Business tax breaks cloud Virginia’s spending transparency

By Kathryn Watson | Watchdog.org, Virginia Bureau

ALEXANDRIA, Va. — To see a person’s priorities, just take a look at his checkbook, some would say.

The same rings true states, transparency advocates say. What if, however, the public is blocked from seeing that entire checkbook?

A new report by the U.S. PIRG Education Fund, a good government research group, gives Virginia a B+ for how much spending data it publishes online for the world to see.

But, the Old Dominion’s failure to report how much it doles out to companies claiming to create jobs through the Major Business Facility Job Tax Credit is dragging down its score.

Qualified companies either locating or expanding in Virginia receive a $1,000 corporate income tax credit for each new full-time job created above a certain threshold — usually anything moe than 50. Just how much and which companies benefit from that credit, however, isn’t reported on the state’s spending transparency website, Commonwealth Data Point.

Virginia’s checkbook is searchable by recipient, keyword and agency, but not so when it comes to economic development subsidies like the Major Business Facility Job Tax Credit. Knowing not only the total dollar figure, but the recipients, is “key,” said Phineas Baxandall, U.S. PIRG senior analyst for tax and budget policy.

“We think it’s important for the public to be able to access this information so they can hold their government accountable and ideally be able to have greater trust in their government,” Baxandall told Watchdog.org. “One is contingent upon the other.”

The Virginia Department of Taxation is responsible for administering the tax credit, while the Auditor of Public Accounts runs Commonwealth Data Point.

Because of Virginia’s tax preference-rich laws, in 2008, the state doled out nearly as much in tax preferences — $12.5 billion — as it accepted in revenue — $14 billion.

Virginia politicians are all about business, but sometimes, that can land the state in some hot water when it comes to transparency, said Megan Rhyne, executive director of the Virginia Coalition for Open Government.

“I think we’re seeing some of the effects of that deference to business interests right now in terms of what’s going on with the progress of the Route 460 expansion,” Rhyne said. “It was conducted under the public-private partnership, and there wasn’t a lot of transparency in the process, so it was awarded.”

The new Route 460, the controversial project pushed by former Gov. Bob McDonnell and his administration, was supposed to run alongside an existing, but not heavily traveled route, from Petersburg to Suffolk. When Gov. Terry McAuliffe took office, he halted progress of the “the road to nowhere,” but not before it cost taxpayers about $300 million.

Government interactions with private entities shouldn’t mean shutting out the public, Baxandall and Rhyne said.

“There are different sets of rules for contracting with the government, and one of those rules has to be public accountability, because it is ultimately the taxpayers’ money, and the taxpayers get to assess continually whether those dollars are being spent the way they want,” Rhyne said.

Kathryn Watson is an investigative reporter for Watchdog.org, and can be reached at kwatson@watchdog.org.