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Illinois’ job climate hurting housing recovery

Local legislators, residents blame state's high taxes, regulations

Caption
(Sarah Nader – snader@shawmedia.com)
The Crystal Lake Plaza strip mall on Route 14 has many empty storefronts.

One of the key ingredients for a housing market recovery is jobs – no jobs, no mortgages, no homes.

Illinois has been a leader in jobs, but unfortunately in the worst way possible – the state is losing more than any other.

No one is sure as to when the nationwide housing market will begin to recover. But local experts are saying with certainty that Illinois’ road to recovery will be longer than elsewhere, thanks in large part to high taxes and regulations passed by a broke state government.

Simply put, recovery of the housing market relies as a start on people being able to find jobs and find access to credit. The fact that Illinois lost 89,000 jobs in the first half of the year tells state Rep. Jack Franks that recovery won’t come anytime soon.

“We are not job-friendly,” said Franks, D-Marengo.

Huntley job seeker Jim Zielinski doesn’t need an expert to tell him that.

Zielinski, a 49-year-old married father of two, was laid off in 2008 from his job as a technician manager for an automobile business. He loses count of the jobs he has sought at 25, from getting back into the auto business to making sandwiches.

His unemployment benefits used up and his savings depleted, Zielinski dreads the idea of not being able to pay his mortgage. Seeking help from food pantries and social service agencies stings his pride.

“I’ve never had to do this. It hurts,” Zielinski said.

Franks lays only part of the blame on the 47 percent tax increase that the General Assembly and Gov. Pat Quinn slapped on businesses in January. Regulations on businesses, banks, and a workers’ compensation system still in need of reform, Franks said, are hampering business’ desire to start up and grow.

McHenry County Economic Development Corp. President Pam Cumpata said she did not think that local companies with large capital investments would pack up and flee to tax-friendlier states. But while they might stay here, Cumpata said, more will choose to grow elsewhere.

“Their expansion will probably occur somewhere else. There are states that are actively recruiting them that have less of a tax structure, they’re more business-friendly, and they work with companies,” Cumpata said.

Since the tax increase, large employers such as CME Group and Caterpillar Inc. have publicly raised the idea of leaving Illinois, although Caterpillar later said it intended to stay and help Quinn improve the business climate. State Rep. Mike Tryon, R-Crystal Lake, pointed out that Peoria-based Caterpillar is growing and creating jobs in Texas, Kansas and China, but not its home state.

“Caterpillar has been having record years. It’s not expanding in Illinois, but it’s expanding everywhere else,” Tryon said.

Quinn has handed other employers large tax incentives to stay, such as $100 million for Motorola Mobility and $64.7 million for Navistar.

Franks long has criticized handing out such tax breaks for large employers – which taxpayers have to make up – when the small- and medium-sized businesses that create the most jobs need the help.

“With this uneven playing field, there is very little incentive for small- and medium-sized businesses to grow or to stay in Illinois,” Franks said.

Of course, it’s not only businesses that are paying more in taxes. The General Assembly and Quinn also raised individual income taxes by 67 percent. That tax increase, Tryon and Franks said, gives consumers another reason to snap their wallets and purses shut, on top of property taxes that are increasing despite plummeting home values.

Less consumer spending further hurts not only struggling businesses, but also governments in the form of lower sales taxes. And with the state’s record budget deficit, pension liability and backlog of unpaid bills despite the big tax increase, businesses might be putting off hiring in anticipation of more tax hikes from Springfield, Tryon said.

“Not only do you have the housing crisis and the economic crisis, but we have a state budget crisis,” Tryon said. “All three of these things have got to be stabilized.”

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