Boeing Deal No Slam Dunk In Illinois Legislature

By: - May 16, 2001 12:00 am

When the Boeing Corporation announced this month that it would move its headquarters from Seattle to Chicago, people throughout Illinois were elated. Now, however, comes the question at what cost? In coming weeks, the Illinois General Assembly will debate a state-crafted economic incentive deal for Boeing that rivals what it would cost to put a decent-playing pro basketball team together in the post-Michael Jordan era. In lean budgetary times, the Boeing deal is anything but a slam dunk in Illinois capitol, Springfield.

In a way, some might argue, Chicago became a city spiritually adrift after Michael Jordan nailed that arching, championship-winning jumper against Utah three years ago, then packed away his red-and-black jersey for what he said was the last time.

That loss was compounded by the recent closure of another Chicago icon, Montgomery Wards. Prior to the retailing giant’s bankruptcy, another longtime Chicago fixture, Amoco Corp., was bought out by British Petroleum PLC and promptly faced widespread layoffs. Crippling job cuts also came at Motorola, the cellular phone maker based in suburban Chicago. A prominent business publication even asked in painful testament to the streak of bad luck – if the city was losing its zip.

But this month, in dramatic response to the skeptics, Chicago beat Dallas and Denver to become the new worldwide headquarters for Boeing Corp. In so doing, Chicago regained some of the civic pride missing since Michael left. In the coffee shops and on the newspaper front pages, the city was on top – just as it was during the Bulls title run, seemingly without trying.

Now, however, comes the question at what cost.In the coming weeks, the Illinois General Assembly will debate a state-crafted economic incentive deal for Boeing that rivals what it would cost to put a decent-playing NBA team together in the post-Jordan era. In lean budgetary times, the Boeing deal is anything but a slam dunk in Illinois’ capitol, Springfield.

Gov. George Ryan put together a $41 million economic incentive program for Boeing that will provide the aerospace giant with corporate tax breaks and state grants stretching out over 15 years. That’s on top of $20 million in property tax abatements being offered by Chicago during the next two decades.

To some in the Legislature, that’s an investment necessary to buff up the state’s image.

“Everybody throughout the world will know Boeing’s headquarters are in Chicago. You can’t put a price tag on what that’s worth and what it does to solidify Chicago’s role as a great place to be a Fortune 500 company or a small business,” said Sen. Kirk Dillard, a Republican from Hinsdale, a west-suburban Chicago suburb.”When people look exponentially at what Boeing means to Chicago, the incentives are well worth it,” he said. “The public relations value and message it sends to the world that Chicago is an aerospace, transportation and high technology leader are immeasurable.”

In better times, little thought would go into rubber-stamping Ryan’s handiwork and rolling out the welcome mat. In fact, that still probably will happen. But state lawmakers face a difficult chore in justifying an expensive, wet kiss for Boeing at a time when a $400 million hole looms in next year’s state budget, and low-income senior citizens may be called upon for the first time to begin paying for part of their state-fundedprescriptions to help ease a Medicaid funding crisis.

“My guess is this is something that’ll go through without a lot of controversy,” Sen. Lisa Madigan, a Chicago Democrat, said of the Boeing deal. “But I think it proves how disingenuous the argument is that it’s a tight budget year and we can’t fund human services at the level they should be.”

Illinois’ legislative leaders have openly suggested Ryan’s Boeing deal may need to be tinkered with.

Senate President James “Pate” Philip, a Wood Dale Republican, doesn’t like the fact state taxpayers are being asked to foot some of Boeing’s moving costs, though he generally endorses the deal.

House Minority Leader Lee Daniels, an Elmhurst Republican, predicted the package wouldn’t pass the General Assembly unless it was somehow changed to offer state loans designed to resurrect Illinois’ downtrodden coal industry. Otherwise, he warned, legislators in the state’s rural southern half would stay off a Boeing bill in droves.

And, House Speaker Michael Madigan, a Chicago Democrat, has coyly withheld his endorsement of the incentive package, perhaps to gain leverage in other areas during the traditional, end-of-session gamesmanship that comes with finalizing a budget.”The speaker is supportive of efforts to bring high-visibility corporate headquarters to the state or city of Chicago, but we won’t give a blank check,” Madigan spokesman Steve Brown said.

While Ryan has forecast a multi-billion dollar impact on the state economy with Boeing’s arrival, simple math shows the city and state incentives represent $122,000 in subsidies for every job the aircraft manufacturer brings to town a sobering, if not unsettling, prospect to some lawmakers.

“The troubling part of the whole thing is there are only 500 Boeing jobs. This isn’t a factory that lots of Illinoisans are going to get jobs at,” said Sen. Steve Rauschenberger, a Republican from Elgin and chairman of the influential Senate Appropriations Committee. “We’re talking about bringing high-tech execs here to buy homes in Barrington,” he said, referring to the tony Chicago suburb where real estate with five- and six-bedrooms can fetch asking prices of $2 million and up. “It’s going to be a complicated political discussion.”

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