* From the Associated Press…
The Illinois Department of Commerce says it has reached tax-break deals with three companies following Gov. Bruce Rauner’s recent decision to reinstate corporate tax incentives.
The deals through the EDGE tax-credit program, though, would not provide tax incentives until Rauner and Illinois lawmakers agree on the overdue state budget.
The department did not provide the size of the tax breaks the companies would receive.
Under the deals announced Tuesday, Fabrik Industries Inc. of McHenry would add 25 new jobs and invest $5 million. The company now employs 264 people.
The other two companies are in Rockford and Northbrook.
* The reason I’m singling out the McHenry County company is because the Associated Press just ran a long story about corporate tax credits and featured that county’s most prominent state legislator, Rep. Jack Franks…
Though fond of some of the Rauner changes, Franks said they don’t address “the underlying program at all.”
He believes the EDGE program favors big companies far too heavily, something small businesses in the state frequently complain about.
“I think a better approach would be to lower the tax rates on all corporations,” Franks said.
Franks was also quoted in a recent News-Gazette editorial and the Tribune saying this…
“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.”
* Team Rauner asked if I’d seen the above story and then asked if I’d asked Franks about it. I told Rep. Franks what was going on and he responded via text with a statement…
They have tightened up some regulations but still have no way of measuring if there is a return in the investment. Additionally this is not line itemed and blows another hole in the budget.
I told the Rauner folks about Franks’ statement and they sent me an e-mail exchange from Rep. Franks…
From: [Jack Franks]
Date: August 10, 2015 at 10:42:47 AM CDT
To: [Richard Goldberg], Robert Stefanski
Subject: Fwd: Fabrik Molded Plastics, Inc.
Gentlemen the attached is self explanatory. This is not only an increase of 100 jobs but also the retention of 400
When I spoke with Mr Wagner he said the state was unhelpful and slow to respond. Can we get someone who is a decision maker to meet with him? I’m happy to answer any questions. Jack
Sent from my iPhone
Begin forwarded message:
From: “Keith C. Wagner”
Date: August 10, 2015 at 10:17:16 AM CDT
To: [Jack Franks]
Subject: Fabrik Molded Plastics, Inc.
Representative Jack Franks,
I appreciate your call and interest in helping Fabrik Molded Plastics with our intentions to grow our business in Illinois. It is good to hear that your willing to put efforts into persuading the state to hear about our plans hopefully offer some assistance to our company. Below is a short narrative regarding what we have been doing so far and what we plan to do in the near future.
Fabrik has been in McHenry County since 1980, 35 years. We are a custom plastic injection molder that employs 400 people and services companies throughout the world. Our primary niche is Automotive products for just about every automobile manufacturer. Our employees range from entry level machine operators to highly skilled executives. We are a growing company that invests within our community and our people. Fabrik continues to pursue interns from high schools and colleges, we also work with local workforce development groups, taking on new hires that have been struggling to find work.
Fabrik is growing our business and our current facility in McHenry will not allow us to meet our customers demands. So as any good business would do, the management team embarked on an analysis of expansion in IL and our options outside of IL. Our intended plan within Illinois, would be to buy the building adjacent to our facility in McHenry and add manufacturing capacity. The growth would cost Fabrik over 5 million dollars and would add 100 jobs in the next 3 years.
As we have been exploring expansion possibilities we have visited several other states and we are considering the potential of utilizing offers that are being made.
In the first quarter of 2015, Doug Martin of the City of McHenry and Pam Cumpata of McHenry County EDC met at Fabrik to have a conversation on our expansion plans for the company. Included in that conversation was Andria Winters of DCEO. The next step was to complete the State of Illinois Project Profile so that DCEO had information on the company and expansion plans. The Project Profile requested that we supply the offers from the other states, which I have declined to provide to DCEO until an Illinois offer is made. Illinois should make an offer if they intend to compete. Hopefully, Illinois will come through with a package that compares to our other choices.
Following the submission of the Project Profile and during the discussion requesting additional information, a representative from the Governor’s office contacted Pam Cumpata to inform her that the Governor was suspending the EDGE Tax Credit incentive until a State budget was in place and to my knowledge that is still the case.
On a local level, the City of McHenry and other taxing bodies are doing all they can to help create a financial incentive for us to aid in our decision process. The total amount that has been discussed as an abatement of taxes would equal $30,000 a year for 10 years. The abatement discussions are not going well, unfortunately the school districts that amount to over half the proposed abatement are not open to the idea. One of the school districts is not discussing the project with the City of McHenry, so it does not look good for the abatement to reach even half of the original proposed amount.
The timing of the start of this project is coming closer, we do not have the luxury of time that we had when we began this process months ago. We hope to hear from the State of Illinois in the next few weeks so we can begin to make plans to expand here where our roots are. Fabrik is not a big company with resources that can withstand a long period of courtship and legalities, so we can receive an incentive package that will aid us in expanding our business. We are hoping that a simple incentive plan that helps us financially with our growth plans can be offered by the state.
What can the State do to help is the question that needs to be answered. Training credits are welcomed, but do not add up to an incentive worth the time and efforts.
President, Fabrik Molded Plastics, Inc.
Jack did the right thing for his district. Good on him. It’s why the Democrat keeps getting reelected in one of the most Republican districts in the state. The man is relentless.
But now he wants to slam the door shut on other districts. Not good.
By the way, I texted Rep. Franks that the governor’s office had released his e-mail and didn’t hear anything back. I’ll let you know if he responds.
*** UPDATE *** From Rep. Franks…
I did not understand your statement that they sent you my email. It had not crossed my mind that they sent you the communication where I asked that they help my constituent.
My criticism of the program remains. It needs to have metrics to determine return on investment It also has to be included in the budget as a verifiable line item. The program needs to be further improved.
Having said that I also have an obligation to help my constituents which were eligible under the guidelines and I did so.
It would serve the governor better to listen to constructive advice instead of attacking the messenger.
To reform Illinois we need to work together. I continue to do so and invite the governor to join me.