Report: Illinois Economic Development Agency Wasting Millions

Published August 30, 2010

The nearly insolvent Illinois state government could save millions of dollars and improve the state’s economy by abolishing the state’s economic development agency.

That’s one of the findings in Budget Solutions 2011, a report published by the Illinois Policy Institute, which offers budget-balancing ideas in three key areas of reform: spending realignment, right-sizing government labor costs, and pension funding reform.

Among the recommendations in Budget Solutions 2011 is the closure of the state’s Department of Commerce and Economic Opportunity (DCEO). According to DCEO’s mission statement, the department is “the lead state agency responsible for improving Illinois’ competitiveness in the global economy” and is responsible for “creating and retaining high quality jobs and building strong communities.”

In reality, much of the DCEO’s work duplicates services already offered by the private sector, the report finds. Illinois businesses already provide other state businesses with services such as global marketing and technology support, for example.

‘Redundant Government Agency’
Some state lawmakers agree with the call to eliminate the DCEO.

“There would be no need for DCEO if the tax policies in Illinois were attractive to business investment. Moreover, it’s a redundant government agency,” said State Rep. Mike Connelly (R-Naperville). “There are already many economic development organizations like the Naperville Development Partnership that already work to bring new business and retain business in Illinois.”

The DCEO is not needed in these areas and may actually be taking away commerce from Illinois companies, he said.

Puzzling Spending Choices
Illinois owes $6 billion in late payments to businesses that provide goods or services to the state and has an $80 billion unfunded pension liability and the nation’s second-worst credit rating. Budget Solutions 2011 gives examples of what it describes as spending that would be questionable at any time but is especially so when the state is in such a deep fiscal hole:

As an example, the report notes the DCEO gave a $100,000 grant in fiscal year 2010 to the Western Illinois Tourism Development Office to help with the costs associated with hosting the Canadian 4th of July Celebration. The DCEO’s grant tracker says the grant’s (#10-372010) purpose is “to assist with costs associated with attracting international tourists to Illinois attractions and events.”

Similarly, the DCEO awarded a $50,000 grant in fiscal year 2009 to the Chicago Convention and Visitor’s Bureau to “increase awareness of Chicago and Illinois in the Republic of Ireland,” according to the grant. The DCEO’s grant tracker says the grant’s (#08-372010) funding will come from “a portion of the state’s hotel-motel tax revenue.”

Sending Money Out of State
In 2009 the state’s Department of Commerce and Economic Opportunity gave the Western Kentucky Carbon Storage Foundation a grant worth $250,000. The Foundation was created when “Peabody Energy, ConocoPhillips and E.ON U.S. formed the non-profit Foundation to work with the Kentucky Geological Survey in a project that includes drilling a well to test the Knox and Mount Simon geological formations at a site in Hancock County,” according to the grant.

The grant from the Department Commerce was used to fund “a test well to research the permanent storage of carbon dioxide (CO2) deep underground in western Kentucky.”

Promoting Obscure Tourism
The DCEO gave a $10,000 grant in fiscal year 2009 to Ryburn Enterprises in Normal, Illinois to “assist in the restoration and preservation of a 1930s gas station, garage, and restaurant.” The DCEO’s grant tracker explains the grant’s (#09-335011) purpose is to promote tourism in the area, as the old and outdated buildings lie on the historic Route 66 highway.

The Blackhawk Waterways Convention and Visitors Bureau in the town of Polo received $1,272.88 for advertising “bed & breakfasts that specialize in chocolate-themed meals.” The DCEO’s grant tracker explains this grant’s (#10-361014) purpose: “based off of the increased interest in culinary tourism, it is clear this promotion strategy will promote more tourism to the area.”

The DCEO’s grant tracker also shows a total of $219,067 in the last two years going to the Blackhawk Waterways Convention and Visitors Bureau to promote tourism in the area in other ways.

‘Pay-to-Play Cesspool’
Similarly, the DCEO gave Downtown Springfield Inc. $100,000 for touch-screen kiosks to “provide information on local historic sites, restaurants, retail shops, services, hotels, recreational facilities, maps of downtown and other services.”

The Web-based informational kiosks are located at Eighth and Adams streets, near the Prairie Capital Convention Center, and at Sixth and Madison streets, near Union Station and the Abraham Lincoln Presidential Museum. The DCEO’s grant tracker says the grant (#08-203453) will provide for hiring a part-time employee “to serve as an information/data input operator to collect and post information.”

“There is absolutely no oversight in the Department of Commerce and Economic Opportunity,” said State Rep. Jack Franks (D-Woodstock). “No one knows how money is spent once it gets into the hands of the grantee. It has turned into a pay-to-play cesspool, and it needs to be eliminated. Clearly, the DCEO is failing when Illinois is losing business and remaining uncompetitive with other states, like Indiana, that are doing a much better job of promoting a friendly, pro-business environment and welcoming businesses in with better incentives.”

Kate Campaigne Piercy ([email protected]) is director of government reform at the Illinois Policy Institute.

Internet Info

Budget Solutions 2011, Illinois Policy Institute: