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State

Enterprise zones useful, but need updates

Business leaders have long criticized Illinois for being heavy on taxes and light on incentives for new businesses. One incentive many of them support is the state’s enterprise zone program, which give tax breaks to companies in return for jobs, a strategy some want to see expanded.

“Enterprise zones are one of the best incentive programs you can have,” said Mary Renner, executive director of the Christian County Economic Development Corp. “Given the fact the fact the state of Illinois has a dearth of incentives to offer, to allow more enterprise zones to be certified would certainly make Illinois much more competitive.”

The zones were started in the 1980s to bring businesses into impoverished areas. A county or city government can apply to have an area certified by the state board of directors for the zones.

The zones last for limited
time, with most given an initial 15 years with an option for a 10-year extension after 13 years.

Certification is a fairly cut and dry process, with applications scored on a point system. Points are awarded based upon factors like a coal mine closing leading to massive job losses or a high amount of families eligible for welfare benefits.

With the goal to create jobs, those benefiting from the tax breaks, such as contractors building on the site or a business operating there, must send a report confirming how many jobs have been created and retained.

The enterprise zone program, however, needs a serious update, according to Todd Maisch, president and CEO of the Illinois Chamber of Commerce.

“Economic development hasn’t been truly modernized since the ‘90s,” he said. “In the era of Foxconn, Amazon, we think this is a real opportunity to go ahead.”

Specifically, he wants to see changes to the yearly certification limit on zones, which the chamber has dubbed “the hunger games provision.” There is an limit on the number of new zones that can open statewide each year. Usually, the limit is 12 or 13. But for some years, it’s less due to a statewide cap of 97 zones. For 2018, only three zones can be certified.

With the point scoring system, Maisch argued the caps are unnecessary and keep economic development away from some towns.

“We would make the contention that if you’ve got communities that have demonstrated real need and demonstrate a real ability and willingness to use their zones effectively, then ... there’s not a need for a cap,” he said.

The reports also are a challenge. Sometimes there are mistakes filing or companies forget a form, according to Abigail Powell and Val Yazell, who oversee parts of the city of Springfield’s economic development incentives. If a report isn’t filed, the only punishment available is to completely revoke the tax breaks and other zone benefits.

“This is an ongoing challenge,” said Renner. “Enterprise zones are designed to help companies expand and relocate in Illinois. There’s a certain amount of accountability to the citizens of Illinois for using their tax dollars for any benefit. However, it’s a fine a line between managing to do that by making reports reliable and without infringing on the privacy of the companies.”

When zones are being recertified or created, Renner said there needs to be some sort equalizing factor between Cook County and the Chicago suburbs compared to a rural community downstate when zones are getting certified. Currently, larger, wealthier areas have a much larger financial and economic impact simply because of how highly populated that area is compared to places like Taylorville or Lincoln.

“Common sense says if you’re in the Chicago area you’re going to have a lot more resources available to you locally to work with,” she said. “If you’re in a rural community, those are extremely limited. So if you take away the enterprise zone and then you’re in state like Illinois, which has its own financial challenges [and] can’t offer much in terms of incentives, you’re essentially putting rural communities out of business.”

Contact Maximilian Kwiatkowski: 788-1530, mkwiatkowski@sj-r.com, twitter.com/MSFKwiat.

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©2018 The State Journal-Register, Springfield, Ill.

Visit The State Journal-Register, Springfield, Ill. at www.sj-r.com

Distributed by Tribune Content Agency, LLC.

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