Progress Illinois

Painting what he described as a "stark contrast" between his platform and the policies endorsed by Republican Senate frontrunner Mark Kirk, State Treasurer Alexi Giannoulias rolled out the first section of a five-part economic plan (titled "Future Works America") before reporters this morning.  "Mark Kirk and the failed politics of the past got us into this economic mess," he said. "I have a plan to lead us to a more promising future."

Standing beside a new homeowner in Chicago's North Center neighborhood, Giannoulias called for a one-year extension of the $8,000 first-time homebuyers tax credit (which was included in the stimulus bill Kirk voted against) and a one-year payroll tax holiday on the first $20,000 of income for individuals making less than $75,000. (Th eSenate is expected to pass the homebuyers credit this week, although the extension would only last eight months.) He also wants to create a tax credit for small businesses with less than 50 employees, available for one year to companies that add workers to their payroll. To pay for the mini-recovery package, the treasurer would work to close corporate loopholes that benefit companies who ship jobs overseas. Watch him layout the expected benefits of the plan:

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When the Bureau of Labor Statistics recently released a rather encouraging jobs report showing that the national unemployment rate actually fell in July --  for the first time in 15 months --  we wondered if Illinois' rate would follow suit. Today the state's latest jobless figures are out and unfortunately, the Prairie State hasn't joined the upswing yet, according to the Illinois Department of Employment Security. The AP reports:

Illinois' jobless rate rose to 10.4 percent in July even though the pace of job losses is slowing.

That's up slightly from 10.3 percent in June [...]

[T]he state lost another 13,000 jobs in July, bringing the number of unemployed statewide to 692,500.

Here's our updated graph showing the national and Illinois rate since the beginning of the year:

The Bureau of Labor Statistics released its July jobs data yesterday and the results were pretty encouraging. For the first time in 15 months, the unemployment rate actually fell, from 9.5 to 9.4 percent. Employers only cut 247,000 jobs, about 80,000 less than experts predicted.

What caused the upswing? Some argue that the labor force is shrinking because people have quit looking for jobs in this tough climate and are therefore no longer factored into the Labor Department's jobs report. But Council of Economic Advisers Chair Christina Romer attributes the progress to the stimulus finally kicking into gear. She said in a speech yesterday that the recovery package has been a boon to state and local governments in particular:

But, state and local government spending actually rose at a healthy 2.4% annual rate in the second quarter of 2009. This followed two consecutive quarters of decline, and was the highest growth rate in two years. No one can doubt that the $33 billion of state fiscal relief that has already gone out thanks to the Recovery Act is a key source of this increase.

Will Illinois' unemployment rate, at 10.3 percent in June, follow the national trend? We will find out on August 20, when the July statewide figures are released.

Yesterday, we highlighted a rare bit of good news for Illinois schools: Revenue from large-scale wind projects are providing relief to some downstate school districts who've been struggling to cope with unreliable state funding. For instance, by next year, the Colfax school district will net an additional $1.7 million in new revenue from Horizon Wind Energy's Twin Groves Wind Farm. For a rural district operating on an $8 million annual budget, that is money that will go a long way.

The economic power of the wind industry -- which is anticipated to invest $1.9 billion in Illinois over the next 25 years -- looks equally promising for the state as a whole, according to some new research out of Illinois State University.  Economist David Loomis of the school's Center for Renewable Energy examined the economic impact of Illinois' 17 major wind projects (and the 1,118.76 MW of energy they've generated).  He found that the farms have succeeded in generating sizable and sustainable revenues, including upwards of $11.4 million in new property taxes each year.

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It's still too early to tell what the budget deficit will look like when state legislators reconvene this winter to hash out the FY 2011 budget. But there is plenty of evidence to suggest it will be very deep.

The "stop gap" budget approved by the General Assembly this week attempts to plug the deficit by cutting programs, borrowing $3.5 billion, and remaining delinquent on $3.2 billion in back-payments to vendors and providers. But many expect this haphazard plan to come up short, necessitating the need for new revenue (i.e., a tax increase) in the January veto session.

As we've explained before, recessions tend to hit the states later than the nation as a whole. And across the country, tax revenues are plummeting just as demand for government-backed, safety-net services grows. A new report from the Rockefeller Institute of Government examines some gory details from the first three months of 2009:

The 45 states that have reported taxes for April and May have seen revenue declines of about 20%, compared with the same period a year ago, according to the report to be released Friday from the Nelson A. Rockefeller Institute of Government at the State University of New York.

"Such extraordinary weakness in revenues, along with continued if more moderate growth in expenditures, make widespread budget shortfalls highly likely this year," the report said.

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Just last month, we highlighted Illinois' unemployment insurance fund as a bright spot in the state's sea of fiscal darkness. When ProPublica teamed up with American Public Media's Marketplace to study the nation's vast and decentralized unemployment insurance system, they found that Illinois had $500 million dollars in the bank, the 14th highest total in the nation. Illinois had not been forced to borrow any money to keep the fund solvent either, unlike other large states. To be sure, there were problems in the system, particularly that the jobless were routinely denied benefits by employers. But overall, the fund was healthy.

Not anymore. In just the past few months, increased demand has drained the fund, forcing the state to seek federal assistance to pay out benefits. Crain's has the scoop:

The state has drawn about $9 million from a federal credit line to help replenish its unemployment insurance fund and pay out close to $100 million in unemployment claims. The fund had dwindled to about $81.8 million as of July 5 from $1.45 billion at the start of 2009.

“There was no interruption of benefits. The borrowing is a result of the national economic challenge,” says a spokesman for the State of Illinois Department of Employment Security.

The loan was small because the state is still expecting a $200 million federal windfall as a result of the unemployment benefits extension law Gov. Quinn signed two weeks ago. But it came at a bad time. Just this morning, the Illinois Department of Employment Security released the state's June unemployment figures. While the increase wasn't as sharp as in previous months, the state is still shedding jobs, jumping to 10.3 percent from 10.1 percent last month:

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Tomorrow, the Illinois Department of Employment Security will release the state's June unemployment rate and the numbers are anticipated to be ugly. The current national unemployment rate hovers around 9.5 percent, up slightly from May. The situation is worse in the Land of Lincoln, though, where the jobless figure already surpassed 10 percent last month.

But as we pointed out last year, the government's unemployment figures don't tell the full story about the plight of American workers. The Bureau of Labor Statistics, for example, doesn't take into account part-timers who want full-time jobs or the jobless who want work but are not actively seeking employment. By not factoring in this so-called underemployment, they are likely obscuring the depth of the recession.

When those factors were considered last September, Illinois' underemployment rate (which combines the typical unemployment rate with those broader statistics) sat at 11 percent, its highest level in more than 14 years. In the nine month since, underemployment has grown by an additional 5 percentage points, according to a New York Times analysis published today.  The Times' David Leonhardt's writes that it might not improve quickly, either:

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The nation's economic climate is still pretty grim. Unemployment, which some predict will exceed 10 percent next year, is rising at a quicker pace than the White House projected in January, weeks before they passed their historic $787 billion stimulus package. And the stimulus package itself  -- as expected -- is taking some time to ramp up. So far, only 10 percent of the spending is out the door.

Not surprisingly, that hasn't stopped conservatives from deriding the spending bill as wholly ineffective. On Sunday, Rep. Peter Roskam made such a claim during his appearance on FOX Chicago Sunday. But economists were never concerned that the recovery package was fundamentally flawed. Instead, many feared that after negotiations with "moderates" in the Senate, the bill was too small to dig us out of a huge hole. That worry is leading some policy makers to float the idea of a second Obama stimulus package. One local lawmaker who appears interested is Rep. Melissa Bean, who told Politico today that "the thing we have to consider is the risk to not doing it.”

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Organizations like the National Training and Information Center have have spent considerable energy over the past 18 months examining the cause of the foreclosure crisis and providing assistance to Chicago residents impacted most acutely. And rightfully so -- in 2008 alone, 20,000 homeowners were foreclosed upon within the city limits, 75 percent of whom took out Adjustable Rate Mortgages (ARMs) or other high-risk loan products to finance their purchase. But in the first few months of 2009, it's Chicago's suburbs that are experiencing a new wave of housing problems. Crain's highlights new data from the Woodstock Institute yesterday:

Foreclosure cases filed in the first quarter jumped between 25% and 70% from the fourth quarter in DuPage, Will, McHenry, Lake and Kane counties, according to new data provided to Crain's by the Woodstock Institute, a Chicago-based housing advocacy group. Meanwhile, foreclosures fell 8% in Chicago, the first quarterly decline in a year.

Across the six-county Chicago metropolitan area, foreclosure filings rose 6% in the first quarter to 17,819, the highest one-quarter total since the housing crisis began in mid-2006.

Suburban growth explains how the number of Illinois households threatened with losing their homes rose 62 percent in February from last year’s levels, even while the crisis in Chicago has plateaued. 

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At a lunch meeting on Tuesday, the SEIU Illinois State Council (which sponsors this website) brought together representatives from 30 Chicago-based progressive organizations to start a discussion around the following question: Beyond taking advantage of efforts at the state and federal level, how should the city invest in an economic recovery?

The groups acknowledge that the first step is to convince the public and elected officials that the city actually has money to spend.  Indeed, using in-depth research on the city budget compiled by consultants, SEIU estimates that Mayor Daley currently has $2 billion at his disposal. 

One source: the tax increment financing (TIF) funds earmarked for "future redevelopment projects," which the union pegs at approximately $1.1 billion.  As Jason Liechty, policy director for then-Cook Co. Commissioner Mike Quigley, told us in January, this is all just "money searching for projects." 

Another major reserve is the pot of unobligated funds derived from the city's recent asset sales, including the lease of the skyway, parking garages, and parking meters.  In a March 31 press release, the city explained that $400 million of the controversial, $1.2 billion parking meter deal will go into the city's rainy-day fund, which has now reached $900 million:

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