The Clinton Herald, Clinton, Iowa

National News

November 4, 2013

Lawmakers: Tax-break deals need more scrutiny

(Continued)

Economists — most of whom don’t like the tax breaks — say that seldom if ever are such incentives a deciding factor in whether a company relocates. But with the difficult economy in recent years and rival states’ governors making highly publicized appeals to lure away companies and jobs, politicians find themselves in a position where it’s exceedingly difficult to say no.

Illinois’ almost $100 billion in unfunded pension liabilities, multibillion-dollar backlog in payments to service providers and 2011 temporary income tax increase make the state particularly vulnerable.

“I can see where it’s like having a gun to your head, and what are we going to do?” said Therese McGuire, a professor of management and strategy at Northwestern University’s Kellogg School of Management.

In 2011, Illinois agreed to a deal worth several hundred-million dollars for Sears Holdings Corp. and CME Group Inc., which operates the Chicago Mercantile Exchange, after both threatened to leave the state. The deal was paired with an earned income tax credit for average Illinoisans to make it more appealing.

Among the incentives deals that could come up during this week’s session in Springfield:

• Under ADM’s plan to establish a new global headquarters outside Decatur, the city will keep thousands of jobs, but 100 at the top of the company are going elsewhere. Chicago is considered a top contender among a number of interested cities, and Illinois lawmakers quickly put together a $24 million incentives package.

State Sen. Andy Manar, a Bunker Hill Democrat, last week added an amendment requiring that the company create more jobs in Decatur, a proposal the company supported. But Gov. Pat Quinn has promised to veto the ADM package unless lawmakers fix the pension crisis first.

• Officials aren’t yet discussing the exact value of the OfficeMax request, but the Naperville-based company would have to retain about 2,000 jobs and create about 200 more. Company officials plan to make a decision where to base a new headquarters by the end of the year.

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