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Some encouraging economic news, but yet another corporate tax incentive is questioned

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Illinois

The economic recovery may have stalled in parts of the South and West hit hard by the housing bubble, but Rust Belt states, buoyed by a manufacturing comeback, have seen a steady decline in their jobless rates over the last year.

Of the 10 states where unemployment rates dipped the most from May 2010 to May 2011, Rust Belt states — Michigan, Indiana, Ohio, Pennsylvania and Illinois — account for half, according to Labor Department figures.

Locally, metropolitan areas in the five Rust Belt states accounted for 30 of the top 34 declines in regional unemployment rates since last year, as well.

* More good news…

Chicago hoteliers are having their best year since 2008, as both occupancy and room rates are climbing thanks to increasing business and leisure travel.

The average daily room rate at Chicago-area hotels through May was $107.44, up 5.7% from $101.61 through the same period last year. The occupancy rate, meanwhile, stood at 56.8% compared with 54.3% through May last year, according to Smith Travel Research.

Seeing room rate and occupancies increase during the winter months is a strong indicator that the upcoming peak summer season won’t disappoint, says Brian Flanagan, president of Property Valuation Advisors Inc., a Chicago-based hotel appraisal and consulting firm.

* Even more…

Last year, Illinois generated $29.3 billion in revenue from the tourism industry, an increase of more than $2.2 billion from 2009, according to tourism data from Quinn’s office. Illinois visitor numbers increased by 5 percent, to 84.7 million, according to the data.

* Some mixed news…

Fewer leisure travelers came to Chicago last year, marking a low point for the city’s tourism in the past six years. But business travel perked back up.

A total of 38.1 million people came to Chicago in 2010, according to figures released Monday by Gov. Pat Quinn’s office. That was down 3.5% from 39.5 million visitors in 2009 and a 16.6% drop from 45.7 million in 2008. (Travel to Chicago peaked in the past decade in 2007, when 46.3 million people visited the city.)

Don Welsh, president and CEO of the Chicago Convention and Tourism Bureau, pins the drop on people reluctant to make day trips into the city.

“We’ve had a couple of spikes in gasoline prices, so in many cases, people will stay closer to home,” Mr. Welsh said.

But he says he is encouraged by the data showing the number of overnight visitors to Chicago rose 7.4% in 2010.

* But here’s yet another troubling report about a corporate tax incentive…

A $64.7-million state deal last September to keep Navistar International Corp. in Illinois lacks a guarantee that the truck and engine maker won’t cut jobs here. […]

In its application for state tax credits, Navistar said it employed 3,100 workers in four Chicago-area locations but planned to pare that number to 2,200, while hiring 400 more “over the next several years.”

Because of efficiencies and “normal attrition,” it added, “it is anticipated that the current work number will be reduced by 15-20%.”

Don Sharp, Navistar’s chief information officer and the company executive who negotiated the deal, said local employment should rebound to “that 3,100 number or above” by the end of next year, spurred by the closing of a truck plant in Ft. Wayne, Ind., and other consolidation.

Asked yesterday about a similar incentive for Motorola, which allowed it to reduce its state workforce by 800 people and still retain its $100 million tax package, Quinn said the proposal was a good one and added “They’re not going to be cutting back.”

Quinn also talked about reports that Sears is shopping around for a new headquarters. Listen…

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posted by Rich Miller
Tuesday, Jun 21, 11 @ 7:31 am

Comments

Two words: “Clawback provisions.”

Comment by Yellow Dog Democrat Tuesday, Jun 21, 11 @ 8:16 am
A drop in day trip leisure travel because if high gas prices? Another reason for taxpayer investment in high speed rail. When we buy affordable mobility for the people, they will travel.

Comment by Dan Johnson-Weinberger Tuesday, Jun 21, 11 @ 8:23 am
Another example of why the government should not be in the business of picking and choosing the winners in business.

They simply do not have the skill set to make sensible choices and protect the public. They would likely be putting together a plan to save the buggy-whip and whale oil industries of those industries were still around today.

Comment by Plutocrat03 Tuesday, Jun 21, 11 @ 8:31 am
“Last year, Illinois generated $29.3 billion in revenue from the tourism industry, an increase of more than $2.2 billion from 2009…”

All those D lawmakers that bailed from their own duties?

Comment by Cincinnatus Tuesday, Jun 21, 11 @ 8:51 am
“Another reason for taxpayer investment in high speed rail. When we buy affordable mobility for the people, they will travel.”

Out of deference and respect for Rich, I’ll let this opportunity pass.

Comment by Cincinnatus Tuesday, Jun 21, 11 @ 8:52 am
Re: High Speed Rail
Newsflash!
People who can not afford $5 gas can not afford high speed train tickets, parking costs or the taxes required to build a white elephant. Someone somewhere is going to have to earn back some money in the real world.

Comment by VanillaMan Tuesday, Jun 21, 11 @ 9:28 am
If we focused upon quality improvements to existing services — for example, changes to Metra that would speed up trains and increase frequency and lower operating costs — that would be a huge incentive for people to take more trips into the city. While I’m all in favor of high-speed rail, this isn’t an HSR issue; it’s an urban mobility issue, and both politicians and Metra leaders, not to mention CTA, have for years been startlingly unambitious about our local rail system or any kind of marketing, land-use planning etc. to boost its use. When Salt Lake City has more frequent off-peak commuter rail than we do and more new miles of line (transit and commuter) under construction than we’ve done in the last three decades, it puts Chicago’s recent efforts in sorry perspective. Settling for hourly off-peak service on high-capacity, purpose-built, grade-separated passenger routes like Metra Electric and UP-N is especially embarrassing.

And, by the way, HSR won’t work viably unless it has fast and frequent urban transit networks to connect to. They understand that not just in Europe but in places like California, whereas we’re in the embarrassing situation of having by far the largest intercity rail station in North America without a direct subway connection.

Comment by Angry Chicagoan Tuesday, Jun 21, 11 @ 10:36 am
What’s with the Tea Partiers and the Pavlonian foaming at the mouth about trains, anyway?

Geez, someone says “trains” and they go nuts. Did Roger Ailes have a bad experience on the NYC to Washington Acela one time?

Comment by wordslinger Tuesday, Jun 21, 11 @ 11:20 am
If the Acela wasn’t the only profitable AMTRAK line in the US, then there would be something else to talk about. It would appear that the only way intercity rail makes sense is if you have high-density urban areas, like the NE corridor, Japan and Europe. There is absolutely no economic justification for government subsidies of high speed rail other than the feel-good instincts of some people. High speed rail saddles taxpayers with endless costs.

Comment by Cincinnatus Tuesday, Jun 21, 11 @ 11:26 am
=== Another example of why the government should not be in the business of picking and choosing the winners in business. ===

Tell that to the “capitalists” feeding at the government trough. It’s a long list.

They scream “free market” until you take away their taxpayer subsidies, then they scream even louder about “job losses” and “the common good.”

Comment by Yellow Dog Democrat Tuesday, Jun 21, 11 @ 11:54 am
They ain’t ALL conservatives, YDD. Look only to the recent vote, bipartisan at that, to eliminate the ethanol subsidy.

Pull the subsidies and tax breaks for all corporations and other entities (yes, mortgage deductions included) and let the chips fall where they may.

What many people, including conservatives, have seem to forgotten is that failure is part of the capitalistic process. We are propping up to many failed systems. This stifles innovation and growth, and without growth, we will have stagnant employment.

Comment by Cincinnatus Tuesday, Jun 21, 11 @ 12:28 pm
–Pull the subsidies and tax breaks for all corporations and other entities (yes, mortgage deductions included) and let the chips fall where they may.–

Why? To what end? What does ideological purity get you?

Comment by wordslinger Tuesday, Jun 21, 11 @ 12:38 pm
Economic growth.

Comment by Cincinnatus Tuesday, Jun 21, 11 @ 12:41 pm
Says you. Eliminating mortgage deductions is the path to economic growth? By what obtuse, untried but seductively simple theory?

Comment by wordslinger Tuesday, Jun 21, 11 @ 12:47 pm
–Pull the subsidies and tax breaks for all corporations and other entities (yes, mortgage deductions included) and let the chips fall where they may.–

Cincy, just so I’m clear on your Universal Theory, raising taxes on EVERYONE is the key to economic growth?

Comment by wordslinger Tuesday, Jun 21, 11 @ 12:55 pm
You assume the tax rate would remain the same under my proposals. I do not.

Comment by Cincinnatus Tuesday, Jun 21, 11 @ 1:23 pm