Tax hike small part of Illinois’ business climate

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.