Study places Illinois near bottom of heap on economic performance, economic outlook

[October 08, 2014]  By Brady Cremeens

 CHICAGO – In news that conflicts with Gov. Quinn’s optimistic take on state growth, a new study places Illinois behind almost every other state in economic outlook.

The study, conducted and published by the American Legislative Exchange Council, or ALEC, a limited government and free markets think tank – looked at various factors that create wealth and economic growth for each state, why some fare better than others and what kind of economic situation the future might hold for each state.

Quinn has stated repeatedly throughout the summer and early fall that Illinois is growing and on the right track.

“Hardworking women and men across our state are back on the job and…Illinois’ comeback continues,” Gov. Quinn said in a news release in September. “More people are working today than at any time in the past six years. While we have more work to do, we are getting the job done and Illinois is headed in the right direction.”

But ALEC’s study found that when it comes to economic outlook, Illinois ranks 48th among the states.

The economic outlook indicator is measured based on 15 policy areas ALEC has highlighted to determine economic growth or stagnation over time. The policy areas include tax rates, regulatory climate, pension liability, publicly held debt, credit rating and hiring rates.

Entitled “Rich States, Poor States,” the study creates a “State Economic Competitive Index,” which ranks states against each other based on various categories like expected job and wage growth.

Illinois’ 48th ranking remains consistent with 2012, and 2013. It has fallen steadily since its 43rd ranking in 2008.

State Sen. Jim Oberweis, R – Sugar Grove is challenging U.S. Senator Dick Durbin for his seat in the November election. Oberweis echoed much of the study’s findings, and criticized Illinois’ unfriendly business climate.

“Illinois is one of the most anti-business states in the entire nation,” Oberweis said. “We have some of the highest tax costs. We have some of the worst workers’ comp laws. Workman’s comp rates in surrounding states are frequently half of what they are here. We also have a corrupt system in many ways. If there’s a surprise, it’s that we’re 48th instead of 49th or 50th.”

The state has the sixth-highest corporate tax rate in the country, the third-highest workers’ compensation costs and the highest estate/inheritance taxes.

Jonathan Williams is the director of the ALEC Center for Tax and Fiscal Policy and co-author of the study. He said states like Illinois underperform compared to their competitors because of a few key policies.

“Lower taxes, limited government interference and pro-competitive policies are what we’ve learned allows some states to thrive while others don’t,” Williams said. “States that don’t penalize work, income, savings and investments outperform their competitors on a consistent basis.

The study criticizes lawmakers for allowing the state’s pension crisis to become such a major problem.

“The chronic underfunding of state and local public pensions has turned the issue of underfunded pension systems from an overlooked issue into a major concern,” the study says. “Illinois, and especially Chicago, has become a poster child for underfunded pension systems.

It also notes that Illinois last year become only the second state in history to be indicted by the Securities and Exchange Commission for accounting fraud due to how the state handled its pension obligations.

The pension reform bill that was passed and it being battled in the court system was a good step, the study says, but not enough to fix the depth of the problem.

Utah ranked first in the country for economic outlook. South Dakota, Idaho, North Dakota, and Illinois’ eastern neighbor Indiana rounded out the top five.

[This article courtesy of Watchdog.]