The public can't keep close tabs on a tax refund program that gave more than $39 million in breaks over the last two-and-a-half years because of laws keeping tax information private.
The Texas Enterprise Zone Program rewards businesses for bringing jobs and improving property in "economically distressed" parts of Texas.
Unlike other state programs that offer grants up front to entice companies to set up shop, the enterprise zone program gives tax refunds. That means virtually all the information about whether companies deliver is hidden from the public.
"It's a huge problem with tax laws. So often all of the information is hidden," said Bill Allison, senior fellow at the Sunlight Foundation, a national group supporting government transparency. "You can get aggregate data only, and from a public perspective it's hard to see who is really benefiting from an incentive. It's a real problem when it comes to transparency. If you have a tax break, there ought to be some way to disclose it."
Under the enterprise zone program, the state pays money to companies annually after they report on their progress.
The public has no access to the outcomes of specific projects, how much of a tax break each company gets or the number of jobs each company adds. None of that information is public because it's all confined to an audit form that is protected by law as private taxpayer information.
The only publicly available information is a list of companies enrolled in the program and the annual totals of refunds paid and jobs created, said James Nolan, assistant general counsel in the open records division of the state comptroller's office. Texas Watchdog requested records detailing individual company tax breaks and jobs created from his office.
The comptroller's office said in a letter response it didn't maintain a database of payments made under the program, and that the individual payments given back to companies could not be made public by law.
"You would think, since they get a tax benefit, that (those enrolled in the program) would have to report that information, but they do not," Nolan said.
Nolan said that even a heavily redacted form indicating only the name of the company and the number of jobs created could not be released.
Even Nolan agreed that the public should be able to check whether companies lived up to their promises to add jobs in needy parts of the state.
"It seems like an unfortunate circumstance to me," he said.
Much more information is available about other corporate incentive programs in Texas.
Under the Texas Enterprise Fund, the grants and their terms are public information, with little barrier between the public and the details of the transactions. The state has allocated more than $383 million since the program was established in 2003 and, according to the governor's office, boosted the creation of 55,500 jobs in Texas.
But every year, some companies fail to meet their hiring or investment goals and must return a portion of the grants.
In 2005, more than $600,000 was returned because companies failed to meet job creation goals.
The sporting goods store Cabela's, in Buda, was forced to return more than $375,000 to the state when the store could not meet its hiring goals.
Meanwhile, the enterprise zone program has ballooned.
In 2007, more than $6.6 million was given out under the Texas Enterprise Zone Program, resulting in about 2,800 new jobs, the comptroller's office said.
For 2008, the state gave out almost $17 million for about 5,000 jobs.
From January through late July, more than $16 million in tax breaks had been given out.
Contact Texas Watchdog at news@texaswatchdog.org or 713-980-9777.
Privacy rules keep details on corporate tax breaks under wraps
Wed Sep 16 10:41:25 2009 CST |
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By Ann Raber
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