Provides that no compacting state shall permit company-specific subsidies and shall not provide any company-specific subsidy to any company whose headquarters, manufacturing facilities, office space or other real estate developments are located in their state or to incentivize any company to locate their headquarters, manufacturing facilities, office space or other real estate developments in their state.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5249
TITLE OF BILL:
An act to amend the state finance law, in relation to creating an inter-
state compact prohibiting company-specific subsidies
PURPOSE OR GENERAL IDEA OF BILL:
To amend the state finance law by enacting the "Interstate Compact
Agreement Prohibiting Company-Specific Subisidies" through the addition
of a new article 17.
SUMMARY OF SPECIFIC PROVISIONS:
Section one sets the title "Interstate Compact Agreement Prohibiting
Company-Specific Subisidies" and states the purpose of the agreement.
Section two sets the definitions for the terms "company-specific subsi-
dy", "by-laws", "compacting state", "board", "state", and "company".
Section three outlines the details and obligations of the compact as
well as any exceptions to the agreement.
Section four establishes the membership and composition of the board of
compact administrators as a governing body for the resolution of the
compact, and outlines the duties, powers, obligations, limitations, and
method of appointment for compact administrators.
Section five establishes the methods by which states will be able to
enter, leave, or be removed from the compact.
Section six establishes the methods by which the compact may be amended.
Section seven outlines the construction and severability of the compact
in relation to the constitution of other states or governing bodies.
Section eight establishes the methods of execution of certain adminis-
trative duties and expenses.
Section nine sets forth the effective date.
For decades, cities and states have been incentivized to pursue a "Race
to the Bottom", rolling out increasingly lavish economic welfare poli-
cies whenever multi-national corporations announce plans to move
locations, build new headquarters, or expand operations. Corporate
executives then sit back and wait as different regions jostle to offer
them the best corporate subsidies package. What transpires next is a
harmful, zero-sum competition between municipalities to aggressively
bundle commercial property tax abatements, job creation tax credits,
investment tax credits, R&D tax credits, and customized job training tax
credits. This practice has grown to become a $45 billion economic tax
break industrial complex designed to extract wealth and resources from
the public for the disproportionate benefit of corporations.
The End of Corporate Welfare Act of 2019 calls for an end to this
"bidding war" by banning the use of company-specific corporate welfare
incentives between cities and states. It would create a level playing
field by refusing to engage in the race to the bottom that large corpo-
rations and their executives have come to rely on. Cooperation between
cities and states that refuse to engage in the extortion of local
resources will end the enrichment of large companies at taxpayers'
expense, and return greater agency, wealth, and independence to communi-
Such an interstate agreement will eliminate secretive, opaque negoti-
ations between government officials and corporate executives, which have
time and again transferred billions to corporations with little to show
in return. Multi-national corporations can no longer play municipalities
off one another when all cities and states band together and refuse to
participate in the race to the bottom. This act will end decades of
wasteful spending, which have by and large not led to meaningful econom-
ic benefits and benefited none but a few of the wealthiest companies.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
This act will save taxpayers of New York billions of dollars.
This act shall take effect immediately.
STATE OF NEW YORK
2019-2020 Regular Sessions
February 8, 2019
Introduced by M. of A. KIM, STECK, BURKE -- read once and referred to
the Committee on Economic Development
AN ACT to amend the state finance law, in relation to creating an inter-
state compact prohibiting company-specific subsidies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The state finance law is amended by adding a new article 17
2 to read as follows:
3 ARTICLE 17
4 INTERSTATE COMPACT PROHIBITING
5 COMPANY-SPECIFIC SUBSIDIES
6 Section 250. Short title; purpose.
7 251. Definitions.
8 252. Compact.
9 253. Establishment of the board.
10 254. Entry into compact, withdrawal and termination.
11 255. Amendments to the compact.
12 256. Construction and severability.
13 257. Administration; expenses.
14 § 250. Short title; purpose. This article shall be known and may be
15 cited as the "Interstate compact prohibiting company-specific subsides".
16 The purpose of this compact is, through means of joint and cooperative
17 action among the compacting states, to eliminate company-specific subsi-
19 § 251. Definitions. As used in this compact, unless the context clear-
20 ly indicates otherwise, the following terms shall have the following
22 1. "Company-specific subsidy" shall mean company-specific tax incen-
23 tives including any change in the general tax rate or valuation offered
24 or presented by the state to a specific company that is not available to
25 other similarly situated companies and company-specific grants including
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.
A. 5249 2
1 any disbursement of funds, property, cash or deferred tax liability
2 offered by the state to a specific company. The term "company-specific
3 subsidy" shall not include workforce development grants that provide
4 funds for the purpose of training employees.
5 2. "By-laws" mean those by-laws established by the board for its
6 governance or for directing or controlling the board's actions or
8 3. "Compacting state" means any state which has enacted this compact
9 legislation and which has not withdrawn or been terminated pursuant to
10 section two hundred fifty-four of this article.
11 4. "Board" means the "Interstate compact prohibiting company-specific
12 subsidies board" established by the compact.
13 5. "State" means any state, district or territory of the United States
14 of America.
15 6. "Company" means any proprietorship, partnership, corporation, or
16 limited liability company.
17 § 252. Compact. 1. The compacting states hereby create and establish a
18 compact to prohibit all company-specific subsidies. Such compacting
19 states shall not provide any company-specific subsidy to any company
20 whose headquarters, manufacturing facilities, office space or other real
21 estate developments are located in their state or to incentivize any
22 company to locate their headquarters, manufacturing facilities, office
23 space or other real estate developments in their state.
24 2. Existing company-specific subsidies shall not be prohibited by this
25 compact, however, any modification to the terms of any existing compa-
26 ny-specific subsidy shall be considered a new company-specific subsidy
27 and shall not be permitted under the terms of the compact.
28 § 253. Establishment of the board. 1. For the purpose of administering
29 the provisions of this compact and to serve as a governing body for the
30 resolution of all matters relating to the operation of this compact, a
31 board of compact administrators is established. The board shall be
32 composed of one representative from each of the compacting states to be
33 known as the compact administrator. The compact administrator shall be
34 appointed by the governor of each participating state and shall serve
35 and be subject to removal in accordance with the laws of the state he or
36 she represents. A compact administrator may provide for the discharge of
37 his or her duties and the performance of his or her function as a board
38 member by an alternate. An alternate shall not be entitled to serve
39 unless written notification of his or her identity has been given to the
41 2. The board shall convene at least once annually and shall be respon-
42 sible for collecting testimony from interested parties including, but
43 not limited to, compacting states, organizations and associations
44 representing state legislators, taxpayers and subject matter experts on
45 how the compact can be improved and strengthened.
46 3. Each member of the board of compact administrators shall be enti-
47 tled to one vote. No action of the board shall be binding unless at a
48 meeting at which a majority of the total number of the board's votes are
49 cast in favor thereof. Action by the board shall be only at a meeting at
50 which a majority of the compacting states are represented.
51 4. The board shall elect annually from its membership a chair and
53 5. The board shall adopt by-laws not inconsistent with the provisions
54 of this compact or the laws of a compacting state for the conduct of its
55 business and shall have the power to amend and rescind its by-laws.
A. 5249 3
1 6. The board may accept for any of its purposes and functions under
2 this compact any and all donations and grants of monies, equipment,
3 supplies, materials and services conditional or otherwise, from any
4 state, the United States or any governmental agency, and may receive,
5 utilize and dispose of same.
6 7. The board may contract with, or accept services or personnel from,
7 any governmental or intergovernmental agency, individual, firm or corpo-
8 ration, or any private nonprofit organization or institution.
9 8. The board shall formulate all necessary procedures and develop
10 uniform forms and documents for administering the provisions of this
11 compact. All procedures and forms adopted pursuant to board action shall
12 be contained in a compact manual.
13 § 254. Entry into compact, withdrawal and termination. 1. This compact
14 shall become effective at such times as it is adopted in a substantially
15 similar form by two or more states.
16 2. (a) Entry into the compact shall be made by resolution of ratifica-
17 tion executed by the authorized officials of the applying state and
18 submitted to the chair of the board.
19 (b) The resolution shall substantially be in the form and content as
20 provided in the compact manual and shall include the following:
21 (i) A citation of the authority from which the state is empowered to
22 become a party to this compact; and
23 (ii) An agreement of compliance with the terms and provisions of this
25 (c) The effective date of entry shall be specified by the applying
26 state but shall not be less than sixty days after notice has been given
27 by the chair of the board of the compact administrators.
28 3. A compacting state may withdraw from participating in this compact
29 by official written notice to each participating state, but withdrawal
30 shall not become effective until ninety days after the notice of with-
31 drawal is given. The notice shall be directed to the compact administra-
32 tor of each compacting state. No withdrawal of any state shall affect
33 the validity of this compact as to the remaining participating states.
34 4. If the board determines that any compacting state has at any time
35 violated any of the terms or by-laws of the compact, then, after notice
36 and hearing as set forth in the by-laws, may terminate such state from
37 the compact if a willful violation has been found.
38 § 255. Amendments to the compact. 1. This compact may be amended from
39 time to time. Amendments shall be presented in resolution form to the
40 chair of the board of compact administrators and shall be initiated by
41 one or more participating states.
42 2. Adoption of an amendment shall require endorsement by all partic-
43 ipating states and shall become effective thirty days after the date of
44 the last endorsement.
45 § 256. Construction and severability. This compact shall be liberally
46 construed so as to effectuate the purposes stated herein. The provisions
47 of this compact shall be severable and if any phrase, clause, sentence
48 or provision of this compact is declared to be contrary to the constitu-
49 tion of any compacting state or of the United States, or the applicabil-
50 ity thereof to any government, agency, individual or circumstance is
51 held invalid, the validity of the remainder of this compact shall not be
52 affected thereby. If this compact shall be held contrary to the consti-
53 tution of any compacting state, the compact shall remain in full force
54 and effect as to the remaining states and in full force and effect as to
55 the participating state affected as to all severable matters.
A. 5249 4
1 § 257. Administration; expenses. 1. The comptroller of the state of
2 New York shall furnish to the appropriate authorities of the compacting
3 states any information or documents reasonably necessary to facilitate
4 the administration of this compact.
5 2. The compact administrator from this state is not entitled to any
6 additional compensation for his or her service as such but is eligible
7 for reimbursement for expenses incurred in connection with his or her
8 responsibilities as compact administrator in the same manner as expenses
9 incurred in connection with other responsibilities of his or her office
10 or employment.
11 § 2. This act shall take effect upon the adoption of the interstate
12 compact prohibiting company-specific subsidies by two or more states;
13 and provided further that the comptroller of the state of New York shall
14 notify the legislative bill drafting commission upon the occurrence of
15 such adoption of the interstate compact prohibiting company-specific
16 subsidies by two or more states in order that the commission may main-
17 tain an accurate and timely effective data base of the official text of
18 the laws of the state of New York in furtherance of effecting the
19 provisions of section 44 of the legislative law and section 70-b of the
20 public officers law.