State prepares to pay up again
What ADM wants, ADM gets — at least in Illinois.
When agri-business giant Archer Daniels Midland Co. came calling in search of tax breaks in exchange for keeping the company's corporate headquarters in Illinois, there was little doubt that the state would pay.
Last week, Democratic state Sen. Andy Manar of Bunker Hill released details of a plan giving ADM the tax break it's seeking while winning company assurances to keep, or possibly add, jobs in Illinois.
Considering that Illinois was negotiating from a position of weakness, the agreement forged by Manar is acceptable and likely will still a chorus of opposition generated by ADM's request for a $24 million tax break.
Under the agreement, ADM will receive $1.2 million per year for 20 years ($24 million total) in exchange for the 100 corporate jobs it will move to Chicago and an additional 100 jobs for a technology center located near its new corporate headquarters.
A $120,000 tax subsidy per job over 20 years is a pretty hefty price for the public to pay. But losing a chunk of ADM is unthinkable because of the further damage it would cause the state's reputation. Plenty of other big cities — St. Louis and Minneapolis, to name just two — were interested in luring a major corporation for the prestige of playing host to a worldwide corporation as well as for the prospect of additional opportunities down the road.
Manar said his goal in the negotiations with ADM was to stave off job losses both in Chicago and Decatur. So he won company pledges to relocate at least 100 full-time positions from out-of-state to Chicago and hire 100 new workers a year for five years for new or replacement positions in Decatur. Additional positions in Decatur would also be eligible for state credits.
The devil, of course, is in the details. So it's unclear just how many additional jobs ADM will create in Decatur, particularly since the company's hiring pledge covers either new or replacement positions.
What is clear, however, is that once again, taxpayers are being forced to subsidize large corporations to keep them in Illinois. In 2011, taxpayers ponied up to Motorola and Sears.
Now ADM, which has annual sales of roughly $90 billion, has stepped up to the pay window.
Why? Because it can.
Why does Illinois pay? Because it dare not call ADM's bluff.
With an unemployment rate in excess of 9.2 percent, state finances in terrible shape and a business climate that's hostile to job creators, what's the alternative when ADM comes calling?
In the short term, there is no alternative. In the long term, our elected officials must act to make Illinois a more attractive to job creator.
That probably should include a reduction in the corporate tax rate to make it more competitive with other states. It must include changing the climate for workers' compensation, regulatory oversight and litigation to help Illinois-based employers lower their cost of doing business as compared to other states.
If that does not happen, Illinois will continue to lag behind other states in terms of the kind of economic growth needed to create jobs for people who need them and generate enough tax revenue to keep state and local governments afloat.
The state will also remain vulnerable to the kind of economic blackmail major corporations employ against weak sisters like Illinois.