Voting & Democracy In the News

by Bruce Speight and Phineas Baxandall

It always makes sense for government to improve the bang it gets for its buck, but especially during tough budget times. Democrats and Republicans deserve credit for having found a way to do so. 

The state of Wisconsin currently faces a $652 million budget deficit. Despite partisan bickering that delayed this year's budget by four months, representatives from both chambers have reached across party lines to pass bipartisan bills that create public disclosure of government subsidies for economic development.

Last summer, the Journal Sentinel examined deals with 25 big companies that were awarded about $80 million in state subsidies over a six-year period. The investigation found that overall the companies fell about 40% short on the job creation they promised in order to receive the subsidies. In the absence of established accountability mechanisms, the investigation reported that the state often lowers its requirements rather than canceling the subsidies or seeking repayment.

Legislation passed this week should prevent such scandals in the future. It consolidates and strengthens rules about disclosure of state expenditures intended to spur business in the state. It will make information about subsidies readily accessible through a searchable online database that lists who receives commerce subsidies for what purpose. It also provides a type of taxpayer money-back guarantee to recoup state funds if recipients do not deliver on their promises.

Regardless of how much public money one believes should be spent on business incentives, improved transparency makes sense. We live in an era when Americans expect to be able to search their own bank accounts or cell phone bills online, in which we can verify information people tell us by Googling it. To restore public confidence in government, we must also have "Google-able government" when in comes to transparency and accountability for the public purse.

The great advantage of disclosing and integrating information about subsidies is also captured in a simple business nostrum: You can't manage what you can't measure. At present, subsidies get doled out through an uncoordinated range of disparate programs that lack a larger vision of the whole. It is not possible, for instance, to access whether subsidies are focused on the right industries or regions and to determine which incentives create the most high-paying jobs. Reliable and comprehensive data make it possible to assess whether we are implementing programs fairly and effectively. It also makes it possible for state managers to evaluate how money could be better spent.

The law, which is expected to be signed by the governor, follows in Wisconsin's proud tradition of open government. Our state also has become a leader in disclosing the activity of lobbyists and disbursement of procurement contracts.

To realize the law's full potential will require careful rule-making and attention to the reported information. The information must be fully searchable and should include details about subsidy recipients' promised investments, jobs and health care coverage, for instance.

Most important will be to ensure that accountability follows transparency. The provision for "recouping" subsidies from recipients that don't deliver or lie about their performance must be enforced to have real teeth. Watchdogs inside and out of government will need to keep a close eye on the information.

As Wisconsinites prepare their taxes this season, they can rest a little easier knowing that a new tool for transparent government will be working for them.

Bruce Speight is a public interest advocate with Wisconsin Public Interest Research Group. Phineas Baxandall is a tax and budget policy analyst for WISPIRG.