More corrections needed
Wednesday, May 6, 2015 - Posted by Rich Miller
* From the AP…
In a story May 3 about legislation to privatize much of the work of the Illinois Department of Commerce and Economic Opportunity, The Associated Press misattributed a quote criticizing the plan. The quote should have been attributed to Ralph Martire, executive director of the Center for Tax and Budget Accountability, not to Ron Baiman, who is no longer with the organization.
* But that wasn’t the only problem with the AP’s story…
Gov. Bruce Rauner says his plan to privatize the state’s economic development agency will improve job creation in Illinois. But similar plans in other states and even in Chicago have sometimes raised concerns about transparency and oversight, with taxpayers not always knowing how their money was being spent. […]
In Chicago, concerns have been raised about a lack of transparency at the publicly funded, not-for-profit World Business Chicago. Mayor Rahm Emanuel chairs the organization.
The Michigan Auditor General in 2013 found that the Michigan Economic Development Corporation significantly overstated job creation, essentially taking companies’ word.
In Ohio, JobsOhio has faced a series of problems. Among them was $5.3 million in state funding given to the agency without the Legislature’s knowledge and criticism of Republican Gov. John Kasich for filling board seats with campaign contributors.
In Indiana, a federal audit last year found that a company contracted by the Indiana Economic Development Corporation improperly funneled almost half million dollars to a business run by the contractor’s chairman. Questions also have been raised about some job-creation numbers reported by the IEDC.
* The Illinois Policy Institute’s news service raises some legit objections…
(A)n Associated Press article compares the not-yet-created board to other public-private economic development agencies in Chicago and other states as not being transparent or providing true follow up on job creation numbers.
Illinois’ measure, however, would require the board’s decisions to be approved by DCEO, all board meeting minutes and copies of final agreements and tax incentives for companies will be publicly posted and subject to the Freedom of Information Act, and operations will be reviewed by the Auditor General every two years. […]
House Bill 574 made it out of the Executive Committee last month and remains in the Rules Committee.
Not including that info in the original story was very odd.
- walker - Wednesday, May 6, 15 @ 10:46 am:
As if we always knew what DCEO did with taxpayer resources as it is.
This is right in Rauner’s wheelhouse, and if his actions can bring more businesses to Illinois, more the benefit.
This new structure can work well, though it will skew more to big companies overall. That’s more the danger to be avoided, not opacity.
- Juvenal - Wednesday, May 6, 15 @ 11:02 am:
HB 574 does not apply the ethics act to the new nonprofit agency, however, including Revolving Door provisions, so that someone could negotiate a huge tax break for a utility one week and go to work for them in six months.
- Liberty - Wednesday, May 6, 15 @ 11:06 am:
Rauner is pro business not a free marketer. All the more reason for strong oversight…. close it.
- Wordslinger - Wednesday, May 6, 15 @ 11:09 am:
Bizarre theory of capitalism that holds the United States is comprised of 50 economic duchies in direct competition with each other for “creating jobs” by giving money to private companies.
Wasn’t always that way. I think it started in the 70s in the fallout from the first energy shock.
According to a 2012 Pew Center report, “Evidence Counts: Evaluating State Tax Incentives for Jobs and Growth,” no one knows how many billions states blow on this nonsense every year, “and no state regularly and rigorously tests whether those investments are working.”
According to Pew, some states are just beginning to take steps to develop criteria for determining ROI.
Illinois is among those doing nothing at all to evaluate whether these giveaways achieve anything beyond fhe creation of a press release.
- Shemp - Wednesday, May 6, 15 @ 11:11 am:
Bingo walker… DCEO was a mess run for political benefit more than job creation. What good people that are left in DCEO have seemed hamstrung for years.
- walker - Wednesday, May 6, 15 @ 11:17 am:
WordSlinger: Completely agree that competitive tax incentives don’t work.
However the right structure and messages that sell Illinois’ real economic benefits do.
- Skeptical - Wednesday, May 6, 15 @ 11:23 am:
Not sure all are familiar with two excellent reports written by Good Jobs First on the (how can I say this nicely?)less than stellar performance of other states forays into the privatization of or Public Private Partnership(P3’s). For those interested, here are the links to those reports:
http://www.goodjobsfirst.org/sites/default/files/docs/pdf/scandalsnotjobs.pdf
http://www.goodjobsfirst.org/sites/default/files/docs/pdf/powergrab.pdf
- Downstate GOP Faithless - Wednesday, May 6, 15 @ 11:26 am:
It’s never a good sign for reputable news agency, when another journalist ever says, “The Illinois Policy Institute’s news service raises some legit objections.” Anytime IPI, which is tantamount to an opinion journal, is referenced in the integrity argument, somebody screwed up!
- Qui Tam - Wednesday, May 6, 15 @ 11:28 am:
“However the right structure and messages that sell Illinois’ real economic benefits do.”
A good start would be for Rauner and the Civic Committee types to stop badmouthing Illinois as a deadbeat state that’s ruinous to business.
- Fudo - Wednesday, May 6, 15 @ 11:31 am:
Wordslinger, actually work is underway to develop the most advanced evaluation model/system out there based in part on the work Michigan (I think it’s Michigan. The conversation was a few months ago) is doing. The problem for them now is staffing. The are trying to recruit the staff to get these things well underway. I expect to see great work coming out of that Department (maybe for the first time)
On a related note, I heard that the CFO for DCEO was marched out, terminated. Something is going down there.
- Wordslinger - Wednesday, May 6, 15 @ 11:38 am:
Walker, it would be nice if Gov. Salesmen would return to the marketing message he pushed when he was big heat at World Business Chicago and the Chicago Convention and
Tourism Bureau.
The message he’s selling to the outside world right now is bankruptcy and corruption.
- Langhorne - Wednesday, May 6, 15 @ 11:44 am:
I liked the part in the original story that said this structure would also allow them to hire and pay more superstars, so they wouldnt have to be, ugh, regular state employees.
- Judgment Day - Wednesday, May 6, 15 @ 11:50 am:
If we really want to have an effect for small business, here’s a concept:
1) Fire a couple of the patronage employees DCEO is infested with. Not many, just a few…. to start.
2) Take the money and setup a very simple program for small business only - Less than $500k (I mean small) and with very limited paperwork.
3) Each small (actually, we should call it “Tiny Business Support Program”) gets a debit card for $2k good at a select number of places (Office Depot, Comcast, A.T.&T. (Internet), Walmart, Staples, OfficeMax, Newegg, Tiger Direct, local office supply stores, local ISP’s, etc.). I don’t care if it’s Illinois purchases or not - make the process simple & keep it simple.
4) Here’s the deal. First off, the vendors have to agree to give the cards government/best pricing. Secondly, the purchases always get deals on shipping and handling (much reduced rates, if not free). Don’t even care about sales taxes at this point. The most important point is to “Keep it simple”.
5) There’s a time limit of 3 years. Time limits are always unfair. Deal with it. Btw, no cash back.
6) Btw, it’s a card system. The State has full rights to audit purchases made through each card. But the card holders don’t have to submit all sorts of paperwork - again, keep it simple.
7) Risky. You bet. Assume that 60% of all money will be wasted (failures, even fraud). Assume that another 30% will be middling success stories. But it’s that last 10% you live for.
Think of this as “Venture capital for the little guys”. Because that’s what it is.
8) Last point: Right now we’re wasting an enormous amount of funding for patronage employees. Remember the IDOT guy who’s specialty was “Creating spreadsheets and planting trees”?
Bet his salary & bennies are up to $68k a year at least. That’s 34 potential ’startup kits’ for tiny businesses.
Illinois doesn’t have the money to play in the big leagues. So play ’small ball’ instead. We have strengths - so let’s play to them.
Just as a final thought, one of the real beneficiaries of this type of program could be agriculture here in Illinois. With water shortages and droughts out West, that’s opportunity for Illinois agriculture.
Just a thought….
- BlameBruceRauner - Wednesday, May 6, 15 @ 11:59 am:
Pretty interesting Judgment
I like it!
Take it a few steps farther, lets do this for small real food producing farmers.
Would give a lot of people a career that otherwise would be working for minimum wage.
They may still make minimum wage after all the hours they put in, but at least its a respectable, honest career they can be proud of.
- Honeybear - Wednesday, May 6, 15 @ 12:42 pm:
Judgement- It would never work. It makes too much sense. They rather have yet another meeting/conference with the 1% hosted by the 100k+ salaried political hacks (Schultz excluded) to discuss how bad things are in Illinois. It’s killing me every time one of these folks says “we’re losing jobs to Indiana”. WELL DO SOMETHING ABOUT IT! Hell, Judgement, I love your idea! 2 grand down here in the Metro East would REALLY help these struggling businesses! It reminds me of one of my favorite Will Rogers quotes. “Always give a dollar to a poor man. Don’t give it to the rich man. It will be back in the rich mans’ pocket by nightfall but at least it went through the poor fellers hand.”
- Judgment Day - Wednesday, May 6, 15 @ 12:47 pm:
Let me just toss an idea out there….
Anybody here have Plano Manufacturing plastic (resin) shelving units? Pretty good stuff, actually….. Expensive, but quality. And it’s IL jobs.
Anybody ever seen these small private ‘greenhouses’? Link: http://www.walmart.com/ip/37060746?wmlspartner=wlpa&selectedItemId=37060745&adid=22222222227024747582&wl0=&wl1=g&wl2=c&wl3=52538491391&wl4=&wl5=pla&wl6=84098983511&veh=sem
Have Plano build & sell a ‘base’ unit (generic, in different sizes & shapes) so other parties could provide the ‘glass/acrylic’ uppers.
Let’s say you are a small farmer on some lower quality ground (say, ground that has an average Adjusted Soil PI in the 80’s-90’s (btw, best soil tops out at 130 SPI - as a reference), so you put in six of these units, give then a 100% property tax exemption on AG Buildings that aren’t owner occupied. Yeah, there’s going to be other issues that have to be addressed (always are) - but this could work.
You’ve got yourself what if memory serves me, used to be called a ‘truck farm’. Grow veggies, flowers, herbs, - you name it.
Just a thought….
- A guy - Wednesday, May 6, 15 @ 1:29 pm:
Someone messed this one up. Too hard to read. Bummer.
- Michelle Flaherty - Wednesday, May 6, 15 @ 1:29 pm:
Did I miss IPI jumping to defend Sens. Manar and Dillard (SB 2) in 2013 from the exact same criticism from the media and Quinn’s administration?
Mr. Manar’s proposal is drawing big concern from officials at DCEO, who note that past privatization efforts have had a distinctly mixed record in Illinois and other states. The agency has an operating budget of about $500 million and administers more than $1 billion annually in federal funds, but that figure has caromed up and down with different governors.
“This new private entity would be shielded from public record laws,” DCEO spokeswoman Sandy Jones said. “There would be no transparency. Other states have tried to privatize economic development with terrible results.”
http://www.chicagobusiness.com/article/20130318/BLOGS02/130319822/lawmakers-go-after-states-economic-development-unit
http://www.chicagobusiness.com/article/20130318/BLOGS02/130319822?template=printart
Manar, the chief sponsor of the bill, narrowed the scope of House Bill 1544 after a series of hearings around the state where dozens of companies testified on behalf of DCEO. Critics of the bill also worried about less transparency. Manar said that the current bill still accomplishes what he set out to do: increase the accountability of DCEO.
http://articles.chicagotribune.com/2013-05-28/business/chi-senate-wants-5year-plan-from-illinois-economic-development-arm-20130528_1_illinois-senate-dceo-spokeswoman-d-bunker-hill
http://news.wsiu.org/post/il-senator-proposes-dceo-overhaul
But while Manar says it has been successful in other states. DCEO Interim Director Adam Pollet says just the opposite. He points to neighboring Iowa, which he says Manar’s plan is modeled after.
“And a report just came out a couple weeks ago that showed that 26% of the tax credits that that authority has given out has gone to companies that have members on the board of directors for that privatized economic development agency. That’s exactly the of issue that we’re very concerned about.”
Pollet also raises transparency concerns.
http://herald-review.com/business/local/committee-looks-at-privatizing-state-s-economic-development-department/article_fea72984-9050-11e2-a7e2-0019bb2963f4.html
- Downstate Illinois - Wednesday, May 6, 15 @ 2:50 pm:
Having actually read the bill unlike the reporter I noticed that too. I’m not gung-ho on this idea, but I’m not opposed to it as long as DCEO still has to approve the credits and everything is posted for the public.
My other issue with the article is that while the writer did mention IHPA would be abolished it reads as though the state is getting out of the historic sites business altogether, not that the Historic Sites Division is actually being absorbed in a new division of DCEO.
One question though. Will Cory Jobe be over that entire new division of tourism, historic sites and the Illinois Film Office or will someone else fill that position? He’s over tourism now and historic sites is supposed to fall under him the legislation places those two side by side in the agency.
- Skeptical - Wednesday, May 6, 15 @ 2:51 pm:
“Michelle Flaherty”
If you look at the Good Jobs First reports in my earlier post you will see that it is not only Iowa, but many other states as well (MI,WI,FL, etc.),that have performed poorly, non-transparently, and quite frankly, when it comes to job creation, abysmally. And, there is no good reason to believe that the Rauner administration will perform any better. It is political theatre and a smoke & mirrors ploy to put more $ in the hands of the rich at the expense of a poorly informed public.
- TwoFeetThick - Wednesday, May 6, 15 @ 3:59 pm:
===It is political theatre and a smoke & mirrors ploy to put more $ in the hands of the rich at the expense of a poorly informed public.===
This. This is the sole reason for pushing these proposals. If this does become law, and includes provisions that proponents say provide for better oversight and transparency than is found in other states, you can bet the farm that that extra transparency and oversight will be quietly removed in coming sessions when no one is paying attention.
Like most privatization, this is just a way to spread that juicy public money around to those deemed worthy, without anyone being able to connect the dots.
- Past the Rule of 85 - Wednesday, May 6, 15 @ 4:27 pm:
Has anyone explained how this new magical private organization is going to streamline and reduce bureaucracy when DCEO has to approve every deal? This is nothing more than a way to confuse and hide transparency and accountability. As a bonus Rauner will get to lay off a lot of people and then watch them apply for their old jobs for probably a lot less money and fewer benefits.
- Skeptical - Wednesday, May 6, 15 @ 4:36 pm:
Agree with =Past the Rule of 85=
Also, think about this. If they hire a bunch of DCEO’s current employees back, what will that say about Rauner’s “best & brightest” theory? In my opinion it will confirm it in a counterintuitive way - that is, they were already there. So, the Rauner win here will be he will get the “best & brightest” but he won’t have to pay “b & b” prices for them. Sounds like something Gordon Gecko would do.