Illinois, a state burdened by high unemployment, $100 billion in unfunded pension liabilities and high borrowing costs, could turn things around with strong political leaders who demonstrate the will and discipline to tackle those key issues head-on.
That was the overriding message at the Seventh Annual Elmhurst College Government Forum, held just days before the statewide primary to select the candidates who will run in November for governor and other offices. Titled Illinois’ Reckoning: Solving the Problems, Fulfilling the Promise, the March 7 event was moderated by former Illinois Governor James R. Thompson and featured a panel of prominent journalists and civic and business leaders. The group, which spoke at the Drury Lane Conference Center before an audience of nearly 700, addressed issues ranging from how to fix the state’s gloomy business climate to whether Illinois deserves its reputation for corruption at the top.
Panel member Ty Fahner, president of the influential Civic Committee of the Commercial Club of Chicago and a partner at Mayer Brown, said Illinois stands in stark contrast to its neighbors in terms of attracting businesses and adding jobs. Indiana, Wisconsin and Michigan have created business-friendly environments in recent years but Illinois continues to lose jobs, he said.
“We’ve sunk to the bottom. We’re at the bottom whether it’s in bond ratings, unemployment, whatever. People are fleeing the state because there are no jobs,” Fahner said. “The biggest single thing we can do is have the General Assembly and the governor, as we go forward, try to create a business-friendly, hospitable environment.”
Bruce Dold, editorial page editor of the Chicago Tribune, said the state’s 8.7 percent unemployment rate is the third highest in the country, and Illinois, the country’s fifth most populous state, was one of only two states in which the unemployment rate increased in 2013 (Massachusetts was the other).
State government has been “nibbling around the edges” on job creation, Dold said, “but it’s not getting the job done. We need people in leadership who are going to focus on getting people back to work.”
Thompson, the longest-serving governor in Illinois history, noted, “It isn’t recognized often enough how important civility and cordiality and consensus-building are to the political resolution of challenges in any state, especially a state as large and dynamic and important as Illinois.”
Mary Ann Ahern, political reporter at NBC5 News, agreed that the current climate in Springfield is more “us versus them” than it was during Thompson’s 14-year tenure, when bipartisan compromise was more common and produced more results.
“It’s all about, ‘I’m going to get mine, what about yours?’ When is that going to change?” Ahern asked. For example, she said, it had been apparent for years that the state’s pension systems were in bad shape, but the unions representing state employees refused to acknowledge the need for change, and government leaders didn’t address union concerns with proper respect.
Tod Miles, a senior vice president of public finance at investment firm Hutchinson Shockey Erley & Co., said potential investors view Illinois state bonds as high-risk because government leaders haven’t shown economic discipline or the willingness to address major issues.
“Until investors believe that there’s the will for the decision makers to sit in a room and reach agreement, we’re going to have problems. It makes it difficult for us to do capital projects because we can’t raise capital in the traditional way,” Miles said, noting that Illinois’ precarious financial condition adds $17 million per day in interest on money the state borrows.
Robert C. Knuepfer Jr., senior partner at Baker & McKenzie and an Elmhurst College trustee, called for government leaders to exercise greater fiscal responsibility. “We can’t spend more than we take in and keep kicking the can down the road,” a practice that only pushes the day of reckoning onto future generations.
Despite Illinois’ current situation and similar fiscal issues facing Chicago, the state’s largest city and commercial center, panelists were optimistic that many of the problems can be fixed.
Illinois and Chicago have “world-class assets,” Knuepfer said, and Chicago remains a choice location for corporate headquarters because of its central location, banking system, transportation and colleges.
“I think this is one of the best places to live and work. I think some of the issues that need to be addressed are very serious, but they can be addressed with the right leadership,” he said. “I’m not down on Illinois or think the world is coming to an end because of the problems we’re facing.”
Legislators recently demonstrated that type of leadership when they passed a pension reform bill, with bipartisan support, that will reduce the $100 billion unfunded liability. The pension reforms were passed after nearly five years of talk without action in the General Assembly.
But Illinois still faces a widespread reputation as a state with high taxes, burdensome regulations and corrupt politicians. Four of the state’s last eight governors have gone to prison, a grim statistic that underscored the panel’s focus on political leadership.
“There’s been a paucity of leadership at all levels,” Fahner said. “They’ve let the infrastructure go down, and you can’t be spending money on infrastructure if you don’t have a balanced budget and prudent spending.
“What we need is some leadership, for someone to say, not ‘here’s what I’m against,’ but ‘here’s what I’m going to do.’ To do that, you have to be able to talk to the legislative leadership and have the (right) amount of respect for those people.”
Leadership starts at the top, said Fahner, who served as state attorney general under Thompson and, as head of the Civic Committee, was a driving force behind the recent pension reform legislation. Fahner praised Thompson, a Republican, for his ability to persuade elected officials from both parties, as well as voters, that spending on worthy projects yields widespread benefits, even if it requires higher taxes.
“A politician is supposed to lead, convince the public that it is in their enlightened self-interest to do this because we’ll all be better. I think that the historic lack of a leader or leadership has been happening for a long time,” Fahner said. “The governor is supposed to lead, and if you don’t have that you’re not going to have solutions to the problems.”
As for Illinois’ reputation for corruption, Knuepfer argued that the state has a stronger culture of prosecuting law-breaking public officials than other states. “It’s not unique to Illinois. We’re just better at ferreting it out and prosecuting the offenders,” he said.
Dold drew laughs from the audience when he joked, “We haven’t arrested a governor now in six years. We’re on a roll.”