Jim Dey: He's got a vested interest in state budget deal

Jim Dey: He's got a vested interest in state budget deal

Greg Baise isn't one of the brawlers in the 20-month-old state budget scrum between Republican Gov. Bruce Rauner and Democratic House Speaker Michael Madigan, but he's sure got a dog in the fight.

As the president and chief executive officer of the Illinois Manufacturers Association, Baise is hoping that any compromise budget and economic growth agreement that emerges from the General Assembly in Springfield will address key issues that have caused a significant drop in manufacturing employment in Illinois while surrounding states have made gains.

But first and foremost, he said, Rauner and legislators "have got to get the state's financial house in order" and put an end to Illinois' well-deserved reputation as "totally dysfunctional."

"No one can disagree that the trajectory we've been on for the last two decades is the wrong trajectory," he said.

A longtime participant in state legislative and political affairs, Baise said he is hopeful that Rauner and Senate leaders can reach an agreement on what's become known as a "grand bargain" that generates the higher revenues from tax hikes Democrats have demanded along with the economic reforms Rauner insists are crucial to jump-starting the state's economy.

Madigan isn't participating in those negotiations, but Baise said, "I'm always hopeful reasonable people can came to some reasonable agreement."

He said a state income tax increase must be part of the deal, and perhaps a new sales taxes covering services. Other aspects of the Senate package under discussion include a property tax freeze, a consolidation of local government taxing bodies to reduce costs to taxpayers, regulatory reform and term limits for legislative leaders.

But most important to Baise is a modification of workers' compensation rules whose high costs make it difficult for Illinois to compete with neighboring states.

What is manufacturing? Why is it important?

It's the production of merchandise for use or sale using labor and a variety of means, including machines, tools and chemical processing. It generates finished goods that are sold to other manufacturers or to consumers.

When it comes to manu- facturing, most people think of huge companies like Kraft in Champaign, Caterpillar in Decatur and Peoria, and John Deere in the Quad Cities.

But the overwhelming majority of manufacturers in the United States are small companies. Of the 291,000-plus manufacturing companies in the U.S., less than 3,800 have more than 500 employees, according to the National Association of Manufacturers. Three-fourths of the smaller firms have fewer than 20.

Big business? It certainly can be, but it's mostly not.

Nonetheless, manufacturing's economic impact is huge. The average manufacturing employee earned $81,000 a year as of 2015 and 92 percent of manufacturing employees have employer-provided health insurance, according to the National Association of Manufacturers.

That's significantly more than the average nonmanufacturing salary of $63,000 salary. Only 79 percent of nonmanufacturing workers receive employer-provided health insurance.

Clearly, manufacturing jobs pay well, provide solid benefits and contribute greatly to the national economy.

Manufacturing jobs, however, have been in steady decline because of productivity increases that allow fewer people to produce more goods. But other factors also contribute to job losses and business closures and relocations — property taxes and workers' compensation costs being just two.

Baise said Illinois has lost 300,000 manufacturing jobs since 2000, 40 percent of them disappearing from Cook County. He attributed the Cook County decline to industrial property that's "taxed at a higher rate," to the point companies close or move.

The Midwest is a key location for manufacturers. Illinois' strength as a manufacturing hub includes a sound work force, central location and strong transportation network. But it lags behind its neighbors in manufacturing jobs.

U.S. Census figures reveal that three Midwestern states lead the nation in the percentage of workers employed in manufacturing. Wisconsin's manufacturing employees represent 9.3 percent of the state work force, Indiana 9 percent and Iowa 8.4 percent.

Illinois lags well behind, its manufacturing employment levels joining other states at between 4.36 and 5.8 percent of its overall work force.

Why is that? There are a number of factors that influence business decisions. But Baise said Ill- inois' workers'-compensation costs are among the highest in the nation. He noted that a company considering locating in either Illinois or North Carolina recently discovered it would pay an extra $4 mil- lion a year in workers'-compensation costs here.

Baise said if Illinois was just in the middle of the pack in workers'-compensation costs, it would be much more attractive to job creators.

Two issues dominate the discussion:

— The medical fee schedule, Baise said, is higher than Illinois' competitors.

— Injury causation. In other words, is an injury solely the result of a worker's job duties or the result of aggravating a pre-existing injury? Baise insists if a pre-existing injury is a partial cause, it shouldn't cost the employer as much as it does now.

But these are tough political issues. Unions and trial lawyers vehemently oppose changes in the causation rules, and they're big contributors to Madigan's campaign funds. Baise said the political opposition will be "very difficult to overcome."

But he insists the state must embrace change if it's to keep what it has and gets its share of new manufacturing jobs to come. That's why Baise said he and members of his group are playing an active role "on the workers' compensation and tax" issues being discussed in Springfield.

Jim Dey, a member of The News-Gazette staff, can be reached at jdey@news-gazette.com or 217-351-5369.

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Local Yocal wrote on February 21, 2017 at 12:02 pm
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The vested interest is in cheaper labor. Period.