H.F. 598 Section 1. NEW SECTION . 15.122 Compact to phase out 1 corporate giveaways. 2 1. This section may be cited as the “Phase Out Corporate 3 Giveaways Act” . 4 2. This compact to phase out corporate giveaways 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 by enacting this 10 compact. 11 4. Article 2 —— Definitions. As used in this section, 12 unless the context otherwise requires: 13 a. “Company-specific grant” means any disbursement of funds 14 by the state to a particular company via property, cash, or 15 deferred tax liability. 16 b. “Company-specific tax incentive” means any change in 17 the general tax rate or tax valuation offered or presented to 18 a specific company that is not available to other similarly 19 situated companies. 20 c. “Corporate giveaway” means any company-specific grant or 21 company-specific tax incentive. 22 d. “Located in any other member state” means any office 23 space, manufacturing facility, or company headquarters that is 24 physically located in another member state, whether or not the 25 company has additional real property in the member state. 26 e. “Member state” means any state or the District of 27 Columbia that has enacted this compact. 28 5. Article 3 —— Findings. The member states find all of the 29 following: 30 a. Corporate giveaways are among the least effective uses of 31 taxpayer dollars to create and maintain jobs. 32 b. Local and state leaders are in a prisoners’ dilemma 33 where it is in all member states’ interest to create a 34 level playing field for all employers without any corporate 35 -1- LSB 2500YH (3) 89 ko/jh 1/ 5

H.F. 598 giveaways; however, each level of government has the incentive 1 to subsidize companies which generates a race to the bottom. 2 c. States should attract and retain companies based on 3 general conditions, including but not limited to more modern 4 infrastructure, an educated workforce, a clean environment, 5 and a favorable tax and regulatory climate, and not based on 6 company-specific grants. 7 d. Corporate giveaways fuel business inequality as only the 8 largest businesses receive the vast majority of these funds. 9 e. A reasonable first step in phasing out corporate 10 giveaways is an anti-poaching agreement among states that 11 prohibits a state from offering company-specific tax incentives 12 and company-specific grants as an inducement for a company to 13 relocate to that state. 14 f. Creating a national board of individuals appointed by 15 member states’ chief executive officers who are charged with 16 coming to a consensus regarding ongoing improvements to this 17 compact will assist states in escaping the prisoners’ dilemma 18 and in implementing a level playing field for all employers. 19 6. Article 4 —— Poaching prohibition. Each member state is 20 prohibited from offering or providing any company-specific tax 21 incentives or company-specific grants to any company currently 22 located in any other member state to induce that company to 23 relocate corporate headquarters, manufacturing facilities, 24 office space, or other real estate developments to the member 25 state offering the incentive or grant. 26 7. Article 5 —— Exclusions. The following shall not be 27 subject to this compact: 28 a. Workforce development grants that are used by companies 29 to fund employee training. 30 b. Company-specific tax incentives or company-specific 31 grants offered by county or local governments. 32 c. Company-specific tax incentives and company-specific 33 grants offered by a state to a company that has a corporate 34 headquarters, manufacturing facility, office space, or other 35 -2- LSB 2500YH (3) 89 ko/jh 2/ 5

H.F. 598 real estate development already located in the state as an 1 inducement to maintain or expand the corporate headquarters, 2 manufacturing facility, office space, or other real estate 3 development within the state. 4 8. Article 6 —— Withdrawal. Any member state may withdraw 5 from this compact with six months advance written notice to the 6 chief executive officer of every other member state. 7 9. Article 7 —— Enforcement. 8 a. The chief law enforcement officer of each member state 9 shall enforce this compact. 10 b. A taxpaying resident of any member state has standing in 11 the courts of any member state to file suit asking the court to 12 require the chief law enforcement officer of that member state 13 to enforce this compact. 14 10. Article 8 —— Board. The phase out corporate giveaways 15 board is established upon the second member state entering into 16 this compact. The chief executive officer of each member state 17 shall appoint one member to the board. The board shall accept 18 appointees from nonmember states. The board shall convene at 19 least annually, elect officers from the board’s membership, 20 establish rules and procedures for the board’s governance, 21 and publish an annual report in December that suggests 22 improvements to this compact. The board shall seek input from 23 member states, organizations and associations representing 24 state legislators, taxpayers, and subject matter experts on 25 improvements to the compact. 26 11. Article 9 —— Construction and severability. 27 a. This compact shall be liberally construed to effectuate 28 its purposes. If any provision of this compact, or the 29 applicability of any provision of this compact to any 30 government, agency, person, or circumstance is declared 31 by a court of competent jurisdiction to be contrary to the 32 Constitution of the United States, or otherwise invalid, the 33 remaining provisions of this compact and the applicability of 34 the remaining provisions to any government, agency, person, or 35 -3- LSB 2500YH (3) 89 ko/jh 3/ 5

H.F. 598 circumstance shall not be affected. 1 b. If this compact is held to be contrary to the 2 constitution of any member state, the compact shall remain in 3 full force and effect as to the remaining member states and in 4 full force and effect as to the affected member state as to all 5 severable provisions. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill creates a compact with certain other states to 10 phase out corporate giveaways. 11 The bill defines “corporate giveaways” as any 12 company-specific grant or company-specific tax incentive. 13 “Company-specific grant” and “company-specific tax incentive” 14 are also defined in the bill. 15 The bill provides that any state and the District of Columbia 16 may become a member of the compact and that member states must 17 cooperate to phase out corporate giveaways for the reasons 18 outlined in the bill. 19 The bill requires each member state to agree to refrain 20 from offering or providing corporate giveaways to a company 21 currently located in any other member state. Each member state 22 must also agree to refrain from offering corporate giveaways 23 for corporate headquarters, manufacturing facilities, office 24 space, or other real estate developments to any company 25 currently located in any other member state to induce that 26 company to relocate to the member state offering the giveaways. 27 The bill excludes workforce development grants; 28 company-specific tax incentives and company-specific grants 29 offered by county or local governments; and company-specific 30 tax incentives and company-specific grants offered by a state 31 to a company that has a corporate headquarters, manufacturing 32 facility, office space, or other real estate development 33 already located in the state as an inducement to maintain or 34 expand the corporate headquarters, manufacturing facility, 35 -4- LSB 2500YH (3) 89 ko/jh 4/ 5

H.F. 598 office space, or other real estate development within the 1 state. 2 The bill provides that any member state may withdraw from 3 the compact with six months prior written notice to the chief 4 executive officer of every other member state. 5 The bill requires the chief law enforcement officer of each 6 member state to enforce the compact. The bill provides that 7 any taxpaying resident of any member state has standing in the 8 courts of any member state to file suit to ask the court to 9 require the chief law enforcement officer of that member state 10 to enforce the compact. 11 The bill establishes a board of member states. The 12 appointees to the board and the duties of the board are 13 outlined in the bill. 14 -5- LSB 2500YH (3) 89 ko/jh 5/ 5