101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB0203

 

Introduced 1/31/2019, by Sen. Toi W. Hutchinson

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Company-Specific Subsidy Interstate Compact. Enters into the compact, which may be entered into by any state and the District of Columbia, in which each member state agrees to not offer company-specific subsidies for companies currently located in or considering locating in the member state, including, but not limited to, for corporate headquarters, manufacturing facilities, office space, or other real estate developments. Excludes existing company-specific subsidies (until terms change, are renewed, or are reenacted) and workforce from abolition under the compact. Creates the Interstate Company-Specific Subsidy Board upon the second member state entering into the compact. Provides for withdrawal of a member state with 6-months' written notice. Defines terms.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Company-Specific Subsidy Interstate Compact Act.
 
6    Section 5. Execution of compact. The Company-Specific
7Subsidy Interstate Compact is hereby enacted into law and
8entered into with any state or the District of Columbia which
9legally joins in substantially the following form:
 
10
COMPANY-SPECIFIC SUBSIDY INTERSTATE COMPACT

 
11    The contracting states agree that:
 
12
ARTICLE 1: MEMBERSHIP

 
13    Any state of the United States and the District of Columbia
14may become a member state of this compact by enacting this
15compact.
 
16
ARTICLE 2: DEFINITIONS

 
17    As used in this compact:

 

 

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1    "Company-specific grant" means a disbursement of funds by
2property, cash, or deferred tax liability by the state
3government or any subdivision of the state government to a
4particular company.
5    "Company-specific subsidies" means company-specific grants
6or company-specific tax incentives.
7    "Company-specific tax incentive" means a change in the
8general tax rate or valuation offered or presented to a
9specific company that is not available to other
10similarly-situated companies, including, but not limited to, a
11tax incentive that is part of a special agreement negotiated
12with an official of the state or an official of any subdivision
13of the state government.
14    "Workforce development grants" means grants that train
15employees.
 
16
ARTICLE 3: FINDINGS

 
17    The member states find that:
18        (1) state governments are caught in a race to the
19    bottom offering ever-larger company-specific tax breaks or
20    grants in an attempt to lure large companies to stay or
21    relocate in their state despite overwhelming evidence that
22    the company-specific tax breaks are neither an efficient
23    use of public dollars nor a determining factor in a
24    company's eventual decision where to locate;

 

 

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1        (2) state governments in the aggregate spend tens of
2    billions annually on company-specific subsidies;
3        (3) spending those economic development dollars on
4    universal infrastructure such as transportation or
5    education that benefits all employers, not just the few
6    large for-profit companies that negotiate a special
7    subsidy, is a far superior use of state budget resources;
8        (4) the ability of the world's most profitable
9    companies to set off a bidding war, often in secret,
10    between states to package the largest subsidy imaginable in
11    order to lure the company to that state demonstrates the
12    inherently weak bargaining position of states in any
13    company-specific subsidy negotiation, which drives up the
14    prices of these subsidies;
15        (5) providing special subsidies for one company puts
16    all the competitors to that company at a disadvantage since
17    they must pay the full tax rate or operative without the
18    benefit of the subsidy, which further exacerbates the
19    largest companies getting even greater market share than
20    they otherwise would if all companies paid the same tax
21    rate;
22        (6) it would be far superior for all employers if
23    states competed for companies based on their overall
24    economic condition that all employers enjoyed, including
25    taxes, infrastructure, workforce, and regulations, and not
26    on a company-specific subsidy package which only benefits a

 

 

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1    small number of the wealthiest companies;
2        (7) despite widespread recognition of the wasteful
3    nature of these company-specific subsidies, no one state is
4    able to unilaterally end the practice as doing so is
5    perceived to put that state at a competitive disadvantage
6    to other states; and
7        (8) in order to set a level playing field and abolish
8    the practice of company-specific subsidies, states should
9    enter into an agreement not to engage in the practice that
10    becomes binding for any companies located in any state that
11    is a member of the agreement, especially among neighboring
12    states, until all 50 states and the District of Columbia
13    are able to join the agreement.
 
14
ARTICLE 4: COMPANY-SPECIFIC SUBSIDIES

 
15    Each member state agrees to not offer company-specific
16subsidies for companies currently located in or considering
17locating in the member state, including, but not limited to,
18for corporate headquarters, manufacturing facilities, office
19space, or other real estate developments.
 
20
ARTICLE 5: EXCLUSIONS

 
21    Existing company-specific subsidies are not impacted by
22this agreement, since this agreement is not retroactive, except

 

 

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1that any changes to the terms, including renewals or
2reenactments, of any existing company-specific subsidies are
3to be considered new company-specific subsidies and not
4permitted under this agreement.
5    Workforce development grants are not subject to this
6agreement since the company receiving the grant may benefit,
7but the employees receiving the training are the largest
8beneficiary.
 
9
ARTICLE 6: WITHDRAWAL

 
10    A member state may withdraw from this agreement with
116-months' written notice to the chief executive officer of
12every other member state to the agreement.
 
13
ARTICLE 7: BOARD

 
14    The Interstate Company-Specific Subsidy Board is
15established upon the second member state entering into this
16compact. Each member state shall appoint 5 members to the
17Board: one from the chief executive officer; one each from the
18majority leader of each legislative chamber; and one each from
19the minority leader of each legislative chamber. If a member
20state does not have a bicameral legislature, then that member
21state shall determine how the 4 appointments by its legislative
22leaders shall be made. The Board shall convene at least

 

 

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1annually, elect officers from its membership, and establish
2rules and procedures for its governance.
3    The purpose of the Board is to determine how this agreement
4can be improved and strengthened by collecting testimony from
5all interested parties, including representatives of member
6states; organizations and associations representing state
7legislators; taxpayers; and subject matter experts. The Board
8may draft and disseminate suggested revisions to this agreement
9from time to time.