THE SENATE

S.B. NO.

2751

THIRTIETH LEGISLATURE, 2020

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to THE interstate COMPACT agreement to phase out corporate giveaways.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that corporate giveaways are among the least effective uses of taxpayer dollars to create and maintain jobs. Local and state leaders are in a "prisoners' dilemma" where it is best for all to create a level playing field for all employers without any corporate giveaways, but each level of government has an incentive to subsidize a company, generating a race to the bottom. Governments should attract and retain companies based on general conditions, including modern infrastructure, an educated workforce, a clean environment, and a favorable tax and regulatory climate, not based on a specific grant for a particular company.

The legislature further finds that corporate giveaways fuel business inequality as only the largest businesses receive the vast majority of these funds. A reasonable first step in phasing out corporate giveaways is an anti-poaching agreement among state governments prohibiting state company-specific tax incentives and state company-specific grants as an inducement for entities to relocate existing facilities. Additionally, creating a national board of gubernatorial appointees charged with finding consensus around improvements to this agreement over time in a phase approach will assist state and local governments in escaping from the prisoners' dilemma and implementing a level playing field for all employers.

Therefore, the purpose of this Act is to enact and enter into the Interstate Compact Agreement to Phase Out Corporate Giveaways.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

INTERSTATE COMPACT agreement to phase out corporate giveaways

   ‑1 Short title; purpose. This law shall be known and cited as the Interstate Compact Agreement to Phase Out Corporate Giveaways. The purpose of the compact is to phase out corporate giveaways in cooperation with compacting states.

   ‑2 Definitions. As used in this compact:

"Company-specific grant" is any disbursement of funds via property, cash, or deferred tax liability by the state or local government to a particular company.

"Company-specific tax incentive" is any change in the general tax rate or valuation offered or presented to a specific company that is not available to other similarly-situated companies.

"Corporate giveaway" means any company-specific or industry-specific disbursement of funds whether property, cash, or deferred or reduced tax liability by a state or local government to a particular company or industry.

"Located in any other member state" means any corporate headquarters, office space, manufacturing facility, or other real estate development that is physically located in another member state, whether or not the company has other property in the member state.

"Member state" means any state or the District of Columbia that has enacted a statute agreeing to this compact.

   ‑3 Anti-poaching prohibition. Each member state is prohibited from offering or providing 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.

   ‑4 Exclusions. Workforce development grants that train employees are not subject to this agreement. Company-specific tax incentives or company-specific grants from local governments are not subject to this agreement. State company-specific tax incentives or state company-specific grants to entities for corporate headquarters, office space, manufacturing facilities, or real estate developments located within its own state are not subject to this agreement.

   -5 Entry into compact; withdrawal. (a) This compact shall become effective at such time as it is adopted by two or more states.

(b) Any member state may withdraw from this agreement with six months' notice and shall do so in writing to the chief executive officer of every other member state to the agreement.

   -6 Enforcement. (a) The chief law enforcement officer of each member state shall enforce this compact.

(b) A taxpaying resident of any member state has standing in the courts of any member state to require the chief law enforcement officer of that member state to enforce this compact.

   -7 National board of the agreement to phase out corporate giveaways. (a) This agreement establishes a national board of the agreement to phase out corporate giveaways.

(b) The chief executive officer of each member state shall appoint one member to the board. The board shall accept appointees from non-member states that wish to appoint a member of the board.

(c) The purpose of the board is to publish suggested revisions and improvements to this agreement in December of every year to continue to phase out those forms of corporate giveaways that the board finds reasonable to include as suggested revisions to the agreement for member states to consider implementing.

(d) The board shall convene at least annually, elect officers from its membership, establish rules and procedures for its governance, and publish a report in December of every year that includes suggested revisions and improvements to this agreement. The board shall collect testimony from all interested parties, including organizations and associations representing state legislators, taxpayers, and subject matter experts on how the agreement can be improved and strengthened.

   -8 Liberal construction. This compact shall be liberally construed to effectuate its purpose. If any phrase, clause, sentence, or provision of this compact, or the applicability of any phrase, clause, sentence, or provision of this compact to any government, agency, person, or circumstance is declared in a final judgment by a court of competent jurisdiction to be contrary to the constitution of the United States or is otherwise held invalid, the validity of the remainder of this compact and the applicability of the remainder of this compact to any government, agency, person, or circumstance shall not be affected. If this compact is held to be contrary to the constitution of any member state, the compact shall remain in full force and effect as to the remaining member states and in full force and effect as to the affected member state as to all severable matters."


SECTION 3. This Act shall take effect upon its approval.

 

INTRODUCED BY:

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Report Title:

Interstate Compact Agreement to Phase Out Corporate Giveaways; Tax Incentives; Grants

 

Description:

Enacts and enters into the Interstate Compact Agreement to Phase Out Corporate Giveaways.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.