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SPRINGFIELD — Illinois has a reputation as a high cost state for businesses. But business and legislative leaders agreed Tuesday that the state’s recently passed income tax increase is only small piece of that high cost.

By Benjamin Yount

SPRINGFIELD — Illinois has a reputation as a high cost state for businesses. But business and legislative leaders agreed Tuesday that the state’s recently passed income tax increase is only small piece of that high cost.

Earlier this year, the state hiked personal income taxes 67 percent. Corporate income taxes were hiked 45.9 percent.

Illinois’ income tax has been in the spotlight since Caterpillar CEO Doug Oberhelman sent a letter to Gov. Pat Quinn stating that other states are using the recent tax hike to try to lure the heavy-equipment giant out of the state.

Oberhelman’s letter talks of working with state leaders on Illinois’ overall business climate. And legislative leaders say there is a lot more to the business climate than just taxes.

Senate President John Cullerton, D-Chicago, spoke to local chambers of commerce on Tuesday, telling them Illinois’ business climate includes taxes, fees and regulation costs. But Cullerton said business leaders also include state government in the business climate, meaning everything from education to human services to state debt is a factor.

“Stability is the one thing that I heard from the CEO of Caterpillar. You guys got to pay your bills. (The state) cannot do business with people and then not pay the bills. And that’s what we’ve been doing. We have, right now — $8.5 billion worth of outstanding bills,” said Cullerton.

The Senate president said that Caterpillar’s Oberhelman asked for a “four-year plan” that business across the state could use to develop plans.

But Cullerton admits the state is going to have to step in and do something about Illinois’ high cost of workers’ compensation insurance. Illinois’ costs are the second highest in the country, behind only Alaska. But it could take some political maneuvering, and arm twisting, to pass reforms this year. Cullerton said an overhaul of workers’ compensation laws is not a partisan battle.

“You’ve got hospitals, doctors, unions, trial lawyers, that group of folks is pretty happy with the way things are now,” Cullerton said. ” But the retail merchants, and chambers of commerce, and manufacturers are obviously very concerned.”

The top Republican in the Illinois Senate, Christine Radogno, R-Lemont, said it will take a sweeping agreement or a tough vote to change workers’ compensation.

But Radogno said it must be done.

“Including things like stronger causation language, so that employers are not on the hook for things that they had nothing to do with,” she said. “We need to reduce the medical fee schedule. It’s just way out of line with the rest of the country.”

Radogno said it is “crunch time” in the Capitol. Lawmakers have until the end of May to reach a deal. They also have to finish crafting a state budget at the same time.

She also wants to see lawmakers and the governor work on environmental regulations, fees and the amount of time it takes to get a permit from both state and local governments.

That’s the kind of government change Doug Whitley, president of the Illinois Chamber of Commerce, said he’s been waiting for. Whitley and the chamber published a business plan last year that deals with the “total business climate.”

“Number one on that list is get (Illinois’] fiscal house in order,” Whitley said. “Number two is workers’ compensation reform. We want to talk about the streamlining of permitting. And the last one, infrastructure, which is absolutely critical to our state,” Whitley said .

There is hope for Illinois. Cullerton is quick to point out that Illinois is one of only a handful of states to spend billions of new roads, bridges, and schools.

Whitley said if lawmakers can reform workers’ compensation, the state may bring in businesses.

“I’m now hearing from companies … who had basically written Illinois off as a bad workers’ comp, bad business environment for years. And now all of a sudden they’ve got an interest because there is a bubbling of awareness,” Whitley said.

Radogno said that’s what she took from the letter from Caterpillar.

“I do not believe Caterpillar is threatening, or trying to extort any sort of concession out of the state. I think they are legitimately sounding the alarm bell. … (saying) we don’t want to leave, but unless you get control over things we will leave.”

Quinn’s office said it has heard the bell. Brie Callahan, a spokeswoman for the governor, said in a statement that the Quinn will be in Peoria in early April to meet with Caterpillar leaders, and she expects they will talk about the business climate.

“Since Day One of the governor’s administration, he’s made it clear that he is willing to meet and work with businesses big and small to help grow jobs and companies in Illinois. We have opened a dialogue with the business community, and what businesses have told us is that they want most is a stable business environment,” Callahan said.

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4 Comments

  1. Democrats are root cause of state’s fiscal woes

    Democrat Senate kingmaker John Cullerton says doctors and hospitals are "pretty happy with the way things are now."

    No they're not. Last year the liberal Illinois Supreme Court struck down a law that capped malpractice awards against doctors and hospitals. Without the cap,  Chicago physicians see their liability premiums increase an average of 10 to 12 percent each year. Yes, trial lawyers are very happy.

    I know someone who works for a hospital who says the state is reducing Medicaid and Medicare payments, causing immense financial stress to hospitals because hospitals have to pick up the cost.

    As the state fails to make payments and borrows billions of dollars, government union employees rule the roost – not one state union employee has lost their job in this Recession and the Democrat governor wants to hire another 1,000 state union employees.

    The union pension system is unsustainable and is the primary reason why the Iliinois bond ratings is the lowest in the nation even worse than Iraq.

    Already, numerous small businesses either have packed up or are planning to move out of state. Angry about the state income tax hike, the owner of Jimmy John's has moved his family to Florida and is planning to move company headquarters out of state.

    Compound that with the fact the Democrats just passed a bill that taxes sales on internet purchases, prompting a slew of internet based companies to move out of state.

    And now Caterpillar, one of the state's largest business with 23,000 employees, has officially announced it is considering moving out state because employee and  corporate income taxes nearly doubled. The response from our Democrat governor, Cullerton and other Democrats is that Caterpillar is bluffing. We'll see.

    Don't forget our very own Democrats Jan Schakowsky and Dick Durbin have lead blistering attacks on private healthcare insurers. It just so happens five of the top 10 Illinois businesses are health insurance providers.

    Remember, every Republican voted against the income tax hike passed in a lame-duck session, which government union employees demanded in a coordinated protest march on Springfield last year.

    The financial crisis facing Illinois has worsened exponentially, and the root cause is –  Democrats!

  2. Root cause

    I would say the root cause of the fiscal crisis at all levels of government is the financial meltdown of the last few years- and to a lesser extent in 2001- but that's just me.

  3. The real root cause

    The true root cause of our woes is the Federal Reserve. Dissolve the Fed and we will all be better off in short order.

    1. Hahaha, you’re kidding,

      Hahaha, you're kidding, right? This is a joke? You know this isn't 1787 anymore, right? Do you want us to go back to the Articles of Confederation too? Please tell me you are kidding, or admit that you have no idea how money works and you have pursued no education, formal or otherwise, when it comes to economics/finance/how money works.

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