Establishes a compact agreement among at least two (2) states to prohibit the selective use of subsidies to an existing specific industry or company, entice relocation from one state to another state or to open a new facility.

RI Bill Summary: Agreement to Phase Out Corporate Incentives Compact Act

This bill would allow Rhode Island to enter into a formal agreement with at least one other state to stop offering special financial deals — like tax breaks or cash incentives — to attract specific businesses or industries. The goal is to create a kind of truce between participating states, where they all agree to stop competing against each other by offering increasingly costly financial packages to lure companies across state lines or to convince them to open new facilities in their territory.

The problem this bill addresses is sometimes called the "race to the bottom," where states keep outbidding each other with taxpayer-funded incentives to win business relocations, often at great expense to their public budgets. Under this compact, member states would collectively agree to stop these targeted subsidies, meaning no participating state could offer a special deal to a particular company or industry that isn't available to all businesses equally. The agreement would only take effect if at least two states sign on.

This bill would affect businesses that currently benefit from or seek out state-specific incentive packages, as well as state and local governments that use these tools as economic development strategies. It could also impact Rhode Island taxpayers, who would no longer see public funds directed toward targeted corporate incentives — though the tradeoff is that Rhode Island might attract fewer businesses that were shopping for the best financial deal. The bill has been referred to the House State Government & Elections Committee for further review.