Rough waters ahead?
Thursday, Oct 3, 2013 - Posted by Rich Miller
* Greg Hinz takes a look at the ADM subsidy bill, which would provide the company with about $1.2 million a year in EDGE tax receipts for 15-20 years…
At a hearing yesterday of the House Revenue Committee, the proposal caught immediate fire from House Majority Leader Barbara Flynn Currie and others, who asked whether the cash-strapped state should be giving special help to one particular company. But the company and its new attorney — Mike Kasper, a close associate of House Speaker Michael Madigan — responded by withdrawing the request for the utility-tax break, and suggesting that the firm really likes Illinois.
But even if Mr. Madigan signs on to the bill — Revenue Committee Chairman John Bradley says he has “no idea” when and if the bill might come up for a vote — the measure now is opposed by [Sen. Andy Manar]. He’s former chief of staff to Senate President John Cullerton, whose chamber is more liberal and has been more resistant to corporate handouts than the House.
Specifically, Mr. Manar said he’ll oppose the bill unless ADM effectively replaces the headquarters jobs by adding 100 slots elsewhere in Decatur.
“I don’t think we can ignore the fact that Decatur has the highest unemployment level in the state,” as high as 25 percent in some neighborhoods, Mr. Manar said — particularly when the company wants a subsidy to move jobs within Illinois.
ADM’s spokeswoman said the company “is negotiating” with Mr. Manar and will not comment on those talks right now.
* And Bernie reports that Cullerton is standing with Manar…
Cullerton said he would like to see the corporate headquarters of Archer Daniels Midland Co. stay in Illinois. […]
“Whether we should incentivize them is another question,” Cullerton said, noting Decatur’s high unemployment rate. He said any tax incentive should be tied to doing something to “make up for that loss of jobs in Decatur.”
* Back to Hinz…
Meanwhile, neither Mr. Quinn’s office nor the state’s Department of Commerce and Economic Opportunity had a comment on where he stands on the matter. That’s likely an indication that a governor who doesn’t much like corporate subsidies in the best of circumstances doesn’t want to expend any political capital on a bill that’s in trouble.
Actually, the governor appears to love these subsidies. It was a last-minute EDGE credit to Ford that resulted in lots more jobs which helped save Quinn’s behind in the 2012 Democratic primary.
However, there is word from inside that the governor isn’t all that enthusiastic about this specific ADM proposal as-is. The fact that he has refused comment so far is, indeed, telling.
- Tracking it - Thursday, Oct 3, 13 @ 9:32 am:
I’m happy that now the corporate deals are much more in the media. It adds transparency to the process and allows a more public vetting.
- wordslinger - Thursday, Oct 3, 13 @ 9:34 am:
Meh, they’ll get it. No one in the political class would risk even an empty threat of a Fortune 100 HQ move out of state over $1.2 million a year.
(Conversely, ADM would move its HQ out of state over $1.2 million a year? Give me a break. They have $81 billion in sales and $2 billion in profits a year. They could find the EDGE credit money in the couch cushions).
I’m sure ADM can figure out a way to make some vague promise of 100 future jobs in Decatur that will produce a press release in which everyone can take credit for “creating jobs.”
- walkinfool - Thursday, Oct 3, 13 @ 9:39 am:
Cullerton is an open supporter of state incentives for ADM to HQ in Chicago. He’ll probably support this proposal, as will Quinn.
Manar’s concerns are driven by the needs of his district, not primarily by any set position on these kinds of incentives.
- hisgirlfriday - Thursday, Oct 3, 13 @ 9:41 am:
You know as egregious as this action by ADM is and as angry as I am at them for so hurting the people of Decatur with this move, at the same time I’m wondering where this outrage was with CME?
On paper, ADM has a better argument to have their ruthless shakedown granted IMO. The HQ move makes logical sense from the perspective of wanting to be a worldclass airport while the C in CME = Chicago. ADM also employs more Illinoisans.
So why is there this Dem outrage there for ADM but not the CME shakedown or ComEds anti-consumer rate hikes?
Is it about supporting Andy Manar in his reelection? Is it the ADM execs not having done fundraisers or attended
social events with Chicago pols, partially because they are down in Decatur? Is it because ag just isn’t a favored industry? Or did ADM just make everyone madder by being so secretive about everything and not giving anyone a warning?
Id like to know.
- train111 - Thursday, Oct 3, 13 @ 9:49 am:
I understand Manar’s concern. He is probably the most endangered Democratic State Senator running in 2014–that is if the GOP can have an actual candidate.
- Old and In The Way - Thursday, Oct 3, 13 @ 10:02 am:
Facts are stubborn things
DEMs are being carefull because it looks like they are taking from the working man (pension reform)and giving to big business.
It looks like it because they are! Every deal like this further erodes the emergency or police powers justification that is at the heart of all of the pension ‘reform’ proposals. The latest is characterized as “less constitutional” than SB2404. What? It’s either constitutional or it’s not. When did we start grading these shams? At the heart of any contractual consideration is the option for either side to maintain the status quo. It is a valid contract after all. You cannot be forced to choose between the lesser of two diminishments any more than you can choose between the more constitutional of two unconstitutional proposals!
- walkinfool - Thursday, Oct 3, 13 @ 10:07 am:
girl: There was outrage in this commentary over CME breaks as well.
One difference, that mitigated it some, was that CME were in fact paying a lot of taxes directly to the state of Illinois, while ADM is apparently not.
- Robo - Thursday, Oct 3, 13 @ 10:12 am:
I hear that ADM execs already treat Decatur like Quinn treats the Governor’s Mansion (lives in Chicago, visits the Mansion). The last Decatur-based executive retired/left ADM at the end of August so this move has been planned for a while. As soon as the Andreas family were out of the picture the clock started ticking on Decatur as HQ.
Can’t blame ADM for trying to make a play for state $ to make a move. Manar’s doing the right thing too especially if you consider it’s a done deal.
- foster brooks - Thursday, Oct 3, 13 @ 10:14 am:
State revenue 62 billion .ADM revenue 80 billion. That makes sense
- Judgment Day (Road Trip) - Thursday, Oct 3, 13 @ 10:17 am:
“Whether we should incentivize them is another question,” Cullerton said, noting Decatur’s high unemployment rate. He said any tax incentive should be tied to doing something to “make up for that loss of jobs in Decatur.”
Want to do something for Decatur? Fine, good place to start is to have our senior Senator to loose the partisanship, get serious, and work to extend I-39/UWS 51 South of Decatur all the way to Mt. Vernon (actually, I-57 near Salem would work better) into four lane limited access.
They’re getting their intermodal rail hub, but that’s potentially going to mean more truck traffic. So they have I-72 east to Champaign-Urbana, I-72 west to Springfield, and US51/I-39 north to Bloomington-Normal.
But South, not so much. Btw, that road expansion would actually improve things for any horizontal fracking going on in the south central/southern part of Illinois. Create a whole lot more than 100 jobs.
Maybe the legislature could return the favor and re-allocate all the money for funding the governor’s office into road construction.
- Judgment Day (Road Trip) - Thursday, Oct 3, 13 @ 10:24 am:
Btw, the road extension would be right at 100/109 miles (it’s 109 if you don’t cut the corner). Doable.
- 4 percent - Thursday, Oct 3, 13 @ 11:16 am:
ADM makes two very good points about why they’re seeking to move their corporate HQ. First of all, they need access to a global city with a major airport. Company employees and customers fly in and out regularly and its very difficult to get to Decatur (especially if you’re trying to get in and out in a day). Secondly, it’s difficult to attract top level talent to Decatur when companies to companies in Chicago, NY, Atlanta, LA, etc.
In terms of taxes, it easy to put a target on their back because they’re a Fortune 25 company with significant revenue. However, keep in mind that the overwhelming majority of their sales are global - not within IL - so they don’t have a big tax bill in IL. They’re asking for the same treatment (refundable credit) that has been given to many companies.
They are a major factor in Illinois. They buy $8 billion in products from Illinois suppliers, employ 6,000 people in the state, and pay significant payroll, sales, property and other taxes.
It will be a big deal to our reputation if Illinois loses ADM’s HQ.
- Six Degrees of Separation - Thursday, Oct 3, 13 @ 12:15 pm:
Judgment Day, US 51 is already 4-laned from Decatur to Assumption and from I-64 to Centralia, and there’s a study to fill in the gap. They have been chipping away at it since the 1990’s, albeit at a glacial pace.
www.us51eis-idot.com
- ChicagoDem - Thursday, Oct 3, 13 @ 12:20 pm:
No matter how you cut it, ADM is seeking a hand-out…”more corporate welfare” has been a campaign mantra used by many Dem politicians running for office for many years. Yet, when they are in a position to end it; they waffle. That’s why people come to hate those who run on slogans but capitulate when they are elected; it’s called HYPOCRISY!
- Judgment Day (Road Trip) - Thursday, Oct 3, 13 @ 12:38 pm:
6 Degrees:
I know. Have to drive it every so often But it’s not a particularly ‘friendly’ drive, if you know what I mean. But we just got the Decatur intermodal facility up and running, and those things tend to really develop some serious truck traffic, and with that come decent paying ancillary jobs.
Because at the rate the State is going in the process, it’s going to require substantial renovations to the original parts of US 51 because it took so long. The need really starts to increase now, and since we can’t effectively ’sell’ our State’s financial and tax stability compared to other states, we better have something we can market.
And right about now, the Decatur area really needs some help.
- Formerly Known As... - Thursday, Oct 3, 13 @ 12:45 pm:
$2 billion in revenue = $2 million in taxes?
My calculator must be broken.
- Formerly Known As... - Thursday, Oct 3, 13 @ 12:53 pm:
The natural advantages Illinois enjoys should be enough to stand for themselves and attract businesses from around the world, much less neighboring states.
Somehow, our noble leaders have managed to bollocks things up so badly in recent decades that now we must pay companies to stay here.
To stay here and enjoy our unique advantages as the central transportation hub of America, diverse geography, world class transportation, developed infrastructure, educated workforce and so on.
The incompetent leadership and policies of both parties managed to finally trump the natural advantages we offer employers.
Incredible.
- wordslinger - Thursday, Oct 3, 13 @ 1:03 pm:
–$2 billion in revenue = $2 million in taxes?–
It’s $80 billion in revenues, $2 billion in profits.
I wonder why ADM thought this was worth the effort. The money’s on the table, of course, and I’m sure they’ll get it, but was it worth the p.r. hit?
They pay more than $1.2 million a year to generate good p.r., and this ain’t that.
The EDGE credit of $1.2 million represents about one half of one percent in annual profits.
Did they really want to lawyer up, hire lobsters, go in front of the GA and generate headlines for that?
Did they really want to testify that they pay $2 million or less in income taxes? I’m sure that came as quite a surprise to some small and mid-size Illinois businesses.
Aren’t the Big Dogs among public companies lobbying hard against legislation that would require them to disclose their Illinois income taxes? And they gave it up voluntarily for $1.2 million — to move out of town?
I don’t think they thought it through.
- unbelievable - Thursday, Oct 3, 13 @ 4:51 pm:
CME paid over 100 million in taxes. They were one of our largest tax payers. Even after their adjustment, they are still one of the largest taxpayers. ADM’s R&D credit alone wipes out their entire state liability. That doesn’t include what their ethonol credits do. So essentially, ADM is asking for millions of just free money handouts at a time when they are a part of the Illinois is Broke coalition. Huge difference.
- steve schnorf - Thursday, Oct 3, 13 @ 11:43 pm:
I rarely venture into these things because there is no good answer that i can think of. I will say the optics here are terrible: let’s take billions from retirees because we are in such a financial crisis, and simultaneously let’s give a million dollars to a company that made billions in profits. Oy
- wordslinger - Friday, Oct 4, 13 @ 12:46 am:
Schnorf, it’s such chump change for ADM I’m surprised that they bother.
They’re after $1.2 million a year, Once you lawyer up, lobster up, contribute up, submit to questioning by the GA, admit you pay virtually no taxes, take the headlines…..
Meanwhile, they’re part of the crew that says the sky is falling on pensions and the folks have to take billions in haircuts.
It’s really kind of bizarre. What’s the ROI for this effort?
For no real gain — at all, considering $2 billion a year in profits — you blow every p.r. effort you ever made out of the water. ADM pays a lot more than $1.2 million a year to generate positive p.r.
Strange.