HB6190 97TH GENERAL ASSEMBLY

LRB097 21380 HLH 69313 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB6190

Introduced , by Rep. Constance A. Howard

SYNOPSIS AS INTRODUCED:

New Act

Creates the Tri-State Metro Area Economic Development Interstate Compact Act. Provides that member states agree not to offer tax breaks to a company located in another member state as an inducement to change the company's location to the offering member state.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning economic development.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Tri-State Metro Area Economic Development Interstate Compact Act.

Section 3. Findings. The General Assembly finds and declares that:

(1) In 2011 and 2012, the Organisation for Economic Cooperation and Development, a 50-year-old Paris-based international institution dedicated to promoting policies that will improve the economic and social well-being of people around the world, conducted its first-ever study of a regional economy in the United States and issued a full and vigorous analysis of the economy in the Chicago metropolitan region.

(2) The report included the following language concerning the economic development pitfalls and challenges facing the Tri-State region: "Several recent examples of inter-state squabbling over finite (and diminishing) public resources or over business decisions to locate in a particular part of the tri-state region point to the need to "take a step back" to integrate the true functionality of the region into planning for workforce development and economic development more generally. Empirical evidence in the U.S. and elsewhere demonstrates that trying to increase the number of firms in a limited geographical area by luring them away from nearby localities in the same functional region via tax incentives is self-defeating in the long run, because it invites retaliation, and some of the firms involved may move to greener pastures when the tax breaks terminate, or may have moved to the region anyway even without the tax breaks. It is preferable by far to attract firms by showing that a pool of talent and organisations exists in the region that can help a newcomer exploit it. In the Tri-State region, this petty, predatory zero-sum, intra-regional, competitive approach to economic growth and job-creation remains all too common."

Section 5. Tri-State Metro Area Economic Development Interstate Compact. The State of Illinois enters into the Tri-State Metro Area Economic Development Interstate Compact in substantially the following form with all other states joining the Compact:

ARTICLE I. PURPOSE

The Tri-State Metro Area Economic Development Interstate Compact is established to shift the state economic development strategies of the three states in our shared region away from zero-sum tax breaks for large firms and towards a universal policy that improves the business climate for all firms and individuals in each of the three states.

The purpose of this Compact is to recognize that there is no net benefit to the region from inducing a business to move from one state in the region to another state in the region because of a special tax break or other specific incentive offered by a state government.

ARTICLE II. PROHIBITED ACTIVITIES

In order to further the purposes of this Compact, member states agree not to offer tax breaks to a company located in another member state as an inducement to change the company's location to the offering member state.

ARTICLE III. MEMBERSHIP

The states of Illinois, Indiana, and Wisconsin may become members of this Compact by enacting the Compact. Any member state may withdraw from this Compact in the same manner in which they entered into the Compact.

ARTICLE IV. EFFECT

This Compact shall take effect when at least two of the three eligible member states become a member of the Compact. The Compact shall apply only to member states and shall not apply to businesses located in a state that is eligible to become a member state but has not done so.

ARTICLE V. DEFINITIONS

"Tax break" means any tax credit, reduction, or elimination specifically applied to a particular company, so that the company's state tax liability is less than the state tax liability of other similarly situated businesses in that state.