H.F. 2095 Section 1. NEW SECTION . 28O.1 Compact to phase out 1 corporate welfare. 2 1. This chapter may be cited as the “Compact to Phase Out 3 Corporate Welfare” . 4 2. This compact to phase out corporate welfare shall be 5 entered into with any state and the District of Columbia if a 6 state or the District of Columbia enacts enabling laws and this 7 compact in substantially the following form: 8 3. Article 1 —— Membership. Any state and the District of 9 Columbia may become a member of this compact. 10 4. Article 2 —— Definitions. As used in this section, 11 unless the context otherwise requires: 12 a. “Company-specific grant” means any disbursement of funds 13 by the state to a particular company via property, cash, or 14 deferred tax liability. 15 b. “Company-specific tax incentive” means any change in 16 the general tax rate or tax valuation offered or presented to 17 a specific company that is not available to other similarly 18 situated companies, including any tax incentive that is part of 19 a special agreement negotiated with an official of the state 20 government. 21 c. “Corporate welfare” means any company-specific or 22 industry-specific disbursement of funds by a state or local 23 government to a particular company or a particular industry in 24 the form of property, cash, deferred tax liability, or reduced 25 tax liability. 26 d. “ Located in any other member state” means any office 27 space, manufacturing facility, or company headquarters that is 28 physically located in another member state, whether or not the 29 company has additional real property in the member state. 30 e. “Member state” means any state or the District of 31 Columbia that has enacted this compact. 32 5. Article 3 —— Findings. The member states find all of the 33 following: 34 a. Corporate welfare as an economic development policy is 35 -1- LSB 5764YH (3) 88 ko/jh 1/ 5

H.F. 2095 among the least effective uses of taxpayer dollars. 1 b. Local and state leaders are in a prisoner’s dilemma 2 where it is in all member states’ interest to stop corporate 3 welfare altogether and to create a level playing field for 4 all employers; however, each level of government has the 5 incentive to subsidize companies through corporate welfare 6 which generates a race to the bottom. 7 c. Member states’ cooperation to phase out all forms of 8 corporate welfare, both company-specific and industry-specific, 9 is required to free government leaders from the prisoner’s 10 dilemma. 11 d. While it will take years to build a national consensus to 12 phase out all forms of corporate welfare, member states must 13 begin to phase out the most egregious and destructive forms of 14 corporate welfare as soon as practical where member states can 15 reach an agreement to do so. 16 e. Companies should grow and potentially relocate to other 17 states based on the general condition of the state, including 18 but not limited to more modern infrastructure, an educated 19 workforce, a clean environment, and a favorable tax and 20 regulatory climate, and not based on corporate welfare. 21 f. Company-specific tax incentives and company-specific 22 grants fuel business inequality as only the largest businesses 23 tend to receive the company-specific tax incentives and 24 company-specific grants. 25 g. A national board of appointees from member states is 26 created to come to a consensus and to draft improvements to 27 this compact. 28 h. This compact shall utilize a collaborative approach 29 to build a national consensus for a better, fairer economic 30 development policy for all member states. 31 6. Article 4 —— Corporate welfare offered to companies in 32 other member states. 33 a. Each member state shall agree to refrain from offering or 34 providing any company-specific tax incentives, company-specific 35 -2- LSB 5764YH (3) 88 ko/jh 2/ 5

H.F. 2095 grants, or other distribution of funds prohibited under this 1 compact to any company currently located in any other member 2 state. 3 b. Each member state shall agree to refrain from offering 4 or providing funds for corporate headquarters, manufacturing 5 facilities, office space, or other real estate developments for 6 any company currently located in any other member state if that 7 facility, headquarters, or office space will relocate to the 8 offering member state. 9 7. Article 5 —— Exclusions. 10 a. Workforce development grants that are used by companies 11 to fund employee training are not subject to this compact. 12 b. Company-specific grants awarded before the effective date 13 of this compact shall not be subject to this compact unless any 14 changes to the terms and conditions of the grant occur on or 15 after the effective date of this compact. 16 8. Article 6 —— Withdrawal. Any member state may withdraw 17 from this compact with six months advance written notice to the 18 chief executive officer of every other member state. 19 9. Article 7 —— Enforcement. 20 a. The chief law enforcement officer of each member state 21 shall enforce this compact. 22 b. A taxpaying resident of any member state has standing in 23 the courts of any member state to file suit asking the court to 24 require the chief law enforcement officer of that member state 25 to enforce this compact. 26 10. Article 8 —— National board of states to determine next 27 steps. A board of member states is established. The chief 28 executive officer of each member state shall appoint one 29 member to the board. The board shall accept appointees from 30 nonmember states. The board shall convene at least annually, 31 elect officers from the board’s membership, establish rules and 32 procedures for the board’s governance, and publish an annual 33 report in December that suggests improvements to this compact. 34 The board shall seek input from member states, organizations 35 -3- LSB 5764YH (3) 88 ko/jh 3/ 5

H.F. 2095 and associations representing state legislators, taxpayers, and 1 subject matter experts on improvements to the compact. 2 11. Article 9 —— Construction and severability. 3 a. This compact shall be liberally construed to effectuate 4 its purposes. If any phrase, clause, sentence, or provision of 5 this compact is declared by a court of competent jurisdiction 6 to be contrary to the Constitution of the United States, or 7 otherwise invalid, the remaining provisions of this compact 8 shall not be affected. 9 b. If this compact is held to be contrary to the 10 constitution of any member state, the compact shall remain in 11 full force and effect as to the remaining member states and in 12 full force and effect as to the affected member state as to all 13 severable provisions. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill creates a compact with certain other states to 18 phase out corporate welfare. 19 The bill defines “corporate welfare” as any company-specific 20 or industry-specific disbursement of funds by a state or local 21 government to a particular company or a particular industry in 22 the form of property, cash, deferred tax liability, or reduced 23 tax liability. 24 The bill provides that any state and the District of Columbia 25 may become a member of the compact and that member states need 26 to cooperate to phase out corporate welfare for the reasons 27 outlined in the bill. 28 The bill requires each member state to agree to refrain from 29 offering or providing corporate welfare to a company currently 30 located in any other member state. Each member state must also 31 agree to refrain from offering or providing funds for corporate 32 headquarters, manufacturing facilities, office space, or other 33 real estate developments for any company currently located 34 in any other member state if that manufacturing facility, 35 -4- LSB 5764YH (3) 88 ko/jh 4/ 5

H.F. 2095 headquarters, or office space will relocate to the member state 1 offering the incentives. 2 The bill excludes workforce development grants used by 3 companies to fund employee training and grants awarded to 4 companies before the effective date of the compact. 5 The bill provides that any member state may withdraw from 6 the compact with six months prior written notice to the chief 7 executive officer of every other member state. 8 The bill requires the chief law enforcement officer of each 9 member state to enforce the compact. The bill provides that 10 any taxpaying resident of any member state has standing in the 11 courts of any member state to file suit to ask the court to 12 require the chief law enforcement officer of that member state 13 to enforce the compact. 14 The bill establishes a board of member states. The 15 appointees to the board and the duties of the board are 16 outlined in the bill. 17 -5- LSB 5764YH (3) 88 ko/jh 5/ 5