State offers companies cash, incentives to stay in Ill.

May 12, 2011 7:06:00 AM PDT
There is a dash for cash under way by Illinois companies that want tax benefits and incentives to stay in Illinois. And now a new survey of CEOs ranks Illinois 48th out of 50 states when it comes to a positive climate for business.

ABC7 has learned the state is offering more money in the form of grants, subsidies, tax cuts and deferments than at any time in recent history. Warren Ribley, director of the Illinois Department of Commerce and Economic Opportunity that brokers the deals, says that's appropriate and only makes sense because of the recession.

At Tempel on Chicago's North Side workers manufacture precision parts for motors, generators and other heavy equipment. They are now doing it faster than ever. In March, the state gave Tempel a little more than $25,000 to cover half the cost of retraining workers.

"There is a lot of pressure to leave the state. But certainly this grant-funding program helps us give a reason to stay here," said Mark Buckner, Tempel.

Gov. Pat Quinn announced earlier this week $100 million in tax incentives to keep Motorola Mobility and its 3,000 employees in Libertyville.

Last month it was Caterpillar's CEO who used a threat to leave Illinois to get the governor to come to the negotiating table on issues like workman's comp.

But are the threats to leave real? Do the hundreds of millions in state subsidies really save Illinois jobs?

"We vigorously challenge these companies to demonstrate it's not a bluff, that they really do have a valid, legitimate out-of-state option," said Ribley.

"It's not surprising large companies would step forward and say 'me too, I want a carve out or we're going to leave.' That's the moral hazard when government picks winners and losers," said John O'Hara, Illinois Policy Institute.

The Illinois Policy Institute researched state incentives and found taxpayers ponied up $10,000 for a cast party for the crew of Batman. More than $78,000 went to the quail industry to promote "wise use and management" of game birds. Six thousand five hundred taxpayer dollars bought a tub of live bass for a fishing seminar.

Back at Tempel, company officials say the small state grant for training has helped them stay competitive, which generates sales and keeps people employed.

"If the state hadn't covered 40-50 percent of the cost, would you have done it anyway?" ABC7's Ben Bradley asked. "We may have, but it certainly made it more available to us," said Buckner.

In 2009, the state says its incentives created more than 6,000 jobs and retained 25,000. At what cost? In 2009, the state gave away $110 million worth of tax credits. Last year, Illiois gave away more than double that number: $225 million.

Load Comments