CHICAGO – The Chicago area’s wealthiest investors are much more nervous about their state’s economy than counterparts elsewhere in the nation, according to a poll released Monday that reinforces concerns some companies may relocate if Illinois’ financial situation doesn’t improve.
The poll by Morgan Stanley Wealth Management comes on the same day Texas Gov. Rick Perry visited Chicago to try to lure businesses from the state with the promise of lower income taxes and a stronger economy. Analysts and economic advisers say it’s another wake-up call for lawmakers who repeatedly have failed to solve Illinois’ $100 billion pension crisis and other financial problems.
“There is a lot of reason to be nervous about the financial future of our government and what it will mean for business,” said Laurence Msall, president of the Civic Federation, a Chicago-based tax policy and government research organization.
The poll found 93 percent of high net worth investors in the Chicago area – many of them CEOs and business owners – were worried about the state’s well-being, with 80 percent “very concerned.” They were more optimistic about the national and global economies.
Fifty-eight percent say they believe the Illinois economy will worsen by the end of this year, compared to 22 percent of those investors in the seven other major metropolitan areas polled: Atlanta, Boston, New York, Denver, Houston, Los Angeles and San Francisco. Investors were most concerned about Illinois’ pension problem, followed by the state deficit, taxes and budget cuts.
Illinois’ public employee retirement systems are the most underfunded of any state in the country, due to years of lawmakers skipping or shorting their payments. If legislators don’t find a solution by the end of the legislative session next month, the state’s annual payment to its five funds will be close to $7 billion next year – about one-fifth of the state’s general fund. The crisis, along with about $8 billion in overdue bills, prompted rating agencies to give Illinois the worst credit rating of any state in the nation.
“[Lawmakers] need to act on it yesterday, or businesses will vote with their feet,” said Steven Esposito, a senior vice president financial adviser for Morgan Stanley. “If they feel the risk or the cost of doing business is greater here, they will invest elsewhere.”
Perry launched his pitch last week with an $80,000 advertising campaign urging Illinois companies to “Get out while there’s still time.” He plans to be in Chicago Monday and Tuesday. Governors of Wisconsin, Indiana and New Jersey have made similar efforts in recent years.
Gov. Pat Quinn dismissed Perry’s trip as a publicity stunt, saying he’s a “big talker” and that Illinois doesn’t need advice from the Republican governor.