From globetrotting smokestack chaser to hands-are-tied penny pincher to backroom negotiator, the last three governors have relied on persona as much as policy to shape Illinois' brand of economic development. So it should come as no surprise that Gov. Rod Blagojevich's approach stresses style as much as substance.
In fact, affixing a new name to the state agency charged with job creation was one of the first economic development decisions made by the Chicago Democrat. After all, the Department of Commerce and Community Affairs answered to George Ryan, Blagojevich's scandal-scarred Republican predecessor. It would be the Department of Commerce and Economic Opportunity that would do Blagojevich's bidding. And it would do so, in part, by cutting back on the diet of so-called pork projects that, fairly or not, had come to characterize Illinois First, the centerpiece of Ryan's economic development efforts.
Illinois First was a $12 billion infrastructure program, a sizable chunk of which went toward "member initiatives," essentially public work projects for individual legislative districts. It's estimated that more than $400 million in member initiative money was still in the pipeline when Blagojevich took office. He froze those projects almost immediately, and some legislators are still griping.
In fairness, though, Blagojevich doesn't have the luxury of a booming economy or a balanced budget, as Ryan did in 1999 when he launched Illinois First. Those advantages, along with the promise of member initiatives, were crucial in helping Ryan convince lawmakers to approve the higher liquor taxes and license plate fees that financed the program.
Instead, Blagojevich inherited a nation-wide recession and a record state budget deficit, one his administration pegged at $5 billion when he took office in January 2003. So when it came to the business of selling Illinois, be it to Fortune 500 companies, foreign investors or simply weekend visitors, a new name and, by implication, a new image seemed the prudent place to begin.
"When we came in, Gov. Blagojevich changed the name of the agency to Commerce and Economic Opportunity, the key word being opportunity," says Jack Lavin, the Chicago executive Blagojevich selected to lead the agency's rebirth. "I think, when we put together the brand name of the governor's strategy for economic development, opportunity had to be in there because we want to create opportunity for everybody. We want people to have access to jobs, access to job training to get a job. We want small businesses to have the ability to access our programs so they can create opportunities for themselves. So it was important to do that."
Recasting the state's economic development agency and mission also wasn't unprecedented.
In 1979, halfway through his first term, former Republican Gov. James Thompson combined three agencies to create the Department of Commerce and Community Affairs. A decade later, that agency, too, faced image problems after a scathing audit accused agency officials of ignoring internal governing policies and overstating the benefits of job-creation programs. Later, as Thompson was preparing to leave office, the agency even became a campaign issue. Neil Hartigan, the Democratic candidate for governor, promised to abolish it.
Hartigan was defeated by Republican Jim Edgar, who, facing his own tough budget times, slashed the agency's workforce by a third in a single year and reduced its main source of state funding by 70 percent.
Blagojevich's challenges are similar to Edgar's. The Democrat is remaking the state's economic development mission without many resources. But, unlike Edgar, Blagojevich has been unwilling to simply slash the agency's spending. Instead, he has styled himself a reformer who is convinced state government can do more with less. And his economic development platform reflects this approach. Whatever the rhetoric, though, the challenges are real: an economy that's been slow to drag itself out of recession and one that is less reliant on high-paying manufacturing jobs.
"Clearly, manufacturing is very important in terms of the products we use," says Robert Resek, an economics professor at the University of Illinois in Urbana-Champaign. "But, on the other hand, because we're so efficient at it, the total employment in manufacturing has been falling and will continue to fall. Whatever else is true about the future of Illinois, or any other state, we have to look for other areas besides manufacturing as the place where our jobs are going to arise."
State labor statistics support Resek's assertion. The state's manufacturing sector has declined for six straight years, shedding more than 200,000 jobs since 1998. "Illinois' manufacturing base is just over 700,000," says Greg Baise, president and CEO of the Illinois Manufacturers' Association. "That's the lowest point of manufacturing jobs since they've kept records."
But Baise isn't ready to embrace this trend and, for that matter, neither is Blagojevich.
"I wouldn't say our future is not in manufacturing because manufacturing in the global economy is constantly changing," says Lavin.
Facing that future would, in part, require building on some well-worn tactics. As with former Gov. Thompson's efforts to draw and keep manufacturers in this state — so-called smokestack chasing — Blagojevich's economic plan includes a strategy of offering competitive incentives, including tax breaks and outright grants. Thompson's most prominent incentive package, for instance, bested six other states to bring Mitsubishi Motors to Normal. In his first few months on the job, Blagojevich promised that Mitsubishi plant $22 million in state incentives in exchange for creating 300 new jobs, a generous $73,000 per job. However, hard times at Mitsubishi have stalled expansion plans and talk at the company has turned to layoffs.
Lavin points to more recent efforts. Pella Corp., a window and door manufacturer, will receive $7 million in grants and tax credits to create 480 jobs at a new plant in Macomb. Farther north, Chrysler Group has been promised $36 million in state support as it moves ahead with a $419 million overhaul of its Belvidere assembly line. The retooling is expected to add up to 1,000 jobs.
But doling out business incentives is only one aspect of Opportunity Returns, the catch-all economic development program Blagojevich took public in late 2003. The heart of this program was his plan to divide the state into 10 economic development zones, with promises of targeted assistance for each region.
Though the effort is coordinated by the economic development agency, Opportunity Returns stresses cooperation with other agencies. Road projects administered by the Illinois Department of Transportation, for instance, are part of Opportunity Returns. So, too, are grant programs administered by the Illinois Environmental Protection Agency and the Department of Natural Resources.
Given the state's sagging finances, Lavin says, Opportunity Returns adheres to a philosophy of focusing all of the state's resources on job creation. But this route had a few bumps. Blagojevich promised new road construction projects under Opportunity Returns months before he brought a capital plan before the legislature. But the construction budget for this year would have required $1.6 billion in bonds. The majority of the legislative leaders deemed the plan unaffordable and put on the breaks.
"Opportunity Returns is not a capital program," Lavin stresses. "We need capital and, yes, we need operational money to run programs, but it's a strategy of getting people out into the regions, having intimate knowledge of each area of the state, helping them."
Nevertheless, the Blagojevich Administration found it necessary to cut its capital bonding request by 25 percent, shifting reliance to state revenue funds. And the administration is offering a 75-cent cigarette tax increase as a way to finance the $1.2 billion in new bond debt.
Both the slimmed-down debt request and the financing proposal appear aimed at blunting criticism from the legislature. The success of those tactics will be apparent soon when lawmakers begin to debate the capital plan. Shepherding it through the legislature this spring should be a critical administration objective after last year's plan stalled.
Failing that, Blagojevich could face the prospect of kicking off a re-election campaign without his own bricks-and-mortar building program in place. Of course, that's if he runs. The governor has yet to say whether he'll seek a second term.
Blagojevich's capital plan would seem to offer him support in places like southern Illinois.This year's version makes room for a few new promises, including $3 million for a minor league baseball stadium in Marion. The economically stressed region also has been waiting for a $51 million Opportunity Returns road project promised in November of 2003 that would expand Route 13 from four to six lanes between Marion and Carterville.
"We're very excited to have the governor's support on these different projects in southern Illinois," says Rep. John Bradley, a Marion Democrat. "But, again, there's still money issues."
Last spring, with Blagojevich's proposed capital budget sinking like a lead weight, the legislature did approve funding for one new Opportunity Returns construction project: a world class sport shooting complex in the southern Illinois town of Sparta. The Ohio-based Amateur Trapshooting Association has pledged to bring its annual competition to the new venue, which is located in Sen. Dave Luechtefeld's district.
"Opportunity Returns to the governor is kind of like Illinois First was to George Ryan. Anything that moved was Illinois First," says Luechtefeld, an Okawville Republican. "This particular project in southern Illinois, obviously, we think it's going to help the area a lot."
Ryan must have thought so, too. Discussions to build the Sparta complex began during his administration, so, in essence, the project builds a bridge from Illinois First to Opportunity Returns. It also underscores the notion that, for any governor, packaging is an important part of economic development.
"I don't see anything wrong with packaging and branding," says Doug Whitley, president and CEO of the Illinois State Chamber of Commerce. "Ultimately, the announcements and programs will be judged by local community leaders and county officials and mayors and legislators as to whether the department delivered on promises that were made."
Baise, of the manufacturers' association, agrees. Each governor brings his own spin, and Opportunity Returns' regional focus reminds Baise of Thompson's Corridors of Opportunity. Each of the 22 corridors had a council of local officials, essentially the first line of defense against job loss.
The Blagojevich Administration espouses a similar approach to soliciting local input and in having field agents who can sound early alarms if employers appear ready to flee Illinois. In fact, his economic development agency plans to station at least four Opportunity Returns employees in each of its 10 regions.
But, as Whitley maintains, the results of this strategy will have to speak louder than the words.
And the Blagojevich Administration has ratcheted up the stakes. While Opportunity Returns may not be a capital program, it's the banner under which many local capital projects have been promised. And, though Blagojevich kicked off his economic development plan during his first year in office, 18 months later, three regions are still waiting for their customized road maps to opportunity. Yet to be announced are plans for the Northeast Region, which includes Chicago, the rest of Cook and nine surrounding counties; the East Central Region, covering Champaign and Danville; and the Central Region, home to Springfield and Decatur.
"Components of the plan have come out in dribs and drabs," says Rep. Bob Flider, a Mount Zion Democrat whose district is part of the Central Region. Some grants have been awarded to local governments, Flider says, but he's worried that, when the region does get its full plan, it may not be as bountiful as the seven already announced.
"I've been very anxious to have the governor come and present his plan," Flider says. "But, unfortunately I guess, the timing just hasn't been right."
Rep. Rich Brauer, a Petersburg Republican, is less diplomatic. He says his input has not been sought, and he questions why the plan that includes Springfield is still pending, especially with the Abraham Lincoln Presidential Museum set to open this month.
And while Brauer and Flider are too new to the legislature to have received any personal promises under Illinois First, they still must explain to constituents why projects secured by their predecessors aren't getting off the ground. Flider says he's well aware of the budget crunch, but he hopes Illinois First grants, such as those promised for a local senior center, library and fire department, will make their way into Opportunity Returns. Similarly, Brauer would like to see the state release funds pledged for building improvements at Lincoln College in his district.
Many more of these requests, of course, are bound to come up this spring if the legislature considers the governor's proposed capital budget.
So, will opportunity indeed return to all of Illinois? Despite the budget constraints, Lavin points to some ambitious plans already in place and a few more on the way. In the first year, the administration consolidated all of the state's job training programs under Commerce and Economic Opportunity. Thirteen regional entrepreneurship centers have been established, and there are plans to set up seven more. And the budget proposal for next year includes $250,000 in seed money to establish the Illinois Opportunity Fund, a $200 million private venture capital plan Blagojevich touted on many a campaign stop. Some region-specific efforts are under way, as well, including up to $1.7 billion in state financing for a clean coal power plant in southern Illinois. And that region could see a boost from a plan to spend $142,000 promoting the state's fledgling wine industry.
Still, resources are limited. And with a $1.1 billion budget deficit expected in the fiscal year that begins this summer, job creation remains an uphill battle. The economy has yet to turn around, and, of course, the legislature will have to be convinced this spring to approve any state spending.
But as Whitley, the state chamber president, asserts, there's a definite tactical advantage for any governor who wants to make certain a carefully styled job creation program is buttressed by substance.
"I think there is cynicism that the department continues to be less than a professional economic development agency and more of an agency that is looked upon as a field organization to help the incumbent governor," Whitley says. "There's no question [former governor] Dan Walker ran the agency that way back in the'70s. And I think, to some extent, Jim Thompson ran the agency that way because it's one of the best ways to instill your programs and your image with local communities and, obviously, with voters, and [to] build rapport with local elected officials who, theoretically, are going to support you and help you get re-elected."
Illinois Issues, April 2005
