101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB2502

 

Introduced 1/28/2020, by Sen. Ram Villivalam

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Phase Out Corporate Giveaways 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 not to offer or provide any company-specific tax incentive or company-specific grant to any entity for a corporate headquarters, manufacturing facility, office space, or other real estate development located in any other member state as an inducement for the corporate headquarters, manufacturing facility, office space, or other real estate development to relocate to the offering member state. Defines terms. Excludes: (1) workforce development grants that train employees; (2) company-specific tax incentives or company-specific grants from local governments; and (3) specified company-specific tax incentives or company-specific grants related to companies already within the member state. Creates the Phase Out Corporate Giveaways Board and provides for membership and meeting requirements. Provides for withdrawal of a member state with a 6-month written notice to each member state's chief executive officer. Contains construction and severability provisions.


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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 Phase
5Out Corporate Giveaways Act.
 
6    Section 5. Execution of compact. The Phase Out Corporate
7Giveaways 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
"PHASE OUT CORPORATE GIVEAWAYS 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:
18    "Corporate giveaway" means any company-specific grant or
19company-specific tax incentive.
20    "Company-specific grant" means any disbursement of funds
21via property, cash, or deferred tax liability by the state
22government to a particular company.

 

 

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1    "Company-specific tax incentive" means any change in the
2general tax rate or valuation offered or presented to a
3specific company that is not available to other
4similarly-situated companies.
5    "Located in any other member state" means physically
6located in another member state, whether or not the company has
7other property in the member state.
8    "Member state" means any state or the District of Columbia
9that has entered into this compact.
10
ARTICLE 3: FINDINGS
11    The member states find that:
12        (1) corporate giveaways are among the least effective
13    uses of taxpayer dollars to create and maintain jobs;
14        (2) local and state leaders are in a prisoners' dilemma
15    where it is best for all to create a level playing field
16    for all employers without any corporate giveaways, but each
17    level of government has an incentive to subsidize a
18    company, which generates a race to the bottom;
19        (3) governments should attract and retain companies
20    based on general conditions (including, but not limited to,
21    modern infrastructure, an educated workforce, a clean
22    environment, and a favorable tax and regulatory climate)
23    that are not based on a specific grant for a particular
24    company;
25        (4) corporate giveaways fuel business inequality as
26    only the largest businesses receive the vast majority of

 

 

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1    these funds;
2        (5) a reasonable first step in phasing out corporate
3    giveaways is an anti-poaching agreement among state
4    governments prohibiting state company-specific tax
5    incentives and state company-specific grants as an
6    inducement for entities to relocate existing facilities;
7    and
8        (6) creating a national board of gubernatorial
9    appointees charged with finding consensus around
10    improvements to this compact over time in a phased approach
11    will assist states in escaping from the prisoners' dilemma
12    and implementing a level playing field for all employers.
13
ARTICLE 4: POACHING PROHIBITION
14    Each member state is prohibited from offering or providing
15any company-specific tax incentive or company-specific grant
16to any entity for a corporate headquarters, manufacturing
17facility, office space, or other real estate development
18located in any other member state as an inducement for the
19corporate headquarters, manufacturing facility, office space,
20or other real estate development to relocate to the offering
21member state.
22
ARTICLE 5: EXCLUSIONS
23    The following are not subject to this compact:
24        (1) Workforce development grants that train employees
25        (2) Company-specific tax incentives or
26    company-specific grants from local governments.

 

 

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1        (3) State company-specific tax incentives or state
2    company-specific grants to entities with corporate
3    headquarters, office space, manufacturing facilities, or
4    real estate developments already located within its own
5    state with the goal to keep within the member state or
6    expand within the member state the in-state facility or
7    development.
8
ARTICLE 6: WITHDRAWAL
9    Any member state may withdraw from this compact with
106-months' written notice to the chief executive officer of
11every other member state to the compact.
12
ARTICLE 7: ENFORCEMENT
13    The attorney general of each member state shall enforce
14this compact.
15    A taxpaying resident of any member state has standing in
16the courts of any member state to require the attorney general
17of that member state to enforce this compact.
18
ARTICLE 8: BOARD
19    The Phase Out Corporate Giveaways Board is established upon
20the second member state entering into this compact. Each chief
21executive officer of each member state shall appoint one member
22to the Board. The Board shall accept appointees from non-member
23states that wish to appoint a member of the Board. The purpose
24of the Board is to publish suggested revisions to this compact
25in December of every year to continue to phase out those forms
26of corporate giveaways that the Board finds reasonable to

 

 

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1include as suggested revisions to the compact for member states
2to consider implementing. The Board shall convene at least
3annually, elect officers from its membership, establish rules
4and procedures for its governance, and publish a report in
5December of every year that includes suggested revisions and
6improvements to this compact. The Board shall collect testimony
7from all interested parties, including organizations and
8associations representing state legislators, taxpayers, and
9subject matter experts, on how the compact can be improved and
10strengthened.
11
ARTICLE 9: CONSTRUCTION AND SEVERABILITY
12    This compact shall be liberally construed so as to
13effectuate its purposes.
14    If any provision of this compact, or the applicability of
15any provision of this compact to any government, agency, person
16or circumstance, is declared in a final judgment by a court of
17competent jurisdiction to be contrary to the Constitution of
18the United States or is otherwise held invalid, the validity of
19the remainder of this compact and the applicability of the
20remainder of this compact to any government, agency, person, or
21circumstance shall not be affected.
22    If this compact is held to be contrary to the constitution
23of any member state, the compact shall remain in full force and
24effect as to the remaining member states and in full force and
25effect as to the affected member state as to all severable
26matters."