Are Tax Incentives Working? Many States Don’t Even Check

The Pew Center on the States checked all 50 states to find out which ones are evaluating their tax incentive programs. Credit: Pew Center on the States.

Tax incentives have become the weapon of choice among states battling for new business investments. Niala Boodhoo reported in December that offering incentives has become a sort of strategy game for Midwest states hoping to one-up each other as everyone fights to grow jobs. But, as Niala reported, these are games with millions of dollars in tax breaks and thousands of jobs on the line.

Now, the Pew Center on the States is taking a look at incentives from a different angle. The Pew Center tried to figure out whether anyone is actually checking to see whether the incentives are worth it.

Turns out, a lot of states do very little follow-up once they approve incentives programs.

Continue reading “Are Tax Incentives Working? Many States Don’t Even Check”

Midwest Memo: Tracking Tax Incentives, Rebounding RVs And Foreclosure Numbers

Not tracking incentives Few states are doing a good job tracking their business tax incentives. That’s according to a new report from the Pew Center on the States. The AP has a writeup. Among Midwest states, Pew says Wisconsin, Minnesota, Iowa and Missouri are “leading the way.” Michigan and Ohio have “mixed results.” And Illinois and Indiana “trail behind.” The full report is here.

Revved up for RVs PBS Newshour reports on the rebounding RV industry in Indiana. The town of Elkhart was struggling just a few years ago because of a downturn in RV sales. Elkhart turned to electric vehicle maker Think to help boost jobs. Now, Think is in bankruptcy, and the RV companies are hiring again.

Now, on to the budget Detroit mayor Dave Bing will present his budget plan to city council this morning. It will be the last budget proposal from the mayor before a new financial advisory team takes over the city’s finances.

In full bloom A report from Michigan State University says the state’s agricultural sector grew dramatically during the recession. Partner station Michigan Radio has the details of the report, which claims agriculture now contributes $91.4 billion to the state economy.

Foreclosures New foreclosure numbers are out from RealtyTrac. The Midwest still has 7 states in the top 20 for highest foreclosure rate.

Midwest Memo: Environmental And Business Interests Clash In Ohio And Wisconsin, Sara Lee Returns To Chicago

Three stories making news across the Midwest today:

1. Ohio officials scrutinize fracking finding. Ohio officials are closely watching the fallout from an Environmental Protection Agency finding that hydrofracking might have caused groundwater pollution in Wyoming. The finding, announced Thursday, could have significant ramifications in Ohio, where leaders have haggled over how to regulate the burgeoning industry. The industry has contended that fracking is safe, but the EPA detected hydrocarbons likely associated with fracking chemicals in the groundwater of a Wyoming town where residents say their well water reeks of chemicals. “All of the rhetoric from the industry has been there’s no way that this can happen,” Trent Doughtery, a lawyer for the Ohio Environmental Council, tells The Columbus Dispatch. “This shows that it has happened, and we need to protect the people in Ohio.”

2. Wisconsin Republicans envision mining boom. Wisconsin Republicans proposed legislation Thursday that would encourage construction of iron ore mines and reduce environmental restrictions. Sponsors of the bill tell the Milwaukee Journal Sentinel its passage could create thousands of jobs. The newspaper reports the bill would scale back water protections and waste rock disposal, as well as mandate that the Department of Natural Resources accelerate its review process. Mining emerged as a significant state issue this year when Gogebic Taconite announced it would construct a new mine that would employ 700 workers. Advocates decried the sweeping rollbacks of environmental protections. The bill will gets its first hearing Wednesday, according to the newspaper, and could be voted upon in January.

3. Sara Lee headquarters back in Chicago. Six years after leaving, Sara Lee is returning part of its corporate headquarters to Chicago. The food and beverage company was headquartered in the city for more than 60 years before a 2005 consolidation brought it to suburban Downers Grove. Next year, the company will split into two publicly traded companies, and one will occupy a building on South Jefferson that will be renovated at a cost of $60 million, according to our partner station WBEZ. A $6.5 million subsidy, a first under Mayor Rahm Emanuel, helped bring the deal to fruition.

Midwest Memo: Lansing-Area UAW Members Voting On Strike Authorization, Illinois Lawmakers Regroup, Milwaukee Businesses Sharing Office Space

Three stories making news across the Midwest today:

1. Lansing-area Local 602 could authorize strike. Members of UAW Local 602 are voting today and tomorrow on whether to authorize a strike. The union, which represents approximately 3,430 employees at the General Motors assembly plant in Delta Township, Michigan, has failed to reach an agreement on a local contract with plant management. According to the Lansing State Journal, a strike authorization gives union leaders the authority to call a strike, but does not necessarily mean one is imminent. Changing Gears profiled Local 602, one of the three locals that defeated the GM-UAW contract, in September.

2. Illinois lawmakers regroup. Lawmakers will give a second effort to keeping CME Group and Sears in Illinois. After rejecting two bills that would have provided the Chicago-based companies with $250 million in tax incentives last week, they announced the House would hold a special session Monday in hopes of trying again. House members have now raised the prospect of splitting the bill into several pieces of legislation and holding multiple votes, our partner station WBEZ reported. The two companies have threatened to relocate elsewhere in the Midwest if a deal isn’t done by the end of the year. Illinois Gov. Pat Quinn said Ohio offered Sears $400 million in incentives to relocate to Columbus.

3. Milwaukee capitalizes on workspace-sharing trend. A Milwaukee developer is bringing a  West Coast trend of small businesses sharing office space to the Midwest. Soon, William Waldren will open the Hudson Business Lounge, where 180 small-business owners have already signed up to share work space, according to the Milwaukee Journal Sentinel. “There’s definitely been a pickup in people wanting to do this,” said James Carlson, who runs Bucketworks, another Milwaukee-based shared workspace building. Hudson offers various levels, starting at $55 per month for part-time access to group work tables to a $795 per month package that includes private office space. Across the U.S., 450 to 500 co-working sites exist, according to the newspaper, but most cater to tech people. Walden wants to broaden the appeal to other businesses.

 

Midwest Memo: Kasich Downplays Ohio’s Sears Hopes, Rail Improvements On Chicago-Detroit Line Come With Delays

Three stories making news across the Midwest today:

1. Kasich downplays Sears hopes. Gov. John Kasich says he “wouldn’t bet on” Ohio’s chances of convincing Sears to relocate its headquarters within its borders, The Plain Dealer reported today. During a visit to the Ford Assembly Plant in Avon Lake, he said Ohio remains in the running, but that it would be hard to pry Sears away from its long-time Chicago-area home. Last week, news outlets reported that Ohio had offered $400 million in tax incentives to bring the company and its 6,100 employees to Columbus. Illinois lawkmakers had rejected a proposal to give Sears $100 million in incentives.

2. Delays ahead on Detroit-Chicago rail line. Faster service is coming along a 135-mile stretch of train tracks between Dearborn and Kalamazoo . It’s just going to take a while. Construction will begin on a series of improvements in May or June, officials said yesterday, but the project will not be completed until 2015 or 2016. In the meantime, passengers can expect more delays. The Detroit Free Press reports today the project to fix tracks, cross ties, grades and crossings will cause further disruption. In four years, Amtrak expects new locomotives, new cars, smoother tracks and better signaling along the route. The improvements were funded as part of $403.2 million Michigan received from the federal government.

3. Indy community protests gas station development. The difference between refurbishing a dilapidated building and continuing a community eyesore? It’s largely in the eye of the beholder in one Indianapolis neighborhood, where residents of Northside are fighting the rebuilding of a gas station on the corner of 16th Street and Central Ave. In a lawsuit filed last week, opponents say the gas station no longer fits the area, and that they want something more friendly for pedestrians, such as shops or outdoor cafes, according to the Indianapolis Star. The newspaper reports the suit underscores the area’s progression from a “fixer-upper to up-and-coming.”

Midwest Economy Improves, Emergency Manager Appointed in Flint, Lawmakers Reject Incentives For Chicago Mainstays

Three stories making news across the Midwest today:

1. Midwest Economy Gains Ground. The Midwest Economy Index showed improvement in the regional economy in October for the first time in six months, according to the Federal Reserve Bank of Chicago. The monthly index, a combination of 134 state and regional indicators, ticked upward from -0.37 to -0.33. Manufacturing was the only sector measured to make a positive contribution to the index at +0.20, although it had ebbed from +0.23 in September. The pace of manufacturing activity decreased in Iowa and Wisconsin, but increased in Illinois and Michigan. Indiana held steady. The service sector and consumer spending showed improvements overall, while construction and mining activity fell.

2. Emergency Manager Takes Over Flint. Michigan Gov. Rick Snyder appointed an emergency financial manager for the city of Flint on Tuesday. On Thursday, Flint’s former mayor, Michael Brown, will begin serving in the position. Under the state’s revamped emergency manager law, Brown will have authority to control the city’s operations and finances, including the power to terminate employee contracts, merge departments and reduce pay. It’s the second time an emergency manager has been appointed in Flint, which had a $15 million deficit in the 2010 fiscal year. Emergency managers are already in place in Benton Harbor, Pontiac, Ecorse and Detroit Public Schools.

3. Illinois Lawmakers Reject Incentives Bill. Two of Chicago’s most visible companies, CME Group and Sears Holdings Corp., have threated to move elsewhere if they weren’t given tax incentives to stay. Illinois lawmakers are calling their bluffs. The Illinois House of Representatives rejected a bill, 99-8, that would have provided $200 million in incentives Tuesday, the final day of the legislature’s fall session. House Republicans wanted the bill to focus solely on tax breaks for businesses they hoped would lead to job growth, while Democrats wanted tax relief for workers and low-income families included, according to the Chicago Tribune. Gov. Pat Quinn said “ample” time remained to reach a deal, but in a written statement, a Sears spokesperson said, “Our timeline for making a decision about our future by the end of the year has not changed.”

Midwest Memo: Chrysler CEO Predicts End Of Two-Tier Wage Structure, Indianapolis Jobs Announcement May Be Hoax

Three stories making news across the Midwest today:

1. Will two tiers vanish from auto contracts? One contentions round of contract negotiations just ended, Chrysler CEO Sergio Marchionne is already making bold predictions about what’s ahead when the current four-year contract ends. He said today that the automakers’ two-tier pay structure is not a viable one, and Chrysler and the UAW must find a way to merge two classes of workers next time. The structure is, “not something that can go on for a long period of time,” he said on a conference call to discuss the company’s second-quarter earnings. Marchionne continued, saying, two-tiers is “not a viable structure on which to build our industrial footprint.” Last month, Changing Gears reporter Kate Davidson examined the two-tiered wage structure and reported on its impact upon automakers and their workers.

2. Is Indianapolis jobs pledge a hoax? Only two short days ago, Indiana Gov. Mitch Daniels and Indianapolis Mayor Greg Ballard welcomed a California entrepreneur whose company would bring 1,100 jobs to the city. Two days later, there’s growing worry the company, Litebox Inc., and its owner Bob Yanagihara aren’t for real. The Indianapolis Star reviewed public documents that show Yanagihara owes “hundreds of thousands of dollars in state and federal tax liens” from the past decade, as well as money to investors who have sued him – and won. “I would strongly advise anyone thinking of investing in his projects to think twice,” Colin McGrath, who is owed $145,000, tells the newspaper.

3. Whirlpool will lay off 5,000 workers. Appliance manufacturer Whirlpool said Friday that it would eliminate 5,000 jobs across North America and Europe. The Benton Harbor, Mich.-based company cut its earnings forecast. Whirlpool CEO Jeff Fettig said the cuts came amid weak demand and higher costs. The cuts include 1,200 salaried positions, and company officials said overall, the layoffs will save approximately $400 million. There was no immediate breakdown of how the cuts would affect Whirlpool’s Michigan workforce.

 

Midwest Memo: UAW Reaches Chrysler Deal, Wisconsin Democrats Begin Effort to Recall Gov. Scott Walker

Three stories making news across the Midwest today:

1. Chrysler and UAW reach deal. Eight days after reaching a tentative agreement with Ford, the United Auto Workers announced today it had reached a tentative agreement with Chrysler. As part of the deal, Chrysler has agreed to add 2,100 jobs by 2015 and invest $4.5 billion in its U.S. plants. “This tentative agreement builds on the momentum of job creation and our efforts to rebuild America,” UAW president Bob King said in a written statement. Chrysler’s 26,000 UAW members will vote on the deal in the coming days and weeks.

2. Democrats commence Walker recall effort. Next month, Democrats in Wisconsin will begin efforts to recall first-year Republican Gov. Scott Walker. Mike Tate, chairman of the state Democratic Party, announced the decision to pursue a recall Monday night during an MSNBC interview. Organizers must gather 540,208 valid signatures, one quarter of the votes cast in last fall’s election, within 60 days of commencing their efforts on Nov. 15, according to The New York Times. If those efforts are successful, Walker would be required to run for his office again.

3. Columbus-area tax incentives brought jobs. Six Franklin County, Ohio, companies received property-tax breaks in exchange for a promise to create 298 full-time jobs over the past seven years. They delivered more than county executives anticipated. Those companies created 665 jobs and added $32.8 million in new payroll, according to a report released Tuesday night by the county’s Tax Incentive Review Council. Leading the way, according to The Columbus Dispatch, was TS Tech North America, a seat supplier for Honda that created 310 more jobs than promised in 2004. TS Tech had received a 10-year, 50-percent tax break on taxes worth $829,000. “This is proof our staff knows what they’re doing,” county commissioner John O’Grady told the newspaper.

Midwest Memo: Unemployment Rate Unchanged, Michigan Business Owner Desires Better-Educated Workforce

Three stories making news across the Midwest today:

1. Unemployment rate unchanged. American’s unemployment rate remained unchanged at 9.1 percent in September even as the economy added 103,000 jobs, the U.S. Labor Department announced Friday. Among those struggling to find work, more than 1 in 4 respondents to a Rutgers University survey said they are opposed to a renewal of extended unemployment benefits. An extension proposal is part of President Obama’s jobs bill, according to The New York Times, which explored the sentiments of the unemployed. Theresa Gorski, a pharmaceutical rep from Detroit, tells the newspaper she once shared skepticism about prolonged benefits, but after 17 months of unemployment, her views have changed.

2. Software chief: Michigan needs more education. For Michigan companies, a strong education base is more important than lower taxes. That’s the opinion of Bill Wagner, co-founder of Ann Arbor, Mich.-based software firm SRT Solutions, who writes the dismantling of education throughout the state has painted a grim picture to prospective global employers in an AnnArbor.com op-ed published today. He believes budget cuts have harmed the state’s education infrastructure, and that savings from reduced business taxes, among other things, amount to less money than his company spent last year on a summer intern.

3. Sara Lee may move headquarters. The headquarters of Sara Lee has only been based in Downers Grove, Ill. for six years. Its’ already looking to move. Our partner station WBEZ reports the company is exploring a move within Illinois, possibly to downtown Chicago or another suburb. “We do believe that a downtown location would provide our new North American Meat Co. with an environment that will be energetic, that will foster breakthrough thinking,” a company spokesperson told WBEZ. Sara Lee currently employs 1,000 workers in Downers Grove.

 

 

Midwest Memo: CME Offered Tax Incentives for Indiana Relocation, John Kasich Begins SB5 Defense

Three stories making news across the Midwest today:

1. Report: Indiana sets sights on luring CME headquarters. Indiana is aiming to land another Illinois company with a tax-incentive package. This time, a big one. Crain’s Chicago Business reports today that Indiana has offered CME Group Inc. $150 million per year to move its headquarters to the Hoosier State. CME CEO Terry Duffy did not comment on the report, but earlier this week, said he expects the headquarters issue “to be resolved by year end.” Indiana’s top economic development official, Dan Hasler, neither confirmed nor denied the report when reached.

2. Kasich begins official SB5 defense. On Thursday night, Ohio Gov. John Kasich made his first official campaign appearance to support Issue 2, a state ballot measure that could repeal Senate Bill 5, a controversial law that limits collective-bargaining rights of public employees. Appearing in Toledo with Mayor Mike Bell, Kasich outlined his defense of SB5 – that it helps local governments control spiraling costs. “I believe in unions, I believe they have a place,” Kasich told The Columbus Dispatch. “I am not out, in any way shape or form, to go after and target anybody.”

3. Michigan airport authority announces cuts. The Wayne County Airport Authority said Thursday it would cut costs and raise fees as part of a plan to reduce its expenses by $20 million over the next 12 to 15 months. The Authority, which runs operations at Detroit Metro and Willow Run airports, approved a budget of $292 million for fiscal 2012 that includes wage and benefit changes for employees. Airport World reports at least 100 employees will lose their jobs. “It’s imperative that we re-engineer Detroit Metro and Willow Run Airports so that they become the most competitive in North America,” said Turkia Awada Mullin, the WCAA’s new chief executive officer, who has drawn attention this week for taking a $200,000 buyout from her previous job as Wayne County’s chief development officer to accept the head position at the airport authority.