Illinois Public Media News

WILL - Illinois Public Media News - January 20, 2011

Voluntary Separation a Possible Budget-Cutting Tool in Champaign

The city of Champaign is getting ready to release another round of budget cuts - and some city employees may be given the option to leave their jobs.

City manager Steve Carter will tell city council members next week about a proposal for a voluntary separation incentive. If the council approves, some union and non-union employees would be able to get two weeks' salary for each year of service up to 26 weeks if they agree to leave, with a minimum of $10,000.

Carter said he expects about 20 employees would accept the incentive, which will be offered first to people whose jobs are already under threat of being cut.

"Any position, whether through past budget decisions or the ones we're going to be discussing next Tuesday, those will be our top priority (for separation offers)," Carter said. "We have the ability to lay people off, but our preference would be not to. We have really good employees, and if we can find a way to make this more mutual, the better for the organization and for the people."

Carter said police officers and firefighters would not be offered voluntary separation because their positions would likely have to be re-filled. He said the city administration will say what other budget cuts they think should be made in the middle of the current year's budget. The last five year forecast suggested the city needed to cut $1.2 million in recurring costs from this year's spending plan.

Categories: Economics, Government, Politics

WILL - Illinois Public Media News - January 20, 2011

University of Illinois Adopts Tuition Control Measure

University of Illinois trustees have adopted a policy designed to limit tuition increases even as they raise the cost of housing at the school's three campuses.

The tuition policy approved Thursday links tuition increases to inflation and other factors.

Students are guaranteed by state law to pay the tuition rate they paid in their freshman year throughout their undergraduate years. But the rate increases for most incoming classes.

This year, tuition increased 9.5 percent and led to complaints from some students and parents. The cost of tuition and housing for a typical undergraduate year at the Urbana-Champaign campus is more than $20,000.

Governor Pat Quinn said he likes 'the basic framework and concept' for the next year's tuition that was outlined Thursday by University of Illinois Chief Financial Officer Walter Knorr.

"I think that has a lot of merit to try and keep tuition pretty much even with inflation and adjusted dollars," Quinn said. "I think carrying that out is a good mission."

Quinn said the state is also putting about $404 million into grants for MAP, or the Monetary Awards program., but he said the demand is at least 50-percent higher that. Quinn added that one of his goals for the next four years is to secure more scholarship money for students who attend Illinois' public universities and community colleges.

Trustees on Thursday also raised the cost of a double dorm room in Urbana-Champaign 4 percent to $9,452 a year. Costs in Springfield and Chicago increased less sharply.

(Additional reporting from the Associated Press)


AP - Illinois Public Media News - January 20, 2011

Mitsubishi Plans New Model for Ill. Plant

Mitsubishi Motors North America plans to produce a new model at its plant in Normal, Ill., extending the life of the facility just a month after employees agreed to lower wages the company said were needed to keep it open.

Mitsubishi announced the plans as part of new, global business plan aimed at revitalizing the troubled Japanese automaker.

"One of the main pillars of this (plan) is a transition from region-specific models with all of the specifics that entails - producing for a single market, single group of consumers, a single economy - to more global models that are produced for multiple markets," Mitsubishi spokesman Dan Irvin said. "And the new model will be one of those global models."

The company plans to announce what the new model will be in the next few weeks, he said, but all four models now made at the central Illinois plant - the Galant, Eclipse and Spyder and the Endeavor sport utility vehicle - will be phased out.

Employees and local officials at the plant said they're still waiting for details on the new model and to learn whether it will keep all 1,300 plant employees on the job. But the news that one of the largest and highest-paying area employers will stay open was a relief.

"These jobs are very hard to come by and, again, particularly in this economy when most companies of this nature are just hoping to sustain their current employment levels," city manager Mark Peterson said. "These would be, I hate to say impossible, but almost impossible to replace."

The United Auto Workers said Mitsubishi's announcement was a just reward for tough pay concessions its members had little choice but to accept.

"Considering the economy, the state of the economy right now, I think the decision was pretty clear for a majority of the members," UAW local President Ralph Timan said. "It was a tough decision, and it came with sacrifices."

Two-thirds of the union's almost 1,100 members at the plant voted last month to cut a reported $1.67 an hour from their wages after the company said it needed the concessions to remain competitive.

The Illinois Department of Commerce and Economic Opportunity said at the time that it was talking with Mitsubishi about possible incentives. The agency and company continue to talk but so far no tax breaks or other incentives have been provided spokesman Mike Claffey said.

Like the auto industry in general, Mitsubishi North America has struggled with slow sales. The company's U.S. market share for 2009 was just over one half of one percent - the lowest level since 1985, according to WardsAuto.com, a web site that tracks auto industry data.

The company's new business plan, which it calls Jump 2013, is aimed at producing more vehicles to sell in emerging markets such as China and Brazil. The goal, according to a company release, is to raise sales to 1.37 million vehicles in 2013 from the roughly 1 million it expects it will sell by the end of the current fiscal year in March.

The Normal plant started making the Gallant and the other three models it now manufactures in 2005, Irvin said.

"They've been very good to us for a very long time," he said.

The plant at one point employed far more workers, but 1,200 were laid off in 2004 as part of what Mitsubishi said at the time was its last chance for survival. Those layoffs have been followed by other wage and benefit concessions.

Peterson said Thursday that he's anxiously waiting for details about what the company's new model will mean for job numbers at the 22-year-old plant.

"The questions is: Now that's one model - is that going to sustain all 1,100 existing jobs, and could it mean more out there?" he said.


WILL - Illinois Public Media News - January 18, 2011

Durbin: AZ Shootings Could Prompt Action on Mental Health, Gun Laws

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)

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WILL - Illinois Public Media News - January 18, 2011

Tuscola Loses Out on Bid to Host Historic Steam Engine

Tuscola lost out on its bid Tuesday to host a steam locomotive that would have traveled through a dozen communities in Illinois and Iowa.

Online voting for the contest through Union Pacific Railroad ended Monday night. In addition to Tuscola, other cities in the running included Little Rock, Ark., Boise, Idaho, and Baton Rouge, La.

Little Rock came out on top in the contest with 76,217 votes, narrowly defeating Tuscola by a little more than 3,000 votes. That means the steam engine will follow a route that starts in Kansas City, Mo., traveling east to Boonville, Jefferson City, Chamois and St. Louis before heading south to Cape Girardeau, Dexter and Poplar Bluff. It will continue through Bald Knob, Ark., before concluding in Little Rock.

According to Union Pacific Railroad, the engine is the last steam locomotive built for the rail company. It was placed in freight service in Nebraska from 1957 to 1959, then was saved from being scrapped in 1960.

Brian Moody, the executive director of Tuscola Economic Development Inc., admitted he was surprised Tuscola, with a population of around 4,500 people, got as far as it did in the competition.

"For our small community to even be competing with these much larger communities," Moody said. "It's kind of a big David and Goliath. We came up a little bit short, and that's ok."

Tuscola is a central point for three different railroads, including CSX, Canadian National, and Union Pacific. Moody said thanks to the national publicity from the contest, Tuscola city officials have been contacted in recent weeks by people who are interested in railroads, and he thinks some of those "railroad enthusiasts" might be encouraged to visit Tuscola.

"We knew there were railroad enthusiasts who had a lot of interest in Tuscola because of the unique characteristics in our rails," he said. "This kind of gave us the opportunity to demonstrate to them that we were as enthusiastic about those things as they were."

Moody said moving forward, Tuscola will focus on how it can take advantage of its rail services to boost tourism. He also noted that the city will keep an eye out on other similar competitions.

(Photo courtesy of Union Pacific Railroad)

Categories: Economics, Transportation

WILL - Illinois Public Media News - January 14, 2011

Illinois State Board of Education Approves Education Funding Request

The Illinois State Board of Education (ISBE) has approved a budget proposal for next year that it will send to lawmakers in Springfield.

After the General Assembly passed a massive 67-percent income tax hike, it is uncertain how Governor Pat Quinn and the legislature will respond to the request. The ISBE is asking for $709.4 million in additional state support for Fiscal Year 2012. Board of Education spokeswoman Mary Fergus said she is "cautiously optimistic" that the funding request will be approved.

Fergus explained that in formulating the proposal, the ISBE considered feedback from the public and the state's Education Funding Advisory Board, which pushed for a much larger $4 billion increase in education funding.

"We know the economic reality is not going to support that," she said.

State support for education has plunged in the last couple of years by about $450 million.

A bulk of the money requested by the ISBE would support General State Aid and mandated categoricals that have seen cuts, like transportation funding. Also included in the budget request is a $3.5 million increase for bilingual education, a $2.3 million increase to improve teacher training programs, and a $900,000 increase in the amount of funding for feasibility studies as school districts consider consolidations.

"We're not really talking about expanding a lot of programs," Fergus said. "Some of this increase will go toward a little bit of expansion, but really this is about restoring funds."

The Illinois State Board of Education will include its budget recommendation as part of the overall Fiscal Year 2012 state budget.


WILL - Illinois Public Media News - January 13, 2011

Ill. Tax Increases: The Beginning of an Exodus, or Just Another Annoyance?

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.


AP - Illinois Public Media News - January 13, 2011

Quinn Signs Major Tax Increase into Law

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)


WILL - Illinois Public Media News - January 12, 2011

Republican Lawmakers Push for Income Tax Repeal

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.


AP - Illinois Public Media News - January 12, 2011

Walker Uses Ill. Tax Increase to Bolster Wisconsin

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.

Categories: Business, Economics, Government

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