Quinn: Tax increase part of hard economic reality
URBANA, Ill. — Gov. Pat Quinn has downplayed the struggles facing Illinois’ economy in recent days, but on Friday said his decision earlier this year to raise income taxes was an acknowledgment that he and the state needed to face a hard truth.
The governor said he had no choice but to raise taxes to deal with the government’s multibillion-dollar budget deficit. The corporate income tax increase prompted several of the state’s major employers — including Caterpillar Inc., CME Group and the Chicago Board of Trade — to say they could leave the state, though Caterpillar later backtracked.
“You have to have a governor with the fortitude to tell the truth, and the truth was in January of this year we had to raise revenue to pay the bills,” Quinn said during a groundbreaking for a new building at the University of Illinois. “We’re doing that.”
Earlier this week, though, Quinn’s message was that some of his critics were too tightly focused on negatives in Illinois’ economic picture, including the income tax increase. During a stop in Chicago on Wednesday, Quinn said the state has a strong recent history on job creation and called on “doomsayers and complainers, naysayers” to look at the record.
The state’s unemployment rate, currently at 9.9 percent, has increased for four straight months, but Illinois Chamber of Commerce President Doug Whitely said Quinn is right to point out that the state’s economic picture is not all bad.
Whitely gives Quinn credit for his recent trip to China and Japan to promote the state’s agriculture industry and other businesses, and said Quinn is far more focused on the economy than his predecessor, former Gov. Rod Blagojevich.
“But clearly he’s got some baggage that needs to be off loaded,” Whitley said. “That extremely high corporate income tax is one of those issues.”
Quinn raised Illinois’ corporate tax rate from 4.8 to 7 percent in January, and it gave other states — including Indiana, Texas, South Dakota and New Jersey — ammunition to try to lure companies away.
Another Illinois-based company, Sears Holding Corp., said this week that company officials have visited sites in Texas and Ohio, hinting that the company could move its Hoffman Estates headquarters and 6,200 jobs. The company wants to extend a tax-cut deal and says it will decide on whether to leave Illinois by the end of the year.
Quinn offered no specifics Friday on how his office is dealing with companies that say they’re looking elsewhere.
“We talk to them all,” he said, then quickly steered the discussion toward Ford Motor Co.’s announcement this week that it plans to add 1,100 workers at a Chicago factory.
Whitley said the government and state lawmakers have to give special attention to big companies such as Sears, but said the state would be better off with across-the-board moves such as tax decreases.
“Most businesses, particularly those that aren’t big enough to draw headlines, would rather have a governor talking about good business climate, making government a partner rather than a barrier to business development,” Whitley said.
One such step Quinn could take, Whitley suggested, would be changing course on a plan he vetoed in September to let ComEd and Ameren Illinois raise utility rates by $3 billion over 10 years. The utilities said they wanted to use the money to finance a “Smart Grid” that could monitor energy use and reduce waste, as well as improve the basic electric infrastructure.
“We do need that investment and it doesn’t happen for free,” Whitley said.
But Quinn wants lawmakers to uphold his veto, and on Friday called the rate increase plan “a bum deal.”