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Rauner administration claims it’s doing better on EDGE credits

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Illinois

* Greg Hinz referees competing interpretations of how effective Gov. Rauner’s administration has been at handling the EDGE tax credit, which essentially allows businesses to keep employee income tax payments for themselves…

According to the Rauner administration, Quinn during his five-year tenure negotiated $1.3 billion in Edge tax breaks for the promise of 18,940 jobs. Also included was preserving 55,000 jobs; but the Quinn folks tried to get out of that business, and Rauner’s team says it will underwrite only new jobs.

Rauner has committed to $125 million for 8,100 jobs. These numbers will rise because the Commerce Department still is negotiating with Amazon for a facility in Monee. But the Rauner figures include 500 jobs and $6 million that Quinn awarded for a new warehouse in Joliet, where Amazon has since announced a much larger expansion.

Based on that, the Rauner folks assert, they’ve delivered jobs at a cost in lost payroll taxes of $15,338.31 per position, well below the $69,372 under Quinn. “We’re still creating new jobs in Illinois,” says spokeswoman Kyle Ann Sebastian, “but for significantly less in Edge tax credits.”

Rauner’s assessment is skewed by the huge Amazon deal, which so far has cost $10,819 per position. But numbers being numbers, I decided to run this by a former top Commerce Department official under Quinn, who asked not to be named.

That source points out—correctly—that the applicable income tax rate under Quinn was 5 percent, versus 3.75 percent today, so the value of the deals under Quinn inevitably was higher, job for job. Factoring that out, the ratio of corporate-to-public investment in the two administrations is fairly similar, that source says.

* Meanwhile…

Raynor Garage Doors has battled back from the 2008 recession and unveiled a $1-million plant upgrade on Monday, but its chairman says Illinois can still do much more to help businesses like Raynor thrive.

The downturn sliced roughly a third of the workforce from this third generation, family-owned business, said Ray Neisewander III, the company’s chairman and CEO.

“Illinois doesn’t make it easy,” he said. “It’s a very difficult state to do business in.”

Raynor, which makes garage doors for homes and businesses, has been a fixture in Dixon since 1945.

While it still employs some 500 employees in a union shop, automation is prompting the need for more highly skilled workers.

* Related…

* Bruce Rauner pits father against daughter in Illinois workers’ comp battle

posted by Rich Miller
Tuesday, Oct 11, 16 @ 10:55 am

Comments

Lets make it fair. Change the tax codes for all businesses.

Comment by Blue dog dem Tuesday, Oct 11, 16 @ 11:14 am
8100 jobs doesn’t sound too bad. But then 7000 of those come from Amazon, which began under Quinn. It doesn’t look like the folks at DCEO have been working very hard at this (only 37 deals?), as their focus has been setting up Intersecr. It also doesn’t look like they have negotiated very hard on the deals as almost half of them merely require the minimum number of created jobs (25) before the companies get to start earning credits. Why they gave over $10,000,000 in credits to ConAgra, when everyone knew they were moving here regardless, doesn’t demonstrate shrewdness. And take a look at the sweetheart deal they gave Akuna Capital, $4,500,000 in tax credits for just 10 jobs!?!?

Comment by Henry Francis Tuesday, Oct 11, 16 @ 12:02 pm
Raynor makes garage doors. How is the state supposed to help it “thrive?”

Somehow increase the demand for garage doors? Somehow eliminate competing garage-door makers?

Comment by wordslinger Tuesday, Oct 11, 16 @ 12:14 pm
$15,338 at a 3.75% tax rate is only $20,451 at a 5.00% tax rate.

But that’s “fairly similar” to $69,372, I guess.

Comment by JI Tuesday, Oct 11, 16 @ 1:06 pm
–That source points out—correctly—that the applicable income tax rate under Quinn was 5 percent, versus 3.75 percent today, so the value of the deals under Quinn–

As JI points out, a 1.25% increase does not explain a 450% difference in the numbers. I’m not saying that the numbers are right or wrong, but that is a very very bad explanation for anyone who can do simple math, which would of course exclude anyone in the Quinn administration.

More to the point, Illinois does not have a good baseline or methodology for tax incentives anyway, so comparing how an administration handles these is always going to be a fuzzy math.

Comment by Ahoy! Tuesday, Oct 11, 16 @ 1:28 pm
JI, when you include the 55,000 retained jobs then the per job cost is fairly similar. ($17,581 under Quinn to $20,451 under Rauner).

And it is also important to keep in mind that 7000 of the 8100 jobs under Rauner pay around $13/hour. Which is $27,040 GROSS a year.

Comment by Henry Francis Tuesday, Oct 11, 16 @ 2:09 pm
Henry Francis:

The statute doesn’t actually allow EDGE credits for “retained” jobs. If Quinn was handing them out for anything but what the statute defines as “new jobs,” he was violating the law.

Comment by JI Tuesday, Oct 11, 16 @ 4:27 pm
JI - the administrative rules provide for it. IPI’s attorneys raised that very issue, sued the state, and the court dismissed it.

It wasn’t just Quinn following those rules, so did every other governor who was in office with the EDGE program.

Your response to the points raised is noted.

Comment by Henry Francis Tuesday, Oct 11, 16 @ 5:23 pm
FYI: Administrative rules don’t supersede statutory requirements.

And the lower court you mention was reversed on appeal.

http://www.illinoiscourts.gov/Opinions/AppellateCourt/2016/4thDistrict/4150522.pdf

Comment by JI Tuesday, Oct 11, 16 @ 5:48 pm
But yes, Ryan and Blagojevich also violated the statute.

Comment by JI Tuesday, Oct 11, 16 @ 5:51 pm
JI - that decision doesn’t support your argument. All it states is that taxpayers have standing to sue.

Comment by Henry Francis Tuesday, Oct 11, 16 @ 6:28 pm
Doing business in Illinois allowed the nicewanders to build a million dollar boathouse on the rock river in dixon

Comment by foster brooks Tuesday, Oct 11, 16 @ 6:51 pm
Is there a bigger kick in the testicular virility that a state can pull off then taxing some of their citizens and then giving that money directly to their bosses?

Reverse Robin Hood?

It doesn’t make any sense. If you want to give taxpayer dollars to private businesses to buck up their profits (which you should not), spread the burden out among the the entire tax base, not just the poor schmucks who work for these grifters.

Comment by wordslinger Tuesday, Oct 11, 16 @ 7:00 pm
Of course the case only decided the standing issue, Henry. That’s the only issue that was before the court, because the lower court wrongly dismissed the case before it could get to the merits.

But you’re the one who brought up the original dismissal as if it were relevant to statutory requirements. I’m simplying pointing out that the dismissal you’re relying on (which was never based on the merits, despite the impression your comment left) was actually reversed on appeal.

Comment by JI Tuesday, Oct 11, 16 @ 7:09 pm
Word. I can’t agree with you more. Its why the Republican party no longer exists. It is why I quit calling myself a Democrat two decades ago. Giving a competetive advantage to one company over another is quite frankly, un-American.

Comment by blue dog dem Tuesday, Oct 11, 16 @ 7:48 pm
Meant to type: –The state, as far as I can tell, has done little to nothing to help.–

Comment by Liandro Tuesday, Oct 11, 16 @ 9:36 pm