Nov 18, 2015 - reporting requirements will put a chill on the provision of incentives. (More on this later) f. We are fa
Consulting Parker Poe Adams & Bernstein LLP
GASB Seminar – Site Consultant’s Perspective November 2015
Parker Poe Consulting, LLC Mark Simmons
© 2014 Parker Poe Consulting
I The disclosure requirements promulgated by GASB – Statement No. 77 will not adversely affect the activities of our site selection clients.
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a. These disclosures do not seem to
require any additional information that would not already be deemed as public information and subject to disclosure through FOIA.
b. The disclosure requirements are
universal and clients will face these disclosure rules throughout the country.
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c. Our clients are interested in doing “fair” deals regarding incentives. While incentives aid in reducing both up-front and recurring costs, most clients recognize that local governments need to show a “return on their investment” and, thus, justification for their incentive deals. d. Our corporate clients are concerned about both the quality of government services and their delivery. A degradation in services creates risks for our clients. 4
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e. There is a concern that these
reporting requirements will put a chill on the provision of incentives. (More on this later)
f. We are fans of reporting in the
“aggregate”. Our clients would rather not see their names listed in the financial reports of local/state governments.
g. Overall, incentives are very much overrated in the site selection process.
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II GASB 77 will require state and local governments to become more thoughtful in assessing the fiscal and economic impacts of the incentive deals being offered. 6
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a. Supportive of the motivation behind
these disclosure rules and agree that state/local governments need to be more transparent as to how government conducts its financial business. But, these proposed standards may not contribute to the desired outcome.
b. GASB’s stated goals are (1) how tax
abatements affect the future ability of government to raise revenues and meet its financial obligations and (2) the impact abatements have on government’s financial position. 7
c. Neither of these goals are accomplished. Reporting on abated tax revenue without any mention of the return on investment (even the opportunity cost of not providing incentives) only tells part of the story and misleads, rather than informs, the public.
d. In strictly following the guidelines, the disclosure would report that government always loses revenue and therefore has a diminished ability to meet obligations when, in reality, tax abatement agreements are expected to generate revenue. 8
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e. Disclosing anything less than the
overall economic impact of these agreements is a disservice to the financial statement users.
f. Are there confidentiality concerns regarding the public disclosure of income tax abatements?
g. Do not existing disclosure
requirements suffice? Do not state/ local governments take into account the effects of tax incentives when preparing balanced budgets? 9
h. The disclosure requirements are
onerous given the sheer volume of information required and it is doubtful that consistent information will be reported across the board.
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THANK YOU Mark Simmons, Principal Phone: (803) 253-6847 Email:
[email protected] Websites: www.parkerpoeconsulting.com http://biig.parkerpoe.com Address: 1201 Main St., Suite 1410 Columbia, SC 29201
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WWW.PARKERPOECONSULTING.COM
(803) 255-8000
1201 MAIN ST., SUITE 1450, COLUMBIA, SC 29201
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