* Peoria Mayor Jim Ardis bitterly complained about Gov. Pat Quinn in a Tribune op-ed the other day…
Peoria’s own Fortune 100 company, Caterpillar Inc., recently announced a $200 million investment to modernize its nearby East Peoria facility. But no new jobs were created. Why? Over the past 18 months, Caterpillar has hired about 11,000 people at facilities across America, yet Illinois hires remain flat. Why?
Except Cat just announced a bunch of new central Illinois jobs…
Caterpillar Inc. says it will spent $640 million to upgrade plants in East Peoria and Decatur, creating 300 new jobs.
A company spokesman tells the (Peoria) Journal Star that Caterpillar will make more tractors in East Peoria and more trucks in Decatur. The announcement comes two months after Caterpillar said it would spend $200 million to modernize part of its East Peoria plant.
* Mayor Ardis also used the op-ed to lay out his “solutions” for Illinois’ woes…
Do I have solutions? Glad you asked.
•Gov. Quinn has to develop a strategy. Don’t just talk about creating jobs, do it. Prepare quarterly assessments for our citizens so we know what’s going on.
•Institute a long-term tax reduction plan without creating an even bigger hole in the budget. Be more business-friendly!
•Create an executive-level task force of private business people. Think President Ronald Reagan’s Grace Commission or President Bill Clinton’s National Performance Review. Illinois has to do what private business does: Maximize efficiency through technology, shared service initiatives, outsourcing and so on. Give this group significant exposure and a platform to show the business community that you’re serious.
•Challenge our state legislators. Use your bully pulpit to squelch the rhetoric and put a real jobs plan in place.
“Gov. Quinn has to develop a strategy.” Well, yeah, but what should be the strategy? This suggestion is even worse than the usual empty campaign rhetoric.
Create a commission? Illinois has plenty of those.
And “Challenge our state legislators” to do what, exactly?
This isn’t a plan. It’s not even a list of viable talking points. I hope he’s not considering a bid for higher office, because if he is he’d better start studying.
Now, that’s not to say that the criticisms of Pat Quinn aren’t legit. They are. The man has no plans. Everything seems to be ad hoc, address today’s emergency, etc. But saying “Get a plan!” is not the same as actually having a plan, or a clue.
*** UPDATE *** Speaking of silly ideas, Congressman Joe Walsh just released a letter claiming that if Illinois got rid of its tax increase, Sears wouldn’t move away.
How absurdly naive.
Sears would have its hat out if Illinois had zero corporate taxation. Actually, the company probably doesn’t pay much in the way of corporate income taxes anyhow because executives have demanded an EDGE tax credit. That means the company gets to keep half the income tax withheld from its employees’ paychecks and all of the tax withheld from new hires. Companies with little to no state income tax burden usually ask for this credit.
Also, you know, there’s the budget ramifications of voiding the income tax, but Walsh doesn’t care about that.
[ *** End Of Update *** ]
* And then there’s this…
Lawmakers inked a deal that may save Illinois taxpayers $240 million and businesses $1.6 billion in federal taxes and fines over the course of the next decade.
The Legislature last week approved allowing the Illinois Department of Employment Security to sell bonds to pay off about $2.4 billion borrowed from the Federal Unemployment Account to keep unemployed Illinoisans’ benefits flowing during the Great Recession.
“It’s probably one of the biggest bills that passed (during the fall veto session),” said state Rep. Frank Mautino, D-Spring Valley, one of the lead architects of the deal negotiated over the summer and into the fall.
It’s slow, but some progress is being made here.
* Meanwhile, the Tribune editorial board takes on the state’s pension problems from a liberal perspective…
This year, Illinois must spend $5.8 billion — that’s 17.4 percent of the state’s operating budget, or more than $1 of every $6 — to meet its rising pension obligations, according to calculations by the Civic Federation of Chicago. That amount is most of what Gov. Pat Quinn, House Speaker Michael Madigan, Senate President John Cullerton and their fellow Democrats are collecting from the big income tax increase they enacted in January.
Worse, the Civic Federation estimates that the pension burden rises to $6.3 billion next year, to $7.7 billion in five years, to $8.2 billion in 10 years …
So if you’d like to see more state aid funneled to your child’s school, forget it. The public pension system is devouring ever more of that money.
If you’d like to see the state spend more to care for developmentally disabled citizens in your family or your community, forget it. The public pensions get the money.
If you’d like deadbeat Illinois to pay its billions of dollars in overdue bills, including money that might keep social service agencies and suppliers and universities from having to fire workers, forget it. The public pensions get the money.
If you’d like more health care for the most disadvantaged families in our midst, forget it. The public pensions get the money.
Nevermind that the Tribune has argued for deep budget cuts in many of these very same programs and completely opposes the only sane plan to pay off those overdue bills.
But they do have a point. Pension payments are eating up the rest of the state budget. No question about it.
* Related and a roundup…
* Unions, politics, the law - Those elements pose roadblock to pension reform
* Unemployment insurance deal to save state millions
* Chuck Sweeny: More jobs, not cells, would fix jail crowding
* Editorial: Quinn needs better plan for crowded prisons
* More Illinois birth certificate rules take effect
- walkinfool - Tuesday, Nov 15, 11 @ 2:23 pm:
Yep. Sounds like a political speech: sounds great, but little usable content.
- Fair and Balanced - Tuesday, Nov 15, 11 @ 2:26 pm:
It’s about time somebody discovered the Unemployment Insurance agreement.
This was a major bi-partisan accomplishment that got completely ignored in the media because it wasn’t “sexy” like gaming, CME, Pensions, etc. etc.
Instead, a bi-partisan group of legislators quietly worked with business and labor to fashion an agreed bill that will save businesses millions of dollars and protect the financial integrity of funds needed to pay unemployed workers.
Unfortunately it doesn’t fit into the “do-nothing” session meme that the media has declared.
How about it Rich, a column maybe?
- The Captain - Tuesday, Nov 15, 11 @ 2:28 pm:
Pension payments are governed by something called “the ramp”. The ramp refers to a 1995 law that was passed that laid out a payment plan to get to 90% fully funded pension system in 50 years. The pension systems had been and continue to be woefully underfuned. This plan was designed to correct that. However because of the politics of the time “the ramp” did not call for steady increases in annual pension payments, it continued to call for very low (inadequate) payments in the 1990s and then a very aggressive increase (that’s why they call it the ramp) during our current time period. All the investment losses in 2008 made the situation even worse.
When the Trib and the deities at the Civic Committee whine annually about how each budget fails to fully fund the pension obligation what they mean in each instance is that the annual contribution falls short of what was called for in the 1995 legislation (the ramp). To them the ramp is sacred.
EXCEPT NOW THEY’RE WHINING THAT LAWMAKERS ARE PAYING THE LARGE AMOUNTS THEY ARE SUPPOSED TO UNDER THE SACRED LAW.
Give me a break. Unsubscribe.
- wordslinger - Tuesday, Nov 15, 11 @ 2:31 pm:
•–Institute a long-term tax reduction plan without creating an even bigger hole in the budget. Be more business-friendly!–
What a great idea!
Why would anyone publish such babble? Oh wait, it’s the Trib edit page.
- Ahoy - Tuesday, Nov 15, 11 @ 2:50 pm:
here’s a plan, follow the Taxpayer Action Board plan that has already been developed to help the reduce spending. It’s just a thought. There’s a plan, it needs follow through and updated.
Also, pass the stinking debt restructuring bill and get on a payment cycle for this back-log of bills.
- Billy Dennis - Tuesday, Nov 15, 11 @ 2:52 pm:
Ouch. Not much to disagree with regarding Ardis. I think he is running for office. Never has so many words been used to say so very little.
- MikeMacD - Tuesday, Nov 15, 11 @ 2:55 pm:
I hope that Mayor Ardis will focus his problem solving skills on more important matters such as curing cancer.
All I’ve been able to come up with is:
1) Figure out a way to cure cancer.
2) Implement cure.
- Really? - Tuesday, Nov 15, 11 @ 2:58 pm:
The Captain -
Excellent post, minor quibble. The law took effect in 1995. It was passed in 1994 and signed by then Gov Edgar in August of that year. And before the braying starts about Mike Madigan, it was SB 533, and the Senate was then controlled by Pate Philip.
- Yellow Dog Democrat - Tuesday, Nov 15, 11 @ 2:58 pm:
illinois has added 185,000 private sector jobs since the tax hike took affect in January.
That’s not just more than any surrounding state, its almost as many new jobs as Indiana and Wisconsin combined.
These arguments about corporate tax breaks are absurd.
Could someone please tell Quinn to call me?
- Rich Miller - Tuesday, Nov 15, 11 @ 3:10 pm:
YDD, I did, remember?
- OneMan - Tuesday, Nov 15, 11 @ 3:12 pm:
Almost as many jobs as WI and IN combined…
Wow, until you do some math
IN 5,054,000 Population
WI 6,400,000 Population
————————–
11,454,000 Total
IL 12,900,000 Population
Then not so impressive
- Yellow Dog Democrat - Tuesday, Nov 15, 11 @ 3:25 pm:
@oneman - its pretty impressive to those 185,000 Illinoisans that now have jobs.
Based on the rhetoric of Republicans, you’d think that Illinois has lost jobs over the past 10 months.
Ironically, the biggest barrier to job creation in Illinois isnt our tax rate, its the amount of time and money our own politicians and business “leaders” spend telling the world that illinois is anti-jobs.
They are shameless.
- OneMan - Tuesday, Nov 15, 11 @ 3:31 pm:
Got any facts to back that statement up or did you just want to take a shot at Republicans?
When we have a higher job growth rate than our neighbors, then I will be impressed. I am not saying job growth isn’t nice, just saying until we are ahead of the neighbors it isn’t impressive.
- OneMan - Tuesday, Nov 15, 11 @ 3:34 pm:
Also using your same rhetoric
I could argue the economy is excellent, since I get calls from headhunters every week and my wife has a job. I however realize that is not case.
- Just Me - Tuesday, Nov 15, 11 @ 3:36 pm:
Quinn, Madigan, nor Cullerton have a plan. Why should Ardis be forced to do their job?
- trib has it back a-- - Tuesday, Nov 15, 11 @ 3:38 pm:
the revenues diverted from pensions allowed the other budget priorities to be adequetly funded for nearly a generation and actually allowed taxes to remain lower than they should have for the services we were funding. The state is no different than a family–they don’t save for retirement at the expense of lowering their standard of living–just doesn’t happen. The ramp can be changed and over time the tier 2 reforms will resolve the pension problem
- wordslinger - Tuesday, Nov 15, 11 @ 3:39 pm:
–Why should Ardis be forced to do their job?–
He put himself out there with an op-ed piece that says nothing. It’s no big deal, he just looks silly.
It’s like the old Steve Martin bit:
You could be a millionaire and never pay taxes. First, get a million dollars. Then don’t pay taxes. When the tax man comes around, say excuuuuuusssssseeeee me!
- Yellow Dog Democrat - Tuesday, Nov 15, 11 @ 3:51 pm:
@oneman - thats like arguing that the Cubs should be world champs because they showed alot of improvement during the season.
- Rich Miller - Tuesday, Nov 15, 11 @ 3:53 pm:
===Why should Ardis be forced to do their job?===
He shouldn’t, but he said he had the solution, and it was a joke.
- Truthteller - Tuesday, Nov 15, 11 @ 4:07 pm:
Does anyone think that allowing the income tax to expire will crowd out spending on important social services? How about the CME, Sears, and other corporate tax cuts? Don’t they crowd out those services? Why blame it on pensions?
Isn’t a pension for a child protective worker part of the cost of a social service? Isn’t a teacher’s pension part of the cost of education?
- Yellow Dog Democrat - Tuesday, Nov 15, 11 @ 4:18 pm:
@Rich - I do remember, and thanks again.
Unfortunately, my repeated phone calls and emails werent returned.
@oneman - i’m not arguing that we dont have more progress to make. But lets acknowledge that we are headed in the right direction, and that there is no empirical evidence to support the argument that the corporate tax increase is causing jobs to leave Illinois. In fact, the data tells the exact opposite story.
However, Perception often trumps reality, which is why consumer confidence is such a powerful economic indicator. And business owners and capital investors are only human, so when they read newspaper quotes and editorials blasting Illinois as anti-business, of course it impacts their decisions.
- Yellow Dog Democrat - Tuesday, Nov 15, 11 @ 4:27 pm:
Btw, Doug Whitley of the Illinois Chamber was quoted by the AP as saying pretty much the same thing three weeks ago.
- Mark - Tuesday, Nov 15, 11 @ 4:43 pm:
My first post was previous to 4:28.
- Rich Miller - Tuesday, Nov 15, 11 @ 4:44 pm:
Mark, either get yourself on topic or go away.
- Way Way Down Here - Tuesday, Nov 15, 11 @ 5:16 pm:
YDD is right, we live in anxious times and the constant negativity has a chilling effect. FDR said it best.
- Anon - Tuesday, Nov 15, 11 @ 6:44 pm:
good article on the pension problem
- steve schnorf - Tuesday, Nov 15, 11 @ 8:23 pm:
Rich, it’s worth reminding people that it is not the cost of the pensions that is breaking the bank. If that’s all we were paying, our payments would go down about 50% this year.
It’s the cost of the debt service on the uncontributed money from past years that is causing the strain. That payment is what is being ramped up, not the normal cost of the pensions, which is a very manageable number. Ever hear the Civic Committee tell you that?
- Judgment Day - Tuesday, Nov 15, 11 @ 8:35 pm:
“The Plan” - Part I:
Ok, realize that Pat Quinn most of the time probably can’t remember how to find his way home. So he’s got to have a “Plan” of some sort - it can’t just be “Cut Taxes” or anything simple. That’s just not how he thinks.
So, here goes….
1. Every TIF district in the State has to set aside (each year) $5k per $100k collected (as actual TIF Increment dollars) over the next 10 years.
2) The money goes to the local Community College each year strictly for the development, equipping, and teaching of Additive (3-D Printing) Manufacturing - not 1 penny anyplace else. NO NEW BUILDINGS!
3) Option exists for 50% of the above money to be directed to a local EDC to acquire/renovate old industrial/warehouse space for an Additive Manufacturing incubator zone, but the EDC must pick up a minimum of 50% of all power/cooling/utility costs for the businesses locating in the Additive Manufacturing incubator zone. The EDC does have to provide a broadband pipe (min T-3 line) that is no monthly cost to the businesses.
4) Businesses locating in the Additive Manufacturing incubator zone can have a max. staff of 20, and under $5 mil a year in gross revenues.
5) The Worker’s Comp rates and UI rates charged to the businesses located in the Additive Manufacturing incubator zone are the lowest rates established for each year.
Crazy idea, and probably half+ of the businesses will fail. 30-35% will succeed to some degree, but it’s that last 15-20% you hope for.
Way too radical for IL to even consider…..
- wishbone - Tuesday, Nov 15, 11 @ 10:59 pm:
“Institute a long-term tax reduction plan without creating an even bigger hole in the budget.”
Good luck with that, Einstein.
- PublicServant - Wednesday, Nov 16, 11 @ 6:39 am:
-”Rich, it’s worth reminding people that it is not the cost of the pensions that is breaking the bank. If that’s all we were paying, our payments would go down about 50% this year.
It’s the cost of the debt service on the uncontributed money from past years that is causing the strain. That payment is what is being ramped up, not the normal cost of the pensions, which is a very manageable number. Ever hear the Civic Committee tell you that?”
Steve, I appreciate your comments on the sleazy way the Civic Committee trys to skew the numbers to mislead the public on the pension issue. So much for exercising their “civic” duty for the good of the public.
But, if the problem is the pension ramp law’s 15 year backloaded repayment schedule that we are currently in the midst of, and in the midst of during a severe reduction in state revenues due to the Wall Street-caused Great Recession, then why don’t we see any effort to replace the old ramp schedule with a more reasonable repayment law? The pensions are a long term commitment, and we ought to be able to more gradually return to full (90%) pension funding, rather than have the sort of draconian repayments mandated by a law approved by a Republican administration during much more prosperous times than we currently are in?
- PublicServant - Wednesday, Nov 16, 11 @ 6:45 am:
In addition Steve, wouldn’t restructuring the debt via a bond issue at today’s low rates save the state billions over say a 20 year period?
- Anonymous - Wednesday, Nov 16, 11 @ 8:00 am:
I’d caution everyone not to overestimate state corporate tax policy in the great scheme of things.
As Rich posted last week, 60% of Illinois corporations pay no state income tax. CAT, for one, has years where it pays none.
State taxes are a component in business. But state government doesn’t set trade policy, or set up foreign trade barriers. State government doesn’t set oil prices. State government doesn’t set monetary policy. State government doesn’t set the rate of labor in China and India.
- steve schnorf - Wednesday, Nov 16, 11 @ 8:01 am:
A couple of things. One, the ‘95 plan never anticipated periods of substantial decline in the state’s tax revenue. No reason for it to, since it had never happened before. In hindsight it’s clear that a plan must have some mechanism built in to accommodate that, while not opening the door to continued unsupportable spending when revenues decline by using pension payments as the piggy bank.
Second, unless I misunderstand, the “ramp” has ended, since 15 years have gone by.
Third, there’s probably nothing sacred about 90%; 80% might be just as good. At the same time extending the goal beyond 2045 is very expensive.
And last, POBs would save the state a lot of money, but they are a very hard sell, I think primarily because of the state’s past lack of discipline.
- Yellow Dog Democrat - Wednesday, Nov 16, 11 @ 8:09 am:
@publicservant -
Ive often suggested changing the ramp myself. A plan that is based in fiscal AND political reality would recognize that when we are in a recession, the state has basic and immediate obligations to meet, including an increased demand for basic human services.
A more sensible plan would have greatly increased pension payments in the late 90s when we were flush with cash instead of expanding programs and keep pension payments flat during a recession.
However, we also need to admit that pensions are not the SOLE cause of our structural budget deficit. The underfunding and misappropriation of public education completely undermines every other effort at economic recovery.
- Flatlander - Wednesday, Nov 16, 11 @ 8:09 am:
Civic Committee = middle class hating millionaires
Also, the Trib is a fiscally responsible organization in its own right, correct?
- Yellow Dog Democrat - Wednesday, Nov 16, 11 @ 8:18 am:
Btw, there is something completely perverse about allowing a relative handful of big businesses like Sears, Cat and CME and an even smaller handful of execs for those companies drive our jobs, spending and tax policy.
2/3 of the jobs are created by SMALL businesses. And every dollar we spend keeping CME here or providing tax breaks for Cat comes out of the pocket of a small business owner.
Unfortunately, big businesses like comed, walmart and caterpillar not only dominate the media, they dominate associations like the illinois chamber, retail merchants association and manufacturers association.
Illinois small business owners need a real voice in the public debate and in Springfield.
- PublicServant - Wednesday, Nov 16, 11 @ 8:22 am:
Thanks Steve. I didn’t think you’d see my post, but I appreciate the comments. I don’t see what’s so magical about the 90% level either. TRS has done just fine being underfunded at a much lower level since the 1950’s, having never missed a payment, nor having dried up it’s asset pool.
Secondly, if the Pension Obligation Bonds would save the state a lot of money over what they’re current payments are on the debt, I’d love to see some solid numbers to that effect. I’m not saying from you, but maybe IGPA, or COGFA.
As for finding some way to prevent the state from spending without having the revenues to back it up, that’s always a problem, and any solution, POBs, that save the state wads of money ought to be implemented independent of that. Saying no POBs, because we can’t control our spending, just siphons off state funds that would legitimately be available to fund state programs.
- PublicServant - Wednesday, Nov 16, 11 @ 8:25 am:
Gah, there’s that they’re/their mistake I often make rearing it’s ugly head again…