Illinois Public Media News
The founder of Jimmy John's sandwich shops says he's considering moving his company's headquarters from Champaign to Florida because of Illinois' new tax increase.
Jimmy John Liautaud told the News-Gazette on Tuesday that he's gathering information on a potential move and will ask the company's board to decide.
Liautaud said he could absorb the increased costs but doesn't believe he should have to.
Gov. Pat Quinn signed the income tax increase last week to help address billions of dollars in state budget shortfalls. And during a visit to the University of Illinois Urbana campus Wednesday, the governor said he hoped Liataud would reconsider any move out of the state. Quinn said a tax increase was necessary to get Illinois out of a "fiscal emergency".
"I inherited a budget deficit of billions and billions of dollars when I became governor," Quinn said. "I was direct right from the beginning. I said we needed to use the income tax to pay our bills"
With Quinn's signing of tax hike legislation last week, Illinois' corporate income tax rate increased from 4.8 to 7.0 percent. Quinn says that's still one of the lower corporate tax rates in the Midwest. But Florida, where Liautaud is considering a move for his company, has a even lower corporate income tax rate --- a flat 5.5 percent.
Jimmy John's headquarters employs 100 people in Champaign. The privately held chain has more than 1,000 sandwich shops around the country.
Liautaud said he recently moved his family to Florida from Champaign.
(Additional reporting from the Associated Press)
Illinois' senior Senator, Dick Durbin, says concrete action can come out of the recent shootings at a congressional event in Tucson Arizona. The attack that killed six people and critically injured U.S. Rep. Gabrielle Giffords (D-Ariz) has led to a flurry of proposals in reaction, from gun control measures to a clampdown on incivility in politics. In an interview with Illinois Public Media's Tom Rogers, Durbin said he thinks some of those ideas can progress beyond the talking stage.
(Photo by Sean Powers/WILL)
Before his death last year, Urbana chocolate-maker Daniel Schreiber proposed a community kitchen that could be shared by small-scale local food producers like him. Now, an organization is seeking community input as they try to make Schreiber's dream a reality.
Lawrence Mate is one of the organizers of the Flatlander Fund --- named after Schreiber's own brand of chocolate. He said they hope to open a commercial-grade kitchen that could be rented by local entrepreneurs --- including Mate himself. Mate operates This Little Piggy, a small producer of meat products such as bacon and sausage. Mate said because he works out of his home kitchen, his operation remains a non-profit private club.
"I've had any number of places in town where they have a deli counter, who have said they would love to carry the stuff I'm making," Mate said. "But in order for them to retail it, it's got to be coming out of a kitchen certified by the Public Health District."
Mate cites the dilemma in 2009 of some local bakers who sold goods at the Urbana Farmers Market, only to discover that their home-baked goods violated public health regulations requiring a commercial kitchen. He said a shared-use community kitchen could provide a certified facility for small food-related businesses.
Laura Huth, another volunteer with the Flatlander Fund, said a community kitchen could also serve a wider public, with classes on food preparation, nutrition and related topics.
"So in addition to providing a spark for artists - food artists, really - in our community to do what they love to do, there's the educational component, the hands-on demonstrations and the business development classes," Huth said.
The Flatlander Fund launched an online survey Monday night to measure public interest in a community kitchen. Huth said that as of mid-afternoon Tuesday, they had received about 70 responses. The survey is open until February 13 on the Flatlander Fund's website.
Shared-use kitchens exist in other communities. In Danville, the Cook's Workshop opened late last year, offering kitchen and dining room space for rent, as well as cooking workshops and demonstrations.
A University of Illinois economist doesn't predict a long line of businesses leaving the state because of higher income taxes, but he said Illinois remains an uncertain place for commerce and industry.
Daniel Merriman of the Illinois Institute of government and Public Affairs said neighboring states had already begun to lure away employers concerned about Illinois' uncertain deficit situation even before lawmakers passed a 67 percent hike in personal income taxes this week. Governor Pat Quinn signed the increase into law Thursday afternoon.
Merriman said the tax increase will be one more drawback, but it still won't be enough to address all the red ink in Springfield.
"A combination of tax increases, expenditure reductions and growth is necessary to eliminate it," Merriman said. "The taxes actually do help reduce the deficit. It's just that it hasn't done enough to fully eliminate it, and they're still going to have to have expenditure reductions along the way."
Merriman said lawmakers still haven't addressed structural problems either, like fixing the underfunded pension system or revamping Medicaid and workers' compensation laws. But he said employers are not as mobile as some would believe - noting that most firms are rooted in the state and serve mainly Illinois customers.
Then there is the question of the region's overall economic health. Merriman said the pressure facing manufacturers in Illinois would face them wherever they relocate.
"A lot of the concern that people have had with the kind of business loss in Illinois has been with manufacturing establishments that have been leaving the entire Midwest, and to some extent they're just leaving the country as a whole," he said. "So it's not clear that Illinois is going to be losing that much to neighboring states. It's that manufacturing just isn't as strong as it used to be.
If you live in Illinois, your taxes have now gone up 67 percent. Governor Pat Quinn has signed the income tax package into law.
The government will get a bigger cut of your next paycheck. Illinois' flat income tax rate is now 5 percent, up from 3 percent. Someone making 40 thousand dollars a year will now pay another 800 dollars in state taxes, not counting deductions or federal tax breaks.
It will stay that way for at least four years when the rate is scheduled to go down. The corporate rate jumps from 4.8 percent to 7 percent, with a similar reversion in four years.
Democrats passed the measure in the wee hours Wednesday morning, among the final acts of the lame duck session. The move is meant to help close a $15 billion budget deficit that threatens to cripple state government.
Governor Pat Quinn says Illinois' fiscal house was burning. "We have an emergency, a fiscal emergency," Quinn said. "Our state was careening towards bankruptcy and fiscal insolvency."
The increase is retroactive, covering all wages earned since Jan. 1 of this year.
Republican legislators are already trying to get the law repealed, and governors of other states are lining up to lure Illinois' businesses, upset that the corporate tax rate is also going up.
(Additional reporting from The Associated Press)
Democratic leaders are fresh off their victory in getting an income tax hike through both chambers of the Illinois General Assembly, but now Republicans in the state Senate are challenging the legislation by calling for its repeal.
State Senator Matt Murphy (R-Palatine) joined his fellow GOP lawmakers in voting against the tax hike, and he is now crafting legislation to repeal the tax increase. Murphy said he is confident an ample number of his colleagues will support the plan, noting that Republicans have more seats in the new legislature. He also said several of the Democratic Senators who voted against the tax hike will continue serving.
"Do I expect the Senate President to allow this bill to move, or the Speaker, or the Governor to sign it?" Murphy said. "I don't, but nobody ever got somewhere by saying I might as well not get started because it probably won't happen."
The legislation calls for a 67-percent increase in the state's income tax along with a spike in the corporate tax. Murphy said the move will cost the state jobs.
It is eliminated that Illinois' budget deficit could reach $15 billion this year. State Senator Dale Righter (R-Mattoon), who serves as the Senate's deputy minority leader, said a tax increase is not something he would make a pledge to block in every situation, but he said in this case, lawmakers have failed to go through the budget line-by-line, and make cuts.
"The tax increase was wrong in the first place," Righter said. "I think it's going to make things worse. It's going to fuel more government spending, and it's going to lead to greater job loss and diminish economic activity."
Governor Pat Quinn says he will sign the income tax legislation, calling it a necessary step to generate revenue.
"It's important for the state government not to be a fiscal basket case, and that's what I confronted when I arrived," Quinn said. "I've said for two years, I said it in campaigns, we needed to restrain spending. We have. And we also need revenue to pay these overdue bills. And we will.
Gov. Scott Walker tried to take full advantage of Illinois lawmakers passing dramatic tax increases Wednesday, saying Wisconsin would welcome any businesses from its neighboring state that care to relocate.
Absent from Walker's sales pitch was the fact that Wisconsin's top income tax rates remain higher than Illinois even under the increase.
Even so, the Republican Walker was reveling in drawing a comparison between Illinois, which has a Democratic governor, and his agenda to cut taxes.
"Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, 'Escape to Wisconsin,'" Walker said in a statement. "Today we renew that call to Illinois businesses, 'Escape to Wisconsin.' You are welcome here."
Walker referenced Illinois' problem in a speech to business leaders on Tuesday, issued a statement hours after the tax increase vote on Wednesday and then called a news conference to talk about it as well.
Wisconsin lawmakers were picking up on it as well. Rep. Robin Vos, R-Caledonia, said he welcomed any chance to "kind of stick it to them" in Illinois. He said lawmakers there raising taxes played right into Walker's hands.
And while income tax rates are higher in Wisconsin, corporate income taxes in Illinois would be higher.
Wisconsin has a graduated income tax rate that goes from 4.6 percent to 7.5 percent. Illinois has a flat rate that would increase from 3 percent to 5 percent under the move passed by the Legislature to help plug a $15 billion budget hole. Lawmakers there also approved raising the state's corporate income tax rate, effectively moving it from 7 percent to 9.5 percent. Wisconsin's rate is 7.9 percent.
Walker hasn't yet proposed lowering the state's income or corporate tax rates. But he has called for eliminating taxes for companies that move to Wisconsin from Illinois or anyplace else. He also wants to cut taxes on small businesses already in the state. He argues that those moves, along with lawsuit and regulatory reforms, will make Wisconsin a more attractive place to do business.
Vos, co-chairman of the Legislature's budget committee, said he wants to change Walker's small business tax cut proposal into a $1,000 income tax credit to companies for every job created in the state. The Legislature could vote on the tax cut proposals as soon as next week.
The key is that Wisconsin is moving toward lowering taxes while Illinois is raising them, said James Buchen, a vice president at Wisconsin Manufacturers and Commerce, the state's largest business group.
"It just makes Wisconsin look more attractive relative to our neighbor to the south," Buchen said.
Walker has adopted the mantra that "Wisconsin is open for business" and has repeated it at nearly every turn ever since his election in November. He's pledged to add 250,000 jobs in Wisconsin by 2015.
Wisconsin faces a two-year $3 billion budget shortfall. Walker has said his budget, which will be released next month, will balance even with the business tax cuts he's already proposed.
While Walker's talking about taking jobs away from Illinois, Wisconsin's neighbor has already tried to woo Talgo Inc., a train maker that said it will move its manufacturing jobs out of Milwaukee next year because the state rejected federal funds for high-speed rail.
Talgo spokeswoman Nora Friend said Illinois's tax structure would be one of many factors in determining whether the company would relocate its manufacturing there.
"Illinois is still a very strong state because of its strong supply chain and strong will to expand its rail plan," she said Wednesday. "Our analysis includes a lot of factors. (The tax situation) would not weigh in as a positive but it's difficult to say whether it's the deciding factor. It would be one more factor that gets weighed in."
She said Illinois, Washington and Florida are among the top three candidates for Talgo's new site.
A company in Decatur that produces police radar and traffic enforcement equipment for police agencies in the United States and in other countries is moving its manufacturing division to Arizona and California.
Decatur Electronics will relocate the department to a larger 50-thousand square foot facility near Phoenix Sky Harbor Airport, and it will also set up an assembly line in San Diego. Forty-three workers would be affected as a result of the move, and 10 of those employees are customer service representatives who will relocate to Arizona.
Tim Roberts, the company's customer service manager, said the sluggish economy has meant that fewer law enforcement agencies are buying new equipment, and instead ordering upgrades or repairs. He said the motivation behind the move is part of an effort to strengthen business
"We're going to a much bigger facility that will allow us to expand our business in the international market as well," Roberts said. "We do service people all over the world, and we need to continue that. So, this will allow us to serve those customers better."
Roberts said it is unclear how many jobs will ultimately be eliminated. He said the company will provide interview training and resume writing workshops to help employees find new work if they lose their jobs.
"We appreciate the functionality and the people who have been here during this time," he said. "We're going to do everything we can to make sure they get job placements and/or transition smoothly."
Relocating the company's manufacturing base is expected to take about three months. The company, which is owned by U.K.-based Bowmer and Kirkland, says the move will not disrupt services or the delivery of products.
A marathon strike at Decatur's Huston Patterson plant has dragged on for months, and there does not appear to be an agreement in sight between union officials and the printing company.
Workers began picketing on June 30 outside the company's headquarters to protest contract changes that took affect in August after their old contract expired. The modified contract includes a 15-percent wage cut, mandatory overtime, and reductions in healthcare benefits. Pat Shields is president of the Graphic Communications Conference International Brotherhood of Teamsters Local 219M. He said many of the picketing workers have a 15-to-30 year history with the company and have no intention of standing down.
"Our only demand is to sit down and negotiate," Shields said. "We want to talk, and we have no pre-conditions others than let's sit and talk."
Shields contended that the company refuses to negotiate directly with the union, which is why a federal mediator is in place to open up dialogue between the two sides.
William Kaucher is with the District Council 4, the umbrella organization that oversees Decatur's printers union. Kaucher said he does not understand why the company's president and CEO, Thomas Kowa, will not negotiate with union members in Decatur. Kaucher said he successfully worked with Kowa a few years ago on a contract for employees at the Sigma Graphics printing company in Ottawa, Il., and negotiations over that deal lasted a day.
"He claims financial hardship," Kaucher said. "The guy's can understand that right now, but why would you change work rules that have been in place when it doesn't affect the bottom line? What this comes down to is this is more dictating than negotiating."
Kowa declined a request for comment.
Huston Patterson has replaced workers who are on strike, but Kaucher said any new contract would have to guarantee that those employees regain their jobs.
The number of workers on strike has dropped in recent months, but union officials say they will continue picketing for as long as possible. On Tuesday, the United Council Staff Union of Illinois donated $5,000 to the striking workers. Other strike funds through local unions and contributions from individuals have been used during the last several months to support the Huston Patterson employees.
The Illinois Department of Public Health (IDPH) is investigating nearly four dozen cases in which people became sick with salmonella after eating at Jimmy John's restaurants in nine counties, including Champaign, McLean, and Cook.
The reported incidents took place between November and early December. No new cases of salmonella have been reported in the last couple of weeks, according to the IDPH. However, the agency is continuing to investigate the outbreak.
"Right now the Department of Public Health is investigating the producers and suppliers of alfalfa to determine where the potential beginning of this problem is," said Tom Green, a spokesperson with the health department. "While the investigation is ongoing, there's no reason for people to stop going to Jimmy John's because of something that happened in November and early December."
Green said not all of Jimmy John's restaurants get their sprouts from the same vendor. A company spokesperson said it closely monitors its food suppliers, and will remove the sprouts from its sandwiches if there is a health warning.
People who eat alfalfa sprouts and become ill with diarrhea and a fever should contact a physician, said Green. Illness usually wears off after three to seven days.
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