Delaware legislators are joining a campaign to phase out corporate relocation incentives by establishing an interstate compact.
The effort picked up steam aftersubsidy battles with other states that included the AmazonHQ2 process last year.
As of Tuesday, the legislation is filed in New York, Hawaii, Florida, Illinois, West Virginia and New Hampshire.
On Tuesday, the New Hampshire bill will be heard in the House Ways and Means Committee, marking the first time the concept has earned a committee hearing. (The New Hampshire bill establishes a commission to study the idea.)
The legislation would bring each state into a formal agreement with other states to Phase Out Corporate Giveaways.
According to a statement from Delaware House Democrats, there are two main provisions of the agreement. First, member states agree to end the practice of offering tax breaks to a facility located in another member state as an inducement to the company to move.
Second, member states participate in a national board of appointees to discuss and propose enhancements to the existing agreement for future consideration by each state.
“Giving companies state tax money in return for promises of jobs is terrible public policy. It merely feeds into the rat race that encourages companies to squeeze states for more and more tax dollars, rather than to spend those tax dollars for things like roads and schools which benefit everyone in our state,” said Rep. Paul Baumbach, D-Newark, the lead House sponsor of House Bill 288.
Bamback continued, “However, a state cannot unilaterally leave the rat race, since ‘everyone else is doing it.’ This legislation enables Delaware to join a club, so we won’t have to spend Delaware tax dollars to raid companies from states in the club, but also to free Delaware from states in that club from raiding Delaware companies.”
“It’s finally time to liberate taxpayers from the extortionate demands companies place on them. Pay up, they say, or we will leave. This bill and this movement will allow elected officials collectively to finally say no more.” said Rep. John Kowalko, D-Newark.
The statement took note of a bipartisan agreement between the governors of Missouri and Kansas reached over the summer to end corporate giveaways for companies moving within the Kansas City region.
Further information is available at.
Chances of Delaware passing the legislation are slim unless neighboring Pennsylvania, New Jersey and Maryland agree to an end to the incentives.
Delaware continues to offer incentives to companies remaining in the state or expanding operations, but has struggled with generous incentives offered by states with deeper pockets. New Jersey has been especially generous with incentives, leading the current governor to criticize the practice.
At times, Delaware has benefitted from companies that came to the state, due to difficulties in their relationships with local governmental units.
Such strains led to AAA, Zenith Products and Hewlett-Packard (now Agilent) moving across the state line.