State lawmakers should compete for jobs by having the best business climate and maintaining the best quality of life for residents. But lawmakers often decide to compete over who can offer the most generous special treatment through tax breaks or subsidies. This competition is unfair to businesses who don’t get favors, can be very expensive to the state and is ineffective at creating jobs. Still, lawmakers justify this favoritism by pointing out that they have to compete with other states who also offer special treatment in an effort to attract or keep businesses in their states.

I’ve collected some of the comments made by supporters of corporate handouts about how they need them to compete with other states. Statements go back to 1985 and come from people in 35 states. Lawmakers have been trying to outbid each other to land footloose companies for over a generation now.

A South Carolina secretary of commerce defended his use of favors in 1995 by noting that neighbors do the same thing: “Everyone has them — North Carolina, Georgia, Tennessee, Alabama. We’re simply trying to remain competitive.” Our mothers might mention something about bridges.

A Vermont officer was worried that the state would fall behind bigger states that can offer larger deals in 2001. “People know Vermont can’t match checkbooks with other states.”

Sometimes the advocates try to put a positive spin on their attempts to lure firms with taxpayer cash. “We went to the major leagues and we proved that Louisiana can compete for any project on the horizon,” said the Louisiana governor in 2007, after offering a business millions of taxpayer dollars. The company chose to locate to Alabama instead.

Others note that this is the price states pay to land business projects. A local economic development agency director in Tennessee commented in 2011, “Other communities are going to continue offering incentives. If we get out of the game, we’re going to miss job opportunities

Not all comments were positive. One skeptical Indiana lawmaker lamented the situation in 1991: “The companies are sophisticated enough now that if they have a prize, they know how to play the game so they can squeeze every ounce of blood out of the turnip.”

Lawmakers can stop this race to the bottom by signing onto an interstate compact to eliminate this kind of competition between the states over corporate handouts. States could give up their targeted programs when enough other states agree to as well.

Compacts have been introduced in 14 states.

Lawmakers should be skeptical of the value of special treatment for select businesses. It’s not only ineffective and expensive, it’s unfair to taxpayers, especially those businesses who do not receive the special treatment. So, the next time policymakers feel like they need to ante up for a project, they ought to sign onto a compact instead that would end this type of competition.

Here is a sample of the comments in support of corporate handouts dating back to 1985:

• ‘“What we’ve learned from Saturn is how to compete in the major big leagues of economic developmnt [sic], or how to try to compete.”
  • Minnesota State Economic Development Commissioner in 1985
  • The state had offered General Motors $1.3 billion in support but the company located the plant in Tennessee.
• “I think this will help us compete on an interstate level, against communities in Washington, California and Idaho.”
  • A local economic development director in Oregon in 1986
• “We need to not only keep up with them, we need to surpass them. All of the states are striving for the same things.”
  • Nebraska Economic Development Director in 1987
• “We’re going to go out and compete for all we can.”
  • Kentucky gubernatorial spokesperson about adding new business subsidies in 1988
• “It’s gotten far more ferocious than it was five years ago.”
  • An official for a local Texas chamber of commerce in 1989
  • She was commenting on “the increasingly aggressive bidding to attract business.”
• “That’s the kind of deals we’re competing with, and when they ask, ‘What do you have (in Arizona)?’ I say, ‘Zero.’”
  • Arizona Economic Council president in 1990
  • He was referencing the difference between what selective incentives are offered in Texas compared to Arizona
• “The companies are sophisticated enough now that if they have a prize, they know how to play the game so they can squeeze every ounce of blood out of the turnip.”
  • A skeptical Indiana lawmaker in 1991
• “What happens all too often is a special deal gets cut for a special situation. You’re always subject to one state being played off another.”
  • The governor of Michigan in 1992
• “Tax Incentives help companies stay competitive in bidding for new contracts. But we’re also in a competition with other states to keep these companies. Without an incentive program, we can’t compete.”
  • A spokesman for the Florida Commerce Department in 1993
• “One look at Iowa incentives compared to other states will tell you that. We don’t have to beat other state’s incentive packages, but we do have to compete with them.”
  • The executive director of a local Iowa economic development office in 1994
• “While we think the incentive side is subordinate, we need the tools and equipment to participate against aggressive states and municipalities.”
  • A New York local economic development official in 1995
• “Everyone has them — North Carolina, Georgia, Tennessee, Alabama. We’re simply trying to remain competitive.”
  • South Carolina Commerce Secretary in 1995
• “We have to be out there competing for those projects. We have to answer to grandparents who want to know if there’ll be jobs available for their grandkids.”
  • An economic strategist with the State of Ohio in 1995
• “It’s beginning to give us some of the tools that other states have to play in the big leagues.”
  • A Maryland County budget administrator in 1996
• “There’s an intense economic war being fought in America, and according to some, it’s threatening to tear the union apart.

• The combatants: the 50 states.

  The mission: attract major companies that bring jobs and boost tax revenue.

  The ammunition: state incentives.”

  • A reporter in Alabama in 1997

• “When financial incentives are better in other states, it’s tough selling Montana.”

  • Montana film office manager in 1998

• “This will be especially helpful in Southern Illinois, where local communities must compete with Kentucky and Missouri for companies providing good jobs.”

  • The governor of Illinois on a new business subsidy program passed in 1999

• “Mississippi now has the tools, thanks to the newly passed tax incentives, training initiatives and other lures, to compete in the same league.”

  • A Mississippi editorial in 2000

• “People know Vermont can’t match checkbooks with other states.”

  • An officer with the Vermont Agency of Commerce and Community Development in 2001

    She referenced competitive offers made by South Carolina for a manufacturing plant.

• “Despite our prosperity, what we found is these other states are out-competing us. There has been, to some degree in the past, a mindset that, gee, we don’t need to do that [offering select incentives]. We’re not Alabama and South Carolina. They need to do that, we don’t.”

  • Georgia state senator in 2002

• “States around the west offer a wide variety of incentives to compete with Nevada.”

  • A leader of a regional Nevada economic development agency in 2003

• “We can’t compete right now within the state and the state can’t compete with other states.”

  • An Arkansas film lobbyist in 2004

    He offered remarks in support of recently-approved subsidies for film production.

• “North Carolina, therefore, must be prepared to compete for good jobs not only with good schools but also with well-thought-out incentive programs when it makes sense for our state.”

  • North Carolina’s Secretary of Commerce in 2005

• “The companies who want incentives are smart. They learn to put you over the barrel, incentives-wise.”

  • A Washington state legislator in 2005

• “There are a few other incentive programs that we can utilize, but we offer those only when necessary to win a highly-competitive project.”

  • A local Colorado economic agency CEO in 2006

• “We went to the major leagues and we proved that Louisiana can compete for any project on the horizon.”

  • The governor of Louisiana in 2007

    The state had offered a plant millions of taxpayer dollars but its managers choose Alabama instead.

• “Having this helps level the playing field when we compete with other communities with bigger incentives or a better economic climate.”

  • The director of a local Virginia economic development department in 2008

• “Governor Deval Patrick acknowledged the competition, saying Granholm ‘busted my chops’ over the A123 deal. Massachusetts ‘just couldn’t match’ Michigan’s incentives, Patrick said, although he noted the Michigan project is expected to result in 100 new jobs at the company’s Watertown headquarters.”

  • A Boston Globe reporter in 2009

•  “While Indiana, Georgia and even Iowa aggressively recruit new employers with industrial-attraction teams and a strategic playbook, Madison often has sat on the sidelines. ‘The state sends a signal to the marketplace that Wisconsin is not open for business,’ the study concludes.”

  • A Milwaukee Journal Sentinel reporter in 2010

• “Surrounding states have more aggressive tax credits and abatements, forgivable loans, reimbursements, grant programs, and/or a lower tax burden than California has today. Competing with these other states has never been more difficult.”

  • A leader of a local California chamber of commerce in 2011

• “Other communities are going to continue offering incentives. If we get out of the game, we’re going to miss job opportunities.”

  • A local economic development agency director in Tennessee in 2011

• “Everyone is in a very heated fight for corporate headquarters. In the world of economic development, we call them our crown jewels.”

  • A New Jersey state economic development official in 2012

    She was commenting on their attempts to lure companies to the state.

• “Exhibit A: House Speaker Michael Madigan’s recent complaint about corporations that pit state against state in search of tax breaks. Madigan charged that this has created the appearance of ‘corporate pay-to-play.’ ‘I question our priorities when corporate handouts are demanded by companies that don’t pay their fair share while middle-class families and taxpayers face an increasing number of burdens.’”

  • A Chicago Tribune column in 2013

• “Every state has similar types of incentives. If you’re going to compete, you have to compete at the same level as your competitors.”

  • The director of Missouri’s economic development department in 2014

• “We want the jobs here, and nobody else is laying down their economic development sword. That’s how the thing keeps chugging along. No one wants to be the first to say, ‘We’re not going to do the incentives or subsidies any more.’”

  • An analyst with local Pennsylvania advocacy group in 2015

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