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February 6, 2014

MARK BENNETT: Illinois officials content their state has its business advantages, too

Most people count the Wabash River as an economic asset for Terre Haute.

It holds rich history, attracts visitors with its scenery and packs vast potential as a wildlife recreation magnet.

The Wabash also serves as the Indiana-Illinois border from Vigo County south, the river’s final 200 miles. That nearness to Illinois is an economic plus, too, at least in the view of Indiana Commerce Secretary Victor Smith. In the competition to attract new employers, businesses can’t help but see greener grass — and profits — in the Hoosier state, Smith contended Tuesday on a visit to Terre Haute.

Of course, economic development officials in the Land of Lincoln beg to differ.

Smith talked up Indiana’s status as the business-friendly, low-tax, lean government “fiscal envy” of other states as keynote speaker of the annual Ground Hog Day Economic Forecast breakfast at Indiana State University. He resolved for Indiana to “be a little bit more aggressive this year in how we go about selling Indiana.” How so? “We are really doing a lot more of a ‘hunter mentality,’ going out and grabbing companies and grabbing industries and bringing them back to Indiana,” he explained.

In an interview after his address, Smith described ways communities such as Terre Haute could gather local public and private sector leaders to craft a “collaboration plan” and enlist the help of the entity he leads — the Indiana Economic Development Corp. — to attract businesses. In the interview, he asked rhetorically, “What are the advantages here in Terre Haute?” A reporter mentioned the local colleges and workforce, and Smith added Indiana’s “attractive environment for business, first” and Interstate 70, which bisects the city.

Then, as Smith described an “inverted wedding cake” model of advantages — including the Midwest’s abundance of manufacturing, logistics and life sciences employers — he said, “This region is a very fertile area for a lot of traditional things, and [benefits from] location, location, location. And I would throw into ‘location’ your proximity to Illinois, which is one of the worst states in the country for doing business and getting worse, literally. So that’s an advantage.”

Asked for specifics, Smith said, “I’ll answer that just with facts.

“Look at the tax policy,” he continued. “Look at the unfunded pension liability that’s looming. There’s only one direction for taxation in Illinois, and that’s up. Their system is broken. That’s not news. Those are facts. Don’t take my word for it, look at third-party rankings.” Smith cited Illinois’ worker’s compensation rate as two times more costly to a business as another example. By contrast, during Tuesday’s focus on the economy, Indiana was lauded for its rankings as No. 1 in the Midwest and top five in America on Chief Executive Magazine’s best places to do business.

An Illinois economic development official sees the situation differently.

One of the worst states for business and getting worse? That “would be a surprise to all the new companies that are looking to locate in our state,” said Dave Roeder, communications director for the Illinois Department of Commerce and Economic Opportunity.

Obviously, Illinois’ post-Blagojevich, post-recession troubles are well-documented. Roeder acknowledged the 8.6-percent unemployment rate (third-highest in the U.S.), saying, “We’re trying to get that unemployment rate down as fast as we can. We’ve got a long ways to go.” (It should be noted that Indiana’s jobless rate, now 6.9 percent, is 21st-highest, and while improving, it has stayed above the national rate for much of the past few years.) Illinois’ rock-bottom credit rating also remains a massive burden, but the state got good marks from Moody’s Investors Service for pension reforms approved in December, aimed at reducing its pension liabilities by $160 billion during the next 30 years.

Despite Illinois’ problems, several third-party rankings cast a promising picture of the state’s future.

Roeder referred to Site Selection Magazine’s 2013 top states for business climate list. It rated Illinois fifth nationally in the number of new and expanded corporate facilities. In its overall list, the magazine put Indiana at No. 10 and Illinois just a few notches back at No. 19. Also, the Anderson Economic Group’s 2013 state business tax burden rankings — based on U.S. Census figures — put Illinois at No. 20 and Indiana at No. 28. And, the CareerBuilder and Economic Modeling Specialists list of the best states for new business establishments — based on U.S. Bureau of Labor Statistics’ Quarterly Census of Employment and Wages — placed Illinois third (behind only Texas and New York), with Indiana rated 24th.

Lists abound and vary, as do states’ economic-development tactics.

“It’s a very competitive market,” Roeder said, “and all states have their different forms of incentives to try to win businesses from somewhere else.”

The idea of Indiana “hunting” in Illinois isn’t a surprise.

“If I were Indiana and I were looking to grab some new business, I would be looking at Illinois, too,” Roeder said, “because our economy is so much larger than theirs, and we have so many more Fortune 500 companies here.”

The primary ways states become business magnets, Roeder said, are by growing an innovative economy, offering a good quality of life in communities, maintaining transportation and investing in a qualified workforce. Given that, Roeder said, “We just feel we’ve got a lot to offer before you even discuss the issue of taxes or incentives.”

Tuesday morning, Smith emphasized the importance of developing the “quality of place” in Indiana communities, and highlighted a current legislative proposal (House Bill 1035) that would require the Indiana Economic Development Corp. to assess needs and potential of Hoosier cities. Smith suggested the idea could lead to a $1 billion fund for communities to enhance their “quality of place” and infrastructure. At this point, though, it’s only a proposal to conduct a study.

It deserves to be more than that. When it comes to Indiana’s economic-development advantages, quality of life should be at the top of the list.

Mark Bennett can be reached at 812-231-4377 or mark.bennett@tribstar.com.

 

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