Gov. Pat Quinn said today that a request by Decatur-based Archer Daniels Midland for millions of dollars in tax incentives to stay in Illinois should not be considered until lawmakers first reform the state's highly indebted public employee pension system.
The company has asked lawmakers for as much as $24 million in incentives over the next two decades to continue to operate in Illinois. The company, which has been based in Decatur for more than four decades, wants to move its headquarters to Chicago.
Quinn said the agricultural giant should "hold back" from seeking special tax breaks and instead put pressure on lawmakers to implement pension reforms.
"I don't think any corporation should be seeking tax break legislation when we have our pension reform front and center," Quinn said today. "The number one priority in Illinois for our economy and for businesses, every business, small business and large business to reform the public pensions. That's the best way to help every business."
The governor said he was not worried that the company would leave Illinois without the tax breaks, saying executives have pledged to keep 4,400 jobs in Decatur.
The state's public worker pension system is $100 billion short, which has hurt Illinois' credit rating and increasingly gobbled up more and more of the state budget. Lawmakers return to the Capitol on Oct. 22 for the start of what's supposed to be a two-week fall session.
Quinn appeared to call for a moratorium on all corporate tax break legislation until pension reform is enacted.
"We need ADM and all of our big businesses to band together, put pressure on the legislature, the House and the Senate, Democratic and Republican, to get a vote on the pension reform. That helps everybody. That helps every business. That helps every taxpayer. So I think we need to have a moratorium on any special legislation for tax breaks for corporations. We have to focus on pension reform," the governor said.
When asked why he decided to tie tax breaks and pension reform together despite previously giving incentives to corporations even as pension problems loomed, Quinn said it's because "this is our moment."
It's a common refrain from the governor, who has unsuccessfully pushed for changed to the pension system for nearly two years. This summer, he suspended pay checks for legislators in an effort to pressure action, a move that was rejected by a Cook County judge last month.
Quinn said he hoped a panel of lawmakers tasked with breaking the pension impasse will have a pension bill ready to vote on by the time legislators return to Springfield for the fall veto session later this month. Quinn said he's seen some of the ideas the group is mulling, but suggested "they need to kind of put it all together in a bill... then get a vote."
The Quinn statement also provided fodder for next year’s election campaign. Rep. Jil Tracy, a Republican lawmaker whose district includes an ADM site with 500 jobs in Quincy, said Quinn’s position is frustrating, saying a true leader has to “multi-task.”
But Tracy, a member of the legislative panel working on a pension solution and a running mate in Sen. Kirk Dillard’s GOP bid for governor, contended Quinn displayed a “terrible lack of leadership to link these two issues.”
She also charged the governor is “disingenuous” in calling for pension reform and then failing to work with the legislative panel for a solution.
"He’s been totally vacant from that process,” Tracy said.
ADM, which said last week it is searching for a new corporate headquarters, wants $1.2 million a year for the next 15 to 20 years, company representatives told a State House Revenue and Finance Committee at a hearing in Chicago on Tuesday. ADM, which has called Decatur home for more than four decades, said it needs to relocate to make international travel and employee recruitment easier.
Mike Kasper, an attorney representing ADM, said the company continues to work on legislation that would allow it to retain its employees' personal income tax withholdings instead of forwarding them to the state. In years in which the company has an corporate income tax liability, it would get a tax credit.
The bill, which was introduced Friday, also called for electricity breaks for the $89 billion grain company with operations in more than 75 countries. On Tuesday, Kasper said that the company is no longer interested in the electricity breaks.
Ray Young, ADM’s chief financial officer, said that there are years in which the company’s corporate income tax liability to the state is minimal. Thus, the company won't fully benefit from a regular tax credit.
House Majority Leader Barbara Flynn Currie did not greet the request warmly at the hearing.
“You are asking us to change the state’s tax policy to give a leg up to this particular corporation,” said Currie, D-Chicago, a top lieutenant for House Speaker Michael Madigan. Currie said she was troubled with the idea of spending state tax dollars to take jobs away from Decatur.
“It essentially is blackmailing the state. It essentially is saying, if you don’t jump to, if you don’t go do this for us we might think about going somewhere else,” Currie said, adding that the legislation is premature.
ADM hasn't said where its new headquarters will be, but Chicago is the preferred location for an operation that would employ about 100 people, according to knowledgeable sources. The company has said it would also create a technology center at its headquarters site that would employ an additional 100.
The company plans to retain 4,400 jobs in Decatur.
If lawmakers approve the bill, ADM would join a select number of companies that can retain their employees’ income tax withholdings. That group includes Motorola Mobility, Sears Holdings Corp., Navistar International Corp. and Ford Motor Co.
To get there, companies have lobbied lawmakers to amended the language of the state’s Economic Development for a Growing Economy tax credit program, or EDGE.
ADM said that once it gets lawmakers’ approval, it plans to submit an application through the state’s Department of Commerce and Economic Opportunity and negotiate an EDGE deal worth $1.2 million a year for up to 20 years.
EDGE allows a business to claim a credit against its corporate income tax liability. Once accepted into the program, a company applies annually for a tax credit certificate, similar to a voucher, which it can claim when it files its taxes.
In general, the value of a certificate equals the number of jobs created and/or retained, multiplied by wages tied to those jobs and the state's personal income tax rate. In 2011, the value of certificates doubled, to about $161 million — the largest increase since the program was created in 1999.Copyright © 2015, The Baltimore Sun