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Tribune’s CEO survey shows glumness all around, except where it counts

Monday, Oct 24, 2011 - Posted by Rich Miller

* The Chicago Tribune’s editorial board conducted a survey of 45 CEOs of what it says are “top Illinois-based public companies.” The survey was conducted over the past six weeks and the results were compiled by Market Shares Corp.

To say these CEOs are pessimistic would be an understatement. The Trib decided to show numbers of CEO responses instead of percentages, but I’ve added some highlights to make it slightly easier to read…

* How do overall Illinois economic conditions compare with nearby Midwestern states? Much/somewhat better: 6 About the same: 9 Somewhat/ much worse: 28

* Within the next couple of years, how much confidence do you have that Illinois state government will solve its fiscal problems? A lot/some: 1 Not sure: 1 Very little/none at all: 41

* How effective are Illinois tax credits and other state and local incentives in attracting and retaining businesses? A lot/some: 13 Very little/not at all: 30

* How much progress is Illinois making in funding its public employee pension and retirement benefits? A lot/some: 1 Not sure: 5 Very little/none at all: 36

* How much progress is Illinois making on public school reform? A lot/some: 10 Not sure: 1 Very little/none at all: 32

* How much progress is Illinois making on curbing corruption in government? A lot/some: 6 Not sure: 2 Very little/none at all: 34

* How much progress is Illinois making on transparency in government? A lot/some: 8 Not sure: 3 Very little/none at all: 29

* The state temporarily raised taxes to reduce its budget deficit shortfall and pay overdue bills. How much do you think this will help reduce state budget deficits? A lot/some: 7 Very little/not at all: 36

* Is the state tax rate your company pays today fair or unfair? Fair: 16 Unfair: 24

* And except for Rahm Emanuel, they don’t particularly care for Illinois’ other major leaders…

What grade would you give the state’s political leadership for fostering a favorable business environment in Illinois?

* Pat Quinn, Governor Excellent/good: 3 Not sure: 1 Fair/poor: 37

* Rahm Emanuel, Chicago mayor Excellent/good: 28 Not sure: 3 Fair/poor: 10

* Michael Madigan, House speaker Excellent/good: 2 Not sure: 2 Fair/poor: 37

* John Cullerton, Senate president Excellent/good: 4 Not sure: 8 Fair/poor: 28

* Tom Cross, House minority leader Excellent/good: 8 Not sure: 14 Fair/poor: 19

* Christine Radogno, Senate minority leader Excellent/good: 7 Not sure: 17 Fair/poor: 17

* Again, these CEOs are very pessimistic about the state’s future…

* How will Illinois economic conditions in the next 12 months compare with the last 12 months? Much/somewhat better: 2 About the same: 20 Somewhat/ much worse: 21

* Do you agree or disagree that now is a good time for your business to expand its investment in Illinois? Agree: 13 Disagree: 30

* Do you believe the Illinois economy will grow at a faster rate than the nation, at about the same rate, or at a slower rate than the nation? Faster: 0 About the same: 14 Slower: 29

* How much are Illinois state taxes an impediment to making business investments in the state? Very little/not at all: 8 A lot/some: 34

* Yet, despite all that pessimism and negativity, a significant number of them have done and are planning some sort of expansion…

* This year, how much did your company expand its Illinois workforce versus last year, if at all? A lot/some: 16 Very little/no change: 17 Reduced: 10

* How much is your company planning to expand its Illinois workforce next year, if at all? A lot/some: 13 Very little/no change: 21 Reduced: 10

Of course this last set of numbers could be a whole lot better, but considering the international economic situation the responses were a bit more positive than I thought it would be, especially factoring in the almost universal disdain these people have for the state government and the state’s future.

Your thoughts?

* Related editorials…

* Making Chicago, and Illinois, competitive: Some companies offset these drawbacks by screaming for help until politicians come running with special tax deals and other bribes (invariably at the expense of other companies and individual taxpayers). The flip of that: Other companies don’t scream, they just relocate to more business-friendly states. Or they don’t even come here in the first place. Look at how painfully unresolved our taxpayer debts, our government retirement costs, our tax disincentives and our often underperforming public schools remain.

* Business to pols: Shape up: Gov. Pat Quinn tried to do some cheerleading last week, telling an audience at the City Club of Chicago: “We shouldn’t get down on ourselves. We shouldn’t sell ourselves short. We have a great state, great workers and great companies.” Governor, the leaders of those great companies, the people who hire those great workers and pay taxes in this great state — they want more than cheerleading. They want results.

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*** UPDATED x1 *** Combo of rate hike, tax increase make for dangerous political waters

Monday, Oct 24, 2011 - Posted by Rich Miller

*** UPDATE *** Here comes the trailer bill…

Sen. Don Harmon (D-Oak Park) told the Chicago Sun-Times that the package he intends to introduce Monday and position for a full Senate vote Tuesday will “make dramatic improvements to the bill that was passed in the spring, focusing on increased reliability, job creation and protection for ratepayers.” […]

Under Harmon’s trailer bill, which he intends to present Monday afternoon in a Senate committee, the state’s two main utilities, ComEd and Ameren, would be required to invest $1.3 billion in “smart-grid” modernizations and pour another $1.3 billion into beefing up their existing electricity-transmission systems.

That marks a reduction in how much the utilities could spend on smart-grid upgrades. The legislation that Quinn vetoed would have authorized $1.5 billion in smart-grid investments and $1.1 billion in upgrades to existing infrastructure.

Harmon said his legislation would bring down the amount of profit ComEd would be guaranteed from a minimum of 10.4 percent under the bill Quinn vetoed to 9.7 percent, which would cost the Chicago-based utility $30 million.

That return-on-equity benchmark would be “reduced in future out years” to the “high 8 percent to low 9 percent range,” Harmon said.

[ *** End Of Update *** ]

* This is no surprise on any front…

Gov. Pat Quinn on Sunday reacted to an AARP-sponsored poll showing that nearly 7 in 10 Illinoisans oppose annual increases in their electric bills, even if they would improve reliability and prevent outages.

“We want our legislators to listen better to the voters, the consumers of Illinois, both families and businesses,” Quinn said. “It’s very, very important on the eve of a legislative session that’s going to concern some of the most important economic issues for years to come that we take a stand and win for the consumers.”

In September, Quinn vetoed a $2.6 billion bill that would have enabled Commonwealth Edison to lock in a 10.25 percent yearly profit rate (with no cap), part of which would be used to underwrite a roughly $1.5 billion modernization of its power grid.

An override battle begins this week as lawmakers return to Springfield. The legislation is being pushed by ComEd and the downstate utility, Ameren.

Read the full poll by clicking here.

* More…

Nearly half of Illinoisans polled say that a rate-increase bill pushed by Commonwealth Edison should contain greater consumer safeguards and seven in 10 oppose raising rates to improve reliability, according to a new survey to be released Sunday.

The poll of 800 registered voters commissioned by AARP of Illinois and the Environmental Law and Policy Center — two groups fighting ComEd’s legislative push — comes as a major override battle in Springfield begins heating up with lawmakers returning to the Capitol Tuesday for the start of their six-day fall session. […]

The survey, which was performed Oct. 11 by the Joliet-based McKeon & Associates polling firm and had a margin of error of plus or minus 4.1 percentage points, found that 47 percent of those polled believed that bill should be “amended to protect consumers,” while just 11 percent said they believed it should be approved and signed as is.

Half of those surveyed described their monthly utility bills as too high, and 69 percent said they would be against an annual increase in electricity bills to “improve reliability and prevent power outages.”

Finally, reacting to a Better Government Association report in the Chicago Sun-Times, 81 percent of those surveyed believed utility company campaign contributions exceeding $1.3 million had “great” or “some” influence over legislators who voted in favor of bill in May.

Utility consumers are opposed to legislated rate hikes. No surprise. And since the “trailer bill” has not yet surfaced, its details couldn’t be polled. Supposedly, that trailer bill will lessen the vetoed bill’s sting.

* But a result buried way down deep in the poll did catch my eye. It also isn’t much of a surprise, I suppose, but the result ought to make legislators who voted for the income tax hike feel uncomfortable voting for this ComEd bill.

According to the poll, 76 percent said they’d be less likely to vote for a candidate who voted for the recent 67 percent income tax hike. 62 percent would be “not likely at all” to vote for that candidate.

Oof.

Couple that with the rate hike stuff and you’ve got major trouble.

* ComEd’s react…

The poll conducted by AARP is not a legitimate or credible survey. It’s a survey designed to produce a pre-ordained result. The language read to respondents is slanted with inaccurate and misleading information.

ComEd commissioned a poll in the last month that in fact found substantial support for modernizing the electric grid. This poll was conducted by one of the most respected polling firms in the nation, Peter Hart Research Associates.

Customers were asked their opinions on smart grid development and its potential reliability impacts. After hearing a description of a smart grid, three-quarters (76%) of customers support updating and modernizing Illinois’s electric system to include the technology. And, two-thirds (64%) of customers believe smart grid technology has a great deal or a fair amount of potential to improve the reliability of electric service and reduce outages.

We believe Senate Bill 1652 provides an array of benefits to Illinois in terms of job creation, economic development, environmental protections, consumer savings, regulatory reform and modern infrastructure. We look forward to working with members of the General Assembly to help make these benefits a reality.

* Lawmakers To Override Smart Grid Veto

* Back to ‘on’ for smart grid bill?

* Questions about electrical fires remain unanswered - 2 years after blazes touched off in a number of Naperville area homes, ComEd has not released a report on the cause, which is being sought in a suit filed by a homeowner

* Press Release: GE Backing ComEd’s Efforts to Modernize Power Grid - Upgrades to Electrical Infrastructure Will Power Economic Growth, Reduce Environmental Impact and Improve Lifestyles

* Forum: Illinois power grid needs boost

* Editorial: ComEd investment important, but not at ICC’s expense

28 Comments

Is Illinois becoming more governable?

Monday, Oct 24, 2011 - Posted by Rich Miller

* For the first time in a very long time, I was heartened after reading a statewide issues poll…

It’s long been a tenet of public opinion that voters want the government to cut its budget and don’t want new revenues, but also don’t want any actual programs slashed.

However, the latest Paul Simon Public Policy Institute poll shows a slow but sure trend in favor of specific state budget cuts and revenue increases.

A large majority of Illinoisans do still believe in magic. According to the poll, 58 percent say the state budget can be balanced by cutting waste and inefficiency. And because of this belief in an utter fantasy world where faeries reign and magic dust solves all our problems, too few want to actually cut state spending programs.

According to the poll, 80 percent oppose cuts in K-12, 74 oppose cuts to public safety programs and 83.5 percent oppose cuts to programs for people with mental or physical disabilities. About 65 percent oppose cuts to spending on programs for poor people. The Institute’s poll of 1,000 registered voters was taken Oct. 11-16 and has a margin of error of +/- 3 percentage points. This was not an autodial “robopoll.” Real people made the calls.

However, there is growing support for cuts. More Illinoisans wanted to protect programs in the Institute’s poll taken three years ago than they do today.

For instance, back in 2008 just 24 percent of Illinoisans favored cuts to pension benefits for state workers’ retirement. Three years later, that support has grown to 45.5 percent. As of now, 48 percent oppose those cuts, but 66 opposed those same cuts three years ago. And there’s a clear trend every year in between.

Also back in 2008, 73 percent opposed cuts to spending on state parks and environmental regulation, but that opposition has fallen to 55.6 percent (perhaps not a coincidence is the increased national Republican rhetoric over “job killing” government regulations).

Again, there is a clear trend over the years toward favoring more cuts. This is not what’s known as an “outlier” poll. In the 2008 poll, for example, 72 percent opposed cuts to state universities. By 2008, opposition had fallen to 61 percent, then fell again to 57.4 percent in 2010. Now, 54 percent oppose cuts to university funding. That’s still a solid majority, but far less than just a few years ago.

And while support for cuts has grown, so has support for some revenue generating ideas.

For instance, the Institute’s poll found that a very substantial 57 percent of Illinoisans now support gaming expansion, while 39 percent oppose it.

That’s ten points higher than the 47 percent who supported gaming expansion in the Institute’s 2008 poll. Back then, a slight plurality of 46.9 percent actually opposed gaming expansion.

We haven’t heard much from gaming opponents during this year’s months-long debate over expansion. They aren’t as organized or as vocal as they used to be, perhaps because they’re losing public support.

Also according to the poll, a very slight majority, 50.1 percent, support expanding the sales tax to cover services like dry cleaning or haircuts, which are not currently taxed. About 46 percent opposed the idea. But today’s support is way higher than in 2008, when only 28 percent favored expanding the sales tax to services.

And even though just 22 percent favored increasing the state sales tax rate, that’s still five points higher than the 17 percent who backed the idea three years ago.

Among the poll’s other findings, a whopping 69 percent of voters support raising cigarette taxes by a dollar a pack, while just 28.5 percent oppose it. The Institute has not asked this question before, so there’s no way to measure the history of its popularity in this particular poll.

Also, 49 percent opposed applying the state income tax to the retirement income of those earning more than $50,000 a year, while 43 percent favored the idea. This issue hadn’t been polled before, either.

What does all this mean? Well, people are gradually becoming more realistic about the state budget, which is a good thing. They’re becoming more conservative about spending and more liberal about new revenues.

These trends make the state easier to govern. Even with this year’s income tax increase, difficult budget decisions still must be made. The more people who are open to cuts and revenues, the easier it is politically to make those cuts and create those new revenue streams.

Read the poll for yourself by clicking here.

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