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11 Hastings Bus. L.J. 1 (2015)

handle is hein.journals/hbuslj11 and id is 1 raw text is: Was the Deal Worth it?: The Dilemma of States with Ineffective Economic Incentives Programs Randle B. Pollard* Federal subsidies to state and local govermnments have been substantially reduced due to public opinion prioritizing the reduction of the federal deficit, the recent fiscal cliff legislation, and the federal budget sequester cuts. In addition, in many states, revenue collection from individual and corporate income tax is below pre- recession levels. To address the reduction in federal funding and reduced revenue collections, state and local govermments will increasingly rely on economic incentive programs to grow their economies through increased job creation and private capital investment within their jurisdictions. These economic incentive programs are no longer comprised of simple tax reductions for companies seeking expansion or relocation, but include financial incentives and direct investment programs. The cost of these incentives, both in expenditures and forgone tax revenue, represents a growing portion of state and local governments' budgets and may subject them to steep budget deficits if the incentives do not produce net economic gro wth. Because of the budgetary risk and the increased reliance on these economic incentives, there is a need for state and local governments to account for the cost of these incentives and to measure their *Randle Pollard is an Assistant Professor of Business Law and Taxation, Indiana University, Kelley School of Business, Indianapolis, Indiana. Professor Pollard has several years of experience as a municipal bond attorney in roles as issuer's counsel and bond counsel. The author thanks the participants of the 2013 Junior Tax Scholars Workshop at the University of Miami School of Law for their comments during my work-in-progress presentation. Thanks to Professors John C. Dernbach, Jill E. Family, Michael J. Hussey, Juliet M. Moringiello, and Phyllis C. Smith for their thoughts and comments on earlier drafts. Additionally, thanks to my research assistant Roya Porter. HASTINGS BUSINESS LAW JOURNAL

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