CBPP Report on Proper Disclosure of State Tax Expenditures
by Adam Hughes*, 4/14/2009
The Center on Budget and Policy Priorities published a fantastic, in-depth report this month examining the state of disclosure of state level tax expenditures. The report reviews the best (OR, MN, and CT) and worst (AR, MD, and RI) state reports and outlines the best practices for the ideal tax expenditure disclosure. CBPP makes a strong case that increased disclosure of tax expenditure data by states would improve policies and accountability:
If properly designed and implemented, a tax expenditure report makes tax expenditures more transparent by telling policymakers and the public how the state is spending its money and what it is accomplishing through those expenditures. A tax expenditure report also encourages accountability by enabling policymakers and voters to evaluate individual tax expenditures and decide whether to continue them. In addition, a tax expenditure report saves money by enabling policymakers to monitor the costs of tax expenditures and rein in their cost if necessary.
The CBPP report has some excellent examples of why well-crafted tax expenditure reports will help promote transparency and inform policy debates, save money and eliminate waste, and make policymakers and state governments more accountable. We couldn't agree more.
However, I would make one small suggestion that would add to the report's recommendations for the ideal disclosure of tax expenditure data. CBPP believes all reports should be available online, which is absolutely true. [Shame on you Arkansas, Maryland, New Hampshire, and South Carolina for not making your reports available online.]
But perhaps more importantly, the data contained within those reports should be made accessible as well - in a machine-readable format. Of the 38 states that publish reports online, every single one published the information as a Adobe Acrobat pdf file even though many of the reports contained detailed tables, charts, and other data presentations. This format prevents people from easily using the underlying data for analysis and comparisons to other data sets and restricts the overall usefulness of disclosing the data in the first place. I could not find any state that publishes the underlying data separately in excel files or through an API or data feed (don't worry states - the feds do a pretty awful job of publishing data on federal tax expenditures too).
By providing the underlying data within the reports in a more useable, machine-readable format, anyone can easily compare tax expenditures across states, draw connections with other data sets, such as campaign finance data or direct spending data, and create visualizations and reports of their own using the data. This will serve to deepen the debate about budget priorities and tax expenditures and increase the understanding of this type of government investment. Let's hope states (and the federal government) start moving in this direction.