State's economy teeters on edge

State's economy teeters on edge

Illinois needs an economic climate friendly to all job creators, not just a favored few.

Gov. Bruce Rauner this week signed legislation that restores a business tax incentive program that's aimed at encouraging businesses — both large and small — to invest in Illinois.

Called the EDGE program — Economic Development for a Growing Economy — the legislation reinstates a program that expired in January 2017 and continues it until June 30, 2022.

Illinois has a mixed history with EDGE grants. It has, since 2001, awarded $1.4 billion in the tax credits in 859 agreements that, reportedly, have created more than 37,000 jobs.

But some of those grants have gone to companies that created jobs in one location while eliminating them in another. The Chicago Tribune took a long look at the program in 2015, identifying some of the program's less satisfying results. It's been, at best, a mixed bag.

But the question is no longer, if it ever was, about whether states or municipalities will offer financial incentives to attract new businesses that create jobs and generate tax revenues. That ship sailed long ago — everyone does it, whether they should or not.

It's no coincidence that Wisconsin Gov. Scott Walker recently signed legislation that provides $3 billion in tax credits to Foxconn after the company agreed to build a new plant in the southeastern corner of the state that could employ up to 13,000 people.

That's one reason why a representative of the Illinois Chamber of Commerce said Gov. Rauner needed to sign the bill because, without it, "Illinois has no real economic development tool."

Well, now Illinois has one.

The new version of EDGE gives increased tax credits to projects located in "underserved areas," provides financial incentives to companies that meet their hiring goals, makes businesses with fewer than 100 employees eligible for assistance and requires $2.5 million in capital investments, reduced from $5 million, from companies with more than 100 employees.

The legislation Rauner signed was passed with overwhelmingly bipartisan majorities. So the consensus of opinion clearly is that EDGE credits are effective tools for attracting investment.

But no one should kid themselves about the impact of an EDGE-type program. It's no substitute for maintaining an environment that is friendly to all job creators, not just those lured by special tax savings.

Consider Illinois' tepid economic growth, particularly as compared with neighboring states.

The state's personal income growth from 2007 to 2016 is tied with Nevada for the worst in the country. Job growth has lagged, tax revenues have fallen short of what's required to fund core government services, and more people with higher incomes are leaving, while fewer people with lower incomes are moving in.

That is a portrait of a failing state, and it will take more than tax credits for the favored few to restore the state to good health.

Indeed, that's why Gov. Rauner has been talking himself blue in the face about the need to revitalize the state's economy by making Illinois more attractive to job creators. Unfortunately, the Democratic-controlled Legislature, for political reasons, has no interest in hearing what a Republican governor has to say, particularly as the November 2018 election approaches.

So EDGE credits will have to do. Under the sorry circumstances, that's good, but not nearly good enough.

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