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1 | AN ACT concerning State government.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||
5 | Company-Specific Subsidy Interstate Compact Act. | ||||||||||||||||||||||||
6 | Section 5. Execution of compact. The Company-Specific | ||||||||||||||||||||||||
7 | Subsidy Interstate Compact is hereby enacted into law and | ||||||||||||||||||||||||
8 | entered into with any state or the District of Columbia which | ||||||||||||||||||||||||
9 | legally 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 | ||||||||||||||||||||||||
14 | may become a member state of this compact by enacting this | ||||||||||||||||||||||||
15 | compact. | ||||||||||||||||||||||||
16 | ARTICLE 2: DEFINITIONS | ||||||||||||||||||||||||
17 | As used in this compact: |
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1 | "Company-specific grant" means a disbursement of funds by | ||||||
2 | property, cash, or deferred tax liability by the state | ||||||
3 | government or any subdivision of the state government to a | ||||||
4 | particular company. | ||||||
5 | "Company-specific subsidies" means company-specific grants | ||||||
6 | or company-specific tax incentives. | ||||||
7 | "Company-specific tax incentive" means a change in the | ||||||
8 | general tax rate or valuation offered or presented to a | ||||||
9 | specific company that is not available to other | ||||||
10 | similarly-situated companies, including, but not limited to, a | ||||||
11 | tax incentive that is part of a special agreement negotiated | ||||||
12 | with an official of the state or an official of any subdivision | ||||||
13 | of the state government. | ||||||
14 | "Workforce development grants" means grants that train | ||||||
15 | employees.
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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;
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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;
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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;
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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;
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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;
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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 | ||||||
16 | subsidies for companies currently located in or considering | ||||||
17 | locating in the member state, including, but not limited to, | ||||||
18 | for corporate headquarters, manufacturing facilities, office | ||||||
19 | space, or other real estate developments. | ||||||
20 | ARTICLE 5: EXCLUSIONS | ||||||
21 | Existing company-specific subsidies are not impacted by | ||||||
22 | this agreement, since this agreement is not retroactive, except |
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1 | that any changes to the terms, including renewals or | ||||||
2 | reenactments, of any existing company-specific subsidies are | ||||||
3 | to be considered new company-specific subsidies and not | ||||||
4 | permitted under this agreement.
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5 | Workforce development grants are not subject to this | ||||||
6 | agreement since the company receiving the grant may benefit, | ||||||
7 | but the employees receiving the training are the largest | ||||||
8 | beneficiary.
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9 | ARTICLE 6: WITHDRAWAL
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10 | A member state may withdraw from this agreement with | ||||||
11 | 6-months' written notice to the chief executive officer of | ||||||
12 | every other member state to the agreement. | ||||||
13 | ARTICLE 7: BOARD | ||||||
14 | The Interstate Company-Specific Subsidy Board is | ||||||
15 | established upon the second member state entering into this | ||||||
16 | compact. Each member state shall appoint 5 members to the | ||||||
17 | Board: one from the chief executive officer; one each from the | ||||||
18 | majority leader of each legislative chamber; and one each from | ||||||
19 | the minority leader of each legislative chamber. If a member | ||||||
20 | state does not have a bicameral legislature, then that member | ||||||
21 | state shall determine how the 4 appointments by its legislative | ||||||
22 | leaders shall be made. The Board shall convene at least |
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1 | annually, elect officers from its membership, and establish | ||||||
2 | rules and procedures for its governance. | ||||||
3 | The purpose of the Board is to determine how this agreement | ||||||
4 | can be improved and strengthened by collecting testimony from | ||||||
5 | all interested parties, including representatives of member | ||||||
6 | states; organizations and associations representing state | ||||||
7 | legislators; taxpayers; and subject matter experts. The Board | ||||||
8 | may draft and disseminate suggested revisions to this agreement | ||||||
9 | from time to time.
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