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All across the country, states are starting to take a second look as it relates to the way they recruit businesses from other states.
In recent times, New York, Florida, New Hampshire, Hawaii, West Virginia and Kansas City have all introduced interstate compacts aimed at eliminating business subsidies.
“Lawmakers are recognizing that luring businesses from other states with taxpayer dollars leads to a bad kind of competition,” the Mackinac Center for Public Policy Director of Fiscal Policy James Hohman said in a blog post. “It’s better to compete over business climate and quality of life rather than courting companies with money from the state treasury."
And even then, Hohman added “corporate handouts are ineffective, expensive and unfair.”
In Kansas City, Missouri and Kansas, state governors recently reached an agreement to outlaw the practice with Missouri and Kansas putting it in writing in the form of new legislation.
It’s all led Hohman to just one conclusion:
“When enough states sign onto the type of compact we recommend, signatories call on the federal government to step in and end the practice nationwide — a power the U.S. Constitution’s Commerce Clause gives them. The court’s ability to enforce those rules, and the strong incentive from officials in competing states to challenge a state who keeps handing out subsidies, creates a solid threat to ensure compliance from reluctant officials,” he wrote.
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