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Be smart about it for a change

Monday, Nov 23, 2015

* From a Champaign News-Gazette editorial

State Rep. Jack Franks, a Democrat from Marengo, has long been critical of the EDGE program. He’s said that he doubts “the EDGE credit programs works,” and he may well be correct.

* Full quote in the Tribune

“I don’t think the EDGE credit program works,” said Franks, who sponsored the 2003 corporate accountability law and co-chaired a House study last year on state tax policy. “I think it’s a loser, a dead-bang loser.”

As I’ve said many times, I’m not a huge fan of corporate giveaways, but the EDGE has had some significant successes

Among the first firms approved for a special EDGE deal was Ford Motor Co., which said it is collecting more than $25 million in tax benefits for the last five years and could qualify for an additional $20 million over the next four years after upgrading plants in Chicago and Chicago Heights.

Ford officials said EDGE was among the factors that helped secure jobs at the Chicago-area plants, where it agreed to keep 2,600 workers but said the local payroll now approaches 5,500.

And the new UAW contract means Ford will soon be investing a billion dollars to upgrade that Chicago plant.

That looks like a rousing success to my eyes.

So, the idea should be to reform the program and, as Rep. Franks has often demanded, do something to help small businesses as well.

* As far as the reform part, the governor has been working on it

Gov. Bruce Rauner is halting a practice that let dozens of companies collect millions of dollars in tax breaks for creating jobs at one office while eliminating a greater number of jobs at another location.

Though it is common for large companies to operate from multiple locations, the state’s flagship jobs program long allowed companies to treat every location, division or subsidiary as an independent operation. […]

His latest initiative will prevent companies from signing up repeatedly for deals and turning what was supposed to be a 10-year incentive into a long-term subsidy.

* But Todd Maisch at the Illinois Chamber urges some caution

In addition to insisting on job creation rather than rewarding job retention, the new rules would require that companies add jobs relative to their total number of workers in the state instead of at just one location. Some past deals rewarded companies for adding workers in one location while they cut elsewhere.

Maisch argues that taking away the retention credits is a mistake since other states that still do it will have an advantage.

“I do think it weakens our hands,” he said. […]

“There needs to be a bipartisan consensus around what happens when (Wisconsin Gov.) Scott Walker comes to town and really does a good job of convincing an employer from, say, Lake County to come,” Maisch said. “I imagine we’ll be talking with (Rauner’s) office very quickly.”

This from the same guy who went all-in on the state’s gridlock, urging the governor to “hang in there.”

Considering how bad this state’s business reputation is (most of it self-inflicted, but a good part of it due to the constant and very loud bad-mouthing by people like Rauner and Maisch), unilateral disarmament may not be a great idea. Yeah, it’ll make some people feel good, but I don’t know if cutting off our noses to spite our faces is ever a wonderful plan.

We should definitely be more discerning and stingier about these corporate subsidies. We need to make sure that the process is much more open. We also need to do something significant to help small businesses. But killing off all these subsidies is about as “smart” as killing off all labor union protections. Meat axes aren’t smart.

- Posted by Rich Miller        

18 Comments
  1. - Oswego Willy - Monday, Nov 23, 15 @ 12:57 pm:

    Boy, Todd Maisch…

    Weather vanes move less than he does these days.

    Hang in there, Todd, you’ll get one.

    To the Post,

    ===…cutting off our noses to spite our faces is ever a wonderful plan.===

    A good rule of thumb is lead, in anything you do, so your choices never end up as…

    “Well, we could cut off our nose to spite our face.”

    That should be a real big red flag on what’s next.


  2. - Anonin' - Monday, Nov 23, 15 @ 12:59 pm:

    Did anyone else notice CAT closin’ a plant in KY and movin’ jobs to IL


  3. - Precinct Captain - Monday, Nov 23, 15 @ 1:04 pm:

    It shouldn’t take our governor long to turnaround on the retention credits since the millionaire class is now whispering sweet nothings about them.


  4. - Juvenal - Monday, Nov 23, 15 @ 1:08 pm:

    === a good part of it due to the constant and very loud bad-mouthing by people like Rauner and Maisch ===

    You banged it there, Rich. Doug Whitley understood that most of the damage to the business community in Illinois was self-inflicted. He rightly argued that toning down the rhetoric that was driving jobs away from Illinois was in the Chamber’s self-interest.

    Maisch would do well to join DCEO in touting Illinois’ strengths.


  5. - pool boy - Monday, Nov 23, 15 @ 1:17 pm:

    I’ll wager Jack and Todd are Gillette men.


  6. - Honeybear - Monday, Nov 23, 15 @ 1:22 pm:

    Franks is right there is nothing for small businesses. Well, unless you’re in an enterprize zone. I get that it might be bad to stop the EDGE credits but I just don’t like the shady backroom feel of them. It’s only going to get worse if the Economic Development Corp is allowed to come into being. Then they can really hide it. How about they do something like EDGE for only small and medium companies. I just feel like large companies are blackmailing us. In the meantime why doesn’t DCEO stop putting all their efforts into an EDC and start helping the majority of companies which are small and medium sized.


  7. - Ares - Monday, Nov 23, 15 @ 1:43 pm:

    Given the recent scandal with VW accused of emissions-software cheating, the US Govt and AG Madigan should demand, as a condition of any settlement, that VW (and any future automaker defendants) disgorge / repay all tax breaks / incentives / subsidies going back 10 yrs, and agree not to take (or ask for) any tax break / incentive / subsidy for the next 20+ years. All 50 States need to get off the “incentive crack”, and cracking down on questionable business practices can be one way to do this.


  8. - 360 Degree TurnAround - Monday, Nov 23, 15 @ 1:48 pm:

    Why are they even talking with Maisch on this? Here is what DCEO’s website says about qualifying for an EDGE Tax credit. How many of the Chamber’s members qualify?

    “Each project must commit to make a capital investment in the state of at least $5 million and must create a minimum of 25 new jobs (excluding recalls, transfers, etc.); or companies with less than 100 employees must make a capital investment of at least $1 million and must create a minimum of 5 new jobs, or the project must meet the investment and job creation, and/or retention requirements as set forth by DCEO.”


  9. - Ahoy! - Monday, Nov 23, 15 @ 1:50 pm:

    The best help for small businesses is UI and workers comp reforms mixed in with some fiscal sanity that would allow businesses to have more certainty moving forward.

    Illinois needs an incentive program if it’s going to compete with other states on big jobs projects like the Ford plant. However, it might want to look beyond edge. Also, we need a massive focus on our higher ed in this state. We’re sending way too many kids out of our state because of tuition costs, put in another way, we’re sending way too much of our workforce to other states.

    Since it can’t be repeated enough, UI & Workers Comp reform is the best solution to help all businesses and increase jobs (we have 50% of the equation).


  10. - Anon - Monday, Nov 23, 15 @ 1:53 pm:

    Practicing local economic developer here.

    The hand-wringing over EDGE in this state is a joke. EDGE is an obsolete incentive and easily 20 years behind what the rest of the country has to offer companies.

    To wit: every state surrounding Illinois has a tax credit program that is either refundable (aka the company gets the value of the credit whether they generate income or not) or is transferable (recipient company can sell the tax credit to another user if they can’t use it themselves). Both transferable and refundable credits allow companies to monetize the value of the tax credit - aka it guarantees that the incentive has real value. EDGE offers neither.

    Think about it: companies moving into the state face their highest costs at the start of their project, when things are being built. This is also the point in time when revenues are the lowest - because the venture is just getting started.

    So what good is a non-refundable, non-transferable tax credit going to do a company when they’re experiencing high costs and not generating an income tax liability?


  11. - Anon221 - Monday, Nov 23, 15 @ 1:58 pm:

    And then there’s Mitsubishi-

    http://www.pantagraph.com/business/will-mitsubishi-have-to-repay-taxpayers/article_a007101e-0d75-52f9-8c11-7e18fbb04514.html

    http://subsidytracker.goodjobsfirst.org/prog.php?statesum=IL

    If you are truly going to tighten the EDGE program up, stop with the “maybes, mights, and not sures” of repayment. Don’t let a loophole where the company keeps the lights on to the very end with a skeleton crew so they are off the hook on repayments.


  12. - Jack Stephens - Monday, Nov 23, 15 @ 2:47 pm:

    We do need to be stingier with Corporate Welfare Entitlements including mandatory drug screenings. Just like we do with people who get “food stamps”. Can’t have Corporate Welfare queens driving around in a Lexus!


  13. - Blue dog dem - Monday, Nov 23, 15 @ 3:14 pm:

    Government picking winners. Why don’t we attack the core problem and give all companies in the Land O Lincoln the same tax deals. This is America isn’t it? It’s just as difficult for my company to survive as it is for Ford in a bad tax environment.raising my and my employees income tax to dole out to big corporations is not fair.


  14. - sal-says - Monday, Nov 23, 15 @ 3:40 pm:

    == Be smart about it for a change. ==

    LOL.

    This IS IL. ‘Be Smart’? You’re asking a lot.


  15. - Jimmy0 - Monday, Nov 23, 15 @ 3:58 pm:

    I believe the name of this website is called Good Jobs First where they keep track of all the state wide and some of the federal corporate subsidies and Illinois was actually ranked 1st with the best jobs created from subsidies


  16. - Blue dog dem - Monday, Nov 23, 15 @ 4:23 pm:

    Jimmyo- bet it doesn’t keep track on how many jobs were lost because some company got a tax break and their competition didn’t.


  17. - Last Bull Moose - Monday, Nov 23, 15 @ 6:51 pm:

    City of Chicago used to waste millions in New Market Tax Credits because city officials did not understand what they had. Most people who are good at picking corporate winners work for people like Warren Buffett.

    I don’t like the Edge tax credits. One of our problems is public corruption. These credits provide opportunities for corruption. Do we think we can prevent it?


  18. - Wordslinger - Monday, Nov 23, 15 @ 8:15 pm:

    Did I miss the statement from the governor thanking the UAW for using its collective bargaining power to leverage a $1 billion investment from Ford at Torrance Avenue and Chicago Heights?

    The governor couldn’t possibly let a $1 billion commitment of private investment for manufacturing go by unremarked, could he?

    It’s good news, right?


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