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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.


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