Despite spending freezes elsewhere, Rauner OKs corporate tax breaks

by Greg Hinz, published April 09, 2015

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Parks and social services are taking a hit, but Gov. Bruce Rauner is waving through $100 million in “commitments” made by his predecessor.

After months of indecision, the Rauner administration is lifting a freeze it put on $100 million in business tax-incentive deals that had been approved in principle by outgoing Gov. Pat Quinn but not yet executed.

The Rauner administration and business sources confirm that an internal review of such spending was conducted and a decision reached to fulfill “commitments made by the Quinn administration” to companies including eBay, Capital One, CDW and SAC Wireless. Some deals reportedly were finalized in the past 10 days or so; others are still in process. (Take a look for yourself here.)

But the decision to go ahead with deals under the state’s Economic Development for a Growing Economy program may be controversial—both because Rauner and others have criticized the Edge program and because he has suspended $26 million in social services grants and $180 million in park grants that had been approved by Quinn but not yet disbursed.

Rauner has cited the state’s financial woes in freezing those monies. A spokeswoman said the Edge credits will proceed “because they have no impact on the current fiscal year.”

The spokeswoman declined to elaborate, even when I pointed out that Edge credits typically begin immediately as an offset against corporate income tax liability and continue for up to a decade.

The Rauner administration has decided to make one big change in the Edge program, at least for now, while it evaluates its long-term policy on incentives. Until further notice, Edge will be available only for creating new jobs in the state, not for retaining current ones that could be moved out of Illinois.

According to an internal report passed on to me, the Quinn team left behind $99.8 million in pending Edge deals that that had been negotiated but not yet finalized, often because needed paperwork had not yet been completed.

The deals covered more than 2,000 new jobs and nearly 4,000 retained jobs, most in the metropolitan area but a few downstate.

According to the spokeswoman, “paperwork was in process” when Rauner took office. The Department of Commerce and Economic Opportunity “chose to abide by those commitments and provided final approval to move forward.”

The spokeswoman said the decision came “about a month ago,” with one source close to the matter saying the approvals began to come in late March, and only after pushing from some of the companies involved.

Not every company has yet received the news that its project will proceed.

For instance, a spokeswoman for Nokia, which has acquired SAC, said the agreement to give the company up to $6.8 million in incentives “has not yet been executed,” with “some internal things that need to be worked out.”

A spokeswoman for eBay, in line for $16 million for its Braintree unit, said it has been “working to iron out all of the details. . . .Given Quinn’s departure, there has been a bit of a delay.”

Other promised grants that Rauner has frozen since taking office include $3.4 million for immigration integration assistance.

During his campaign, the governor said he would restructure the Edge program and remake DCEO into a private/public partnership, as has occurred in some states with mixed success. There has been no sign of action on the latter, with Rauner recently naming private-equity exec Jim Schultz to head the agency.

Update, 4:20 p.m. — The Rauner folks haven’t had anything more to say, but the Illinois Federation of Teachers sure does.

“If anyone is still unclear about Gov. Rauner’s priorities, look no further,” the big union said in a statement. “Giving tax breaks to big corporations while slashing millions from the services our most vulnerable citizens rely upon is beyond the pale.”