A contentious bill designed to penalize Illinois businesses that move a portion or all of their operations out of state would actually be punishing compliant businesses, Rep. Steven Andersson (R-Geneva) argued recently.
“What this bill does is it penalizes those who comply with their agreements,” Andersson said. “This is not about fraud. This is not about businesses that didn’t comply with the rule that were established for their credit. This is about businesses that did. They did everything right and yet in the future … what happens? They move a single person out of the state of Illinois and, even though they did everything they are supposed to under their agreement, they lose it all.”
HB3538, introduced to the House by Rep. Michael Halpin (D- Rock Island) on Monday, would take away government economic development assistance from any company that moves any part of its operations out of Illinois. The company would also be required to pay back any development assistance it had received.
Andersson argued that the bill, also called the Keep Illinois Business Act, does little to encourage business development and would instead give businesses pause before establishing their presence in Illinois.
“It appears to me that there is no limit to this,” Andersson said. “In other words, somebody gets an Edge Tax Credit, for example. That Edge Tax Credit program has claw-back provisions in it right now. It also has time limits within it. Let’s say [a company] fulfills all of [the provisions]. They don’t lose any jobs; they add jobs. Later on, they add more jobs. It has nothing to do with the tax credit, but it is a business that has added jobs. And now, at some point further yet, they decide to move out of state some portion of that, but they are still complying with the Edge compliance program. [HB3538], literally, would require them to pay it back even though they have complied with the Edge Tax Credit.”
Halpin contends that the bill ensures that thriving Illinois companies follow through with their commitment to investing in the state.
“Illinois has been participating in a race to the bottom, and this bill will hopefully prevent corporations that aren’t interested in investing in Illinois to move on and let our taxpayers be preserved,” he said.
While Andersson acknowledged that provisions would help guard against businesses that abuse the economic incentives provided by Illinois, the bill goes about it the wrong way.
“There is no limit to this,” he said. “This could happen 20 or 30 years after the fact. There is no tying to this penalty to the benefit that was granted. It makes sense to have claw-back provisions in incentive agreements, [but] this creates a super claw-back. I would recommend a 'no' vote.”
The House passed the bill on a vote of 64 to 48.
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