AMAZON'S NEWEST ILLINOIS DISTRIBUTION CENTER DEAL MAY BE THE LAST UNDER ILLINOIS'S CURRENT POLITICAL GRIDLOCK
Chicago Tribune Reporters Ally Marotti and Ray Long bring to attention the degenerative state of Illinois's corporate welfare programs in a time when Even President Trump calls for state competiveness to keep and create jobs.
Amazon is bringing two more distribution centers to the Chicago area with the promise of more than 1,000 jobs in Aurora, thanks in part to nearly $12.9 million in new corporate tax breaks through a state jobs program that soon may be overhauled.
It's the latest in a set of tax breaks that potentially could save Amazon more than $100 million over the next decade if the giant delivery company fulfills promises to create thousands of jobs.
ADVERTISINGWith this latest announcement, Amazon's workforce in Illinois would total more than 7,000 full-time jobs. The company already operates similar facilities in Joliet, Romeoville and in Edwardsville, near St. Louis. Another center is under construction in suburban Monee.
Money for nothing: Illinois' EDGE jobs program often doesn't workBecause of Illinois' special brand of political gridlock, the Amazon announcement also represents one of the state's last few business deals that could be consummated under the Illinois EDGE program — short for Economic Development for a Growing Economy. Without legislation to keep EDGE alive, the current program is set to expire at year's end.
Whatever its size or shape, however, Illinois' premier jobs program may be in limbo for weeks, if not months — a distasteful position for state officials in both parties.Republican Gov. Bruce Rauner supports legislation emerging in the Illinois Senate that would set up a slimmed-down version of EDGE—complete with a new name: THRIVE, short for Transforming, Helping and Reviving Illinois' Versatile Economy.
Emerging as a potential way to fill the breach is the bill forged by Sen. Pam Althoff, R-McHenry, and Sen. Melinda Bush, D-Grayslake, two lawmakers whose districts in Lake and McHenry counties are prime areas for job poachers from other states.
"Employers are frequently being solicited to move across the border to Wisconsin," Althoff said. "We need to continue to provide them with incentives to stay, especially in a time when jobs are already leaving our state in record numbers."
Bush also maintained action is needed because Illinois, which has suffered from a poor image over its failure to reach a budget, "has to send a message that we're open for business and still open for business."
In any case, the chances of quick approval are slim. Lawmakers are not expected to return to Springfield until early January and may take up little of substance before a newly elected General Assembly is sworn in next month. Without an agreed-upon bipartisan push in both the House and Senate, proposals could languish well into the spring and get caught up in the budget stalemate between Rauner and Democratic House Speaker Michael Madigan of Chicago.
More or less, the reason Illinois faces an expiration date on EDGE without a new program in place is because the budget fight is all-consuming. Althoff, who plays a role in budget negotiations, acknowledged she "dropped the ball" in pressing to pass new legislation sooner. But she and Bush also faced tough challengers on their way to re-election, causing another layer of divided attention.
Rep. Lou Lang, a Skokie Democrat who is a veteran of Madigan's leadership team, said that ultimately the Rauner administration "bears the responsibility and burden of figuring out what to do about EDGE, all of this, and they should have assumed the responsibility before the program expired."
Lang predicted the time crunch makes passage of a proposed overhaul of the program difficult before the new legislative session but said the measure could be refiled with the new General Assembly and sped along if an agreement could be reached.
"If somebody came to (House) Democratic leadership about a proposal, I'm certain they would review it," Lang said, noting the expiring EDGE program has been "valuable for this state."
In its current form, which is likely to evolve, the new legislation differs in numerous ways from the law today.
For example, the EDGE program allowed companies to get credit for 100 percent of the Illinois withholding tax attributable to the jobs created. THRIVE would give companies 50 percent credit. The EDGE program allowed companies to get a 10-year break and then add 10-year increments, effectively giving companies a chance to keep the sweet deal as a longterm subsidy. The THRIVE program would hold the break to 10 years, or 15 years in some narrow cases.
"The Rauner administration's focus is on growing opportunity, creating jobs, and improving the quality of life for Illinois families while protecting taxpayers," said Jacquelyn Reineke, spokeswoman for the Department of Commerce and Economic Opportunity. "By reforming the EDGE credit to be about job creation rather than job retention, we continue to create jobs but with significantly less cost to the taxpayer."
Bush, one of the bill's sponsors, said she still wants to be able to give credits for jobs retained in some instances, such as when a plant is expanding in Illinois rather than moving to another state.
Madigan spokesman Steve Brown also said giving credit for retention of jobs as well as job creation is an issue that's likely to be hashed out as the bill gets debated.
The Rauner administration shut down the generous job incentives that his Democratic predecessor, Gov. Pat Quinn, allowed for job retention. Rauner also halted a practice that let dozens of companies collect millions of dollars in tax breaks for creating jobs at one office while eliminating a greater number of jobs at another location.
Though it is common for large companies to operate from multiple locations, the EDGE program long allowed companies to treat every location, division or subsidiary as an independent operation.
The practice was highlighted in a Tribune investigation, published in October 2015, that found at least 37 agreements in which Illinois companies were rewarded with tax credits after hiring employees in one location while firing a far greater number of workers at another site.
Under Rauner, EDGE agreements signed between when he took office in January 2015 and Oct. 1 of this year have seen an average cost per job of $15,338, compared to $69,372 under Quinn, according to the current administration's figures,
Todd Maisch, president and CEO of the Illinois Chamber of Commerce, said deals like the one with Amazon would be made much more difficult if EDGE goes away.
"If we have another company that wants to create 1,000 jobs in Illinois and they'd like to talk about a tax incentive to do so, we're going to be dead in the water," he said.
In a new release, Amazon called Illinois "an ideal location from which Amazon can continue offering customers our vast selection and superfast shipping speeds."
In Aurora, one facility spanning nearly 1 million square feet will handle the selection, packing and shipping to customers of small items like books, electronics and consumer goods. A separate 400,000-square-foot building will handle large items like big-screen televisions. "(To) get a world-renowned company that's having great success and have it place its business here and the employment opportunity, we haven't seen that development and investment since before the recession," said Aurora Mayor Robert O'Connor.
The facilities are set to receive a $400,000 property tax abatement from Aurora, an exchange O'Connor said is "very, very fair," given the employment and community investment returns the city could see.
The warehouses are set to be built along Duke Parkway, west of Route 59, an area populated with other manufacturers and industrial warehouses, O'Connor said. Construction is scheduled to begin this spring.