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House File 2095 - IntroducedA Bill ForAn Act 1creating a compact with certain other states to phase
2out corporate welfare.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 28O.1 Compact to phase out
2corporate welfare.
31. This chapter may be cited as the “Compact to Phase Out
4Corporate Welfare”.
52. This compact to phase out corporate welfare shall be
6entered into with any state and the District of Columbia if a
7state or the District of Columbia enacts enabling laws and this
8compact in substantially the following form:
93. Article 1 — Membership. Any state and the District of
10Columbia may become a member of this compact.
114. Article 2 — Definitions. As used in this section,
12unless the context otherwise requires:
13a. “Company-specific grant” means any disbursement of funds
14by the state to a particular company via property, cash, or
15deferred tax liability.
16b. “Company-specific tax incentive” means any change in
17the general tax rate or tax valuation offered or presented to
18a specific company that is not available to other similarly
19situated companies, including any tax incentive that is part of
20a special agreement negotiated with an official of the state
21government.
22c. “Corporate welfare” means any company-specific or
23industry-specific disbursement of funds by a state or local
24government to a particular company or a particular industry in
25the form of property, cash, deferred tax liability, or reduced
26tax liability.
27d. “Located in any other member state” means any office
28space, manufacturing facility, or company headquarters that is
29physically located in another member state, whether or not the
30company has additional real property in the member state.
31e. “Member state” means any state or the District of
32Columbia that has enacted this compact.
335. Article 3 — Findings. The member states find all of the
34following:
35a. Corporate welfare as an economic development policy is
-1-1among the least effective uses of taxpayer dollars.
2b. Local and state leaders are in a prisoner’s dilemma
3where it is in all member states’ interest to stop corporate
4welfare altogether and to create a level playing field for
5all employers; however, each level of government has the
6incentive to subsidize companies through corporate welfare
7which generates a race to the bottom.
8c. Member states’ cooperation to phase out all forms of
9corporate welfare, both company-specific and industry-specific,
10is required to free government leaders from the prisoner’s
11dilemma.
12d. While it will take years to build a national consensus to
13phase out all forms of corporate welfare, member states must
14begin to phase out the most egregious and destructive forms of
15corporate welfare as soon as practical where member states can
16reach an agreement to do so.
17e. Companies should grow and potentially relocate to other
18states based on the general condition of the state, including
19but not limited to more modern infrastructure, an educated
20workforce, a clean environment, and a favorable tax and
21regulatory climate, and not based on corporate welfare.
22f. Company-specific tax incentives and company-specific
23grants fuel business inequality as only the largest businesses
24tend to receive the company-specific tax incentives and
25company-specific grants.
26g. A national board of appointees from member states is
27created to come to a consensus and to draft improvements to
28this compact.
29h. This compact shall utilize a collaborative approach
30to build a national consensus for a better, fairer economic
31development policy for all member states.
326. Article 4 — Corporate welfare offered to companies in
33other member states.
34a. Each member state shall agree to refrain from offering or
35providing any company-specific tax incentives, company-specific
-2-1grants, or other distribution of funds prohibited under this
2compact to any company currently located in any other member
3state.
4b. Each member state shall agree to refrain from offering
5or providing funds for corporate headquarters, manufacturing
6facilities, office space, or other real estate developments for
7any company currently located in any other member state if that
8facility, headquarters, or office space will relocate to the
9offering member state.
107. Article 5 — Exclusions.
11a. Workforce development grants that are used by companies
12to fund employee training are not subject to this compact.
13b. Company-specific grants awarded before the effective date
14of this compact shall not be subject to this compact unless any
15changes to the terms and conditions of the grant occur on or
16after the effective date of this compact.
178. Article 6 — Withdrawal. Any member state may withdraw
18from this compact with six months advance written notice to the
19chief executive officer of every other member state.
209. Article 7 — Enforcement.
21a. The chief law enforcement officer of each member state
22shall enforce this compact.
23b. A taxpaying resident of any member state has standing in
24the courts of any member state to file suit asking the court to
25require the chief law enforcement officer of that member state
26to enforce this compact.
2710. Article 8 — National board of states to determine next
28steps. A board of member states is established. The chief
29executive officer of each member state shall appoint one
30member to the board. The board shall accept appointees from
31nonmember states. The board shall convene at least annually,
32elect officers from the board’s membership, establish rules and
33procedures for the board’s governance, and publish an annual
34report in December that suggests improvements to this compact.
35The board shall seek input from member states, organizations
-3-1and associations representing state legislators, taxpayers, and
2subject matter experts on improvements to the compact.
311. Article 9 — Construction and severability.
4a. This compact shall be liberally construed to effectuate
5its purposes. If any phrase, clause, sentence, or provision of
6this compact is declared by a court of competent jurisdiction
7to be contrary to the Constitution of the United States, or
8otherwise invalid, the remaining provisions of this compact
9shall not be affected.
10b. If this compact is held to be contrary to the
11constitution of any member state, the compact shall remain in
12full force and effect as to the remaining member states and in
13full force and effect as to the affected member state as to all
14severable provisions.
15EXPLANATION
16The inclusion of this explanation does not constitute agreement with
17the explanation’s substance by the members of the general assembly.
18This bill creates a compact with certain other states to
19phase out corporate welfare.
20The bill defines “corporate welfare” as any company-specific
21or industry-specific disbursement of funds by a state or local
22government to a particular company or a particular industry in
23the form of property, cash, deferred tax liability, or reduced
24tax liability.
25The bill provides that any state and the District of Columbia
26may become a member of the compact and that member states need
27to cooperate to phase out corporate welfare for the reasons
28outlined in the bill.
29The bill requires each member state to agree to refrain from
30offering or providing corporate welfare to a company currently
31located in any other member state. Each member state must also
32agree to refrain from offering or providing funds for corporate
33headquarters, manufacturing facilities, office space, or other
34real estate developments for any company currently located
35in any other member state if that manufacturing facility,
-4-1headquarters, or office space will relocate to the member state
2offering the incentives.
3The bill excludes workforce development grants used by
4companies to fund employee training and grants awarded to
5companies before the effective date of the compact.
6The bill provides that any member state may withdraw from
7the compact with six months prior written notice to the chief
8executive officer of every other member state.
9The bill requires the chief law enforcement officer of each
10member state to enforce the compact. The bill provides that
11any taxpaying resident of any member state has standing in the
12courts of any member state to file suit to ask the court to
13require the chief law enforcement officer of that member state
14to enforce the compact.
15The bill establishes a board of member states. The
16appointees to the board and the duties of the board are
17outlined in the bill.
-5-ko/jh
2out corporate welfare.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 28O.1 Compact to phase out
2corporate welfare.
31. This chapter may be cited as the “Compact to Phase Out
4Corporate Welfare”.
52. This compact to phase out corporate welfare shall be
6entered into with any state and the District of Columbia if a
7state or the District of Columbia enacts enabling laws and this
8compact in substantially the following form:
93. Article 1 — Membership. Any state and the District of
10Columbia may become a member of this compact.
114. Article 2 — Definitions. As used in this section,
12unless the context otherwise requires:
13a. “Company-specific grant” means any disbursement of funds
14by the state to a particular company via property, cash, or
15deferred tax liability.
16b. “Company-specific tax incentive” means any change in
17the general tax rate or tax valuation offered or presented to
18a specific company that is not available to other similarly
19situated companies, including any tax incentive that is part of
20a special agreement negotiated with an official of the state
21government.
22c. “Corporate welfare” means any company-specific or
23industry-specific disbursement of funds by a state or local
24government to a particular company or a particular industry in
25the form of property, cash, deferred tax liability, or reduced
26tax liability.
27d. “Located in any other member state” means any office
28space, manufacturing facility, or company headquarters that is
29physically located in another member state, whether or not the
30company has additional real property in the member state.
31e. “Member state” means any state or the District of
32Columbia that has enacted this compact.
335. Article 3 — Findings. The member states find all of the
34following:
35a. Corporate welfare as an economic development policy is
-1-1among the least effective uses of taxpayer dollars.
2b. Local and state leaders are in a prisoner’s dilemma
3where it is in all member states’ interest to stop corporate
4welfare altogether and to create a level playing field for
5all employers; however, each level of government has the
6incentive to subsidize companies through corporate welfare
7which generates a race to the bottom.
8c. Member states’ cooperation to phase out all forms of
9corporate welfare, both company-specific and industry-specific,
10is required to free government leaders from the prisoner’s
11dilemma.
12d. While it will take years to build a national consensus to
13phase out all forms of corporate welfare, member states must
14begin to phase out the most egregious and destructive forms of
15corporate welfare as soon as practical where member states can
16reach an agreement to do so.
17e. Companies should grow and potentially relocate to other
18states based on the general condition of the state, including
19but not limited to more modern infrastructure, an educated
20workforce, a clean environment, and a favorable tax and
21regulatory climate, and not based on corporate welfare.
22f. Company-specific tax incentives and company-specific
23grants fuel business inequality as only the largest businesses
24tend to receive the company-specific tax incentives and
25company-specific grants.
26g. A national board of appointees from member states is
27created to come to a consensus and to draft improvements to
28this compact.
29h. This compact shall utilize a collaborative approach
30to build a national consensus for a better, fairer economic
31development policy for all member states.
326. Article 4 — Corporate welfare offered to companies in
33other member states.
34a. Each member state shall agree to refrain from offering or
35providing any company-specific tax incentives, company-specific
-2-1grants, or other distribution of funds prohibited under this
2compact to any company currently located in any other member
3state.
4b. Each member state shall agree to refrain from offering
5or providing funds for corporate headquarters, manufacturing
6facilities, office space, or other real estate developments for
7any company currently located in any other member state if that
8facility, headquarters, or office space will relocate to the
9offering member state.
107. Article 5 — Exclusions.
11a. Workforce development grants that are used by companies
12to fund employee training are not subject to this compact.
13b. Company-specific grants awarded before the effective date
14of this compact shall not be subject to this compact unless any
15changes to the terms and conditions of the grant occur on or
16after the effective date of this compact.
178. Article 6 — Withdrawal. Any member state may withdraw
18from this compact with six months advance written notice to the
19chief executive officer of every other member state.
209. Article 7 — Enforcement.
21a. The chief law enforcement officer of each member state
22shall enforce this compact.
23b. A taxpaying resident of any member state has standing in
24the courts of any member state to file suit asking the court to
25require the chief law enforcement officer of that member state
26to enforce this compact.
2710. Article 8 — National board of states to determine next
28steps. A board of member states is established. The chief
29executive officer of each member state shall appoint one
30member to the board. The board shall accept appointees from
31nonmember states. The board shall convene at least annually,
32elect officers from the board’s membership, establish rules and
33procedures for the board’s governance, and publish an annual
34report in December that suggests improvements to this compact.
35The board shall seek input from member states, organizations
-3-1and associations representing state legislators, taxpayers, and
2subject matter experts on improvements to the compact.
311. Article 9 — Construction and severability.
4a. This compact shall be liberally construed to effectuate
5its purposes. If any phrase, clause, sentence, or provision of
6this compact is declared by a court of competent jurisdiction
7to be contrary to the Constitution of the United States, or
8otherwise invalid, the remaining provisions of this compact
9shall not be affected.
10b. If this compact is held to be contrary to the
11constitution of any member state, the compact shall remain in
12full force and effect as to the remaining member states and in
13full force and effect as to the affected member state as to all
14severable provisions.
15EXPLANATION
16The inclusion of this explanation does not constitute agreement with
17the explanation’s substance by the members of the general assembly.
18This bill creates a compact with certain other states to
19phase out corporate welfare.
20The bill defines “corporate welfare” as any company-specific
21or industry-specific disbursement of funds by a state or local
22government to a particular company or a particular industry in
23the form of property, cash, deferred tax liability, or reduced
24tax liability.
25The bill provides that any state and the District of Columbia
26may become a member of the compact and that member states need
27to cooperate to phase out corporate welfare for the reasons
28outlined in the bill.
29The bill requires each member state to agree to refrain from
30offering or providing corporate welfare to a company currently
31located in any other member state. Each member state must also
32agree to refrain from offering or providing funds for corporate
33headquarters, manufacturing facilities, office space, or other
34real estate developments for any company currently located
35in any other member state if that manufacturing facility,
-4-1headquarters, or office space will relocate to the member state
2offering the incentives.
3The bill excludes workforce development grants used by
4companies to fund employee training and grants awarded to
5companies before the effective date of the compact.
6The bill provides that any member state may withdraw from
7the compact with six months prior written notice to the chief
8executive officer of every other member state.
9The bill requires the chief law enforcement officer of each
10member state to enforce the compact. The bill provides that
11any taxpaying resident of any member state has standing in the
12courts of any member state to file suit to ask the court to
13require the chief law enforcement officer of that member state
14to enforce the compact.
15The bill establishes a board of member states. The
16appointees to the board and the duties of the board are
17outlined in the bill.
-5-ko/jh