3-29-2011; If the Big Cat takes off, you can forget about jobs in central Illinois—What are we prepared to do?

We salute Caterpillar CEO and Chairman Doug Oberhelman who recently reached out to Illinois Governor Pat Quinn to explain Illinois business policies were making him consider moving the company elsewhere. Mr. Oberhelman sent a March 21 letter to Illinois Gov. Pat Quinn and confirmed governors from at least four other states including Texas, Nebraska, Virginia and South Dakota have been wooing Caterpillar, adding each has made “compelling arguments.”

We assure our readers one of the compelling arguments being made by Texas, Nebraska, Virginia and South Dakota are much fairer and more predictable workers’ compensation benefit levels. Texas remains in the top twenty of the Oregon WC Premium Rankings but they have made massive changes and are dropping quickly from their previous high rank. Nebraska, Virginia and South Dakota are all farther down the line and present favorable workers’ compensation environments in comparison to Illinois that is number three below only Montana and Alaska. If South Dakota is at the median, Illinois is 149% of their expected WC premium. When you are talking about several billion dollars in premium and benefits, that is a lot of money. Don’t take our word for it, please feel free to review the report online at: http://www.cbs.state.or.us/imd/rasums/2083/10web/10_2083.pdf

Mr. Oberhelman wrote: “Before, I never really considered living anywhere else, and certainly never considered the possibility of Caterpillar relocating. But I have to admit, the policymakers in Springfield seem to be making it harder by the day.” While Oberhelman did not cite specific policies he felt were bad for business, a Caterpillar spokesman recently stated that Illinois’ recent income tax increase is a prime example.

The possibility of a relocation came to light after a letter written by Caterpillar's CEO to Governor Pat Quinn was leaked to the media. The letter says the four states listed above have approached the company about moving since Illinois raised its income tax in January. Nothing is written in stone and a spokesperson for Caterpillar says the letter, which they say they did not intend to be made public, was only an attempt to open a dialogue and certainly not a threat. Caterpillar officials say if Illinois doesn't shape up its business climate, the heavy equipment maker may have to ship out.

Caterpillar officials note they are going to pay about $40M in new taxes. Governor Quinn claimed “it’s worth it” reminding us of former Chicago Mayor Harold Washington who called the “head tax” in Chicago that drove hundreds of businesses and jobs out of the city a “drop in the bucket” for big companies, many of whom quickly left the “bucket” behind for Schaumburg and Naperville. Quinn plans to meet with Oberhelman during a visit to Caterpillar plants in Peoria on April 5.

We caution the “Trilogy” of Governor Quinn, Senate President Cullerton and House Speaker Mike Madigan, if Big Cat pulls up their jobs and the jobs of the thousands of folks who support their workers, it will be the equivalent of a neutron bomb going off in the center of our state. There may be buildings left behind but there won’t be anyone left in them. And as we have always said about companies leaving our state—they only leave once and they won’t be back. Let’s hope our Governor and legislative leaders start to show the business community they care about jobs and the future of our children in Illinois.

One hot tip for our state leaders comes from none other than Mayor-elect Rahm Emanuel in Chicago who stunned most political observers by suggesting the Chicago City Council trim its membership and wards from 50 to 25. We think this brilliant idea should be considered in Springfield that has both a Senate and House representing the same voters in the same districts—why not follow the lead of Nebraska that has a unicameral legislature with just one body? Illinois could get rid of one or the other legislative body and have a governor and single-body for a legislature. The savings would be both immediate and immense is a state which is clearly way past broke. One wag in our office pointed out this simple change would save Illinois private citizens, unions and employers millions because there would be fewer legislators to bribe.

This article was researched and written by Joseph R. Needham, J.D. Please reply to Joe at jneedham@keefe-law.com with your thoughts and comments.