Illinois’ main economic development programs don’t have enough safeguards in place to make sure taxpayers get quality jobs from companies receiving incentive packages, according to a national analysis of state programs to be released Wednesday.
Good Jobs First, a Washington-based nonprofit that researches economic development subsidies, gave Illinois a D in the report, saying the state doesn’t require companies to offer workers health benefits or set goals on their pay. Those drawbacks more than offset the state tying incentives to jobs.
Illinois lags most other states in requiring that high-quality jobs result from its business relocation and retention incentives, a new study found. […]
“For a state that’s a big spender, to be rated this low and to be under the gun with high-profile deals like Sears or Motorola Mobility or CME, Illinois needs to be sure the jobs it is subsidizing pay good wages and have health care,” said Greg LeRoy, executive director of Washington, D.C.-based Good Jobs First, a non-profit critic of corporate subsidy programs, which conducted the study.
* The problem with this study is it looked at statutes and not results. So, for instance, a few of the major beneficiaries of state incentives over the past year have included Ford, Motorola Mobility, CME Group and Sears. All of those companies have solid wages and benefits at their headquarters and/or factories. But, the study doesn’t look at that.
Also, on the basics like job creation, job retention or training requirements, Illinois gets a perfect score in all but one of its incentive programs. In fact, in its “Performance Requirements” category, Illinois scores 140 out of 175, and has perfect scores 11 out of 15 times.
* However, the group does make a good point. The race to the bottom shouldn’t be happening here. We shouldn’t be using tax credits to create minimum wage jobs, which has happened in other states. Illinois has no market-based or even non-market based wage requirements, no healthcare coverage requirements and no other benefit requirements.
* One other point, according to Good Jobs First, states spent $11 billion on business incentives last year. Illinois spent $148.7 million in 2010. That’s just barely over 1 percent of the total spent nationally. We have a long ways to go before we’re spending more than other states.
…Adding… From Good Jobs First…
Rich,
Just thought I’d respond to your criticism that we only looked at statutes. We looked at both statutory language (statutes, administrative code, rules, other publications by the agency) as well as interviewed officials about what is typically included in subsidy contracts. DCEO was surprisingly difficult to get a straight answer and required us to file a number of FOIAs just to learn what the practices were with these programs. Ultimately, they rejected our most of our requests. Other states are very clear on what their programs require. Take, for instance, Virginia. It puts up documents detailing what each program requires. DCEO doesn’t do that. Conducting economic development on an ad hoc basis behind closed doors is not the standard set in other states.
While it’s true that Illinois does “only spend” $150 million in this fiscal year, we also know that many of the EDGE tax credits are not utilized (per Chicago Tribune investigation) because companies don’t have liabilities these days. Single Sales Factor apportionment, other than the down economy, is the most likely reason why many companies don’t have tax liabilities. When the economy bounces back in Illinois, it is quite likely that these blank check tax credits will bump up costs to the state. Since taking office, the Quinn administration has awarded $600 million in EDGE tax credits alone. These will cost the state at some point in time, even if it’s not today.
These state figures also ignore how much Illinois spends on local subsidies like TIF and property tax abatements. The last time anyone counted, in 2008, TIF alone diverted over $1 billion in property tax revenues from local governments. It could be the case that state aid to local governments is picking up the tab for the revenue loss from local subsidies.
Best,
Thomas Cafcas
Good Jobs First
…Adding More… Response from DCEO…
While it is not the department’s usual practice to engage in political rhetoric through the media, we feel it is important to address a number of the claims made by Thomas Cafcas to the Capitol Fax. After Mr. Cafcas contacted DCEO regarding film subsidies, we arranged a conversation with the director of the Illinois Film Office and other DCEO officials. Following that conversation, DCEO sent him the attached letter, which included the offer to provide any additional information he needed.
We make every effort to provide the public with adequate and timely information related to our programs, which is why much of the information related both to our services and our program expenditures is now posted online. It’s unfortunate that Mr. Cafcas seems to be more concerned with garnering headlines than serving as the public watchdog his agency purports to be. Were they genuinely interested in productive dialogue aimed at boosting job creation, perhaps they would have shared their findings with states – rather than just the media.
A fact that is missing from Mr. Cafcas’ letter is that the $150 million or so the state has made in EDGE investments, it has supported nearly $11.5 billion in actual and projected investment, and created and retained tens of thousands of jobs. Since January 2010, Illinois has added 108,100 jobs and saw the largest job gain in the nation (more than 30,000) in the month of October. We acknowledge there is still more work to be done, and this administration is committed to continuing our work to bring businesses to Illinois by highlighting our tremendous assets such as reforms to unemployment insurance and the workers’ compensation program; investments in our infrastructure, innovation and foreign trade; and of course highlighting our world-class workforce. Those are the headlines that matter to us in Illinois.
Thanks,
Marcelyn Love
Communications Manager
Illinois Department of Commerce and Economic Opportunity
CME’s earnings per share will be about 4.76% higher than they would have been; CBOE’s will be 3.16%, [Chicago exchange analyst Niamh Alexander of Keefe Bruyette & Woods Inc.] estimated.
Did anybody buy stock this week?
* And while CME Group was lobbying for a big tax cut, it was also angering traders, who say the firm’s new rules could leave them out of a job…
CME said it will start incorporating data from electronic trading to set grain and livestock closing prices by next spring, a move that could sharply limit the role of the trading pit where closing prices have always been set.
We essentially leave it up to the governor’s office to make sure that these incentives aren’t being doled out to companies that don’t care about their employees. […]
While the pits are typically quiet for much of the day, the final minutes of each trading session are marked by frenetic buying and selling because only pit-traded dealings are used to set the official end-of-day price. […]
CME has a long history of adopting rules that tend to push trading to the computer screens, in large part because once contracts are traded electronically, volume historically rises. […]
“Basically it will be a pit killer,” said Jim Clarkson, an analyst for A&A Trading. “My feeling is big traders, including funds with the big volume, want the business on screens. But I believe the more traders you have, the better markets you have. In the end, all electronic trade will be much more volatile with bigger price moves.”
* House Republican Leader Tom Cross is having a press conference today at 9:30 about the corporate tax rate. I may do a live blog. We’ll see. Check back…
House Republican Leader Tom Cross, of Oswego, who has called for rolling back the temporary increase in the corporate income tax, is expected to unveil legislation regarding that tax Wednesday morning.
* And Gov. Pat Quinn and Senate GOP Leader Christine Radogno both offered up observations yesterday…
“Sometimes when you have an emergency, where another state is trying to take a big employer… we’re not going to stand on the side of the road and watch them do it,” [Quinn] said. “We’re going to roll up our sleeves and protect our jobs.” […]
Senate Minority Leader Christine Radogno, R-Lemont, said she’s willing to say “no more” to individual business tax breaks until the state’s corporate income tax structure is reviewed.
“I don’t call the shots entirely, but I think that’s one approach,” she said. “We need to say, ‘We recognize we have a problem,’ I think you heard a lot of recognition of that today. We need comprehensive reform, and that may be one way to hold our feet to the fire to get it done.”
*** UPDATE 1 *** Leader Cross’ presser is starting, so let’s go to the ScribbleLive session feed. BlackBerry users click here, iPad and iPhone users remember to use the “two-finger” scrolling method…
*** UPDATE 2 *** From Senate Republican Leader Christine Radogno…
“We’re hopeful the House effort is successful and we’ll have the opportunity to repeal the tax increases that are driving jobs out of Illinois and hurting families. Our similar efforts in the Senate have so far fallen on deaf ears. But perhaps, with the spotlight now clearly shining on the failure of the Democrats’ tax increases and fiscal management, they will join with us to take a comprehensive look at Illinois’ tax structure, business regulation and over-spending.”
* Cat: R&D provision ‘a small step’: “Passage of this bill does not alter the fundamental dynamic for the state as a place to do business. From a financial standpoint, Illinois is a patient in critical condition. Yet Springfield continues to react in crisis mode, using Band-Aids rather than developing a long-term plan to get the state on the road to being healthy,” Dugan said. “We hope our political leaders can move away from this crisis approach and develop and implement a long-term strategy that moves Illinois away from being rated 48th out of 50 states in terms of business climate to a ranking that will encourage job creation, business growth and business involvement.”
* Rosenthal: Tax wishes keep Sears, CBOE, CME Group home in Illinois for holidays and beyond - Incentive package, worth an estimated $371 million a year, heads to governor for approval
* Press Release: Chamber Commends Illinois Governor and Legislature’s Support for Business
* Press Release: Sears Holdings Applauds Illinois Lawmakers for Recognizing Company’s Value to the State
* Bill to ease rules for small cemeteries sent to governor
The video replays footage of Walsh’s famous brunch-time freakout at Uno Chicago Bar & Grill, over a soundtrack of The Clash’s cover of “Brand New Cadillac,” which is supposed to make us feel that Walsh is out of control.
“Don’t blame banks and don’t blame the marketplace for the mess we’re in right now,” he shouts. “I am tired of hearing that crap.”
Without a doubt, this Walsh candidacy is gonna be a fundraising bonanza for Duckworth and Raja Krishnamoorthi, but…
It is not true that House Speaker John Boehner (R-Ohio) promised Walsh $3.5 million for an 8th district run. Last week, Walsh switched from the 14th district, where he faced a GOP primary with Rep. Randy Hultgren (R-Ill.)
“That number credited to him is not accurate,” Cory Fritz, Boehner’s political spokesman told me Monday. Duckworth is using the $3.5 million number to help jumpstart her donations, attributing it to a report in a suburban paper.
* Meanwhile, Peter Roskam isn’t exactly champing at the bit to endorse Walsh…
Rep. Peter Roskam (R-Ill.), a member of House leadership, says it is premature to back anyone yet because a federal court panel in Chicago has not yet ruled on the legality of the Democratic-drawn congressional map. The map is designed to help Democrats pick up seats.
“We’re not even convinced the new 8th District is going to exist. So It is entirely premature to discuss any hypothetical matchup while the map is still with the Courts,” Dan Conston, Roskam’s spokesman told me.
* Duckworth’s campaign is doing whatever it can to generate press, including placing stories about old donations…
Top House and Senate leaders cut checks for Iraq War veteran Tammy Duckworth’s (D-Ill.) House bid recently — a strong signal that top Democrats are ready to make a significant investment in her campaign for the 8th district.
House Minority Leader Nancy Pelosi (Calif.), House Minority Whip Steny Hoyer (Md.) and Senate Majority Leader Harry Reid (Nev.) donated to Duckworth in the past couple of months via their campaigns or political action committees, according to the House hopeful’s campaign.
The disclosure comes only a few days after freshman Rep. Joe Walsh (R) announced he’ll seek re-election in the 8th district instead of running against his fellow GOP freshman Rep. Randy Hultgren. The donations are also notable because Duckworth faces former Illinois Deputy Treasurer Raja Krishnamoorthi in the Democratic primary this March.
* In other campaign news, the idea for allowing candidates to draw a salary from their campaign funds was designed to let the non-wealthy compete with people who didn’t have to work for months at a time. But, of course, it was inevitable that somebody would take advantage of the law…
Chicago aldermen get paid $114,000 a year, but a FOX Chicago News investigation finds two of them are paying themselves out of their campaign funds for extra work, like marching in parades, passing petitions, and slating candidates at political meetings.
Ald. Danny Solis (25th Ward) has paid himself $194,778 since 2004.
“My job is to promote the Democratic Party in the 25th Ward, and that’s what I paid myself for,” Solis said. “If I paid a consultant, they would probably get paid maybe a little more than that if they were doing this full-time.”
The practice of paying for political work is completely legal, but David Morrison from the Illinois Campaign for Political Reform says when politicians pay themselves, it creates huge ethical problems.
“I can’t give you a bribe, but if I can give you money you can convert to your own use it’s the same thing,” Morrison said.
That’s less than $28K a year, but the guy is making a decent buck as an alderman.
Lots of people in Washington, D.C., own lots of stock in companies whose profits are affected by federal legislation. But one holding by DuPage County Congresswoman Judy Biggert now is drawing particular scrutiny.
According to her federal financial disclosure, Ms. Biggert, R-Hinsdale, is one of four members of Congress who own stock in TransCanada Corp., the company whose plans to lay pipeline from Alberta to the American Midwest have stirred an environmental furor and have been at least temporarily sidetracked by the Obama White House.
Ms. Biggert’s stake is valued at between $1,000 and $15,000, according to the disclosure.
If that’s all that was there, the matter likely wouldn’t be worth much more review.
But, as first reported by the Sunlight Foundation, a Washington research group, Ms. Biggert last month tweeted about the White House action, writing, “WH caves to anti-American energy lobby, delays job-creating Keystone XL Oil Pipeline.”
Nowhere in the tweet did she mention her ownership of up to $15,000 in stock.
* If nothing else, the corporate tax cut bill raids Indiana…
An Indiana-based maker of automobile replacement parts is one step closer to receiving a tax incentives package worth $3.5 million over 10 years that would see the company move its corporate headquarters to Illinois.
UCI International Inc. is the latest in a growing number of companies seeking a special break in exchange for jobs. The company was added last week to a bill aimed at keeping Sears Holdings Corp. and CME Group Inc. from exiting the state. The Illinois House approved the tax-break package Monday. The Senate is expected to consider it Tuesday.
Look, I’m no fan of these cross-border raids, but I’m really getting tired of Indiana and other states bad-mouthing Illinois and attempting to steal our companies.
A buddy of mine had an interesting suggestion yesterday. Every time one of these states tries to lure a company out of Illinois, we ought to go after one of that state’s biggest companies with everything we have. In other words, the “Chicago Way.” Don’t bring a knife to a gun fight, fellas.
We might not have to do that too many times before other states get the message: Lay the heck off.
For instance, how about we make an offer on the Indianapolis Colts? The team sucks this year, but they’ll improve when their quarterback returns. We could move it to Arlington Heights in exchange for no slots at tracks. And then we could grab the Pacers and move them to the Metro East or the STAR Bonds district in Marion. St. Louis has no basketball team, so let’s get one and grab another state’s money in the process.
OK, that was mostly snark. But, seriously, we can’t just sit by and allow ourselves to be hammered like this. Repealing the tax increase would cost too much money and put the state in an even deeper fiscal hole. Maybe it’s time to fight fire with an even bigger fire as well as reforming some business laws.
The Illinois House approved a package of tax relief on Monday for families and businesses, including some big names like Sears and the Chicago Mercantile Exchange that are threatening to leave the state.
When fully phased in, the tax cuts would cost state government roughly $320 million a year. Chicago-based financial exchanges operated by CME Group Inc. and CBOE Holding Corp. would get about $85 million of that tax relief. Sears Holdings Corp. would get about $15 million.
Those companies have warned that they might move their operations to other states unless Illinois offers them incentives to stay.
During the debate, protesters unfurled a banner saying “Stop Corporate Extortion.” They were soon led out of the House chamber and discussion of the bills resumed.
The Illinois House approved tax breaks for the Chicago Mercantile Exchange Monday in a move that could cut short its parent company’s talks with outside suitors, including Downtown Indianapolis and Carmel.
It was CME Group Inc., after all, that made noises about relocating most of its highly paid 2,000 employees to another state after the House initially voted down a similar measure last month.
Still, the Indianapolis mayor’s office is watching the developments closely until any possibility of a move is off the table.
Also, local governments — such as Community Unit District 300 in Carpentersville — would get about double the property taxes they now get from the deal, and Hoffman Estates wouldn’t be allowed to use its share to run or pay for the Sears Centre.
“This is a bittersweet victory for us,” said District 300 Superintendent Michael Bregy, who was in Springfield Monday. He noted that while the school district will get more money under the plan the House approved, it wasn’t as much as he wanted.
“We were able to negotiate the best possible deal,” Bregy said.
Thirty-nine Republicans supported the [corporate tax cut] plan after accounting for only one of the eight votes on Nov. 29.
“It’s not a break. It’s not a credit. The reality is they’re being taxed on all of their trades, and that’s not fair. That’s not right,” House Minority Leader Tom Cross (R-Oswego) said of CME, whose trades are taxed by Illinois whether they occur in or out of the state. […]
House Republicans were mostly missing in action on the other piece of the tax-relief package that passed 67-49. It would double the earned income tax credit available to the working poor and increase the standard exemption for all taxpayers by tying it to the rate of inflation.
Senate President John Cullerton, D-Chicago, and Senate Republican leader Christine Radogno, of Lemont, each are optimistic the provisions will win Senate approval on Tuesday, according to their respective aides.
The measures are nearly identical to those of a single, overarching package that received bipartisan support in the Senate late last month, only to be shot down in the House.
“We had agreement about what was put into one proposition and we hope there will be the same level (of) support,” said John Patterson, a spokesman for Cullerton.
