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States Look to Make Spending More Accountable

In early March, New Mexico progressives achieved a notable victory after the state legislature approved SB47, a bill to develop an annual tax expenditure budget, to accurately assess how much the state spends on tax breaks for various industries and companies. Currently, New Mexico is only one of seven states that fails to produce a document that lists tax credits, deductions, and exemptions, with associated annual costs.

New Mexico State Sen. Tim Keller and Rep. Eleanor Chavez, who have persistently championed accountability, were instrumental in heralding legislative passage. Sen. Keller remarked that a tax expenditure budget “would allow the state to accurately measure and debate whether to fully fund priorities like education or continue tax breaks for activities and products including boxing, cigarettes, trucking... and others. Some of these tax expenditures play an important economic development role and some support vulnerable segments of the population. The challenge is right now we don’t know which ones are beneficial to our state and which ones aren’t needed.” Gov. Susana Martinez, who has previously expressed support for increased transparency, has until April 8 to approve or veto the legislation.

The bill's movement is complimented by heightened legislative momentum around accountability across the states. Such reforms, including increasing disclosure of state spending on subsidies, contracts, and corporate tax breaks, are especially necessary considering the bleak fiscal and economic circumstances states continue to confront. Further, these policies are needed to counter the right-wing's disturbing efforts to roll back various types of transparency laws and pursue privatization of infrastructure, government operations, and public programs.

Additionally, the bill comes at the heels of two new reports that underscore the significance of strengthened accountability mechanisms at the state level. U.S. PIRG recently published FOLLOWING THE MONEY 2011: How the 50 States Rate in Providing Online Access to Government Spending Data, that examines the extent to which states allow citizens to see government spending on subsidies and contracts, and, in effect, whether the state’s expenses are made open to public scrutiny. The leading states provide information that is accessible, highly searchable, and include detailed data about government contracts, tax subsidies and grants to businesses. U.S. PIRG finds that online disclosure "give[s] citizens and government officials the ability to monitor many aspects of state spending — saving money, preventing corruption, and encouraging the achievement of... public policy goals... As states grapple with difficult (budget) decisions, transparency websites provide an important tool to allow both citizens and civil servants to make informed choices."

Good Jobs First, which just released Slashing Subsidies, Bolstering Budgets, an examination of some of the most costly, unaccountable, and inefficient subsidies in several different states, including Iowa, Massachusetts, New York, Oregon, Texas, and others. The authors find that eliminating or reducing ineffective corporate subsidy programs can make a significant contribution towards addressing state revenue shortfalls.

People deserve to know how businesses that benefit from public contracts, subsidies, or tax expenditures are spending their tax dollars. Lawmakers must make sure that these entities are creating jobs, saving the state money, and best serving the public interest. Dealing with the impact of the economic downturn, states cannot afford to hand out enormous subsidies or award lavish contracts with nothing to show in return. Without needed accountability reforms, states are placing taxpayers, budget sustainability, and economic recovery at risk. Progressive States Network has outlined several policy options to promote accountability in state budgets in its 2011 Blueprint for Economic Security.

Full Resources from this Article

States Look to Make Spending More Accountable

Center on Budget and Policy Priorities – States Continue to Feel Recession's Impact
Good Jobs First – Accountable USA
Good Jobs First – Slashing Subsidies, Bolstering Budgets
Progressive States Network – Blueprint: Rebuilding Prosperity for States and Working Families
U.S.PIRG – FOLLOWING THE MONEY 2011: How the 50 States Rate in Providing Online Access to Government Spending Data

This article is part of PSN's email newsletter, The Stateside Dispatch.
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