (food, prescription drugs are exempt)

      This study looks at business tax subsidies.

  3. I love studies like these.  Someone’s paying attention (thank you Co Fiscal Pol Inst.)  Once granted, subsidies are incredibly hard to pull back.  Some transparency as to who’s getting the $ brings accountability.  So these incentives, they were legislated by the GenAssm and are overseen by the Gov’s office, is that right?

    And – are these R or D pet subsidies?

  4. It’s disappointing that Colorado scores so poorly on disclosure on who is getting what and what it’s costing the taxpayer’s.

    I would go one step further and say there should be not only disclosure, but cost/benefit analysis done on programs such as the Colorado Enterprise Zone Program, the purpose of which is economic development. I was shocked a couple of years ago when I was told by a state Senator there is very little cost/benefit program evaluation done in Colorado.  If a program like the Colorado Enterprise Zone Program is not generating a measurable benefit over it’s cost to the taxpayers, then it’s simply corporate welfare. NOTE: I don’t know if this program is achieving it’s intended objectives or not, but does anyone?

    I attended a legislative meeting on Monday and was told by a legislator that there is a very real possibility Colorado will end all public financing of higher ed this year. With such a dire budget situation, it’s imperative we know not only where this money is going but if it’s achieving a definable public benefit in exchange for the subsidy.

    There’s a fine line between “economic development” and “corporate welfare”. Disclosure and program evaluation can help define that line and ensure taxpayer money is used effectively, efficiently, and achieves the intended public policy objectives of the program.  

    1. I agree, this is good information.  It is shocking there is no cost-benefit analysis.  I also wonder if anyone is really keeping tabs on this information.  Does anyone know who would keep and therefore release this data?  The Office of Economic Development?  The Treasurer?  

        1. I’m going to follow up on this with the Senator who told me that a couple years ago – a strong advocate of transparency and accountability in state government – and try to get some more information.

          David, would you have a bill number ?

          As always, the devil’s in the details.  

    1. That’s discouraging. I assume the chances of such legislation passing this session would be even less.

      Let’s talk about this and your plans for the C4’s when you get back. I’ve been on the COFPI site and want to learn more about this.

      Have a safe and enjoyable trip !

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