97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB6190

 

Introduced , by Rep. Constance A. Howard

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Tri-State Metro Area Economic Development Interstate Compact Act. Provides that member states agree not to offer tax breaks to a company located in another member state as an inducement to change the company's location to the offering member state.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning economic development.
 
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
5Tri-State Metro Area Economic Development Interstate Compact
6Act.
 
7    Section 3. Findings. The General Assembly finds and
8declares that:
9        (1) In 2011 and 2012, the Organisation for Economic
10    Cooperation and Development, a 50-year-old Paris-based
11    international institution dedicated to promoting policies
12    that will improve the economic and social well-being of
13    people around the world, conducted its first-ever study of
14    a regional economy in the United States and issued a full
15    and vigorous analysis of the economy in the Chicago
16    metropolitan region.
17        (2) The report included the following language
18    concerning the economic development pitfalls and
19    challenges facing the Tri-State region: "Several recent
20    examples of inter-state squabbling over finite (and
21    diminishing) public resources or over business decisions
22    to locate in a particular part of the tri-state region
23    point to the need to "take a step back" to integrate the

 

 

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1    true functionality of the region into planning for
2    workforce development and economic development more
3    generally. Empirical evidence in the U.S. and elsewhere
4    demonstrates that trying to increase the number of firms in
5    a limited geographical area by luring them away from nearby
6    localities in the same functional region via tax incentives
7    is self-defeating in the long run, because it invites
8    retaliation, and some of the firms involved may move to
9    greener pastures when the tax breaks terminate, or may have
10    moved to the region anyway even without the tax breaks. It
11    is preferable by far to attract firms by showing that a
12    pool of talent and organisations exists in the region that
13    can help a newcomer exploit it. In the Tri-State region,
14    this petty, predatory zero-sum, intra-regional,
15    competitive approach to economic growth and job-creation
16    remains all too common."
 
17    Section 5. Tri-State Metro Area Economic Development
18Interstate Compact. The State of Illinois enters into the
19Tri-State Metro Area Economic Development Interstate Compact
20in substantially the following form with all other states
21joining the Compact:
22
ARTICLE I. PURPOSE
23    The Tri-State Metro Area Economic Development Interstate
24Compact is established to shift the state economic development
25strategies of the three states in our shared region away from

 

 

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1zero-sum tax breaks for large firms and towards a universal
2policy that improves the business climate for all firms and
3individuals in each of the three states.
4    The purpose of this Compact is to recognize that there is
5no net benefit to the region from inducing a business to move
6from one state in the region to another state in the region
7because of a special tax break or other specific incentive
8offered by a state government.
9
ARTICLE II. PROHIBITED ACTIVITIES
10    In order to further the purposes of this Compact, member
11states agree not to offer tax breaks to a company located in
12another member state as an inducement to change the company's
13location to the offering member state.
14
ARTICLE III. MEMBERSHIP
15    The states of Illinois, Indiana, and Wisconsin may become
16members of this Compact by enacting the Compact. Any member
17state may withdraw from this Compact in the same manner in
18which they entered into the Compact.
19
ARTICLE IV. EFFECT
20    This Compact shall take effect when at least two of the
21three eligible member states become a member of the Compact.
22The Compact shall apply only to member states and shall not
23apply to businesses located in a state that is eligible to
24become a member state but has not done so.
25
ARTICLE V. DEFINITIONS
26    "Tax break" means any tax credit, reduction, or elimination

 

 

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1specifically applied to a particular company, so that the
2company's state tax liability is less than the state tax
3liability of other similarly situated businesses in that state.