Gov. Bruce Rauner on labor, economy: Jan. 27, 2015
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Transcript of Gov. Bruce Rauner on labor, economy: Jan. 27, 2015
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8/9/2019 Gov. Bruce Rauner on labor, economy: Jan. 27, 2015
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TheIllinoisTurnaround
Governor Bruce Rauner
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Our Goal:Make Illinois the Most
CompetitiveandCompassionateState in
America
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Illinois OnUnsustainable Path
Raising Taxes Alone Wont
Work
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Net Migration 2003 - 2014
68,585
31,069
132,716
81,771
22,354
-277,725-300,000
-250,000
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
Indiana Iowa Kentucky Missouri Wisconsin Illinois
Source: U.S. Census Bureau
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Illinois Domestic Migration 2003-2014
-94,956
-67,313
-73,453
-66,452
-49,843-48,249
-52,349
-60,265
-68,661
-79,525
-70,968-73,980
-100,000
-90,000
-80,000
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0201420132012201120102009200820072006200520042003
Source: U.S. Census Bureau
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Declining Real Median HouseholdIncome
Even with a 9% spike in 2013, real median householdincome is still nearly 12% below its 1999 level
Source: U.S Bureau of Economic Analysis; income figures in 2014 dollars
$50,000
$52,000
$54,000
$56,000
$58,000
$60,000
$62,000
$64,000
$66,000
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Job Creation vs. Neighboring States20032014
Source: U.S. Bureau of Labor Statistics
IL IN IA KY MO WI
Total percentage employmentgrowth
0.2% 3.8% 8.0% 5.3% 3.6% 4.3%
Annual compound growth rate 0.01% 0.3% 0.7% 0.4% 0.3% 0.4%
Cumulative job growth 10,300 109,900 115,900 94,500 96,300 120,500
Cumulative job growth per 1,000people
0.80 16.66 37.30 21.41 15.88 20.93
Multiple of Illinois growth 20.8x 46.6x 26.8x 19.9x 26.2x
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Workers Compensation Costs 7thHighest in the Nation
Source: 2014 Oregon Workers Compensation Premium Rate Ranking Summary
$2.35
$1.98$1.92
$1.88
$1.51
$1.06
$1.87
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
Illinois Missouri Wisconsin Iowa Kentucky Indiana National Average
Employer Workers Compensation Cost Per $100 ofSalary
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Unemployment Insurance Tax Costs -9thHighest in the Nation
$693
$612
$566
$315 $308 $298
$473
Illinois Iowa Wisconsin Kentucky Missouri Indiana National Average
Unemployment Insurance Tax on Average FTE
Source: U.S. Department of Labor, Employment and Training Administration, UIData Summary
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State Lawsuit Climate RankingsOne of the Worst in the Nation
Source: U.S. Chamber Institute for Legal Reform2012
46
38
34
15 14
10
IL KY MO WI IN IA
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How Illinois Ranks
48thBest States for Business2014 Chief Executive Magazine
FSmall Business Friendliness2014 Thumbtack.com Small Business
Friendliness Survey
35thSmall Business Policy2014 Small Business andEntrepreneurship Council
31stState Business Tax Climate2015 Tax Foundation
http://www.google.com/url?url=http://taxfoundation.org/&rct=j&frm=1&q=&esrc=s&sa=U&ei=mNW-VOrkEMWdygTciIHwBg&ved=0CBYQ9QEwAA&usg=AFQjCNEgyRHoPkQ2j7kZZ4fJugoKLtnbmQhttp://www.thumbtack.com/http://chiefexecutive.net/ -
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Nations Second Highest Property Taxes
Mean Property TaxesPaid
Mean Property Tax as a Percent ofHome Value
Kentucky $1,339 0.92
Indiana $1,200 0.93
Missouri $1,767 1.19
Iowa $2,398 1.6
Wisconsin $3,530 2.07
Illinois $4,469 2.28
Source: Urban-Brookings Tax Policy CenterNov. 18, 2013
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Root Causes of High PropertyTaxes
Pensions - $2 billionin 2013, and localgovernments neither control benefits norcontribution levels
Over one decade, state and localgovernments lost $1.6 billion due toprevailing wage requirements on educationconstruction projects alone
Project Labor Agreements can increase costsup to 18%
Nearly 7,000 units of government
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Illinois Gives Billions to Local GovernmentBut Costs Billions Too
The State of Illinois SharesMore than $6 Billion inRevenue with LocalGovernments.
But More than 280 StateImposed UnfundedMandates on LocalGovernments Cost
Communities Billions
StateLocal
Government$6B State
LocalGovernment
Source: GOMB, Illinois Municipal League
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Narrow Sales Tax Base
Services Covered by Sales Taxes
Source: Federation of Tax Administrators
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Top States for Business2014
Rank State
1 Georgia
2 Texas
3South
Carolina
4 Alabama
5 Tennessee
6 Louisiana
7 Indiana
8North
Carolina
9 Ohio
10 Mississippi
Rank State
1 Texas
2 Florida
3 Tennessee
4North
Carolina
5South
Carolina
6 Indiana
7 Arizona
8 Nevada
9 Louisiana
10 Georgia
48 Illinois
Ranking Criteria1.BusinessEnvironment2. Labor Climate3. Infrastructure
Ranking Criteria1. Tax andRegulatory Regime2. Quality of theWorkforce3. Quality of Living
Environment
http://chiefexecutive.net/ -
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Employee Empowermentvs. Forced Unionism
A study by a leading Canadian think tank (Fraser Institute) examined findings from aneconometric model of state gross product and total employment for 49 states from1977-2010
The resultsEmployee Empowerment Laws:
Increase economic output by 1.8% for the average state
Increase employment by 1% for the average state
A 1.8% increase in Illinois GSP would equal roughly $13 billion in increased economicactivity, which could result in approximately $675 million in tax revenue
Based on 2013 estimated GSP of $720.7 billion (St. Louis Fed data)
A 1% increase in Illinois employment would equal over 61,000 jobs
Based on BLS estimate of November 2014 IL employment of 6.1 million
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Employee Empowerment IncreasesJobs and Income
Percentage Growth in Non-Farm, Private-Sector Payroll Employment (2003-2013)Employee Empowerment States 9.2%Forced-Unionism States 4.0%National Average 6.1%Source: Department of Labor, Bureau of Labor Statistics (BLS)
Percentage Real Growth in Private Sector Employee Compensation (2003-2013)Employee Empowerment States 15.1%Forced-Unionism States 8.2%National Average 9.6%Source: BEA; BLS
Cost of Living-Adjusted Per Capita Disposable Personal Income (2013)Employee Empowerment States $38,915Forced-Unionism States $36,959National Average $37,878Source: Missouri Economic Research and Information Center; BEA
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Ability to be
Compassionate
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Medicaid Spending vs. Population Growth
12,000,000
13,000,000
14,000,000
15,000,000
16,000,000
17,000,000
18,000,000
$5,700
$6,700
$7,700
$8,700
$9,700
$10,700
$11,700
$12,700
$13,700
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Medicaid Spending Population
Source: GOMB, U.S. Census
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Spending vs. Job Growth Spending is 62% higher than its 2003 level while employment is less
than 0.5% above its 2003 level
Source: Illinois Office of Management and Budget; U.S. Bureau of Labor Statistics
Expenditures in current dollars
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Employment Total Expenditures
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Unfunded Pension System Liability, and Bondand Unpaid Bill Debt per Capita
Excludes Retiree Health Care Liabilities
Source: GOMB and Illinois Comptroller
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
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State Employee Payroll vs. Numberof State Employees
Source: State Employees Retirement System
$2,000,000,000
$2,500,000,000
$3,000,000,000
$3,500,000,000
$4,000,000,000
$4,500,000,000
$5,000,000,000
55,000
60,000
65,000
70,000
75,000
80,000
85,000
199419951996199719981999200020012002200320042005200620072008200920102011201220132014
TotalStatePayroll
NumberofEmployees
Active Members
Payroll
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Source: Pew Charitable Trusts
Average Total Premium
Per Employee
Wisconsin $1,331Illinois $1,181Indiana $1,018
Missouri $1,004Iowa $982
Kentucky $875
Average EmployeePremium Contribution
Percentage
Kentucky 24%Missouri 22%Indiana 19%
Wisconsin 13%Illinois 12%
Iowa 3%
Illinois Has theSecond-Highest
Premiums Amongour Neighbors
But the Second-Lowest Employee
ContributionShare
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Sample State Worker Pension Payout
A state worker retiring this year with an average career salary of
$38,979:
Contributes $40,539 in pension contributions over a 26-yearcareer
Receives $821,588 in total pension benefits after 20 years of
retirement
Source: State Employees Retirement System
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Total Employee Contributions Total Employee Pension
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Guaranteed Pension Spiking
Prior to 2005, there was a 20 percent annual cap on salary spiking.
In 2005, this was fixed with a 6% PerYear Salary Increase Ceiling for TeacherPensions
(f) If a teacher's salary for any school year used to determine final average salary exceeds the member's
annual full-time salary rate with the same employer for the previous school year by more than 6%, theteacher's employer shall pay to the Systemthe present value of the increase in benefits resulting from theportion of the increase in salary that is in excess of 6%.
Source: 40 ILCS 5/16-158
But Teacher Contracts Make the Ceiling a Floor
An eligible teacher will receive a maximum total increase in creditable earnings equal to 6% of the prior years
creditable earnings for each of the final three (3) years of employment.
Source: Actual Teacher Contract Language
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Project Labor Agreements=
Uncompetitive Bidding
Estimates show that mandatory Project LaborAgreements can drive up the cost of a project by
roughly 18 percent.
In Illinois, the Tollway, the Illinois Department ofTransportation, and the Capital Development
Board have increasingly used and required PLAsover the past decade.
Source: The Impact of Government-Mandated Project Labor Agreements (PLAs):
A Review of Key Reports and Studies (2014 Edition)
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Uncompetitive Bidding Costs Toll Payers$1 Billion
100% PLA requirement under Multi-Project Labor Agreement(MPLA).
From 2005 to present, the Tollway has awarded 419 construction
contracts at a value of $6.1 billion. Since 2012, the Tollway hasawarded 166 contracts, representing $2.18 billion that haveincluded the MPLA construction contracts.
Estimated Resources Lost Because of PLAs since 2005:
$1,098,000,000
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Uncompetitive Bidding Costs TaxpayersMore than $100 Million Per Year Just on
IDOT Projects
Year
Number ofawardedcontracts
% oftotal
amountawardedas PLA
Estimated savings ifno PLA (18 percent)
2004 827 2.5% $6,188,459
2005 801 3.0% $6,157,613
2006 821 0.7% $1,871,340
2007 905 2.3% $4,590,173
2008 1035 4.0% $9,017,543
2009 1560 5.5% $21,397,479
2010 1444 25.0% $108,968,900
2011 1008 30.2% $99,179,671
2012 876 62.6% $164,851,405
2013 982 62.3% $224,139,254
2014 1011 57.7% $195,319,310
TOTAL
11,270
$841,681,146
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Uncompetitive Bidding Costs Taxpayers $250Million on Capital Development Board Projects
Year
Number ofawardedcontracts
% of total
amountawarded as
PLA
Estimated Savings ifNo PLA (18 percent)
2004 498 15.7% $6,794,451
2005 274 12.8% $4,537,734
2006 356 71.2% $23,241,922
2007 349 61.0% $14,581,640
2008 443 23.0% $4,939,086
2009 371 42.8% $9,571,854
2010 375 92.0% $36,974,934
2011 339 92.6% $25,481,348
2012 404 96.8% $42,570,075
2013 352 96.1% $28,674,165
2014 364 99.0% $65,688,501
TOTAL 4,125 $263,055,710
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Prevailing Wages Cost SchoolsOver $1 Billion
All government projects in the state are forced to useprevailing wage requirements.
From 2002-2011 state and local governments overspentby $1.6 billion on education construction projects alonedue to our prevailing wage laws.
Illinois schools could save nearly $160 million a yearwith prevailing wage reforms.
Source: Anderson Economic Group, LLC, Illinois Prevailing Wage Law and the Cost of Education Construction (2014)
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Conflicts of Interest in State PoliticalContributions
Illinois state law bans contributions from businesses that domore than $50,000 worth of business with the state (30 ILCS500/50-37)
But Illinois law does not prohibit labor organizations with statecollective bargaining agreements from contributing to theelected officials who negotiate their contracts.
Numerous states already have bans on labor contributions,
including Arizona, Michigan, Ohio, Texas and Wisconsin.
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A Corrupt Bargain
Union PoliticalContributionsto Quinn andBlagojevich
HigherUnion Dues
BiggerBureaucracyTaxesIncreaseJobs Leave
Illinois
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Union Dues Cut State Worker TakeHome Pay
State union members pay $884 peryear on union dues despite already
having civil service protections.
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Top Seven GovernmentUnions InIllinois
SEIU AFSCME AFL-CIO Teamsters
Illinois Federation of Teachers Illinois Education Association Chicago Teachers Union
$25.5 Million To BenefitGubernatorial Candidates Since
2002
Virtually All (99.9%)to Quinn andBlagojevich
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Ability to be Compassionate
Tax Revenues
Individualsand Families
in Need
Consumers/Recipients
Classrooms
Government
Bureaucracy
Education
Bureaucracy
Service Providers
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Competitiveness
Tax Ratesx Tax Base
x Economic Activity=
Tax Revenues
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Illinois OnUnsustainable Path
Raising Taxes Alone Wont
Work
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Our Goal:Make Illinois the Most
CompetitiveandCompassionateState in
America
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TheIllinoisTurnaround
Governor Bruce Rauner