New Rule Will Require Local Governments to Account for Property Tax Breaks

Theo Francis reports on the details of a rule approved earlier this week by the Governmental Accounting Standards Board (GASB) to "require government officials to show the value of property, sales and income taxes that have been waived under agreements with companies or other taxpayers." The rule will take effect next year.

A sample of the kind of information that will be reported as a result of the new report:

Shelby County, Tenn., which includes the city of Memphis, waived about $48.7 million in property taxes last year, equivalent to 6.5% of its property tax receipts. Chicago channeled $372 million to nearly 150 special taxing districts in 2014, or $1 for every $13 of property taxes billed in the city, according to figures from the Cook County clerk’s office, which collects city taxes. Before it was shut down in 2012, a major California tax-incentive program sent about 12% of statewide property taxes to redevelopment agencies—and more than 25% in some counties—often benefiting private industry.

That information, according to Francis, shows how discounted property taxes, in their many forms, quickly pile up for local governments.

For the uninitiated, the GASB is an independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. According to the group's website, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments [pdf].