The Problem:

There are about 500 individuals in the U.S. who work as “site selection consultants.”[1] Corporations employ these consultants to find and negotiate subsidy deals with state and local governments. They have been involved in high-profile site location decisions, such as Amazon’s “HQ2” search and Foxconn’s 2016 deal with Wisconsin. They often work on commission, receiving a percentage of the subsidies received by the corporation, giving them an incentive to drive the cost of subsidy deals even higher.[2] Though they actively lobby state and municipal legislators, regulatory bodies, and executive agencies, these consultants often do not have to register as lobbyists, as their activity is not explicitly covered by state lobbying or ethics laws.

The Policy:

States and municipalities should explicitly add economic development negotiations to their definitions of lobbying, and also explicitly add state and local economic development agencies to those public bodies covered by lobbying and ethics law. Connecticut, for example, includes the state economic development agencies under its definitions for executive agencies and “quasi-public agencies.”[3] This would allow local communities to identify which corporations are lobbying for subsidies and which firms and individuals are engaged in that work.

Model bill: SB867, Missouri, 2012

Notes:

[1] Podkul, Cezary, “Meet the Fixers Pitting States Against Each Other to Win Tax Breaks for New Factories,” The Wall Street Journal, May 18, 2019, https://www.wsj.com/articles/meet-the-fixers-pitting-states-against-each-other-to-win-tax-breaks-for-new-factories-11558152005.

[2] Ibid.

[3] Connecticut Code, Chapter 10, Code of Ethics, https://www.cga.ct.gov/current/pub/chap_010.htm#sec_1-91.