SPRINGFIELD -- Sears Holdings Corp. CEO Lou D'Ambrosio told employees in a memo Tuesday that if Gov. Pat Quinn signs a massive package of tax breaks into law as expected, the Hoffman Estates-based company will stop shopping for a new headquarters location out of state.
The message came shortly after the Illinois Senate Tuesday made quick work of a debate that's raged since May, approving the far-reaching tax plan that also includes tax breaks for CME Group, which runs the world's biggest futures markets, as well as other businesses, the working poor and Illinois income tax payers. The tax breaks won House support on Monday.
What's in the tax break packageThe tax breaks approved by lawmakers this week are complex and far-reaching. Here's what they do.
ŸProperty tax break extended for 15 years or until the company can recover $125 million.
ŸEDGE state income tax credits worth $15 million a year for 10 years.
ŸIf the company leaves within five years, it must repay the incentives.
ŸIt must keep 4,250 jobs local.
ŸLocal governments get double what they currently get from affected property taxes.
ŸHoffman Estates can't use money from the deal to pay for or operate the Sears Centre arena.
ŸIf Sears leaves, the property tax deal ends.
ŸNow, all online trades are subject to Illinois income tax. Under the plan, about 27.5 percent would be.
ŸThe southern Illinois company would get annual EDGE credits worth $3.5 million to expand its workforce in Albion and move some offices to Lake Forest.
Research and development credit for businesses
ŸIt's extended until Jan. 1, 2016.
Net operating loss deduction
ŸBusinesses can use the net operating loss deduction in 2013 and 2014.
ŸIncreases the state estate tax exemption from $2 million to $4 million by 2013.
Live theater tax credit
Ÿ$2 million a year is available to help with the labor and production spending of some long-run shows.
Investment tax credit
ŸExtended through 2018.
Gasohol tax extension
ŸExtends sales tax exemptions for agrifuels until 2018.
ŸThe standard income tax deduction is raised from $2,000 to $2,050 next year, and future increases are tied to inflation.
Earned income tax credit
ŸThis state credit for the working poor rises from 5 percent to 7.5 percent next year and 10 percent in future years.
"While the legislation still needs to be signed by Gov. Pat Quinn, he has been a strong supporter of ours throughout this process and I believe he will do so," D'Ambrosio wrote in a memo, obtained by the Daily Herald. "When he does, it is our intention to cease the review of alternative locations and remain in Illinois where we have been located for nearly 125 years."
Hoffman Estates Mayor William McLeod expressed relief at the prospect of keeping Sears' headquarters and its 6,000 employees.
"We're trying to grow out of a recession," he said. "You can't do it if you lose all those jobs."
The final move is up to Quinn, who said he'd sign the legislation "hopefully very soon."
Critics, however, continued to decry the estimated $325 million cost of the tax breaks in the face of Illinois' ailing finances, as well as the lack of support in the plan for the middle class. They warned that other businesses will seek similar concessions.
Quinn defended giving individual tax breaks to Sears, parent company of Kmart and Land's End, and CME Group, which is based in Chicago and has a data center in Aurora, saying other states are offering Illinois companies deals to move away.
"We're not going to stand on the side of the road and watch them do it," Quinn told reporters after the vote. "The bottom line is, you have to defend yourself."
A broader debate could already be unfolding. House Republican Leader Tom Cross has called a news conference for today to unveil new legislation regarding the state's overall corporate income tax rate.
The battle over Sears' tax breaks began in May, with negotiations quietly progressing behind closed doors and heated rhetoric often spilling out of them.
"You've got a lot of people who provide for their families with their jobs at Sears," said Sen. Matt Murphy, a Palatine Republican.
The proposal to give Sears hefty tax breaks was eventually politically tied to the tax requests of CME Group, as well as Democratic bid to give some relief to the working poor.
The Illinois Senate Tuesday voted 44-9 on the Sears and CME proposal and 48-4 for tax credits for individual Illinoisans.
CME Group had no comment on today's vote, said Chris Grams, a spokesman.
What Sears would get under the deal: An extension of its 20-year-old local property tax deal worth $125 million, as well as $150 million in state income tax breaks over 10 years.
The Senate move had opponents, though, as lawmakers have argued for months over whether the state should be giving pricey tax breaks out to businesses -- especially after raising income taxes earlier this year.
Sen. Chris Lauzen, an Aurora Republican, called the plan "corporate welfare" and said it would be a drain on the state budget in future years.
"Where will the money come from?" Lauzen asked.
Plus, Lauzen said, the small increase in the standard income tax deduction in the proposal could mean less than $3 in relief per year for many average suburban families.
During the Senate floor debate, Sen. Michael Noland, an Elgin Democrat, raised concerns that the legislation isn't strong enough to guarantee Sears will stay in Hoffman Estates in future years.
"There is nothing in this bill that actually requires them to stay," Noland said.
Noland also defended the lobbying efforts of Carpentersville-based Community Unit District 300, which sought for months to block an extension of Sears' property tax incentives.
School district officials, parents, staff and even students -- often wearing red in unity -- bombarded Springfield in opposition to continued tax breaks for Sears before signing on to the proposal last month, a move that helped end some of the gridlock over the Sears tax breaks among lawmakers.
Under the plan approved Tuesday, the school district would get about $3 million more in property taxes a year from Sears, about double what it gets now.
"At the end of the day, our very few critics have been far outnumbered by our legions of supporters -- both at the local level and the state level," Superintendent Michael Bregy said in a statement this week.