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Despite state budget cloud, businesses poised to grow in 2016, experts say

The state budget crisis will continue to cloud the suburban business climate going into 2016, but there are indicators that point to continued economic growth for the year, according to a panel of experts at the Daily Herald Business Ledger's Newsmakers' Forum: Economic Outlook 2016.

About 100 suburban business executives attended the lunchtime event Thursday at The Drake Hotel in Oak Brook.

The budget standoff between Gov. Bruce Rauner and the General Assembly, now into its sixth month, will continue to hurt as the state is forced to withhold or cut back funding for programs that affect businesses, said Elliot Richardson, co-CEO of the Chicago-based Small Business Advocacy Council. He foresees a final resolution by February 2016, but that resolution will likely result in increased taxes, including a possible state income tax hike of 5 to 7 percent, a tax on retirement savings and cuts in services, he predicted.

“It's going to be a challenging time,” Richardson said. “I feel good about Illinois business because of the people in this room ... folks who are truly engaged in trying to make the economy better, but it's going to be a challenge.”

Richardson added that once the budget uncertainty is resolved, business owners will have confidence to focus on growth. But they need to become actively involved in convincing lawmakers to work together to assure that growth will succeed, he said.

“It's not a matter of if. We have to if we want to survive,” he said. “Then we will have some certainty and business owners will want to grow, and local communities will grow.”

Regional Transportation Authority Chairman Kirk Dillard said the growth of the millennial workforce in the region will put a greater emphasis on mass transit in the upcoming years, as millennials will make up one half the region's workforce during that period. That generation — generally those born between the early 1980s and early 2000s — is shunning automobiles for mass transit, Dillard said, and the Chicago region has the largest number of millennials in the nation who do not own cars.

“The millennial generation changes the equation, especially on mass transit,” Dillard said, noting the group has been big in train ridership.

While Dillard said the RTA is positioned well to help meet the changing transit needs, he said the region needs to be focused on maintaining and improving services as other cities are spending more on upgrading their mass transit system. New York, for example, is spending three times more on transit than Chicago, while Dallas and Los Angeles have also earmarked considerably more money to improve their systems.

“In fact, there are only three cities in the U.S. that are spending less than Chicago: Philadelphia, St. Louis and Washington,” he said.

Dan Wagner, senior vice president of government relations for The Inland Real Estate Group of Companies based in Oak Brook, painted a brighter picture for the real estate market in 2016. Real estate sales and median values increased in 2015, and a shortage of properties for sale prompted greater demand during the year, he said. That trend is expected to continue in 2016 even if interest rates begin to increase.

“We've had very, very low interest rates for years, so it stands to reason the rates can't stay that way forever, especially as the economy is much stronger than it was,” Wagner said.

He added home prices will see monthly gains ranging from 3.5 percent to 9.5 percent for the Chicago region, with a median price by the end of 2016 of $212,304, about 5 percent higher than the previous year.

James Hamilton, a partner with accounting firm Weiss & Company in Glenview, outlined a number of “opportunity scenarios” facing businesses as they prepare for the tax season. He noted in particular the tax extender package that Congress has yet to pass, which could affect what breaks and provisions businesses are able to take advantage of in the next year.

“They're trying to decide in Congress whether we should make some of these extenders permanent, two years, drop them out completely or some other alternative,” Hamilton said. “But business owners want to know right now if I have those extenders.” Overall, Hamilton said the business climate is healthy going into the next year as most have learned to operate leaner after the Great Recession.

“They learned how to run a $50 million company as a $25 million company,” he said. “There seems to be some good slow growth there.”

Presenting sponsors for the forum are Weiss & Company LLP and Northern Illinois University College of Business. Corporate sponsor is the Small Business Advocacy Council. Media sponsor is AM560 The Answer.

  Daniel Wagner, senior vice president of government relations for the Inland Real Estate Group of Companies, addresses the Daily Herald Business Ledger Newsmakers' Forum: Business Outlook 2016 on Thursday at the Drake Hotel in Oak Brook. Daniel White/dwhite@dailyherald.com
  Accountant James L. Hamilton, a partner in the tax services department of Weiss & Co. LLP, addresses the Daily Herald Business Ledger Newsmakers' Forum: Business Outlook 2016 on Thursday at the Drake Hotel in Oak Brook. Daniel White/dwhite@dailyherald.com
  RTA Chairman Kirk Dillard was a panelist at the Daily Herald Business Ledger Newsmakers' Forum: Business Outlook 2016 on Thursday at the Drake Hotel in Oak Brook. Daniel White/dwhite@dailyherald.com
  RTA Chairman Kirk Dillard speaks with business community members following the Daily Herald Business Ledger Newsmakers' Forum: Business Outlook 2016 on Thursday at the Drake Hotel in Oak Brook. Daniel White/dwhite@dailyherald.com
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