Indy not shy in pitch for Chicago jobs
1.19.11

INDIANAPOLIS STAR

Ballard ad woos business on heels of Illinois tax hike


Let the wooing begin.
Chicago business leaders still smarting over Illinois lawmakers' decision to raise personal and corporate income taxes were greeted Tuesday by Indianapolis Mayor Greg Ballard's smiling mug in their morning newspaper. A full-page ad purchased by a city economic development group in the Chicago Tribune -- and two other downstate newspapers -- extolled our fair city's friendlier business climate.
Soon, business execs might see billboards hyping the Hoosier state's lower tax rates while they sit in Chicago traffic.
But as state and city economic development leaders compete with surrounding states to capitalize on Illinois' tax mess, there is one line that Indiana Secretary of Commerce Mitch Roob says he won't cross as the state contemplates its own ad campaign.
Slapping ads on the side of Chicago city buses -- well, that would just be unseemly.
"I'm not going to go there," Roob said.
Since Illinois' Democrat-controlled legislature and Gov. Pat Quinn signed off on the income tax increases last week to help overcome a $15 billion deficit, Roob and counterparts in Wisconsin and other states have been figuring out just how far they might go.
Governors have leveled competing quips. Wisconsin's Scott Walker said his state should revive its old tourism ad campaign, "Escape to Wisconsin."
Indiana's Mitch Daniels compared being Illinois' neighbor to "living next door to 'The Simpsons.' "
A Tribune editorial -- headlined "Goodbye, jobs" -- last week said both states "should send the Springfield Democrats orchids and champagne."
Illinois' personal income taxes will increase from 3 percent to 5 percent. The corporate rate will go from 7.3 percent to 9.5 percent.
Indiana's personal income tax rate is 3.4 percent, while corporations pay 8.5 percent.
Roob, who noted the Indiana Economic Development Corp. has received unsolicited information requests from 14 Illinois businesses considering a move, sees full-fledged opportunity.
"Right now, the (news articles) and people's natural revulsion is doing a pretty good job for us," Roob said. "But we'll keep reminding people of that in the media up in Chicago. We'll be advertising around the state," likely by renting billboard space and buying print ads starting in coming weeks.
But don't count out the competition. Communities in Iowa, Missouri and Michigan also are weighing possibilities.
"I'm sitting here looking out my window at the state of Illinois, and I envision all of this business activity from companies crushed by taxation and really extraordinary records of public corruption," said Craig Malin, a Davenport, Iowa, city administrator, from his office across the Mississippi River.
The Quad Cities that straddle the Illinois-Iowa border have long agreed not to entice each other's businesses and even share a chamber of commerce. Davenport leaders instead are considering targeting ads at Chicago.
"We're not going to be bashful," said Malin, a former Chicagoan, "about telling Chicago business leaders that if they want to grow their businesses in a climate that supports them, go west."
The Illinois tax increases have only enhanced what long has been the pitch from Indianapolis development boosters, who tout affordability and business-climate rankings that put Indiana far ahead of Illinois. Though Indiana's income tax rates were higher until now, other state business costs and property taxes were much lower.
This week's newspaper ads -- featuring a "business invitation" and a letter from Ballard -- were just the start of a budding campaign to reach out to Illinois, said Marc Lotter, the mayor's spokesman.
Melissa Todd, spokeswoman for Develop Indy, said her public-private agency had already fielded phone calls.
Develop Indy and the Indianapolis Bond Bank paid for the ads using private sources. Officials would not disclose what they spent, but the Chicago Tribune estimated the ad's cost at $35,000 to $36,000. The Peoria Journal-Star also verified that the city's ad ran, costing $4,300. The Springfield Journal said its open rate (though not necessarily what the ad cost) is $9,793.
Economists differ on whether a grab for jobs is likely to bear much fruit.
Companies affected by Illinois' corporate rate increase stand to lose $15 billion in equity value, according to Blaine P. Rollins, a Denver-based financial analyst.
"Illinois is giving away all of its jobs to the surrounding states and Canada," Rollins wrote in an e-mail. "So go get your fair share, Indiana."
But Peter Grossman, an economics professor at Butler University, said competitions between cities and states for business are nothing new.
"It'll be interesting to see if any businesses (in Illinois) respond," Grossman said. "Moving a business is not something where you pack a suitcase and drive over the border. . . . There will always be a complex set of calculations going on."
John Ketzenberger, president of the Indianapolis-based Indiana Fiscal Policy Institute, also was less bullish: "Indiana's tax structure is marginally better now, but it's nothing to brag about," he said.
"More important is Indiana's fiscal stability," Ketzenberger added. "The business community has known for years that Illinois has had massive budget problems. The tax hikes may cause some businesses to look into relocating to Indiana or Wisconsin, but it's more likely to help stabilize the finances in Illinois and alleviate the uncertainty business had about that state's government."
Some Indiana border cities have been cautious in soliciting businesses across the Illinois line and are less likely to take an aggressive stance.
That's true in Terre Haute, which is on good terms with Marshall, Ill., its neighbor 17 miles away.
"We have a good relationship with the mayor in Marshall and wouldn't want to do anything to attract business from those counties," said Steve Witt, president of the Terre Haute Economic Development Corp.
He's doubtful many far-eastern Illinois companies are eager to pick up and leave.
"What we found a lot of times is that a company . . . may not like what's going on in Springfield, but they are still loyal to their work force. There's a lot more than just the tax increase."
http://www.indystar.com/article/20110119/LOCAL18/101190317/-1/7daysarchives/Indianapolis-not-shy-pitching-Chicago-jobs