The Clinton Herald, Clinton, Iowa

National News

November 4, 2013

Lawmakers: Tax-break deals need more scrutiny

CHICAGO — Once again Illinois lawmakers are considering a list of tax breaks and other incentives to keep some companies in state and attract others — would-be deals that even many supporters say the state needs a more comprehensive method to scrutinize in the future.

The most widely publicized would give up to $24 million to an agribusiness giant, Archer Daniels Midland Company, to keep a new global headquarters in the state. Another would give breaks to the company that emerges from the soon-to-be-completed merger of OfficeMax Inc. and Office Depot Inc., if it chooses Illinois as it headquarters rather than Florida.

Others would give perks to makers of online video games and a chemical distribution company contemplating moving its headquarters to Illinois.

Lawmakers meeting this week in the fall legislative session are typically under pressure to act. But there’s no certainty the packages would be approved if they’re called for a vote. Illinois’ troubled finances make the timing difficult and there are still some doubts about the wisdom of big deals the state has offered other companies in recent years.

Even if some of the proposed incentives are approved, some lawmakers say there’s a feeling in Springfield that a harder look is needed at how Illinois grants tax incentives and other perks.

“There are some of us, we talk about it a lot. We’d love to make it happen,” said state Rep. David Harris, an Arlington Heights Republican. “It’s not going to happen in the next two weeks, I can tell you that, but it does need to happen.”

The state’s primary tools for businesses it’s either trying to keep in Illinois or recruit to the state are so-called EDGE tax credits. Officials with the Department of Commerce and Economic Opportunity tout how the credits come with job-creation or retention requirements and provisions that require companies to give money back if those goals aren’t met.

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.

• Zurich North America insurance wants a payroll tax break in exchange for relocating its Schaumburg offices to another location in Schaumburg. The company would retain 1,000 jobs, create at least 250 more and make capital investments of at least $128 million.

• Univar, a chemical distribution company based in Redmond, Wash., is seeking incentives worth $5 million to move its headquarters to Downers Grove. Univar would keep 100 jobs at its two current Illinois locations and add at least 69 jobs.

• Fred Crespo, a Hoffman Estates Democrat, is pushing incentives legislation for High Voltage Software, a video-game maker in his district. The bill would give the company tax credits it says it needs to compete with mainly Canadian competitors.

Barbara Flynn Currie of Chicago, the second-ranking Democrat in the Illinois House, has called the requests for such tax breaks the equivalent of blackmail. But she says she isn’t sure the General Assembly can do anything more ambitious to evaluate the incentives in a larger, systematic way.

“Legislating that, you can’t do,” she said. “It becomes very difficult if there are companies out there that want to use those incentives.”

But Manar believes legislation Quinn signed into law in May will provide at least a start. The law, which Manar sponsored, requires DCEO to develop an economic plan for the state by mid-2014 and update it every year, including a review of tax credits and how they’re handled.

“Clearly it’s a necessary piece,” Manar said. “I’m anxious to see how we can make it better.”

1
Text Only
National News
  • mama.jpg What we get wrong about millennials living at home

    If the media is to be believed, America is facing a major crisis. "Kids," some age 25, 26, or even 30 years old, are living out of their childhood bedrooms and basements at alarmingly high numbers. The hand-wringing overlooks one problem: It's all overblown.

    July 22, 2014 1 Photo

  • Obamacare hit by ruling, but subsidies to continue

    A federal appeals court delivered a potentially serious setback to President Barack Obama's health care law Tuesday, imperiling billions of dollars in subsidies for many low- and middle-income people who bought policies.

    July 22, 2014

  • 10 things to know for today

    Your daily look at late-breaking news, upcoming events and the stories that will be talked about today:

     

    July 22, 2014

  • Obama gives protection to gay, transgender workers WASHINGTON (AP) — President Barack Obama on Monday gave employment protection to gay and transgender workers in the federal government and its contracting agencies, after being convinced by advocates of what he called the “irrefutable rightness of yo

    July 22, 2014

  • Starved Pennsylvania 7-year-old weighed only 25 pounds

    A 7-year-old Pennsylvania boy authorities described as being so underweight he looked like a human skeleton has been released from the hospital.

    July 21, 2014

  • Hopkins to pay $190M after doc taped pelvic exams

    Johns Hopkins Health System will pay $190 million to more than 8,000 women whose bodies may have been videotaped or photographed by a gynecologist using a pen-like camera during pelvic exams.

    July 21, 2014

  • Lawmaker: Texas to send 1,000 guardsmen to border

    Gov. Rick Perry, a vocal critic of the White House's response to the surge of children and families entering the U.S. illegally, plans to deploy as many as 1,000 National Guard troops to the Texas-Mexico border, a local lawmaker confirmed Monday.

    July 21, 2014

  • Sparring justices find little disagreement at the opera

    Justice Ruth Bader Ginsburg revealed a different view of U.S. Supreme Court on Saturday when she described about her passion for opera, one she shares with Justice Antonin Scalia.

    July 21, 2014

  • Second chance? Perry in Iowa again courting voters

    Texas Gov. Rick Perry is visiting Iowa for the fourth time in eight months, hoping for a second chance to win over Republican voters who delivered him a stinging caucus loss when he ran for president two years ago.

    July 21, 2014

  • 10 things to know for today

    Your daily look at late-breaking news, upcoming events and the stories that will be talked about today:

     

    July 21, 2014

AP Video
Facebook