By Hilary Russ
NEW YORK: Corporate tax breaks for housing and economic development projects cost New York City $3 billion in fiscal 2016, according to a Reuters’ review of a first-of-its kind report from the city’s chief fiscal officer.
The biggest chunk of lost revenues were from property tax abatements for housing developers, nearly all under a now-expired affordable housing program.
The city’s latest annual financial report from Comptroller Scott Stringer, released on Monday, was the first in the United States to include new mandated information about how much these tax abatements have cost the city.
“New Yorkers deserve to know where their tax dollars are being spent, and this disclosure brings more transparency to New York City’s tax abatement programs than ever before,” Stringer said in a statement to Reuters.
The city’s abatements cost more than $2.5 billion, but another $500 million in revenues was lost via state-administered subsidy programs.
There was no impact on the city’s financial statements as a result of the new rule, the report noted.
The disclosures are required under a new Governmental Accounting Standards Board rule, which went into effect for states, cities, counties and school districts for fiscal reporting periods beginning after Dec. 15, 2015.
That means financial reports due for release in the spring of 2017 and beyond will include the new data.
New York City did not have to unveil the information until May. The rule, No. 77, was issued in August 2015.
Greg LeRoy, executive director of Washington-based watchdog Good Jobs First, applauded Stringer for being the earliest reporter of what LeRoy said was “landmark accountability reform.”
“He even gave us two years of data so we can begin to analyze trends, which is above and beyond the technical requirements of Statement No. 77,” LeRoy said.
Critics of the rule say that reporting only lost revenues paints a lopsided picture of economic development subsidies by excluding the jobs created and other benefits.
Others, including Good Jobs First, say the rule does not go far enough because it does not require naming of specific companies, disclosure of how many individual agreements are included in a year or future-year cost reporting.
Some local governments are already reporting detailed information under their own rules. But GASB 77 will consolidate the data into the main financial statement.
The New York City charter, for instance, requires detailed reporting on tax breaks from its main economic development agency. The city’s finance department separately reports affordable housing tax breaks – about $1.2 billion in fiscal 2016.
(Editing by Daniel Bases and Jonathan Oatis)
Source: Reuters