* The House narrowly approved a bill this afternoon to lift the state’s smoking ban at Illinois casinos…
The proposal, which passed 62-52 and now moves to the state Senate, represents a significant softening of the state’s 2008 anti-smoking law that banned tobacco use in virtually all indoor public areas.
“Ladies and gentleman, if we’re serious about our budget crisis in Illinois, let’s be real. This is not about the smoking issue. This is about the money,” said Rep. Dan Burke (D-Chicago), the bill’s House sponsor.
Burke said the smoking prohibition has cost the state $800 million in lost casino-tax revenues since the imposition of the ban and would put Illinois’ casinos on par with casinos in neighboring states that allow bettors to smoke.
Opponents argued that other states have added casinos, which partly accounts for Illinois’ sliding casino tax revenues, and that carving out an exemption for casinos will embolden other businesses, like bars and restaurants, to try legislatively sidestepping the smoking ban. […]
A report by the General Assembly’s Commission on Government Forecasting and Accountability characterized the indoor smoking ban as “the biggest contributor” behind a 28 percent decline in casino revenues since January 2008.
* Gov. Pat Quinn, however, has said he opposes the idea. Listen…
Even if the bill makes it through the Senate, supporters have a long way to go to find the votes to override a Quinn veto. Then again, Quinn has changed his mind before.
Discuss.
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* I’ve seen more than a little misinformation about the leaked letter by Caterpillar’s CEO and chairman revealing that he’s being intensely wooed out of state. I told subscribers about it this morning, but figured I should probably post some of that here since things got kinda outta hand in comments while I was gone.
First, this stuff about how the recent tax hike will cost Caterpillar $40 million comes from an ABC7 story linked in my absence…
Caterpillar also says the tax hike will cost them $40 million.
Not true. They got that number from a Wall Street Journal story…
The Illinois tax increase will cost Caterpillar’s 23,000 employees in the state about $40 million this year, said Jim Dugan, the company’s chief spokesman. Higher taxes make it harder for Caterpillar to attract and retain engineers, accountants and other employees, Mr. Dugan said. He added that Caterpillar’s corporate taxes in the state also will increase but provided no estimate on the added cost.
So, this was about personal income taxes, not corporate. As you might remember, I linked to a story several years ago about how Caterpillar had managed to avoid paying state corporate income taxes…
The Citizens for Tax Justice study found Boeing did not pay income taxes to any state during two of the three years studied, 2001 to 2003. During the two years in which Boeing did not pay state corporate income taxes, the company turned a combined profit of $3.1 billion, McIntyre said.
Other profitable Illinois-based corporations such as Caterpillar, Tribune Co., Sears and Sara Lee successfully avoided paying any state’s corporate income taxes during at least one year of the period studied by Citizens for Tax Justice.
Although tax returns for companies, as well as individuals, are private, the institute was able to determine whether companies were able to avoid state taxes by analyzing documents publicly traded companies must file with the Securities Exchange Commission.
* The Engineering News-Record took a look at the letter in a far less freaked out way than most local outlets….
“You’ve always been honest with me, and that’s why I want you to know about these letters,” [Cat CEO Doug Oberhelman] says to Quinn. “I’m not sending them to you as a threat that Caterpillar is leaving Illinois…I’d like to invest more here…but as the leader of this business, I have to do what’s right for Caterpillar.”
Oberhelman goes on to say that “the direction that this state is headed in is not favorable for business, and I’d like to work with you to change that.”
Caterpillar executives are chiefly concerned about lawmakers’ ability to balance the state budget, reduce state spending, create new workers’ compensation reform and renew a research-and-development tax credit. But so far, Cat has no plans to move.
“Again, we have not said we are looking to relocate,” Jim Dugan, Caterpillar spokesman, told ENR in an e-mail exchange. “We are looking to help Illinois to become more competitive for all businesses.” [Emphasis added.]
There are serious problems here, for sure. Workers’ comp reform talks are proceeding, but things aren’t going well, as subscribers know. The R&D tax credit Cat has will undoubtedly be renewed, as will others, especially now that the letter has been sent.
* All that being said, Cat is definitely looking elsewhere to build new plants. Here are just a few stories…
* Dec 18, 2008: Cat announces new plant in Texas - Company spokesman says plan is not related to decision to lay off Mossville workers
* January 5, 2009: Caterpillar plant, 600 jobs bound for North Little Rock
* Jul 30, 2010: Cat announces new North Carolina plant - 850,000-square-foot facility will be used for axle assemblies
* October, 2010: Caterpillar Selects Victoria, TX, For New Hydraulic Excavator Facility
It’s more than obvious that we’re losing out to other states.
* But the hyperventilating from politicians about this letter is getting to be a bit much. For instance…
Illinois Congressman Aaron Schock denounced Gov. Pat Quinn on Tuesday after Quinn dimissed the possibility of Peoria’s Caterpillar Tractor leaving the state because of high taxes.
The Peoria congressman told Don Wade and Roma that Quinn is “out of touch” and his “idiotic policies” could cost the state a Fortune 15 company.
“For the governor of the state of Illinois to scoff and laugh, that is very, very dangerous and it shows a level of naivety, that is indicative of a governor that is out of touch,” Schock said.
Quinn didn’t “scoff and laugh.” Listen for yourself…
In fact, Quinn is being presented with an award by the Caterpillar CEO next month in Peoria. The two obviously have a decent relationship, as evidenced by the “You’ve always been honest with me” comment in Oberhelman’s letter.
Also…
“I like to work with all the executives but the notion of leaving Illinois is not a good idea. We’ve had great companies like Ford, Chrysler, Navistar, and Boeing all come here with more manufacturing. They understand we have a good workforce, and if you have a government who wants to work with you, you’ll go pretty far.”
Again, no scoffing and laughing there.
* The first thing that came to my mind during my break, once the shock of seeing the blaring headlines wore off a bit, was that Gov. Quinn really needs to tone down the rhetoric and get to work on our problems and forget about everybody else’s. He’s upset about what happened in Wisconsin. Fine. We get it. But he’s running around the country like Mother Jones singing “Solidarity Forever” at the drop of a red hat. That sort of defiant, pro-union attitude won’t go over well with corporate types.
This is a centrist state, something that Quinn may not fully comprehend. He didn’t squeak by Bill Brady because he was so liberal. Quinn beat Brady because Brady was far more Right than Quinn was Left. The governor would do well to move to the center.
And while I don’t agree with Congressman Schock about the tone of Quinn’s response to the Cat letter, the governor should’ve sounded far more concerned. At least for appearance’s sake, for crying out loud. Show that you’re on it, man. Get busy. Lead.
* Also, while he’s at it, Quinn should check into this…
Modern Drop Forge Co. of southwest suburban Blue Island said Monday it expects to ship one of its two Illinois plants to Indiana, taking 250 Chicago area jobs with it. The 97-year-old company makes automotive, truck and recreational equipment parts.
“Illinois is becoming very, very unfriendly to manufacturers,” company CEO Pat Thompson told CBS 2.
Thompson cites not only the corporate income tax hike approved last year, but other state tax laws, workmen’s comp rules and prevailing wages.
“We now have just about the highest state income tax in the United States, and the overall income taxes for corporations in Illinois are amongst the highest in the free world,” he said.
Illinois has lost hundreds of thousands of manufacturing jobs in the last decade. We can’t do a whole lot about China and Mexico, but we can and should attempt to compete far better with neighboring states. Workers’ comp absolutely must be reformed, for instance.
* And speaking of neighbors…
Less than four months after losing nearly all of an $810 million grant, Wisconsin is again seeking federal high-speed rail money - this time to upgrade the existing Milwaukee-to-Chicago passenger line.
Gov. Scott Walker’s administration announced Tuesday that the state will seek at least $150 million to add equipment and facilities for Amtrak’s Hiawatha line. […]
In a bizarre twist, some of the money that Walker is now seeking originally was allocated for the Milwaukee-to-Madison route he previously turned down. That money is available because a fellow Republican governor rejected it, as well. […]
The state’s share of the cost of the maintenance building will be $12 million.
Walker earlier rejected a much larger rail project which would’ve cost the state about $4.7 million a year.
* Related…
* Caterpillar letter may trigger workers’ comp overhaul
* Cat CEO letter a wake-up call for Quinn, state
* What is Caterpillar trying to tell Illinois?: One is that the company wasn’t threatening as much as trying to send a message: Big segments of the business community think Illinois has become a terrible place to start or run a business. Two: Though we can disagree on details and solutions, we ought to listen to the message, because it contains much truth.
* Illlinois delays college construction projects
* Neb. governor tries to entice Caterpillar to move
* Wisconsin reaches out to Caterpillar
* Sen. LaHood: Caterpillar Letter is an Opportunity
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House Bill 14: Setting the Record Straight
Tuesday, Mar 29, 2011 - Posted by Advertising Department
[The following is a paid advertisement.]
Myth: HB14 allows Illinois utilities to automatically raise rates every year.
Fact: That is not the case. Under HB14, utilities are required to submit to more frequent oversight (annual) and still are subject to stakeholder challenge and ICC prudence reviews over 8 ½ months.
Myth: HB14 eliminates much of the oversight currently provided by the ICC.
Fact: HB14 actually strengthens oversight because it makes the regulatory process a more frequent annual process that is transparent, allows discovery, holds utilities accountable for every dollar they invest and jobs they create. The ICC retains responsibility for reviewing utilities’ costs and setting rates.
Myth: HB14 provides utilities with higher-than-needed profits.
Fact: Under the Public Utilities Act, utilities are allowed to earn a reasonable rate of return. This is done through determining a return on the equity invested (ROE) for the utility. This rate has varied from rate case to rate case. This proposal only changes the way the ROE is set and is consistent with past ICC approved ROEs. Utilities still must establish that they managed work prudently at reasonable cost and stakeholder challenge and ICC prudence reviews remain.
Learn the facts. Visit SmartEnergyIL.com
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Question of the day
Tuesday, Mar 29, 2011 - Posted by Rich Miller
* My weekly syndicated newspaper column is about Secretary of State Jesse White’s future…
Secretary of State Jesse White has been saying for at least the past two years that this fourth term would be his last. By the end of this term he’ll be the longest-serving secretary of state in the history of Illinois. It seemed like a good way to go out.
“This is my last run for public office,” White told the Chicago Defender just before the November election.
“I think I am going to spend time working with the Jesse White Foundation,” he said. The Chicago City Council recently voted to spend $10 million on a training facility for the Jesse White Tumblers, his signature group for inner-city youth. White’s foundation is supposed to kick in $5 million.
The new facility would be part of White’s significant legacy. Most people wouldn’t even drive near Chicago’s old Cabrini Green public housing complex. White went in there and recruited those kids, trained them to do superhuman feats and not only kept them out of trouble, but showed them how to make a life for themselves and their community.
Young boys who were looking at a miserable existence at the bottom of society’s ladder were given a chance to make it in the world. Only a tiny few have disappointed. The overwhelming majority have gone on to be productive, decent citizens. The impact White has had on those kids is truly one of the miracles of our time.
But I’d been hearing for a couple of months that White was thinking about running yet again when this term is up in 2014. I made some calls and was told by a few trusted insiders to just let it go for now. White and his top people simply were experiencing the rush of yet another big victory and eventually would calm down and White would retire.
So, I decided to bide my time and wait him out. But the rumors persisted and I eventually decided that holding off until March was long enough. It had been, after all, more than five months since his latest landslide victory. Surely that was enough time for White to put things into perspective.
I put in a call and asked to speak to the man himself. He called me back and confirmed the rumors I’d been hearing. White said he was “leaning toward” another run in 2014.
White told me he was “encouraged to rethink” his decision after being “inundated” with pleas to run again. White claimed people have telephoned, e-mailed, “stopped me in the street, stopped me in meetings” and asked him to reconsider his decision because, White said, the office is running well and they don’t want it to deteriorate again.
Some insiders say, however, that a few of White’s top staff members also have been quietly urging him on for their own personal reasons.
Whatever the case, if White does decide to run again, a whole lot of people in both parties are going to be pretty darned depressed. White has proved to be unbeatable in the office. He won all 102 counties in 2002, and his lowest vote share was the solid 55 percent he received the first time he ran in 1998. He has been the top statewide vote-getter in the last three election cycles.
But a line has formed around the block for 2014 as most folks in both parties expected that White would keep his word and leave office.
“I feel good,” White said, joking that, at 76, he was still a “youthful, young person.” He will be 84 at the end of a fifth term in 2019. But the man literally still can do handstands. He’s no spring chicken, but he’s in better shape than most of the people who want to replace him — and most of the rest of us, for that matter.
White said he hasn’t set a time frame for making a final decision.
“I’m leaning toward it right now primarily because of the wishes and desires of the people of the state of Illinois,” he said. “Plus, I enjoy public service. I love public service.”
Asked about all those potential candidates who’ve been queuing up to run for the office for the past several years, White quipped, “I expect when the time comes, there will be about 25 Democrats and 25 Republicans vying for the job.”
That may be an understatement.
* The Question: Do you think Secretary White should run for another term? Take the poll and then explain your answer in comments…
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Statistics
Tuesday, Mar 29, 2011 - Posted by Rich Miller
* This Wall Street Journal op-ed is making the rounds…
High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population’s during the recession. […]
New York, New Jersey, Connecticut and Illinois—states that are the most heavily reliant on the taxes of the wealthy—are now among those with the biggest budget holes. A large population of rich residents was a blessing during the boom, showering states with billions in tax revenue. But it became a curse as their incomes collapsed with financial markets. […]
In New York before the recession, the top 1% of earners, who made more than $580,000 a year, paid 41% of the state’s income taxes in 2007, up from 25% in 1994, according to state tax data. The top 1% of taxpayers paid 40% or more of state income taxes in New Jersey and Connecticut. In Illinois, which has a flat income-tax rate of 5%, the top 15% paid more than half the state’s income taxes.
For everybody else, the WSJ piece uses top 1 percent. For Illinois, it’s the top 15 percent. Why? Because Illinois is among 25 states where the richest one percent account for 20-30 percent of personal income tax receipts. In other words, we’re about average. So, why include us? You’d have to ask the Wall Street Journal.
Also, all five of the states most heavily reliant on taxes from the wealthy (California, New Jersey, Connecticut, New York and Vermont) have graduated income taxes. Illinois has a flat tax.
The piece may explain why Illinois tax revenues shot up in the late 1990s. But it only partially explains the recent revenue crash.
* And I’m not quite sure about this one…
Tax money coming into state and local governments in Illinois fell sharply — by $2.2 billion dollars between 2009 and 2010, according to the U.S. Census Bureau.
The decline in tax revenue from $32 billion to $29.8 billion is on par with a pattern that has emerged during the past several years. Areas that measure a state’s economic health — income, sales and property taxes — all have weakened. […]
While income dropped for Illinois, general fund spending increased from $27.9 billion to $29.7 billion between 2009 and 2010.
According to the budget office, General Fund revenues fell from $29.1 billion in FY09 to $27.9 billion in FY10. Actual General Fund spending, according to GOMB, was $29.8 billion in FY09 and $25.5 billion in FY10. I’m not sure why there’s such a huge discrepancy here, but maybe somebody can enlighten me.
* And one more thing…
If budget cuts aren’t made now, Radogno said Illinois will face a $22.7 billion deficit by 2016.
The Senate Republicans have repeated this stat for weeks now. What they’ve done is projected spending at the top of the statutory spending cap and used lowballed revenue forecasts. Since state law now requires the General Assembly to match up revenues with spending, it’s not exactly a trustworthy number.
However, the General Assembly really ought to lower those spending caps, which are too high. It wouldn’t mean much in the “real” world, but it would take this oft-repeated argument off the table.
* Related…
* Senate President Cullerton discusses state budget on Chicago Fox News
* IllinoisIsBroke.com launches statewide radio ad campaign
* That new Amazon tax. It was there all the time.
* Senator Radogno discusses Amazon Internet law: Remember, it was not a tax increase. It was simply a means to force places like Amazon to collect the same sales taxes brick and mortar stores must collect.
* At school for blind, travel budget cuts have impact beyond sports
* VIDEO: State Senator Kimberly Lightford On The GOP’s Proposed Budget Cuts
* Schilling amends tax philosophy: It was revealed last week that General Electric paid no taxes on $5.1 billion of profits made in the U.S. and actually claimed a tax benefit of $3.2 billion. “That’s not fair,” Schilling said.
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Illinois is now free of fleeing Democrats
Tuesday, Mar 29, 2011 - Posted by Rich Miller
* After about a month in self-imposed exile, Indiana House Democrats have finally left Urbana and headed home to Indianapolis. Here’s what they got…
So-called “right to work” legislation, which bars companies and unions from negotiating a contract that requires non-union members to pay fees for representation, is off the table, at least for now. House committee passage of this bill on Feb. 21 triggered the walkout. The measure is headed to a study committee.
Also dormant are 22 other bills that were approved in committee but did not clear the legislative process because of the walkout. Those include one that bars a future governor from signing an executive order allowing collective bargaining for state employees; another that would allow private companies to take over failing public schools; and one that bars funding to Planned Parenthood. However, the Senate still could deal with some of those issues.
House Bill 1003, which would allow some public school students to use state dollars to pay private school tuition, will be changed. Republicans have agreed to limit the number of vouchers to 7,500 in the first year and 15,000 the second.
House Bill 1216, which affects project labor agreements and wages paid on public construction projects. Current law requires the agreements, which guarantee a certain number of union jobs in exchange for no-strike pledges, on all projects that cost more than $150,000. As introduced, that threshold shot up to $1 million, with all school and university projects exempt. Republicans agreed to a series of changes during the walkout, lowering the threshold last week to $350,000 and including schools and universities. The final proposed amendment — put on the table late Thursday and filed in the House on Monday — phases that in over two years.
* The spin wars have begun in earnest…
House Speaker Brian Bosma, an Indianapolis Republican, said it was “public pressure” that drew the minority party back.
Not so, Democrats said.
“We are coming back after softening the radical agenda,” said House Minority Leader Patrick Bauer, a Democrat from South Bend.
“We won a battle, but we recognize the war goes on.”
Republicans, though, said the changes to which they’ve agreed probably would have happened during the regular course of action anyway.
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Heads. Must. Roll.
Tuesday, Mar 29, 2011 - Posted by Rich Miller
* We talked about a nightmarish group home for developmentally disabled people last week. A refresher…
A multimillion-dollar operation under state contract was supposed to be taking care of people with special needs. Instead, its employees are accused of fatally beating two residents and several incidents of abuse. […]
Forty-two-year-old Paul McCann suffered a brutal beating in January. The man called a gentle giant, who functioned at the level of a 6-year-old, was punched, kicked, and struck with a frying pan inside his group home for reportedly taking a cookie. […]
State records obtained by CBS 2, which date back to 2003, reveal 33 cases of Graywood staff abusing residents. Those cases included sexual abuse, physical battery and alleged coercion of residents to attack each other.
Even worse, in 2008, a resident named Dustin Higgins was murdered by staff. That death prompted an internal memo from the Illinois Department of Human Services Inspector General. The memo warned that Graywood residents were at risk amid an increase of serious allegations of abuse and neglect.
* Well, it turns out that the state’s Department of Human Services has known about the problems at that group home for quite a while…
Conditions at the group homes run by the nonprofit Graywood Foundation were “totally unacceptable,” according to a 2009 memo an Illinois investigator wrote to his bosses and the AP obtained through a Freedom of Information Act request.
The memo was written almost a year after murder charges were filed against two employees in the 2008 death of Dustin Higgins, another resident who lived in a Graywood group home. The homes were under intense state scrutiny, and the state eventually stopped them from admitting new residents.
But residents’ families weren’t told about the problems then – or even after state investigators substantiated 18 new allegations of staff abuse and neglect, according to an attorney representing McCann’s family and a state lawmaker working to improve the system.
You just wanna tear your hair out when you read stuff like that.
* Another problem…
While nursing home inspection reports are posted online in Illinois, there’s no similar information on group homes, an alternative to institutional care likely to be used more widely in Illinois after a preliminary settlement was reached this year a class action lawsuit over the civil rights of adults with disabilities.
Rep. Greg Harris is hoping to change that law.
* Meanwhile, here’s something else to make you beat your head against the wall…
Emails flew between the Menard Correctional Center workers’ compensation coordinator and a Central Management Services claims processor, using words like “pandemic” and “flood” to describe hundreds of repetitive trauma claims filed by guards at the Chester prison.
But despite the written concerns of two state workers whose job it was to deal with the rising number of workers’ compensation claims at the state’s largest prison, an investigation only began following newspaper stories a year later.
Those stories by the Belleville News-Democrat detailed $10 million for 500 workers’ comp claims filed by Menard prison employees.
More…
The emails also brought to light that some Menard employees on temporary total disability leave recuperating from surgery to correct a repetitive trauma injury were also getting elective surgery while off work for such things as hernia repair or lap-band surgeries to lose weight.
“Can we do anything about these people, while they are out on work comp, getting nonrelated surgeries?” Zellers asked in an email to Barry H. Wesley, an assistant attorney general who handles workers’ compensation cases.
“This would impede their recovery on the work comp claim and the taxpayers are paying for their time off for nonwork-related medical issues. … What can we do to stop this? Just ridiculous!” Zellers wrote to Wesley, whose job is to handle workers’ compensation claims that either are challenged and/or go to arbitration.
Ugh.
* And if that wasn’t enough…
State hearing officer Kathleen A. Hagan, who recently filed her fourth worker’s compensation claim three days before the deadline, is seeking a settlement for an undisclosed injury.
But the public will not learn — either before or after the claim is settled — how Hagan was injured. The only public reference about her accident on Feb. 13, 2008, is on a state website that simply reads, “knee and leg right.”
That’s because Central Management Services, the large state agency that handles much of Illinois’ state government paperwork, has taken the position that because it is self-insured, virtually all information it receives regarding a claim made under the Illinois Workers’ Compensation Act can be withheld because it is “proprietary.”
* More joy…
On a summer day in 2008, an Illinois Department of Corrections worker secretly watched as Calvin Landis, who had been receiving weekly total disability payments for five years for a back injury, moved furniture from his front porch, climbed a ladder and power washed his house.
Using a telephoto lens, the observer snapped photos as Landis, 45, a lieutenant on disability leave from a Du Quoin prison boot camp, performed about an hour of work at his home on Birch Road, a few miles from the camp. The photos showed Landis lifting an 8-foot step ladder by a rung with one arm, wielding the power wash spray head and scrubbing aluminum gutters by hand. […]
The photos were submitted to Landis’ supervisors at the Department of Corrections. Internal state agency e-mails obtained by the Belleville News-Democrat showed that corrections department administrators requested an investigation for possible violation of Illinois Workers’ Compensation Commission rules.
But no investigation resulted, according to copies of the department e-mails. For the past two years, Landis’ checks kept arriving, according to comptroller’s office documents.
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