Alexander Supports Legislation To Protect State Economic Development Incentives

Posted on October 7, 2004

WASHINGTON - U.S. Senator George Voinovich (R-OH) today announced growing support for legislation he introduced last week to defend the rights of states to offer tax incentives to promote economic development and create jobs within their borders. In addition to support from U.S. Sen. Mike DeWine (R-OH), U.S. Sen. Lamar Alexander (R-TN), Ohio Governor Bob Taft, and Tennessee Governor Phil Bredesen, Voinovich's bill was also recently supported by the National Conference of State Legislatures, the National Association of Counties, the U.S. Conference of Mayors, led by Akron Mayor Don Plusquellic, and the National League of Cities. The bill would undo the potential damage caused to states' rights and state economic development efforts by a Sept. 2 ruling by the 6th Circuit Court of Appeals in Cuno v. DaimlerChrysler which declared that Ohio's investment tax credit program violated the Constitution because it was an attempt by a state to interfere with interstate commerce. Congress has authority to regulate interstate commerce so the legislation simply says that such programs do not violate the Constitution's Interstate Commerce Clause. The program at the heart of the case, the Ohio Machinery and Equipment Investment Tax Credit program, was used successfully by Voinovich while he was governor to convince DaimlerChrysler to build its Jeep plant in Toledo, which plays a key role in ensuring the region's economic vitality. Since the creation of Ohio's investment tax credit program in 1995, nearly 16,500 businesses have been able to claim a total of $1.9 billion in credits leveraging $31.6 billion in new equipment investments across the state. Ohio's manufacturing sector accounts for the second highest weekly earnings of any economic sector and supports local communities and schools with more than $1 billion in corporate franchise and personal property taxes. "States are the laboratories of democracy and they have developed innovative programs in recent years that have encouraged new growth through tax incentives for training, job creation, and investment in new plants and equipment. These incentives were critical to our success in Ohio and allowed us to lead the nation in new plant construction and expansion," said Voinovich. "States should be allowed to use these growth tools in their borders, and yes, states should be allowed to compete for new businesses and jobs. The winner will be the working men and women who are looking for a job and my bill guarantees that we can keep using these tools to help grow our economy and put people to work." U.S. Senator Mike DeWine (R-OH), "It is my hope that this important bill translates into more jobs for Ohioans," said Senator DeWine.  "State officials should be able to offer the incentives they have available to encourage investment.  Tax incentives for job training, job creation and new plants and equipment create a broader, better qualified workforce and bring more jobs to Ohio." U.S. Senator Lamar Alexander (R-TN), "Investment tax credits are important for governors trying to attract business," said Alexander.  "Competition across the country for economic development is fierce. The 6th Circuit ruling could put states that offer investment tax credits at a disadvantage, which would hurt job growth in those states." Ohio Governor Bob Taft, "Your legislation would allow states to provide tax incentives for investment in new machinery and equipment.  It would provide that such incentives would be considered reasonable regulation of commerce and not undue burdens on interstate commerce.  I am pleased to lend my support to this important legislation.  Working together, I am confident we can accelerate Ohio's economic growth," wrote Taft in a letter to Voinovich. Tennessee Governor Phil Bredesen, "The State of Tennessee joins with other states in expressing our strong support of your efforts and those of U.S. Senator Lamar Alexander (R-TN) to protect state economic development incentive programs from legal attempts that would undermine their viability. In the face of serious national economic challenges, states must have the flexibility through their respective incentive programs to encourage job growth and job retention in our communities," wrote Tennessee Gov. Phil Bredesen in a letter to Voinovich. National Conference of State Legislatures, "NCSL supports the ability of states to adopt fair and effective economic development tools to meet the needs of our constituencies. Your legislation clarifies that states can enact these important tax incentives without impairing or discriminating against interstate commerce. In doing so, this would ensure conceptually that the 40 states that have enacted these tax credits as economic development incentives and any state deciding to do likewise in the future could do so without threat of litigation," wrote Maryland state Delegate John Hurson, NCSL President, and Illinois state Senator Steve Rauschenberger, NCSL President Elect, in a letter to Voinovich. National Association of Counties, "We must continue to allow states to use tax incentives to help attract business and industry -- and the much-needed jobs they bring -- to our nation's counties," said Angelo Kyle, a member of the Lake County, Ill. Board and president of the National Association of Counties. "NACo strongly supports Senator Voinovich's legislation, and hopes that the Congress will act soon to eliminate the uncertainty created by the court's decision." U.S. Conference of Mayors, "The Conference of Mayors supports Senator Voinovich's efforts to correct the problems caused by this ruling and we will work with our representatives in Congress in any way we can to undo the harmful impact of this decision.  These types of tax incentives have long been used to promote economic development in all sectors of our communities.  They are critical to revitalizing urban areas," said Don Plusquellic, mayor of Akron and president of the U.S. Conference of Mayors. National League of Cities, "NLC believes that your legislation will help restore constitutional balance and preserve the ability of state and local governments to conduct economic development that, as a former mayor and governor, you know is necessary to preserve economic growth, including job retention and creation," wrote Executive Director Donald J. Borut in a letter to Voinovich. Voinovich is a member of the Senate Task Force on Manufacturing, as well as the co-chair of the Senate Auto Caucus. Due to the importance of this legislation, he is hopeful that the Senate will pass this measure before the end of the year.