In Groupon vs. Nancy, Nancy’s still winning
Kristen McQueary email@example.com | (708) 633-5972 February 18, 2011 6:20PM
Employees work at Groupon headquarters, 600 W. Chicago Ave., Chicago, Wednesday, Jan. 12, 2011. | John H. White~Sun-Times
Updated: November 24, 2011 3:34AM
Those of us who follow Illinois politics often get criticized for being overly critical. Go ahead. Call me Negative Nancy.
I was unimpressed with Gov. Pat Quinn’s budget proposal. He and several Southland lawmakers who voted for the 67 percent income tax hike in January promised the increase would mark the first step toward realigning state government — meaning, shrinking it. They vowed to focus this year’s spring session on reducing spending.
But Quinn did not address many of the state’s structural costs, such as health care for retired state workers. He didn’t mention across-the-board cuts or asking current workers to pay more into their pension systems. He didn’t talk about combining state agencies or reducing the state’s work force, even through attrition.
His presentation, even by the most generous of calculations, amounted to a 2.9 percent reduction to the state’s $34 billion operating budget. And that doesn’t include the money he wants to spend hiring additional state workers.
Tough? Pain? Sacrifice? Hardly.
I could go on, but the point of this column is not to rehash the downside. Rather, I’m setting Nancy aside to give Quinn a splash of praise. Or maybe just a sip.
Quinn promised $25 million toward the Monetary Award Program, a smart investment that actually pays dividends. The MAP program — backed by its most vocal supporter, state Rep. Kevin McCarthy (D-Orland Park) — is a bright light in the state’s messy financial portfolio. It awards grant money to low-income, college-bound students who maintain decent grades while in school.
Compared with the unstructured General Assembly tuition waiver program, MAP grants actually include elements of rationale and accountability.
And Quinn proposed, again, getting rid of the tuition waiver program, a step that’s long overdue.
He highlighted some of the Illinois Department of Commerce and Economic Opportunity’s business incentive packages that lured or kept businesses in Illinois, including Groupon, which is precisely what that state agency ought to be doing year round — not exclusively during the ramp-up to Election Day. Last year, the department announced dozens of business incentive packages, not coincidentally, in August, September and October.
One of the deals seems a bit odd, even though Quinn boasted about it during his address.
Groupon, one of the nation’s fastest-growing, most-watched companies, received a $3.5 million state investment package in October, insisting it needed an incentive to expand in Illinois or it would look elsewhere. Quinn and Commerce and Economic Opportunity officials courted the firm with a 10-year tax credit and a $125,000 job training grant.
Two months later, however, Google offered to buy Groupon for $6 billion, an astounding figure that revealed Groupon’s full value. Groupon declined, and the following month announced it had raised a purported record $950 million in capital, $575 million of which would be used to buy stock for shareholders, the Wall Street Journal reported.
I’m all for boosting Illinois’ economy with surgically composed tax incentive packages, but a $6 billion company that raised nearly $1 billion in private investments got a tax break from us?
Keep in mind, Groupon, at 600 W. Chicago Ave., Chicago, resides in a building the city rewarded with a $28 million tax increment financing package about eight years ago.
According to Quinn’s office, Groupon will receive the tax credits only if it proves on an annual basis it reaches and maintains the 250 new hires it promised in exchange for the $3.5 million.
I realize tax incentives and TIF packages are some of governments’ best tools to enhance economic development. And Quinn has done a pretty good job in a tough economy offering flexible incentives to businesses.
But it’s difficult to rally around a governor who raised income taxes on everyday workers 67 percent, called for more borrowing to pay vastly overdue bills and gave a multibillion-dollar company a tax break — albeit a smallish one — while announcing last week he would reduce Medicaid reimbursement rates for providers.
He offered no outside-the-box ideas to reinvent a woefully underfunded state government.
Instead, Quinn will appoint a commission for that, headed by Groupon’s co-founder — perhaps something he should have done when he first took office, before handing the firm a taxpayer-funded gift box.
I don’t know. Sometimes, I think Nancy is right.