Pennsylvania Spending Transparency 2.0: Online Tools for Better Government

Pennsylvania Spending Transparency 2.0: Online Tools for Better Government Fall 2010

Kari Wohlschlegel and Elizabeth Ridlington, Frontier Group Megan DeSmedt, PennPIRG Education Fund Phineas Baxandall, Ph.D., U.S. PIRG Education Fund Acknowledgments

The authors would like to thank Steve Herzenberg, Executive Director of the Keystone Research Center for his review of this report. Phineas Baxandall of U.S. PIRG Educa- tion Fund shared his expertise and advice at numerous points during the development and writing of this report. Clair Embry provided valuable research assistance. Thanks to Tony Dutzik and Travis Madsen of Frontier Group for editorial assistance.

This report is made possible with funding from the Ford Foundation.

The opinions expressed in this report are those of the authors and do not necessarily reflect the views of our funders or those who provided editorial review. Any factual errors are strictly the responsibility of the authors.

With public debate around important issues often dominated by special interests pursuing their own narrow agendas, PennPIRG Education Fund offers an independent voice that works on behalf of the public interest. PennPIRG Education Fund, a 501(c)(3) organization, works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public, and offer Pennsylva- nians meaningful opportunities for civic participation.

Frontier Group conducts independent research and policy analysis to support a clean- er, healthier and more democratic society. Our mission is to inject accurate information and compelling ideas into public policy debates at the local, state and federal levels. For more information about Frontier Group, please visit www.frontiergroup.org.

Cover photo: iStockPhoto

Layout: Alec Meltzer, meltzerdesign.net Table Of Contents

Executive Summary...... 1

Introduction...... 4

A Growing Movement: State Governments Are Embracing Web-Based Spending Transparency...... 6

Transparency 2.0 Initiatives Enjoy Broad, Bipartisan Support...... 7 Transparency 2.0 Is an Effective, Low-Cost Tool...... 8

Leading States Have Developed Best Practices...... 10

Comprehensive...... 11 One-Stop...... 15 One-Click Searchable...... 16

Pennsylvania’s Transparency Web Sites: A Good Foundation That the State Should Build On...... 17

Accessing Contracts: The Contracts e-Library...... 18 Accessing Subsidies: Investment Tracker...... 19 Needed Improvements...... 20

Conclusion...... 26

Appendix: States With Transparency Web Sites...... 27

Endnotes...... 29

Executive Summary

The ability to see how government uses the ➤➤Bipartisan efforts – Transparency legislation public purse is fundamental to democracy. has been championed by legislators both Spending transparency checks corruption, Republican and Democratic. In 2009, the bolsters public confidence in government, and Pennsylvania House unanimously passed promotes fiscal responsibility. legislation sponsored by a Democrat to create an enhanced transparency Web site (pro- Pennsylvania’s new online government viding more information than the Contracts spending Web site – the Contracts e-Library e-Library). A similar bill, sponsored by a – represents a good first step toward greater Republican, passed in the Senate. In 2008, transparency. But Pennsylvania has a long federal legislation to strengthen Web-based way to go to match the spending transparen- spending transparency was co-sponsored in cy efforts of leading states in the movement the U.S. Senate by presidential rivals John toward “Transparency 2.0” – a new standard McCain (R-AZ) and Barack Obama (D-IL). of comprehensive, one-stop, one-click budget accountability and accessibility. ➤➤Public support – Republicans, independents and Democrats all support enhanced gov- With the state in the midst of a budget crisis, ernment transparency by wide margins. it’s especially important for Pennsylvanians When asked about the role of transparency to have easy access to information about the in the federal economic recovery package of state’s expenditures. Pennsylvania should fill in early 2009, fully 75 percent of American vot- the gaps in government reporting and bring its ers said creating state level Web sites to track online transparency up to the level of leading funds was “important,” and 34 percent said states. Doing so will create savings and will al- it was “very important.” low Pennsylvanians to hold decision makers in Harrisburg more accountable. Transparency 2.0 saves money and bolsters citizen confidence. The movement toward Transparency 2.0 is broad, bipartisan, and popular. ➤➤Increased civic engagement – Americans are eager to use transparency Web sites. Hous- ➤➤A nationwide wave – Legislation and ex- ton officials report improved public confi- ecutive orders in 32 states have given resi- dence after the launch of their transparency dents access to online databases of detailed Web site. The Missouri Accountability Por- government expenditures, and the federal tal received more than 13 million hits in the government has launched similar initiatives. 18 months after its launch. The vast majority of these states have acted over just the last three years.

1 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund ➤➤Low cost – Spending transparency Web sites with other public purchasers on good deals; can be inexpensive to create and maintain. avoiding wasteful duplication of bidding and The federal transparency Web site, which contracting procedures through centralized allows Americans to search over $2 trillion processes; better enforcement of favorable in federal yearly spending, cost less than $1 pricing and contract terms; and focusing million to create. Missouri’s Web site, which cost-cutting in areas where greater resources allows its residents to search over $20 bil- are spent. lion in state annual spending and is updated daily, was created with already-existing staff Pennsylvania’s transparency Web site puts and appropriations. the state on the right track, but still has major deficiencies. ➤➤Big savings – Transparency Web sites can save millions through more efficient gov- ➤➤Good first step into Transparency 2.0 –Penn - ernment operations, fewer information re- sylvania’s new Contracts e-Library Web site quests, more competitive contracting bids, gives residents access to crucial government and lower risk of fraud. In the two years accountability information. State contracts following the launch of its transparency are keyword-searchable by department, website, the Texas Comptroller reported supplier name, and cost, making it easy $4.8 million in savings from more efficient for Pennsylvanians to find out information government administration. Utah estimates about how government is spending taxpay- millions in savings from reduced informa- ers’ money. tion requests. The largest savings may come from the deterrence of waste or abuse of ➤➤An effective and cheap tool – The Contracts public funds due to enhanced public scru- e-Library Web site cost $457,000 to create, tiny – savings that are impossible to quantify and lessons from other states indicate that but likely significant. Pennsylvania will recoup this cost through fewer information requests and more effi- ➤➤Better-targeted expenditures – Transparency cient government spending. budget portals allow states to track how well subsidies and tax incentives deliver results. ➤➤Information on corporate tax breaks and sub- Funds from underperforming projects and sidies is incomplete – The state’s Investment programs can be reinvested in more success- Tracker Web site provides incomplete infor- ful programs. By tracking the performance mation on the millions of dollars that Penn- of state subsidies, Minnesota and Illinois sylvania spends each year on corporate tax have both been able to recapture money breaks and subsidies. Data that would allow from numerous projects that failed to de- citizens and officials to evaluate the effec- liver promised results. tiveness of these subsidies are missing.

➤➤Better coordination of government contracts – ➤➤Contracting data are incomplete – Contracts The Massachusetts’ State Purchasing Agent are missing from the Contracts e-Library identifies four sources of savings for state because the state agencies determine which procurement officers: sharing information contracts are subject to public disclosure.

2 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund No enforcement mechanism exists to ensure sidies for corporations from the Investment that officials comply with the law. This repre- Tracker Web site into its transparency Web sents a large weakness in the state’s transpar- site, including the names of the corporations ency efforts. that benefit, the intent of the subsidies, and a measure of whether the subsidies achieved ➤➤Comprehensive information on contracts is their intended purposes. Given that Penn- unavailable – Though Pennsylvania does sylvania spends millions of dollars on tax provide copies of the contracts on the Con- expenditures, it is essential that the perfor- tracts e-Library, it does not offer other key mance of these subsidies is monitored so points of information, such as the compet- taxpayers can ensure their money is being ing bids received for each contract or the used wisely. performance of contractors. This information must be included so that the public can ➤➤Include contracts from all agencies – Penn- determine if the contracts represent an effi- sylvania should require all agencies to re- cient use of government funds. port expenditures on the transparency Web site, and specify penalties for noncompliant ➤➤Transparency information is not centrally lo- agencies. cated – Pennsylvania provides a lot of government information on the Web, but most of it ➤➤Include comprehensive information on gov- is scattered across multiple Web sites and is ernment contracts – The Contracts e-Library not in a searchable format. This reduces the should not only provide copies of the con- ability of citizens who do not already know tracts, but it should also offer more detailed what they are looking for and where to find information that would allow citizens to it to effectively monitor government spend- fully monitor the contracting process, such ing and find important information. as providing information on other bids received, noting whether subcontractors were Pennsylvania should fill in the major holes on employed, and analyzing the performance of its transparency Web site and make the site the contractors. easier to use, bringing it up to the best practices established by other Transparency 2.0 states. ➤➤Provide accountability information on one Web site – Pennsylvania should ensure that ➤➤Add corporate tax subsidies – Pennsylvania all government accountability information should incorporate information on tax sub- is provided on a central Web site.

3 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Introduction

The ability to see how government uses the the ability to track deliveries online, to check public purse is fundamental to democracy. cell phone minutes and compare real estate on Spending transparency checks corruption, the Web, even to summon – at the click of a bolsters public confidence in government, and mouse – satellite and street-level views of any promotes fiscal responsibility. address. But until recently, when it came to tracking government expenditures online, we Poor transparency, on the other hand, cor- were left in the dark. rodes democracy. When Americans are unable to access information about public funds, State governments across the country are or when that information is difficult to scruti- changing that. A growing number of states nize, accountability is severely hampered. As are using powerful Internet search technol- the Association of Government Accountants ogy to make spending transparency more ac- notes, “Without accurate fiscal information, cessible than ever before. Legislation and ex- delivered regularly, in an easily-understand- ecutive orders around the country are lifting able format, citizens lack the knowledge they the electronic veil on where tax dollars go. In need to interact with—and cast informed 32 states, citizens have access to checkbook- votes for—their leaders. In this regard, a lack level data on government expenditures, with of government accountability and transpar- citizens in most of those states able to access ency undermines democracy and gives rise to that information through a searchable data- cynicism and mistrust.”1 base. (See Table 1.) These states have come to define “Transparency 2.0” – a new standard of comprehensive, one-stop, one-click budget ac- “We might hope to see the finances of the countability and accessibility. Union as clear and intelligible as a merchant’s Experience from the leading Transparency 2.0 books, so that every member of Congress and states shows that these Web sites are effective, every man of any mind in the Union should low-cost tools that bolster citizen confidence, be able to comprehend them, to investigate reduce contracting costs, and improve public oversight. The popularity of these sites can abuses, and consequently to control them.” be seen in the millions of visits by residents to –Thomas Jefferson, 1802 Missouri’s Accountability Portal Web site and in the increased number of businesses bidding for government contracts on Houston’s trans- In the private sector, Internet search technology parency Web site.2 Meanwhile, Texas’s Comp- has revolutionized the accessibility and trans- troller reports her agency saved $4.8 million parency of information. We take for granted and identified an additional $3.8 million in ex-

4 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund pected savings by using its transparency Web Pennsylvania can reap these benefits as well, by site to make its administration more efficient.3 filling in the holes in its transparency site and improving the accessibility of the information With the ongoing state budget crisis, it is espe- already available. cially important for Pennsylvania to do every- thing it can to improve transparency. The new It’s time for Pennsylvania to take its trans- 2010-2011 state budget of $28 billion includes parency efforts to the next level. Acting now funding cuts to a broad swath of government would go a long way towards restoring the services at the same time that it boosts spend- public trust in government. And a comprehen- ing for economic development by $600 million, sive transparency Web site could be a power- which the state hopes will create 18,000 jobs.4 ful tool to help the state reduce the possibility Detailed information on state expenditures is of another fiscal crisis. necessary for citizens to understand and weigh in on the hard decisions being made in Harris- burg, and for legislators to evaluate if the state has received the benefits expected from its in- Table 1. States with Checkbook- vestments. Improving transparency can also help balance the budget by encouraging effi- Level Transparency Web Sites ciency and discouraging corruption. Checkbook-level transparency allows viewing of individual government transactions, akin to Pennsylvania has just recently taken a step to- viewing the government’s checkbook. wards joining the ranks of the Transparency states Alabama, California, 2.0 states with its new Pennsylvania Contracts provide Colorado, Delaware, e-Library Web site. This Web site is a good step checkbook- Florida, Georgia, in the right direction, but it has a long way to level29 information Hawaii, Illinois, Kansas, go in providing all of the information and tools on government Kentucky, Louisiana, that are necessary for Pennsylvanians to evalu- expenditures in Maryland, Minnesota, ate government expenditures. In order to bring searchable databases Mississippi, Missouri, its Web site up to speed, Pennsylvania should Nebraska, Nevada, ensure that the Contracts e-Library contains New Mexico, New York, North Carolina, information on every contract, analyzes the Ohio, Oklahoma, performance of each contact, and includes all Pennsylvania, Rhode forms of government spending, such as tax Island, South Carolina, subsidies and agency expenditures. Texas, Utah, Virginia, Wyoming Other states have shown that it is possible to states provide Alaska, Oregon, make comprehensive information on govern- checkbook-level Tennessee ment expenditures easily accessible to the pub- information 3on government lic. These states have also found that this level of transparency costs very little, can save the state expenditures in non- searchable formats millions of dollars, and is a very effective tool for the public and government officials alike.

5 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund A Growing Movement: State Governments Are Embracing Web-Based Spending Transparency

Thanks to recent state efforts, government These state efforts have added momentum to the spending is now more transparent than ever be- larger Transparency 2.0 movement, which now fore. In the past three years, a nationwide wave holds broad-reaching, truly global strength. Al- of legislation and executive orders has brought ready, Americans can monitor federal spending Web-based spending transparency to residents through a new government Web site created by of 32 states. (See Figure 1 and Appendix.) Most the Federal Funding Accountability and Trans- of these “Transparency 2.0” states provide resi- parency Act of 2006.5 At the same time, a grow- dents access to a comprehensive, centralized, ing number of local and foreign governments easily-searchable online database of state gov- have created transparency portals for their resi- ernment expenditures. dents.6 With each new initiative, the Transpar-

Figure 1. 32 States Provide Checkbook-Level Detail on Government Spending

WA ME MT ND VT OR MN NH MA AK NY ID SD WI WY MI RI CT IA PA NJ NE NV OH DE IL IN UT WV CO MD CA VA KS MO KY NC TN AZ OK NM AR SC GA HI MS AL LA TX

Has Checkbook-Level Transparency Web Site FL Transparency Web Site in Development No/Incomplete Transparency Web Site

6 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund ency 2.0 movement moves closer to its goal of and Democrats: fully 75 percent of American holding every government and its contractors voters said creating state level Web sites to track accountable at the click of a mouse. funds was “important,” and 34 percent said it was “very important.”10

Transparency 2.0 Initiatives This is not some abstract desire. Thirty percent Enjoy Broad, Bipartisan Support of people polled have tried to search the Web for information about how their state govern- Americans of both political parties over- ment generates and spends taxpayer dollars – whelmingly support Web-based spending searches that often end in frustration.11 transparency. A poll of Maryland residents, for example, reported that over 80 percent of The bipartisan public support for these Web sites Democrats, Republicans, and independents fa- is reflected in the diverse political sponsorship vored legislation to mandate the creation of a of Transparency 2.0 initiatives. In Pennsylva- comprehensive, searchable Web site of all state nia, members of the House unanimously passed spending.7 A poll in Oklahoma found similar legislation proposed by a Democratic sponsor levels of support.8 in 2009 to create a searchable database contain- ing all government expenditures worth at least A poll released by the Association of Govern- $1,000.12 Similar legislation, with a Republican ment Accountants found that an overwhelm- sponsor, passed the Senate, but the bills were not ing majority – 91 percent – of Americans be- reconciled and thus did not become law. This lieves state officials have a responsibility to Web site would have been a significant improve- provide financial information to the public in a ment over the Contracts e-Library. In 2010, 11 way that is understandable to average citizens. Senate Republicans joined 12 House and Senate Similarly, approximately 75 percent of Ameri- Democrats in sponsoring legislation that would cans believe it is very important for govern- improve accountability for firms that receive ment financial management information to be economic development funds.13 available to the public.9 Elsewhere in the nation, elected officials across More specifically pertaining to Web-based the political spectrum – from New York Attor- budget portals, three-quarters of voters (76 ney General Andrew Cuomo to former Mis- percent) believe that “creating a national Web souri Governor Matt Blunt – have championed site where citizens can see what companies and Web-based spending transparency in their government agencies are getting [economic re- states.14 Nationally, prior to the 2008 presidential covery] funds, for what purposes, and the num- election, opponents Senator John McCain and ber and quality of jobs being created or saved” then-Senator Barack Obama co-sponsored the would have an important impact on the recov- Strengthening Transparency and Accountability ery package, including 39 percent who believe in Federal Spending Act of 2008.15 Divergent po- its impact would be extremely important. Sup- litical figures Grover Norquist and Ralph Nader port for state transparency Web sites to moni- similarly came together in a joint statement to tor recovery funds received almost equally high support more understandable and timely online marks, again from Republicans, independents information about government budgets.16

7 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund received more than six million hits.17 The Texas Americans Are Eager spending Web site reported similar engagement.18 Residents are eager to use transparency Web sites for Transparency 2.0 to learn more about public expenditures.19

By the Numbers: Portals save money. In addition to improved public confidence, Transparency 2.0 states real- Percent of Americans believe they ize significant financial returns on their invest- are entitled to transparent informa- ment. The savings come from sources big and 90% tion on how the government man- ages its finances. small – more efficient government administration, fewer information requests, more competi- Percent of Americans believe their tive bidding for public projects, and a lower risk state government provides under- of fraud – and can add up to millions of dollars. 5% standable financial information. In Texas, for example, the Comptroller was able to utilize the transparency Web site in its first two Percent of Americans have themselves tried to search the Web for in- years to save $4.8 million from a variety of effi- 30% formation about the financial man- ciencies and cost savings. The Comptroller also agement of their state government. identified an additional $3.8 million in expected savings.20 And after the new transparency Web Source: Harris Interactive, Public Attitudes Toward Government site was unveiled in South Dakota, an embold- Accountability and Transparency 2008, February 2008, available at ened reporter requested additional information http://www.agacgfm.org/harrispoll2008.aspx on subsidies that led legislators to save about $19 million per year by eliminating redundancies in their economic development program.21

Transparency 2.0 Is an Estimates suggest that transparency Web sites Effective, Low-Cost Tool save millions more by reducing the number of information requests from residents and States with good transparency Web sites have watchdog groups and by increasing the num- found that these sites result in a wide variety of ber of bids for public projects.22 The Utah State benefits for state residents and the government. Office of Education and the Utah Tax Commis- Transparency Web sites have not cost states sion save about $15,000 a year from reduced much money, but they have helped govern- information requests, and with over 300 other ments find ways to save money and meet other government agencies, Utah’s total savings are goals, and residents use them frequently where likely to be in the hundreds of thousands of they are available. dollars.23 South Carolina estimates savings of tens of thousands of dollars thanks to a two- Taxpayers and businesses use these Web portals. thirds drop in open records requests after Spending transparency Web sites have proven creation of the state’s transparency Web site.24 themselves to be exceptional tools of civic en- Texas began receiving lower bids for contracts gagement. Less than a year after its launch, the after making contracting information avail- Missouri spending transparency Web site had able to the public.25

8 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Transparency Web sites can help reduce fraud Online transparency costs little. The benefits of and misspending. Kansas legislators have begun transparency Web sites have come with a sur- to use their transparency Web site to identify prisingly low price tag. The federal transparen- questionable payments, and have begun holding cy Web site – which allows Americans to search hearings to question agencies about expensive federal spending totaling over $2 trillion a year building leases, out-of-state travel, and out-of- – cost less than $1 million to create. Missouri’s state contracts.26 When combined with “claw- Web site – which is updated daily and allows its back” legislation designed to recoup money from residents to search state spending totaling over businesses that do not produce promised results $20 billion a year – was created entirely with ex- in return for subsidies, the added transparency in isting staff and revenues.30 Nebraska has spent contracting can produce even greater savings.27 $38,000 for the first two phases of its Web site.31 Oklahoma’s Office of State Finance created its Online transparency offers increased support for transparency Web site with $40,000 from its ex- a range of indirect public policy goals, includ- isting budget.32 (See Table 2.) ing promotion of community investment and affirmative action goals. Governments often Table 2. Cost to Create a stumble when trying to meet community in- Transparency Web Site vestment and affirmative action goals because United States of Less than $1 million public managers struggle to benchmark agen- America cies, spread best practices, or identify contrac- Alaska $15,000-$25,000 from existing tors that advance these goals. Spending trans- budget parency portals allow states to better measure California $21,000 and manage the progress of public policy initia- Florida Existing budget tives like affirmative action programs. Massa- Kansas $100,000 from existing budget chusetts’ Comm-PASS procurement Web site, for example, allows tracking of which recipi- Kentucky Funds from existing budget to develop, $150,000 additional ents of government contracts are women and budgeted to implement minority-owned businesses.28 Louisiana $1,000,000 By providing a single, one-stop destination Maryland Less than $100,000 for public procurement, the system encour- Missouri $293,140 from existing budget ages more companies to bid on public projects. Nebraska $38,000 This improves quality, keeps prices down, and Nevada $78,000 opens up the system beyond what could other- Oklahoma $8,000 plus existing staff time wise be an “old boy network” of usual bidders Oregon Existing budget who know the system. Advancing similar goals, Pennsylvania $456,850 Rhode Island has passed legislation that requires subsidy recipients to describe their plans Rhode Island Existing budget to stimulate hiring from the host community, South Carolina $310,000, from existing budget to train employees or potential employees, and Texas $310,000 to reach out to minority job applicants and mi- Utah $192,800, plus existing staff time 29 nority businesses. Washington $300,000

9 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Leading States Have Developed Best Practices

As leading states gain experience in Transpar- is comprehensive, one-stop, and one-click – a ency 2.0 initiatives, they have produced a set major improvement from the incomplete, scat- of best practices. States at the cutting edge of tered and difficult-to-find information typical Transparency 2.0 now offer transparency that of “Transparency 1.0” states.

Table 3. Transparency 2.0 Best Practices 4 COMPREHENSIVE ALL EXPENDITURES SUBSIDIES ➤➤Checkbook level detail ➤➤Detailed information on number and quality of jobs created CONTRACTS, GRANTS, ➤➤Information on whether companies have SUBCONTRACTS AND relocated, and from where DISCRETIONARY SPENDING ➤➤Purpose and performance of each subsidy ➤➤Purpose of each contract ➤➤Disclosure of performance connected to programs ➤➤Location of businesses receiving to recapture subsidies when promises not kept contracts ➤➤Includes all forms of subsidies including direct ➤➤Subcontractor spending payment, tax benefits and infrastructure assistance ➤➤All government entities, ➤➤No minimum threshold for reporting including localities and ➤➤Information disclosed before approvals are independent agencies finalized ➤➤No minimum threshold for ➤➤Synthesized in a unified economic development reporting budget ➤➤Information updated regularly

4 ONE-STOP Single Web site discloses comprehensive information on expenditures, including contracts, tax credits and other subsidies. 4 ONE-CLICK SEARCHABLE Users can browse by broad, common-sense categories and make directed keyword and field searches.

10 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund which legislative districts are receiving gov- Comprehensive ernment contracts and how trends are likely to affect the future capacity to fulfill these Transparency Web sites in the leading states contracts. All states exempt state and federal offer spending information that is both broad public assistance payments to individuals, as and detailed. In contrast to Transparency 1.0 well as any information that is confidential states – which may offer only partial infor- under state or federal law. mation about government contracts online – leading Transparency 2.0 states provide user- ➤➤Leading states track the purpose of con- friendly searches of a comprehensive range of tracts. Both Texas and Hawaii list the pur- government expenditures, including detailed pose of each expenditure on their Web information about government contracts with sites.36 Establishing goals and benchmarks private providers, subsidies, and grants. Trans- allows public managers in leading states to parency 2.0 states include all expenditures in drive improved contracting performance their Web sites. and allows the public to track patterns in the awarding of contracts.

Contracts, Grants, Subcontracts, and ➤➤Leading states track subcontractors since Discretionary Spending these entities may perform most of the work and receive most of the profit as part of a Many public goods and services are provided government contract. Hawaii mandated the under contract by private companies, and many creation of a pilot program to test the imple- government agencies now spend well over half mentation of a sub-award reporting program their budget on contractors.34 These contrac- across the state, and required that all sub- tors are generally subject to fewer public ac- contracts be disclosed by January 1, 2010.37 countability rules, such as sunshine laws, civil At the federal level, the Federal Funding Ac- servant reporting requirements, and freedom countability and Transparency Act of 2006 of information requests. It is therefore particu- requires that all sub-grants be disclosed on larly important that states provide comprehen- the federal transparency Web site.38 sive online transparency and accountability for all contract spending. ➤➤Leading states disclose spending by all government agencies. Many Transparency 2.0 ➤➤Leading states disclose detailed informa- states require all government agencies, in- tion for each contract with specific private cluding independent authorities and insti- companies and nonprofit organizations. Ha- tutes of higher education, to disclose their waii’s transparency Web site, for instance, spending.39 Lawmakers in several states have discloses the name of the entity receiving the also proposed legislation mandating local award, the amount of the award, the trans- spending transparency.40 Extending trans- action type, the funding agency, and agency parency to the county and municipal level contact information.35 The ability to track makes sense given that the volume of spend- the location of entities receiving government ing by local governments equals that of state contracts gives important information about governments.41 Several counties have inde-

11 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund pendently created their own online trans- the awarding of contracts and to measure parency portals.42 current contracts against benchmarks. Many states already disclose this information ➤➤Leading states disclose all spending, with- on their procurement Web sites. Leading out a minimum threshold. Kansas and Mis- Transparency 2.0 states, like Missouri, link souri both disclose spending by every entity, those procurement databases to the spend- regardless of that entity’s cumulative funding ing transparency portal.47 from the state.43 The governor of Kentucky has promised that any expenditure information subject to the Open Records Act will be Subsidies on the Web site.44 State and local governments allocate billions ➤➤Leading states disclose timely information. of dollars in subsidies each year, yet most gov- Missouri and Kentucky have set the stan- ernments still don’t disclose information about dard for disclosure timeliness by updating these expenditures.48 Unmeasured, the perfor- their Web sites daily.45 mance of these subsidies remains unmanaged and unaccountable. Special tax breaks and ➤➤Leading states disclose all bids for each con- credits are especially in need of disclosure be- tract. Disclosing all bids – rather than just cause they typically receive much less oversight. the winning bid – for each contract allows Once created, these have the same bottom-line residents to have complete confidence in the effect on public budgets as direct appropria- awarding process. tions; yet they often escape oversight because they are not included in state budgets and do ➤➤Leading states disclose contract data that not require legislative approval to renew. In the tracks performance of public policy goals. rare cases when unexpected audits of subsidy Government contracting agencies are ex- programs are conducted, they are often shown pected to deliver performance in a variety of to fall short of promised results. For instance, a ways. Tracking and disclosing information Milwaukee Journal Sentinel investigative report about attainment of public mandates helps in 2007 examined 25 Wisconsin companies to ratchet up performance, identify trouble that were awarded $80 million in subsidies and spots, and nurture best practices in contract- found that, overall, the companies fell about 40 ing. Government agencies also benefit from percent short on their job creation promises.49 more readily identifying minority-owned contractors. The Massachusetts’ procure- Unfortunately, public incentives and subsidies ment Web site for statewide contracts labels to particular business too often get approved minority and women-owned vendors with a under the mantle of secrecy. Negotiations for a special icon to allow Bay Staters and agen- new Google facility in Lenoir, North Carolina, cies to quickly track this information.46 required over 70 local officials to sign non-disclosure agreements saying they would not talk ➤➤Active and past contracts are disclosed in about the project, at the same time that $260 leading states, allowing residents, including million in public subsidies were allocated to state and local officials, to track patterns in the project.50 Such arrangements short-circuit

12 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Tracking the Bottom Line: Tax Subsidies Are Expenditures

One way governments allocate resources is through “tax expenditures.” Special tax breaks have the same effect on budgets as direct spending because government must cut other public programs or raise other taxes to avoid a deficit. In order to increase transparency, Congress’ 1974 Budget Act established the practice of measuring proxy spending programs conducted through the tax code. Congress defined tax expenditure as:

Revenue losses attributable to provisions of Federal income tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.

States similarly provide tax expenditures through new rules for special revenue reductions on state taxes. These include special breaks on sales taxes, property taxes, real estate transfer taxes, corporate income taxes, or payroll taxes.

Tax expenditures act as a hidden drain on state budgets because they do not require yearly approval, unlike most government expenditures. Thus, when a tax credit or subsidy is enacted into law, it often stays on the books for many years with little scrutiny. Certain states have attempted to regulate these expenditures by providing tax reports online, while others have taken more dramatic actions. Oregon, for example, enacted legislation in 2009 that requires the forced expiration of most of its tax credits between 2011 and 2015. The expiration of these credits will give the legislature an incentive to analyze their efficacy before reenacting them into law.

the democratic process because the public, in- ➤➤Detailed information disclosed about each cluding local and state officials, remains unin- subsidy in order to guide future decision formed and cannot hold responsible represen- making and enhance accountability. For in- tatives accountable. stance, Minnesota mandates the disclosure of the type and amount of subsidies and the Leading states offer best practices on provid- number of jobs created, as well as the hour- ing transparency and accountability for all ly wage of each job created and the cost of forms of subsidies, including tax benefits, di- health insurance provided by the employer. rect grants, low-interest loans, infrastructure Thus, while states around the country often improvements, and other incentives.51 Trans- justify subsidies by the jobs they promise to parency for subsidies in leading states has a create, Minnesota can evaluate how many number of characteristics: jobs they actually do create, as well as the

13 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund quality of those jobs. Minnesota similarly a searchable format with annual progress re- tracks information that helps determine ports online.55 whether subsidies are increasing the number of jobs in-state or merely encouraging ➤➤Mechanisms to recapture subsidies from companies to relocate within the state for companies that do not deliver on promises higher subsidies. Minnesota mandates dis- are connected to information about perfor- closure of: the location of the recipient prior mance on agreed-upon goals. Such provi- to receiving the business subsidy; the num- sions provide a kind of taxpayer money-back ber of employees who ceased to be employed guarantee to ensure that public monies paid by the recipient when the recipient relocated to private entities achieve their public goals. to become eligible for the business subsidy; Oklahoma, for example, recently enacted a why the recipient may not have completed a provision to allow the state to recapture the project outlined in a prior subsidy agreement value of certain manufacturing subsidies af- at their previous location; and if the recipi- ter one company, Mercury Marine, used the ent was previously located at another site in Oklahoma subsidies to get concessions from Minnesota.52 Likewise, Minnesota mandates its workers and state and local governments disclosure of the name and address of the re- in Wisconsin before permanently moving to cipient’s parent corporation, if any, and a list that state.56 Among the other states with these of all other financial assistance to the proj- “clawback” programs tied to public disclo- ect and its source. This information makes it sure of subsidy performance are Illinois and clear which companies are already receiving Minnesota, and those with provisions for other public subsidies through their affiliates some subsidies are Arizona, Colorado, Con- or through other agencies. necticut, Georgia, Iowa, Maine, Maryland, Massachusetts, Michigan, Nebraska, Ne- ➤➤Purposes and performance of each subsidy vada, North Carolina, North Dakota, Ohio, tracked. Public decision makers can only Oregon, South Carolina, Vermont, Virginia, manage what they can benchmark or oth- and West Virginia.57 Pennsylvania includes erwise measure. Rhode Island requires sub- clawback provisions in its subsidy contracts, sidy recipients to file reports on the status but does not consistently enforce them.58 of their program each fiscal year, which are made available to the public. These include ➤➤Subsidies from a broad range of public information on the number of jobs created, sources are disclosed. These may include the benefits provided with those jobs, and local governments or independent au- goals for future job creation and retention.53 thorities. North Dakota’s Century Code re- Minnesota mandates the disclosure of the quires the reporting of subsidies from the public purpose of the subsidy as well as the state or any political subdivision – though, date the job and wage goals will be reached, unfortunately, that information has not yet a statement of goals identified in the subsidy been integrated into a broader transpar- agreement and an update on achievement of ency Web site.59 those goals.54 Likewise, Illinois discloses performance and accountability information in ➤➤Information is disclosed before subsidies are granted. Subsidy disclosure is most ef-

14 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund fective when residents can use information ency, residents, including local and state offi- to weigh in before subsidies receive final ap- cials, in these states can access comprehensive proval. Rhode Island’s recent legislation re- information on direct spending, contracts, tax quires the preparation and public release – preferences, and other subsidies. prior to finalization of the agreement – of an analysis of the impact of the proposed sub- One-stop transparency can also produce big sidy on the state.60 Minnesota goes further savings. For contracts, the centralized collec- and requires notice and hearing for large tion and disclosure of government spending subsidy grants.61 data allows purchasing agents to find savings more efficiently. Massachusetts’s State Purchas- ➤➤Unified economic development budgets ing Agent identifies four ways that centralized are compiled and published by leading spending transparency improves coordination: states, enabling decision makers to see how state procurement officers know where the subsidies are distributed from various pub- most money is spent and can focus negotiation lic agencies between regions, industries, and resources; purchasing agents can share infor- companies. In the absence of such a unified mation on good deals, harnessing the power of view, decision makers cannot target where the market; purchasing agents can avoid dupli- subsidies will be most effective because they cation of procurement efforts; and purchasing have no way to know how or where other agents can more easily enforce Most Favored subsidies from other programs get allocat- Pricing and similar contract terms.65 ed.62 Most recently, Rhode Island and New Jersey mandated the disclosure of their uni- One-stop transparency is perhaps most im- fied economic development budgets online. portant in the oversight of subsidies. Subsidies come in a dizzying variation of forms – including direct cash transfers, loans, equity invest- One-Stop ments, contributions of property or infrastructure, reductions or deferrals of taxes or fees, Transparency Web sites in leading states offer guarantees of loans or leases, and preferential a single central Web site where residents can use of government facilities – and are adminis- search all government expenditures. In many tered by countless government agencies. Transparency 1.0 states, particular public officials volunteer to disclose information about Because many subsidies are not publicly re- their finances, or a patchwork of disclosure laws ported at all, determining the total subsidy as- gives residents the right to obtain much infor- sistance a company receives can be nearly im- mation about government expenditures.63 But possible. In order to determine the amount of in order to exercise that right, residents have subsidy assistance received by Wal-Mart, for to access numerous Web sites, go to several example, the organization Good Jobs First re- agency offices, read through dense reports, and sorted to searching local newspaper archives perhaps make formal information requests.64 and contacting numerous local officials directly. Transparency 2.0 states, by contrast, disclose all They tabulated well over $1 billion in subsidies information about government expenditures nationally from state and local governments.66 on a single Web site. With one-stop transpar- Whether or not these amounts are considered

15 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund excessive, making the information publicly Transparency Web sites in the leading states of- available will improve decision making about fer a range of search and sort functions that al- subsidies in the future. low residents to navigate complex expenditure data with a single click of the mouse. In Trans- The scattered nature of subsidy expenditures parency 1.0 states, residents who don’t already makes coordination and oversight of these pro- know government funding flows are stymied grams crucial. States that make comprehen- by inscrutable layers of subcategories, jurisdic- sive disclosure of all subsidies a high priority tions, and data that can’t be readily compared. include Minnesota, Illinois, Iowa, New Jersey, Transparency 2.0 states, by contrast, allow resi- and Rhode Island.67 The experiences of these dents both to browse information by broad, states show that the one-stop nature of spending common-sense categories and to make directed transparency portals is successful at improving keyword and field searches. coordination of subsidies. When Minnesota began to require agencies to submit reports on the Best practices of Transparency 2.0 states include performance of subsidized projects, the reports allowing residents to browse expenditures by revealed that numerous projects were receiving broad category and to make directed searches. assistance from two or more funding sources – At the federal spending transparency portal, for that is, Minnesota taxpayers were double- and instance, Americans can browse spending by triple-paying for the creation of some jobs. Af- agency, contractor, legislative district, competi- ter the centralized publication of those reports, tion type, or product provided – and advanced the double-dipping stopped.68 search options allow residents to make directed searches of each broad category.69 Missouri’s Web site allows residents to browse spending One-Click Searchable by agency or purpose and to browse tax credits by legislative district or purpose – and residents Transparent information is only as useful as it is can make directed searches for specific vendors, easily accessible, which means easily searchable. contracts, or tax credit recipients.70

16 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Pennsylvania’s Transparency Web Sites: A Good Foundation That the State Should Build on

In 2008, Pennsylvania dramatically improved However, the Contracts e-Library still leaves government transparency with the passage of significant holes that limit its value as a source Act 3, otherwise known as the Right-to-Know of transparency. Most importantly, the Web Law. This piece of legislation, which took ef- site does not provide enough information to fect on January 1, 2009, was a big step forward evaluate the value and propriety of government in improving the ability of citizens to monitor spending. Information that would enhance the government spending. It does this by expand- ability of the public to monitor government ing the amount of information available to the spending includes listing information on non- public, enlarging the number of government winning bids and the performance of the cho- agencies and other bodies that are subject to sen contractor. Some contracts are also missing disclosure laws, and establishing a standard in from the database, either because the funding favor of disclosure. The law is an historic step agency has been exempt from disclosure laws, towards improving transparency, and drastical- or because the agencies have not been ade- ly increases the ability of citizens and watchdog quately compelled to submit their information. groups to hold the government accountable. Similarly, while Pennsylvania makes avail- A key provision of the law mandates the cre- able information on corporate subsidies ation of a searchable database for most gov- through its Investment Tracker Web site that ernment contracts. The new Web site, known allows for the monitoring of some economic as the Pennsylvania Contracts e-Library, is development incentives, the information is the state’s first major step towards becoming not provided on or linked to the state’s main a Transparency 2.0 state. The Contracts e-Li- transparency Web site. In addition, the Web brary allows citizens to easily view important site does not contain comprehensive informa- accountability information, such as the cost tion that would allow government officials or and purpose of contracts. concerned residents to properly monitor the performance of the tax subsidies.

17 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund The Pennsylvania Department of Treasury is Accessing Contracts: responsible for maintaining the transparency The Contracts e-Library Web site, though individual agencies are required to provide the necessary documents and ensure their accuracy. Agencies are required to “Unless otherwise provided by law, a public file their contract information with the Trea- sury Department within 10 days of the con- record shall be accessible for inspection and tract’s execution. duplication by a requester in accordance with this act.” Commonwealth of Pennsylvania Right Pennsylvania’s transparency Web site gives citizens the ability to monitor the government at to Know Law, Act 3 of 2008 little cost. The Contracts e-Library, which went online on July 22, 2008, cost the state approximately $456,850 to establish.72 The experience Pennsylvania’s new Web site is a commend- of most states indicates that this money will able first foray into Transparency 2.0. The site quickly be recouped through fewer information is well organized and discloses comprehensive requests and more efficient government spend- information on state contracts. Pennsylvanians ing. Terry Mutchler, the executive director of will benefit from this site, which puts impor- the Pennsylvania Office of Open Records, has tant government accountability information at stated that her agency will be able to save time, every citizen’s fingertips. money and effort by providing more information online.73 The Contracts e-Library catalogues almost every state agency and legislative contract worth Making it easy for Pennsylvanians to access in- at least $5,000. The Web site provides copies of formation about the government’s use of mon- the contracts along with summaries that contain ey is good for the state. It bolsters trust in gov- pertinent information, such as the value of the ernment and gives residents the tools they need contract, the name of the vendor, the funding to evaluate the decisions being made in Har- agency, the contract dates, and the purpose of the risburg. Transparency is always fundamental contract. The Web site allows citizens to search to a healthy democracy, but these benefits are for contracts by these categories, or to make a especially valuable during times of budgetary directed keyword search. In addition, the Con- crisis. Launching the new Contracts e-Library tracts e-Library provides links to related docu- Web site was the right step for the state to take ments, such as amendments or purchase orders, at a critical moment. which allows citizens to follow the evolution of a particular contract.71 (See Figures 2, 3, and 4 for images from the Contracts e-Library.)

18 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Figure 2. Main Search Page of Figure 4. Detailed Results of One Contracts e-Library Web Site Contract from Sample Search

Accessing Subsidies: Investment Tracker Figure 3. List of Sample Search In addition to the Contracts e-Library, Penn- Results from Contracts e-Library sylvania operates a separate Web site, called the Investment Tracker, which provides company-specific information on certain tax subsidies. The Investment Tracker includes the name of the entity receiving funds, a very brief description of what the funds will be used for, through what program they are receiving funds, what county the entity is located in, how many jobs the entity currently offers and how many it plans to create, and how much money it has received.74

Investment Tracker can be searched by county, by a particular loan or grant program, by the name of the recipient, by the date of the grant period, and/or by a specific project.

19 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Figure 5. Main Search Page of Investments Tracker Web Site

Needed Improvements make it easier for legislators and citizens to review all elements of the government’s budget. There are still some critical holes in Pennsylva- nia’s online transparency efforts. The Contracts To fix these problems, Pennsylvania should: e-Library site does not include information on corporate tax breaks and subsidies, nor does it ➤➤Provide the Treasury Department with an provide complete contract information from enforcement mechanism to ensure that all the state agencies. This information is impor- agencies report all contracting information tant because it allows residents and watchdog in the Contracts e-Library; groups to more properly monitor spending and hold government officials accountable. ➤➤Increase the level of detail posted on the Contracts e-Library site and the Investment Information on tax subsidies is not easily avail- Tracker site; able. Data on subsidies in the Investment Tracker are not integrated into the Contracts e-Library. ➤➤Post data on tax breaks provided to individ- Including all information in one place would ual companies; and

20 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund ➤➤Integrate the data on Contracts e-Library, The Contracts e-Library Should Include Investment Tracker, and various agency Web More Detailed Contract Information sites into a single transparency site. While the Contracts e-Library makes some important accountability information acces- The Right-to-Know Law Needs Clearer sible to the public, it is not designed to provide Standards, Enforcement Mechanisms oversight for the contracting process. The best Transparency 2.0 sites provide comprehensive The Right-to-Know Law that created the Con- information on contracts throughout the entire tracts e-Library requires government agencies process – including bids, subcontracting, and and the Legislature to submit all contracts to the performance evaluation. This level of informa- Department of Treasury to be catalogued on the tion allows citizens, government officials, and database.75 The law does not, however, provide watchdog groups to monitor the contracting the Treasury Department with an enforcement process and ensure the government is getting mechanism nor specify any penalties for non- the best deal for taxpayers’ money. compliant agencies. In addition, each agency is empowered to determine which of its contracts The Contracts e-Library falls far short of these are subject to the public disclosure law, and to standards. Though the Web site does allow ensure their accuracy. citizens to view the actual contracts, the information is only posted after a deal has been This lack of clear standards creates many executed. Thus, there is no information avail- holes in the state’s transparency Web site. able about the bidding process. Similarly, after Allowing individual agencies to determine a contract has been awarded most agencies fail which contracts to make available to the pub- to disclose other relevant information, such as lic increases the likelihood that some govern- the performance of the contractor or whether ment officials will err on the side of provid- subcontracting was used. This information is ing too little information. This decreases the vital to monitoring government spending – if effectiveness of the Web site as a monitoring citizens cannot track the money and verify tool. Similarly, the Treasury Department’s in- the outcomes of the contracts, they will not ability to enforce the disclosure of public re- be able to ensure their tax dollars are being cords makes it more likely that contracts will used effectively. be missing from the database. In addition, all contracts, regardless of their For a transparency Web portal to be effective, value, should be posted on the Contracts e- all contracts must be posted online in a uni- Library. Currently, Pennsylvania only requires form manner. Allowing individual agencies to the posting of contracts worth at least $5,000, decide what information to provide, and not which leaves a significant portion of govern- having any mechanism to hold them account- ment spending unavailable for public scrutiny. able, increases the likelihood that insufficient The leading Transparency 2.0 states have im- information will be provided to citizens and proved their transparency efforts by making all decrease the effectiveness of the Web site as a government spending information available to monitoring tool. the public. Pennsylvania should follow the prac-

21 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund tices of these states to ensure that all government ➤➤the wages and benefits of those positions, spending is subject to external monitors. ➤➤the addresses where the jobs are located, Finally, old contracts should be archived on the database. Currently the database only provides ➤➤the type of industry the recipient is involved information on contracts executed since July 1, in, and 2008. Posting older contracts on the Web site will enable citizens to more effectively monitor ➤➤whether the recipient was required to repay government spending over time and glean use- any funds to the state if it failed to achieve ful information from spending trends. the wage and job-creation goals it had promised. Other states have saved millions of dollars by providing this accountability information. In addition to providing more detail about sub- James Quintero, a fiscal policy analyst for the sidies and grants already reported in the Invest- Texas Public Policy Foundation, found that Tex- ment Tracker, the Web site should include ad- as began to receive lower bids for its contracts ditional subsidies, such as local tax exemptions after making information about the contracting or Keystone Opportunity zone tax breaks. process available to the general public.76 A number of states already provide this information about their subsidies. Illinois’ Cor- Investment Tracker Needs More porate Accountability Web site, for example, Detail to Hold Subsidy Recipients posts a report from every company that has Accountable received economic development assistance from the state each year. The report lists the Pennsylvanians spend millions of dollars on number of jobs the assistance was intended to corporate tax breaks each year, and likely mil- create and what was actually achieved through lions more on subsidies targeted at specific the report year, and it requires companies to companies, yet information about the subsidies account for any discrepancies between the is difficult to find and understand. A small in- two. It also lists the total amount of assistance, vestment in better disclosure of those subsidies the types of jobs added, and the average salary and tax breaks could ensure that the state re- for each job type.77 ceives the greatest benefit from its spending. Adding this information would be relatively The usefulness of the Investment Tracker Web simple because the Department of Community site is limited because it does not provide essen- and Economic Development already has most tial accountability information that would allow of it in its internal databases.78 The department citizens to judge the efficacy of tax breaks. The would need to update the application that com- Investment Tracker Web site needs to include panies must submit when applying for assis- more details, including: tance, and then require them to submit updated information using that form during the course ➤➤the number of jobs created, of the grant period.

22 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund An additional shortcoming of both the Con- the performance of companies and ensure they tracts e-Library and the Investment Tracker are using state money effectively. is that neither includes data on tax subsidies targeted to individual businesses, such as large Unfortunately, though, the state often grants tax incentive packages given to companies that large financial incentive packages to private consider relocating in the state. Though some companies to create jobs without any account- of this information is presented in the Tax Ex- ability or follow-up. For example, the state penditure Analysis in the Governor’s Budget, granted Cabela’s, a large hunting, fishing and that report fails to specify how tax subsidies are outdoor supply retailer, a $32 million package allocated across industries, geography or politi- to locate one of its stores in Hamburg, PA. In cal districts, and it does not provide specific in- exchange for the tax breaks, Cabela’s promised formation on the public benefits of individual to create jobs and attract out-of-state tourists subsidies. The entry on the Job Creation Tax to Pennsylvania, thus boosting tax revenue. Credit, for example, lists its value as $22.5 mil- However, a few years after the deal was final- lion in fiscal year 2011 and states that 120 com- ized, the Allentown Morning Call newspaper panies will benefit from the expenditure. How- was unable to determine if the company was ever, there is no information about the number meeting its stated goals because no public of- of jobs that will be created or the historical ef- ficial was tracking the outcome of the agree- ficacy of the program. This severely limits the ment.79 Thus, the state may have been eligible ability of the public to monitor tax subsidies to recoup millions of dollars from the compa- and ensure they are efficient and effective uses ny, but failed to do so because the information of government money. Data on tax subsidies was not available. should be available online. Pennsylvania should be analyzing the effects of It is crucial for the public to have information these sorts of tax breaks and other subsidies, about corporate tax breaks and subsidies, both and making that information available on the in terms of their cost and their effectiveness. transparency Web site along with the original Pennsylvanians know the cost of only some measurable goals of the program. It should also corporate tax breaks, and the effectiveness of include company-level information on the cost none. This information is especially important of all programs, including those targeting spe- in Pennsylvania because the state has a “claw- cific industries and companies, and include lo- back” provision that would allow it to recoup cal subsidies in addition to state expenditures. money from companies that do not meet stated And this information should be made available goals on job creation. If this information were in a format that can be organized, such as by provided on a central transparency Web site, industry and geography, and easily searchable government officials would be able to monitor on the state’s main transparency Web site.

23 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Pennsylvania Needs a One-Stop mation. In contrast, the California Reporting Destination for Accountability Transparency in Government site provides in- Information formation on contracts, travel expense claims, audits and Statements of Economic Interest, In terms of the information that it puts online, which are legal documents that agency heads Pennsylvania ranks ahead of most state govern- and other important staff use to report any fi- ments. However, the state tends to provide its nancial gifts they’ve received, investments they transparency information in a piecemeal ap- hold, or other types of financial interests. Pro- proach, spread across numerous Web sites and viding this information on the Contracts e-Li- departments, which means it is not nearly as brary would allow citizens to more effectively useful as it could be. Requiring individuals to monitor government expenditures. go to multiple Web sites to view government accountability information decreases their power Similarly, Pennsylvania should include compre- as external monitors. In addition, not all infor- hensive subsidy and tax expenditure informa- mation that should be online has been posted. tion on the same Web site that has contracting and other government spending data. Though The Contracts e-Library should include con- the Contracts e-Library was originally intended tracting information from all agencies. While only as a database for contracts, Pennsylvania most agencies are required to place their con- can transform it into a more effective transpar- tracts on the Contracts e-Library, the Jus- ency tool by providing searchable, company- tice Department, for example, actually hosts level information on all agency expenditures a separate Web site to display its contracts. and tax subsidies. Similarly, the Governor’s Executive Budget is only provided on the Governor’s Office Web Pennsylvania should incorporate all contracts, site, while the Department of Community and agency budgets and expenses, subsidies and Economic Development hosts its own Web tax expenditure reports on a central, search- site to display information about the subsidies able transparency Web site. This would allow it provides. citizens, government officials, and watchdog groups to more easily monitor government Another major shortcoming of the Contracts spending. As the experiences of other Transpar- e-Library is that it only provides information ency 2.0 states indicate, providing all account- on government contracts. The Web site is not ability information on a single site will improve integrated with departmental budgets, nor does government efficiency and identify numerous it include other government spending infor- cost saving measures.

24 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Table 3. Pennsylvania Has Not Yet Achieved Transparency 2.0

Transparency 1.0 Pennsylvania Transparency 2.0

Incomplete: Residents have ac- The Contracts e-Library is in- Comprehensive: User-friendly cess to only limited information complete. Missing information web portal provides residents about public expenditures. In- includes: certain contracts; per- a single location to search for formation about contracts, sub- formance measures, such as the detailed information about gov- sidies, or grants is not disclosed number of jobs created; the use ernment contracts, spending, online and often not collected of subcontractors; other bids re- subsidies, and grants. at all. ceived for each project; tax subsidies and economic development incentives.

Scattered: Determined residents Pennsylvania provides account- One-Stop: Residents can search who visit numerous agency Web ability information in numerous all government expenditures on sites or make public record re- places: the Contracts e-Library, a single Web site. quests may be able to gather The Governor’s Executive Bud- information on government ex- get, the Investment Tracker, the penditures, including contracts, Justice Department’s spending subsidies, and special tax breaks. Web site, and the Department of Community and Economic De- velopment site.

Tool for Informed Insiders: The Contracts e-Library is one- One-Click Searchable: Resi- Researchers who know what click searchable and user friendly. dents can search data with a sin- they are looking for and already Residents can search the database gle query or browse common- understand the structure of by the name of the contractor or sense categories. Residents can government programs can dig purchase type. sort data on government spend- through reports for data buried ing by recipient, amount, legis- through layers of subcategories lative district, granting agency, and jurisdictions. purpose, or keyword.

25 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Conclusion

Transparency 2.0 – a broad bipartisan move- tracts e-Library Web site is a commendable first ment for online government spending transpar- step, but the state still has a long way to go com- ency – is growing. In the past few years, 32 states pared with the standard established by leading and the federal government have upgraded states. The site is missing detailed analysis of their spending transparency websites, making contracts and corporate tax breaks, as well as them comprehensive, one-stop, and one-click other accountability information. searchable. Many of these states report already reaping the benefits of this greater transparen- Pennsylvania should fill in these major holes and cy, saving millions of dollars and bolstering the bring the site’s accessibility up to speed. Provid- confidence of residents and businesses. ing a cutting-edge comprehensive transparency Web site for Pennsylvanians will help restore the Especially in the midst of a budget crisis, Penn- trust in government that has been lost during sylvania should be doing all it can to ensure that the budget crises. It will also be useful for identi- residents have easy access to information about fying inefficiencies and checking corruption, to how the state is spending its money. The Con- help avoid another financial crisis.

26 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Appendix: States With Transparency Web Sites

Contract or Detailed Summary Information Available?

Searchable by Activity? Past Contracts Available? (Prior to FY09)

Searchable by Contractor? Tax Subsidies Included?

Checkbook-Level Website (lets you Economic see individual Incentives government Included? transactions)?

State Authorizing Law Web Site Address Alabama Y Y Y Y Y N Y Executive Order signed February 2009; open.alabama.gov SB204 signed May 2009 codified EO Alaska Y N N N Y N Y Cooperation of Gov. Sarah Palin and the fin.admin.state.ak.us/dof/checkbook_online/index.jsp Department of Administration Arizona N* Y Y Y N+ N N Directive of the State Treasurer; new website will go online www.azcheckbook.com; procure.az.gov in January 2011, run by Department of Administration Arkansas N N N N N N N No transparency Web site California Y Y N N Y N N California Executive Order, April 2009 www.reportingtransparency.ca.gov Colorado Y Y Y Y N N Y Colorado Executive Order April 2, 2009; HB tops.state.co.us 1288 signed June 2009 codified EO Connecticut N* Y Y N Y N N HB5163, requiring establishment of a searchable Website is under development. online database for state expenditures, including state contracts and grants, passed on May 3, 2010. Delaware Y Y Y N N N Y Created through the cooperation of several agencies per checkbook.delaware.gov Gov. Markell’s instructions; HB 119 signed in August 2009 Florida Y Y N Y Y N Y Chief financial office and Gov. Crist launched website in myfloridacfo.com/transparency March 2009; SB 1796 signed in May 2009 codified website Georgia Y Y Y N N N N SB 300, signed May 12, 2008 open.georgia.gov Hawaii Y Y Y Y Y N Y HB 122, became law without signature May 1, 2007 hawaii.gov/spo2 Idaho N N N N N N N No transparency Web site Illinois Y Y Y N N Y Y HB 35, signed in August 2009; PA 93- accountability.illinois.gov; ilcorpacct.com/corpacct/ 552, signed in August 2003 Indiana N* N* N* N* N* N N State auditor launched Web site in August 2010. www.in.gov/itp/ Iowa N N N N N N N No transparency Web site Kansas Y Y Y N Y N Y First authorized by FY 2008 appropriations bill kansas.gov/kanview Kentucky Y Y Y Y Y Y Y Executive Order 2008-508, issued June 6, 2008 opendoor.ky.gov Louisiana Y Y Y Y N Y Y Executive Order No. BJ 2008-2, issued wwwprd.doa.louisiana.gov/laTrac/portal.cfm January 15, 2008; SB 37 Maine N N N N N N N No transparency Web site Maryland Y Y N N Y Y Y HB 358, signed May 22, 2008 spending.dbm.maryland.gov Massachusetts N* N N N N N N Note: State recently passed legislation to establish a budget transparency website. Michigan N N N N N N N No transparency Web site

+ Only active contracts. * Web site is in development.

27 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Contract or Detailed Summary Information Available?

Searchable by Activity? Past Contracts Available? (Prior to FY09)

Searchable by Contractor? Tax Subsidies Included?

Checkbook-Level Website (lets you Economic see individual Incentives government Included? transactions)?

State Authorizing Law Web Site Address Minnesota Y Y Y N Y Y Y HB 376, signed May 4, 200 www.mmb.state.mn.us/tap Mississippi Y Y Y Y N N N HB 101, signed either April 14, 2008 or in April 2008 merlin.state.ms.us Missouri Y Y Y N Y Y Y Executive Order 07-24, issued July 11, 2007 mapyourtaxes.mo.gov/MAP/portal Montana N N N N N N N No transparency Web site Nebraska Y Y N N Y N Y Directive of the State Treasurer; SB 18 signed in May 2009 nebraskaspending.com Nevada Y Y Y Y Y N Y Executive Order issued March 18, 2008 open.nv.gov New Hampshire Y Y Y Y N N N Initiative of Gov. Lynch http://www.nh.gov/transparency/index.htm New Jersey N Y Y N Y N N Created by Governor www.nj.gov/transparency New Mexico Y Y Y N N N Y HB 546, signed April 6, 2009 contracts.gsd.state.nm.us New York Y Y Y N Y N Y Directive of the Attorney General www.openbooknewyork.com North Carolina Y Y Y N N N Y Executive Order No. 4 issued January 12, 2009 www.ncopenbook.gov North Dakota N* N N N N N N HB 1377, later amended into SB 2018, To be operational June 30, 2011 signed into law May 2009 Ohio Y Y Y Y Y Y Y HB 420, signed in December 2008. transparency.ohio.gov Oklahoma Y Y N N N Y Y SB 1, signed June 5, 2007 www.ok.gov/okaa Oregon Y N N N Y Y Y HB 2500, pending Governor’s signature www.oregon.gov/transparency Pennsylvania Y Y Y Y Y N Y Act 3 of 2008, signed February 14, 2008 contracts.patreasury.org/search.aspx Rhode Island Y Y Y N Y N Y Administrative Order, February 2009 ri.gov/opengovernment South Carolina Y Y N N Y N N Executive Order 2007-14, issued August 30, 2007 www.cg.sc.gov/agencytransparency South Dakota Y Y N Y N N Y Created by the Office of Finance and open.sd.gov Management per Gov. Round’s instructions Tennessee Y N N N Y N Y Created by the Department of Finance, tn.gov/opengov per Gov. Bredesen’s instructions Texas Y Y Y N Y N Y HB 3430, signed June 15, 2007 texastransparency.org/index.php Utah Y Y Y Y N N Y SB 38, signed March 14, 2008 utah.gov/transparency Vermont N N N N N N N No transparency Web site Virginia Y Y Y N Y N Y SB 936, signed March 30, 2009 datapoint.apa.virginia.gov Washington N N Y Y Y N N SB 6818, signed March 1, 2008 or April 2008 fiscal.wa.gov West Virginia N N N N N N N No transparency Web site Wisconsin N Y Y N N N Y Wisconsin Act 410, signed 2005; Wisconsin http://ethics.state.wi.us/contractsunshine/ Act 125, signed March, 2008 contractsunshineindex.html; http://www. commerce.state.wi.us/BD/BD-Act125.html Wyoming Y Y N N N N Y HB 144, signed March 2009 www.wyoming.gov/transparency.html

28 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund Endnotes

1 Association of Government Accountants, matter of public record. And Collin Coun- 12 Mackinac Center for Public Policy, Public Attitudes Toward Government Ac- ty, Texas, is reportedly the first county in “2009 House Bill 1880 (Government countability and Democracy 2008, Febru- the nation to do the same: Amy Oliver and Accountability Portal Act),” Pennsylva- ary 2008. Stephanie Kubala, “No Taxation Without niaVotes.org, downloaded from http:// Information,” The Denver Post, 29 Sep- pennsylvaniavotes.org/2009-HB-1880, tember 2008. For a foreign example, see, on 28 April 2010. 2 Missouri: Governor Matt Blunt, Gov. Brazil’s transparency portal: Presidência Blunt’s Accountability Internet Site Eclipses da República, Controladoria-Geral da Six Million Hits (press release), 29 April Uniúo, Portal da Transparencia, down- 13 House Bill 2340 and Senate Bill 1279, The 2008; Houston: John Fritze, “Bill Shines loaded from www.portaldatransparencia. Economic Development and Fiscal Ac- Light on Baltimore Contracts,” Baltimore gov.br, 21 September 2009. For a detailed countability Act, Pennsylvania General Sun, 19 July 2008. discussion of Latin America’s successes Assembly Session of 2010. with transparency portals, supported by the Inter-American Development Bank, 3 Sutherland Institute, How Much Will see Miguel Solana, Transparency Portals: 14 New York: Nicholas Confessore, “And Transparency Cost?, 15 February 2008, Delivering Public Financial Information to Cuomo Said, Let There Be Light,”The New available at www.sutherlandinstitute.org/ Citizens in Latin America, in Civil Society York Times, 5 December 2007, available at uploads/How_Much_Will_Transpar- Team, Latin America and the Caribbean cityroom.blogs.nytimes.com/2007/12/05/ ency_Cost_Policy_Brief.pdf. The $2.3 Region, The World Bank, Thinking Out and-cuomo-said-let-there-be-light/; Mis- million dollars saved came from multiple Loud V: Innovative Case Studies on Par- souri: Governor Matt Blunt, Blunt Shines sources. Some examples include: ticipatory Instruments, Spring 2004. the Light on State Spending With New In- • $73,000 from combining multiple print- ternet Site (press release), 11 July 2007. er toner contracts; • $250,000 from eliminating duplicate 7 Warren Miller, “Marylanders Deserve printing in many state agencies; Government Transparency,” The Exam- 15 S 3077, 110th Cong., 2d Sess. (2008). The • $130,000 from posting publications on- iner, 26 February 2008, available at www. bill did not pass. line rather than printing and mailing; examiner.com/a-1242109~Warren_Mill- • $457,319 from eliminating information er__Marylanders_deserve_government_ technology contracts; transparency.html. 16 Americans for Tax Reform, Norquist, Na- • $100,000 from eliminating microfilm der Join Forces in Push for State Spending no longer needed; and Transparency (press release), 5 July 2007. • $14,600 from disconnecting pagers. 8 Oklahoma Council of Public Af- fairs, Oklahoma Voters Favor Trans- parency Web Site, 1 February 2007, 17 Governor Matt Blunt, Gov. Blunt’s Ac- 4 Governor’s Budget Office, Governor Ren- available at www.ocpathink.org/pub- countability Internet Site Eclipses Six Mil- dell Signs Jobs Bill to Spur $1.2 Billion In- lications/perspective-archives/february- lion Hits (press release), 29 April 2008. vestment in PA’s Economy, Create 18,000 2007/?module=perspective&id=1470. Jobs (press release), 7 July 2010. Governor’s Budget Office, Governor Rendell Signs Bill 18 In its first four months, the brand new that Restrains Spending in Difficult Econo- 9 Association of Government Accountants, site received 242,302 hits during 32,543 my, But Invests More in Education and Job Public Attitudes Toward Government Ac- sessions. Joni Sager, “People Behind the Creation (press release), 6 July 2010. countability and Transparency 2010, Feb- Scenes: Where the Money Goes,” State- ruary 2010. wise, Fall 2007, available at fmx.cpa.state. tx.us/fm/statewise/07/fall/money.php. 5 120 Stat. 1186 (2006). The Web site is operational at www.usaspending.gov. 10 Lake Research Partners and the Topos Partnership, New Poll Shows Broad Sup- 19 A 2008 survey found 71 percent of report for Economic Recovery Package and spondents who receive budget informa- 6 For a local example, see Milwaukee Tough Government Accountability Mea- tion or believe it is important to receive County, Wisconsin’s transparency portal: sures (press release), 1 February 2009. budget information would use that in- Citizens for Responsible Government, formation to influence their voting de- Milwaukee County Government Account- cisions, 48 percent would respond by ability in Spending Project Database, 11 Harris Interactive for Association of Gov- contacting their representatives, and 28 downloaded from milwaukeecounty. ernment Accountants, Public Attitudes percent would attend a town hall meeting headquarters.com/search_mke.aspx, 21 Toward Government Accountability and or other political gathering. Harris Inter- September 2009. In Texas, over 150 school Transparency 2008, February 2008, avail- active for Association of Government districts reportedly post online their check able at www.agacgfm.org/harrispoll2008. Accountants, Public Attitudes Toward registries, which are reportedly already a aspx. Government Accountability and Trans-

29 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund parency 2008, February 2008, available at 28 Commonwealth of Massachusetts, Ex- Administrative Services, Letter to Derek www.agacgfm.org/harrispoll2008.aspx. ecutive Office for Administration and Monson, Sutherland Institute, 29 January Houston officials similarly report im- Finance, Operations and Service Divi- 2009, available at sunshinereview.org/improved public confidence after the launch sion, CommPass, downloaded from www. ages/0/07/Sutherland_Institue_FOIA.pdf. of their Web site. John Fritze, “Bill Shines comm-pass.com, 21 September 2009. Light on Baltimore Contracts” Baltimore Sun, 19 July 2008. 34 See, e.g., Stephen Goldsmith and William 29 R.I. S2661A (2008); R.I. H7953A (2008). D. Eggers “Government for Hire,” New York Times, 21 February 2005. 20 Tracy Loew, “States Put Spending Details Online; Public Can Check Where Their 30 Sandra Fabry, Americans for Tax Reform, Taxes Go,” USA Today, 23 February 2009. Testimony to the Maryland House of Del- 35 State of Hawaii, State Procurement Office, egates Health and Government Opera- Awards, downloaded from hawaii.gov/ tions Committee Regarding H.B. No. 358, spo2/, 21 September 2009. 21 Rep. Bernie Hunhoff, “Pierre Report: 6 February 2008, available at www.atr.org/ Open Governments Saves $10M,” Yank- pdf/2008/feb/020508ot-testimony_md_ ton Press and Dakotan (South Dakota), 17 trnsp.pdf. 36 Tex. HB 3430 (2007); Hawaii HB 122 March 2010. (2007).

31 Shane Osborn, Nebraska State Treasurer, 22 Sutherland Institute, How Much Will Letter to Maryland Senator Mooney, 20 37 Hawaii HB 122 (2007). Transparency Cost?, 15 February 2008, March 2008, available at www.show- available at www.sutherlandinstitute.org/ methespending.org/uploads/MD-NE_ uploads/How_Much_Will_Transpar- Letter.pdf. 38 Pub. L. 109-282 § 2(a)(1)(B) (2006). The ency_Cost_Policy_Brief.pdf. Houston’s law requires these contracts to be available city Web site has similarly reduced public starting January 1, 2009. As of 21 Septem- records requests and increased bids: John 32 Lisa McKeithan, Oklahoma Office of State ber 2009, the page was still under devel- Fritze, “Bill Shines Light on Baltimore Finance, personal communication, 6 Au- opment. White House Office of Manage- Contracts,” Baltimore Sun, 19 July 2008. gust 2008. ment and Budget, Subcontracts Data, The Boston Housing Authority reports downloaded from www.usaspending.gov/ that it receives approximately 20 percent subcontracts, 21 September 2009. more bids per contract since it began us- 33 Alaska, Louisiana, Maryland, Nebraska, ing Massachusetts’s Comm-PASS Web site Texas and Washington: Jerry Brito and and that the bids are of higher quality due Gabriel Okolski, Mercatus Center, George 39 See, e.g., Kansas HB 2730 (2007), Georgia to the increased competition. Dan Casals, Mason University, The Cost of State On- SB 300 (2008), and Washington SB 6818 Chief Administrative Officer, Boston line Spending-Transparency Initiatives, (2008). Housing Authority, personal communica- April 2009; Kansas, Missouri, Oklahoma, tion, 8 August 2008. and South Carolina: Center for Fiscal Ac- countability, Transparency in Government 40 See, e.g., Florida HB 181 (2008) and Spending, Cost Vs. Savings, downloaded Florida SB 392 (2008) which would have 23 Sutherland Institute, How Much Will from www.fiscalaccountability.org/user- required all government entities – defined Transparency Cost?, 15 February 2008, files/cost&savings.pdf, 24 August 2009; as “a state agency, a political subdivision, available at www.sutherlandinstitute.org/ California: Office of the Governor, State of a corporation created by and acting on uploads/How_Much_Will_Transparen- California, Gov. Schwarzenegger Expands behalf of a state agency or political subdi- cy_Cost_Policy_Brief.pdf Transparency Web Site Creating Greater vision, or a taxing authority created by a Accountability to the People (press release), state agency or political subdivision” – to 8 September 2009; Florida: Florida Gov- disclose their spending on a transparency 24 March 2, 2010 phone communication ernor Charlie Crist, Governor Crist, CFO Web site. with RJ Shealy, Spokesperson for South Sink Unveil Sunshine Spending Web Site Carolina Comptroller General’s Office. (press release), 17 March 2009; Kentucky: e-Transparency Task Force, Final Report 41 U.S. Census Bureau, State and Local Gov- to Governor Steven L. Beshear: Kentucky’s ernment Finances: 2005-06, 1 July 2008, 25 See note 20. Open Door, 1 November 2008; Nevada: Ed available at www.census.gov/govs/www/ Vogel, “Open Government: Finances Web estimate.html. Site Coming,” Las Vegas Review-Journal, 26 Center for Fiscal Accountability, Trans- 19 March 2008; Pennsylvania: Estimate 42 See, e.g, Milwaukee County, Wis. Web parency in Government Spending: Cost vs. based upon two contracts the state had site: Citizens for Responsible Govern- Savings, downloaded from www.fiscalac- with Koryak Consulting: The Pennsylva- ment, Milwaukee County Government countability.org/userfiles/cost&savings. nia Treasury Department, Pennsylvania Accountability in Spending Project Data- pdf, on 9 February 2010. Contracts e-Library, downloaded from base, downloaded from milwaukeecounty. contracts.patreasury.org/search.aspx, 21 headquarters.com/search_mke.aspx, 21 September 2009; Rhode Island: Treasury September 2009; and Howard County, 27 State of Illinois, Corporate Accountability, Online Checkbook, State of Rhode Island, Md. Legislation: Bill No. 9-2008, avail- Annual Report of Recapture Provisions by Frequently Asked Questions, downloaded able at www.co.ho.md.us/countycouncil/ Program, downloaded from www.ilcor- from www.treasury.ri.gov/opengov/faq. ccdocs/enrcb9-2008.pdf. pacct.com/corpacct/RecaptureProvisions. php, 14 September 2009; Utah: John C. aspx, 21 September 2009. Reidhead, Utah State Department of

30 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund 43 Kansas HB 2730 (2007); Mo. Exec. Order available at www.goodjobsfirst.org/news/ pany fails to create the number of jobs No. 7-24 (11 July 2007). article.cfm?id=361. specified above, fails to invest the amount of private funding specified above, or fails to operate at the Project site for at least 44 Kentucky OpenDoor, Site Policy, down- 52 Minn. Stat. 116J.994 (2008). Reports avail- five years, the Company shall be liable loaded from opendoor.ky.gov/Pages/site- able at www.deed.state.mn.us/Communi- for a penalty equal to the full amount of policy.aspx, 12 August 2009. ty/subsidies/index.htm. the grant awarded to them.” A 2007 audit documented inconsistent enforcement of this provision: Jack Wagner, Auditor 45 Missouri: State of Missouri, Missouri Ac- 53 R.I. 2008 - S2661A and 2008 - H7953A. General, Pennsylvania Department of the countability Portal, downloaded from See also Susan A. Baird, “R.I. posts $54M Auditor General, A Special Performance mapyourtaxes.mo.gov/MAP, 12 August in Tax Credits in FY2008,” Providence Audit of the Pennsylvania Department of 2009; Kentucky: Kentucky OpenDoor, Business News, 11 September 2008, avail- Commerce and Economic Development, Contract Search, downloaded from open- able at www.pbn.com/stories/34972.htm. October 2007. door.ky.gov/Pages/contractsearch.aspx, 12 August 2009. 54 See note 52. 59 ND Century Code 54-60.1.

46 Ibid. 55 State of Illinois, Corporate Accountability, 60 R.I. S2661A (2008); R.I. H7953A Annual Report of Recapture Provisions by (2008). 47 Ratings of current state disclosures: Good Program, downloaded from www.ilcor- Jobs First, The State of State Disclosure, pacct.com/corpacct/RecaptureProvisions. available at www.goodjobsfirst.org/news/ aspx, 21 September 2009. 61 See note 52. article.cfm?id=361; Missouri: State of Missouri, Office of Administration, Mis- souri Accountability Portal: Expenditures, 56 “Sunk: Mercury Marine Fiasco Casts Light 62 Tax expenditure budgets, such as Massa- downloaded from mapyourtaxes.mo.gov/ on Costs of State Subsidy Wars,” OK Policy chusetts, are often unable to provide this MAP/Expenditures/Contracts/Default. Blog, 3 November 2009. policy-making support. John L. Mikesell, aspx, 21 September 2009. “Tax Expenditure Budgets, Budget Policy, and Tax Policy: Confusion in the States,” 57 Illinois: State of Illinois, Corporate Ac- Public Budgeting and Finance, Winter 48 Massachusetts’s economic development countability, Annual Report of Recapture 2002. tax expenditures, for example, cost the Provisions by Program, downloaded from state nearly $1.5 billion a year: Bruce www.ilcorpacct.com/corpacct/Recapture- Mohl, “Subsidizing the Stars,” Common- Provisions.aspx, 21 September 2009; Rhode 63 For example, Georgia’s Secretary of State Wealth, Spring 2008. During its decades of Island’s recapture provisions were mandated posts her own budget and ethics state- expansion, Wal-Mart alone has received in 2008 - S2661A and 2008 - H7953A; Mas- ments on financial disclosure: Georgia over $1 billion in state and local subsidies sachusetts: Bruce Mohl, “Budgets Slashed, Secretary of State, Transparency in Gov- nationally: Barnaby Feder, “Wal-Mart’s But Not Corporate Tax Breaks,” Common- ernment Initiative, downloaded from Expansion Aided by Many Taxpayer Sub- Wealth Magazine, 24 December 2009, and www.sos.georgia.gov/tig, 21 September sidies,” New York Times, 24 May 2004. Pension Reserve Investment Management 2009. Board Staff, Pension Reserves Investment Trust Fund: Comprehensive Annual Finan- 49 Joel Dresang and Steve Schultze, “Subsi- cial Report, For the Year Ended June 30, 64 See, e.g., Norman Leahy, So Much for dies Without Scrutiny: Millions for Jobs 2009, 1 December 2009; Minnesota: Min- Transparency, 19 May 2008, avail- Worth it?” Journal Sentinel, 1 July 2007, nesota Department of Employment and able at www.baconsrebellion.com/Is- available at www.jsonline.com/story/in- Economic Development, Business Subsidies sues08/05-19/Leahy.php. dex.aspx?id=626798. Reporting, downloaded from www.deed. state.mn.us/Community/subsidies/index. htm, 21 September 2009; Oregon: Harry Es- 65 Ellen Bickelman, Massachusetts State Pur- 50 Zach Patton, “Hush Money,” Governing teve, “Oregon Governor Signs New Limits chasing Agent, Operation Services Divi- Magazine, 1 August 2008. on Business Energy Tax Credit, The Orego- sion, personal communication, 7 August nian, 18 March 2010; Pennsylvania: Natalie 2008. Kostelni, “Vanguard Group, Pa. Reworking 51 North Dakota regulates all “business Financial Incentives,” Philadelphia Business incentives,” defined as any direct cash Journal, 6 April 2007. For a full analysis of 66 Phillip Mattera and Anna Purinton, Good transfer, loan, or equity investment; con- state subsidy clawback provisions, see Good Jobs First, Shopping for Subsidies: How tribution of property or infrastructure; Jobs First, Clawbacks Chart, September Wal-Mart Uses Taxpayer Money to Fi- reduction or deferral of any tax or any 2005, available at www.goodjobsfirst.org/ nance Its Never-Ending Growth, May 2004, fee; guarantee of any payment under any pdf/clawbacks_chart.pdf. available at www.goodjobsfirst.org/pdf/ loan, lease, or other obligation; or prefer- wmtstudy.pdf. ential use of government facilities given to a business. ND Century Code 54-60.1. 58 For example, the Department of Commu- For an analysis of state subsidy disclosure nity and Economic Development includes 67 Minnesota: Minnesota Department of Web sites, see Good Jobs First, The State the following language in contracts for its Employment and Economic Development, of State Disclosure, 21 November 2007, Opportunity Grant Program: “If the Com- Business Subsidies Reporting, downloaded

31 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund from www.deed.state.mn.us/Community/ 74 Investment Tracker is available at www. subsidies/index.htm, 21 September 2009; dced.state.pa.us/investmenttracker/. Illinois: State of Illinois, Corporate Ac- countability, Annual Report of Recapture Provisions by Program, downloaded from 75 The Right-to-Know law identified approx- www.ilcorpacct.com/corpacct/Recapture- imately 30 exemptions to the general rule Provisions.aspx, 21 September 2009; Iowa: of making public records available for in- Iowa Department of Economic Develop- spection and copying. These exemptions ment, Reports, downloaded from www. were largely made to protect the identity iowalifechanging.com/reports.aspx, 21 of individuals, protect confidential infor- September 2009; New Jersey: P.L. 2007, mation, and for security concerns. Chapter 200. The disclosure requirements are described for businesses at State of New Jersey, Premier Business Services, 76 See note 20. downloaded from www.state.nj.us/njbusi- ness/premierservices.shtml, 21 September 2009; Rhode Island: 2008 - H7953A. 77 State of Illinois, Department of Com- merce and Economic Opportunity, Illinois Corporate Accountability Progress Reports, 68 Minnesota Department of Employment downloaded from www.ilcorpacct.com/ and Economic Development, 1999 Busi- corpacct/ProgressReport.aspx, 24 Sep- ness Assistance Report, available at www. tember 2009. deed.state.mn.us/Community/pdf/ busar99.pdf. 78 Stephen Herzenberg, Testimony of Stephen Herzenberg, Keystone Research Center, on 69 White House Office of Management and House Bill 2340 and Senate Bill 1279, 29 Budget, Subcontracts Data, downloaded June 2010. from www.usaspending.gov/subcontracts, 21 September 2009. 79 Greg LeRoy, Good Jobs First, The Great American Jobs Scam: Corporate Tax Dodg- 70 Missouri: State of Missouri, Missouri Ac- ing and the Myth of Job Creation, 2005. countability Portal, downloaded from mapyourtaxes.mo.gov/MAP, 12 August 2009.

71 Senator Jake Corman’s Office, PA Trea- surer Unveils State Government Contracts Online Database [press release], 23 July 2008.

72 Senator Jake Corman’s Office, PA Trea- surer Unveils State Government Contracts Online Database [press release], 23 July 2008. $456,850: Sunshine Review, Cost of State Transparency Websites, downloaded from http://sunshinereview.org/index. php/Cost_of_state_transparency_web- sites, on 5 February 2010. This figure was calculated by the cost of specific contracts, listed on the Web site, pertaining to the establishment of the Web sites. Though established by the Right-to-Know Law, the Contracts e-Library went live before the legislation took effect.

73 “Christiana’s Proposal to Create Pennwatch Discussed by House GOP Policy Committee,” States News Service, 19 June 2009.

32 Pennsylvania Spending Transparency 2.0 PennPIRG Education Fund

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