Pair of Bills Proposed in Illinois House Intended to Limit Corporate Incentives
INTRODUCTION
Two bills have been recently introduced in the Illinois House of Representatives that look to limit governments’ ability to attract businesses, manufacturing, and jobs. The bills aim to limit the ability of states and municipalities (respectively) from offering corporate incentives tied to relocating projects, developments, or headquarters. While these bills, HB1188 and HB1255, aim to address different issues but share the common theme of limiting incentives to businesses and corporations.
PROPOSALS
HB1188, the Phase Out Corporate Giveaways Act, aims to create the Phase Out Corporate Giveaways Interstate Compact. This compact would prohibit member states 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.
On the other hand, HB1255, the Local Government Business Anti-Poaching Act, aims to prohibit municipalities and counties from offering any incentive to a business or corporation to move its headquarters located in Illinois, or any part of its business located in Illinois, away from the current location. The bill defines “incentive” as any economic benefit, financial benefit, or other benefit, such as those authorized under the Economic Development for a Growing Economy Tax Credit Act, the Property Tax Code, the Counties Code, the Illinois Municipal Code, or any other provision of law authorizing abatements, credits, or tax or fee reductions. Additionally, the bill limits the home rule powers of municipalities and counties.
While these bills offer a different route to go about accomplishing their goals, they would in effect, limit the ability of governments to work to attract businesses to their jurisdictions. While the HB1188 proposal seems to be a rather ambitious proposal that would require serious effort to get other states on board, HB1255 provides a framework that can much more quickly severely impact the options municipalities may have in Illinois. It would appear that both of these bills would limit TIF districts for example, something that is extremely common for attracting businesses to an area.
HB1255 is interesting especially when looked at through the lens of the Chicago Bears’ relocation. While it appears the Bears will not receive state money should they relocate to Arlington Heights, this type of legislation would likely prevent a TIF district or other incentive from being offered for future moves of the same nature.
TAKEAWAY
Both bills propose limits on the ability of states and municipalities to offer incentives to businesses and corporations, which could have negative consequences on job creation and economic growth. While HB1188 focuses on limiting company-specific tax incentives and grants, HB1255 goes a step further by prohibiting municipalities and counties from offering any incentives to businesses or corporations to move their headquarters or any part of their business away from the current location in Illinois and limiting home rule powers of municipalities.