Tax transparency plan awaits Ill. gov signature

DAVID MERCER
June 5, 2012
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FILE - In this Nov. 9, 2011 file photo, Illinois Rep. Jack Franks, D-Woodstock, argues legislation at the Illinois State Capitol in Springfield. Franks is this sponsor of a bill lawmakers have sent to Gov. Pat Quinn that would require Illinois to publicly reveal the details of corporate tax breaks as soon as the deals are complete. Franks says he had to cut a provision that would have beefed up oversight of the state's primary tax-break program to get the legislation through the General Assembly. (AP Photo/Seth Perlman, File)

SPRINGFIELD, Ill. (AP) — A measure awaiting action from Gov. Pat Quinn would require Illinois to publicize the details of corporate tax breaks as soon as they're completed, but a provision aimed at strengthening oversight of those deals was removed to get the bill through the General Assembly.

Before lawmakers left Springfield last week, they approved the bill sponsored by Rep. Jack Franks, D-Marengo, a longtime critic of the tax breaks, requiring the immediate public release of the amount and details of any tax breaks issued under the Economic Development for a Growing Economy, or EDGE, program.

Quinn has made heavy use of the program over the past 18 months, cutting high-profile deals with companies such as Sears Holdings Corp., CME Group Inc. and CBOE Holdings Inc. that threatened to leave Illinois. The details of those deals sometimes remain secret long after they're made.

Franks' original bill included a requirement that a committee of experts would review any tax-break deals, but that provision was deleted to improve its chances. He said he plans to re-introduce that proposal early next year but views Quinn as the biggest hurdle.

"The governor doesn't want any oversight on this. He wants to be able to cut deals," Franks said. "That's the bottom line."

Quinn's staff didn't immediately respond Monday to questions about the governor's position on the measure.

Marcelyn Love is a spokeswoman for the Department of Commerce and Economic Opportunity, the agency that oversees the EDGE program, said Quinn favors greater transparency but hasn't taken a position on the bill.

"Gov. Quinn has long advocated for openness and transparency in state government, and he is supportive of measures that will continue to do just that," Love said in an email.

But the objections began before the bill ever reached either house of the General Assembly, Franks acknowledges. Department of Commerce and Economic Opportunity officials testified in the State Government Administration Committee that it would slow them down as they tried to woo companies. Opposition within the committee — which Franks chairs — was so strong that he cut the review committee altogether.

Without it, the bill sailed through and was unanimously passed by both the House and Senate.

Kent Redfield, an emeritus professor of political science at the University of Illinois-Springfield, said few governors or legislators would willingly add hurdles that could make it tougher for them to hand out tax breaks or other perks that they can use to win over constituents and build power.

"If you've got an oversight commission, if you've got a very detailed strategic plan (for economic development), then that detracts from your ability to negotiate and deal and leverage," Redfield said. "Governors want to have maximum flexibility to kind of react, but also to build power."

Illinois has more than quadrupled its EDGE tax-break commitments since 2006, increasing them from $63.7 million that year to $272.7 million in 2010. Complete 2011 figures are not yet available but the state topped the 2010 level with the $330 million it agreed to provide to Sears, CME and CBOE alone.

The state has agreed to give up more and more tax dollars even as it has searched for revenue to fill a multibillion-dollar budget deficit.

The governor has increasingly used the tax breaks to try to convince companies to preserve existing jobs, rather than create new ones. In some cases, the job level requirements don't even prevent cuts. Sears Holdings earlier this year laid off 100 employees at its Hoffman Estates headquarters two months after the state agreed to give it $150 million in tax breaks.

Illinois' oversight of the EDGE program has gotten poor grades by outside groups that track corporate tax breaks. A report earlier this year from the Pew Center on States found that Illinois was among states that do little if anything to evaluate the effectiveness of tax breaks.

Franks' committee would have had five members appointed by the governor, all of them either business owners or experts on the economy.

The Illinois Chamber of Commerce opposed Franks' bill as it was introduced, but President Doug Whitley said he now considers it "innocuous" with the oversight committee provision taken out. Rather than a review committee, though, the chamber would rather see the Department of Commerce and Economic Opportunity do a better job of reviewing tax breaks for effectiveness.

"The department has to step up its game," Whitley said.

Redfield said Illinois' approach to economic development has long been characterized by reactions to problems rather than initiative.

"If you piecemeal it, (giving breaks to) whoever is either making the most noise or has the most leverage or whatever is the flavor of the month, over time, there may not be much coherence or consistency in what your trying to do," he said. "I think that's been a criticism of state economic development for a long time that it tends to be pretty reactive."

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