Increase accountability by enhancing tax expenditure audits

The Joint Legislative Audit and Review Committee (JLARC) conducts performance evaluations of most tax preferences over a ten-year period. JLARC’s evaluations are overseen by a Citizen Commission. Many tax expenditures were created without a clearly defined public purpose, and JLARC cannot effectively evaluate tax expenditures that have no explicit policy goals.

Out of 95 tax preferences reviewed to date, JLARC has recommended that 24 be terminated, or clarified by the legislature. These 24 tax expenditures cost taxpayers an estimated $314 million per year. So far, the legislature has not terminated or clarified a single tax preference reviewed by JLARC.

The following policy changes would enhance JLARC’s ability to conduct tax expenditure evaluations and would ensure its findings are considered by elected officials.

• Allow JLARC to examine all tax expenditures
• Require the legislature to act on JLARC’s recommendations
• Give JLARC and the Citizen Commission greater flexibility to conduct and schedule reviews

For more information on tax expenditures and long-term reforms to our state budget process read our latest policy brief, Every Dollar Counts: Why it’s Time for Tax Expenditure Reform.