Update from Springfield: Governor’s State of the State Lacks Bold Initiatives
By: Jay Shattuck
Governor Quinn’s State of the State Message on February 1st reflected on many of the positives that Illinois has recently enjoyed such as the expansion of auto manufacturing by Ford and Chrysler in Illinois. He announced the creation of an Export Advisory Council to be chaired by Navistar CEO Dan Ustian. The Governor is asking the Council to assist in meeting a goal of doubling our exports from Illinois by 2014. The Governor also mentioned last year’s successes in workers’ compensation and unemployment insurance but much remains to be done with those two issues if Illinois is to turn around its business climate.
The meat of the Governor’s speech was the announcement of his Illinois Jobs Agenda. The Agenda’s main features being:
1. Elimination of the state 5% sales tax on natural gas;
2. Establishing a Child Tax Credit in Illinois for parents raising children ($100 annually for a family of 4); and
3. Creating a new tax credit to employers for hiring an unemployed veteran of the Iraqi or Afghan wars.
Each of the programs will be helpful but really are not game changers for the state’s woeful reputation and economic reality. The other question is how do we pay for these programs estimated to cost state taxpayers nearly a quarter of a billion dollars. Illinois is unable to pay for its current programs let alone any new ones.
The Illinois Policy Institute’s recent report, “Wrong Way Illinois” indicates Illinois was dead last in the country when it comes to our unemployment rate. During 2011 our unemployment rate increased 0.8% from 9 to 9.8%. We were one of only three states to have an increase. Hawaii and Mississippi increased 0.3%. CEO Magazine ratings have Illinois 48th dropping 3 spots from the previous year and 40 spots in 5 years. CEO Magazine says Illinois is in a “death spiral”. The Tax Foundation’s 2012 “State Business Tax Climate” saw Illinois’ ranking drop 12 spots from last year, greater than any state in the country. We went from 16th to 28th. On key components of the ranking we were 45th in corporate tax ranking, 44th in property taxes 43rd in unemployment taxes, 33rd in sales taxes and 13th in individual taxes. The Foundation noted about Illinois, “Businesses in the state now pay one of the highest corporate tax rates in the industrialized world.” The state of Oregon’s “Workers’ Compensation Premium Rate Ranking” at the end of 2010 had Illinois the third highest cost state in the country. Only Montana and Alaska were ranked higher.
Illinois needs bold action and leadership to reverse the very deep trough that has been built for the cost of doing business in this state. The Governor will be presenting his budget message on February 22nd. We can only hope that his message then will offer serious solutions to tackle the Medicaid, pension and education funding problems our state faces.
