Candidates for governor offer different economic visions
In late 2017, Gov. Bruce Rauner’s reelection campaign debuted an adfeaturing three Republican governors from surrounding states sarcastically saying “thank you” to House Speaker Michael Madigan for “raising Illinois taxes” and “helping create new jobs” in their states.
The ad was an opening salvo in a campaign that has seen Rauner and his Democratic critics blame one another over who is more responsible for economic growth that lags behind most other states.
The state added slightly more than 50,000 jobs between September 2017 and last month, representing a year-to-year increase of just 0.8 percent, the fourth-slowest rate of job growth of any state, according to the Bureau of Labor Statistics.
Such news has become a common refrain over the past few years, and it’s the economic reality that in part motivated Rauner to run for office in the first place. And now, it’s part of the reason why billionaire J.B. Pritzker is attempting to unseat him.
When Rauner first ran, he said that as a businessman without prior government experience, he would have the independence to make politically tough, but necessary choices to get the state’s struggling economy back on track.
Literature from his campaign website that year claimed the state was in a “jobs crisis” with the highest unemployment rate in the Midwest and among the highest in the nation, calling it “unacceptable.”
Since Rauner took office, the state’s unemployment rate has dropped from 6.1 in January 2015 to 4.1 percent now. And the state added slightly more than 200,000 jobs in that time.
But Illinois’ unemployment rate stubbornly remains higher than the national rate and that of most its neighboring states. And government statistics indicate the rate of job growth has been slower during Rauner’s tenure than the final years of former Gov. Pat Quinn’s administration.
The governor’s critics say he made the state’s already dire fiscal position worse by refusing to compromise on a budget, which led to a two-year impasse that was only broken when a handful of Republican lawmakers joined Democrats to override his veto.
In that time, the state’s already-soaring pension debt climbed, its backlog of unpaid bills ballooned to more than $16 billion and the uncertainty created hampered economic growth around the state.
In this backdrop, here’s what the candidates for governor have said about dealing with the state’s economy and creating jobs:
Republican Bruce Rauner
The governor pins most of the blame for the state’s economic woes on state Democrats and, specifically, Madigan, D-Chicago, who he argues stymied his agenda, which he claims would have helped turn around Illinois’ economy.
“The Madigan Machine has stood in the way for decades, obstructing necessary regulatory and spending reforms that would grow jobs and revive the Illinois economy,” Rauner said. “Instead, Madigan forced through a 32 percent income tax hike without spending reform that does nothing but drive business and jobs away from our state. When we reduce the tax and regulatory burdens on businesses in Illinois, the economy will thrive.”
Rauner said he would seek to lower the cost of doing business in Illinois by freezing property taxes and reforming the state’s workers compensation system. He also supports the creation of “right-to-work zones,” which would allow local municipalities to decide if workers should be required to join a union.
He said such reforms are necessary for the state to compete with its neighbors, which have less generous workers’ compensation laws and, besides Missouri, are all right-to-work states.
Rauner also opposes changing the state’s “flat” income tax structure to a “graduated” scale, which would allow the state to tax wealthier people at a higher rate than middle- and lower-income folks.
Instead, Rauner has proposed rolling back the 2017 income tax increase in the form of a $1 billion tax cut. However, he has not disclosed how he would close the hole the tax cut would create in the state budget.
And while state funding for higher education was decimated during the budget impasse, Rauner was a major proponent of launching the Discovery Partners Institute/Illinois Innovation Network, a University of Illinois system-led initiative meant to drive economic growth across the state through research and innovation.
The state budget that he signed in early June included $500 million in seed money for the initiative.
“We have fantastic research universities doing world class innovation,” Rauner said. “We need to make sure that we collaborate, coordinate, communicate, partner and accelerate the economic development that can come from that kind of innovation and fundamental research.”
Most pro-business groups, including the Illinois Chamber of Commerce and the Illinois Manufacturers Association, are still backing Rauner, crediting him for holding the line during his first term on regulations and tax increases in face of a Democrat-controlled General Assembly.
“We’ve seen federally what happens when you take the shackles off job creators,” said IMA vice president Mark Denzler. “You see what the president has done in Washington with tax reform, reduced regulations, and that’s kind of created a spark across the country. Unfortunately, in Illinois, we haven’t had as much success because of the policies that have been enacted largely by the Democratic General Assembly or the reforms they’ve blocked.”
If he is reelected, however, Rauner’s allies acknowledged he would have to change his approach given the strong likelihood the legislature will remain in Democratic control.
“When he rolled out 48 items for a turnaround agenda in his very first State of the State address, that was overreach, no doubt,” said Illinois Chamber of Commerce CEO Todd Maisch. “However, Democrats have been the defender of the status quo, and I don’t care if you’re a conservative Republican or a liberal Democrat, almost no one is satisfied with the status quo.”
Democrat J.B. Pritzker
Pritzker, a venture capitalist and heir to the Hyatt Hotel fortune, has made his record as a businessman central to his campaign to unseat Rauner.
In its endorsement of Pritzker, Crain’s Chicago Business described the billionaire as “a known quantity in Chicago’s moderate business community,” and in many ways, “its unofficial mayor.”
Pritzker was instrumental in creating 1871, a Chicago-based tech incubator that has created an estimated 7,000 jobs since opening in 2012.
Former 1871 CEO Howard Tullman said the project would not have been possible without Pritzker’s leadership.
“1871 wouldn’t really exist without J.B.,” Tullman said. “Not simply because he was a part of the visualization and the conception, but because we wouldn’t have had a physical location without his willingness to underwrite the lease for the initial space.”
Pritzker said he would take a similar approach to job creation in the state by expanding the availability of microloans to increase access to capital for small businesses. Pritzker also proposes restoring and expanding Small Business Development Centers that provide mentorship, training and support to business owners.
Pritzker’s economic plan also includes a capital bill to invest in the state’s infrastructure, investing more resources into higher education and jump-starting the state’s manufacturing sector.
“Having engaged in building a fast-growing startup environment in Chicago, I know Illinoisans’ creativity and entrepreneurial drive is the best creator of new jobs for Illinois,” Pritzker said.
Pritzker, however, has caught the ire of business interests wary of his proposal to change the state’s flat income tax to a graduated rate. Such a change would require amending the state constitution. They say job creators in the state already face too high a regulatory and tax burden.
And there has been a level of uncertainty created as Pritzker has repeatedly deflected when pressed to provide proposed rates and tax brackets under a progressive system. Pritzker said such details will have to be negotiated with the General Assembly.
“Our biggest problem with J.B. isn’t that he’s not a good businessperson ... but it’s that he’s bought into this Bernie Sanders track of the far-left liberal ideology that is just completely inconsistent with a thriving, growing economy,” Maisch said.
And Pritzker’s more loyal backers dating back to the Democratic primary have been labor unions, which leads some in the business community to believe he will not make the tough, but necessary decisions when it comes to pensions, worker’s compensation and other reforms to make the state more business-friendly.
But Pritzker’s supporters say the billionaire is pragmatic and will ultimately be a governor who listens to the concerns of entrepreneurs and small business owners. Tullman, who has worked with both Pritzker and Rauner in the past, said Pritzker’s collaborative approach would be an asset in the Governor’s Mansion.
“So I’ve known both of these guys, and I would say that J.B.’s diverse experience, his ability to delegate and his ability to get along with all kinds of different people — and entrepreneurs are not easy to get along with — I think that all of those skills will be beneficial in trying to get his arms around the structure of the bureaucracy, which is the state government,” Tullman said.
And Pritzker, if elected, said he would serve as the state’s “chief marketing officer,” which he said would be a contrast from Rauner, who he believes “made our state’s problems worse by repeatedly bad-mouthing Illinois.”
Libertarian Kash Jackson
In keeping with his party’s ideology, Jackson believes a key to making the state more business-friendly is to get government out of the way.
“Illinois already has high taxes and compliance costs, but the constant increase in these taxes, fees, and regulatory requirements makes Illinois an unattractive place for businesses to want to set up shop,” Jackson said.
Jackson believes that fees associated with opening a business should be reduced to a bare minimum and that state occupational licensing should be greatly reduced, arguing that red tape and high costs hamper job growth.
The Libertarian also believes the state should lower the minimum wage, which he said will help small business owners struggling to make ends meet.
Conservative Sam McCann
McCann, who is running as a pro-union, social conservative, said he would work to restore “economic liberty” to Illinois.
He said he would work with the legislature to reduce the overall tax burden and to overhaul the state’s property tax system, but has offered very few details on how he would accomplish this.
Contact Brenden Moore: 788-1526, brenden.moore@sj-r.com, twitter.com/brendenmoore13.