Governor's business stimulus plan panned

Gov. Rod Blagojevich presented his 2009 budget this week seeking a $1.2 billion economic stimulus package for families and businesses. But could it mean pushing more than $1 billion in tax hikes on Illinois businesses over the next two years?

That is what many business leaders contacted Thursday believe.

Last year, the business community fought and won against more taxes. This time the business payroll tax reared its head again to help fund health initiatives.

Business leaders say they would be willing to work with Blagojevich. They agreed with the governor that they should work together to help boost the state's economy and help struggling business colleagues -- as long as it doesn't mean more taxes.

"Health care is a major issue right now and it should be reviewed on the whole, not keep taxing businesses to fund it," said Shirlanne Lemm, president of the Greater O'Hare Association of Industry and Commerce in Bensenville. "This is just a Band-Aid solution."

Last year, Blagojevich sought in vain to require a company to spend at least 4 percent of its payroll costs on health insurance for employees or face a 3 percent tax to help pay health-care costs. The proposed plan was to ensure all employers were participating in covering health-care costs, according to the governor's office. Businesses with fewer than 10 employees would have been exempted.

He pitched the same idea this week. Such a payroll tax could cost businesses about $1 billion, said Doug Whitley, president and chief executive of the Illinois Chamber of Commerce.

"The governor's rhetoric was gentler toward business in this speech than in the past, but offering a tax cut that only a handful of businesses would qualify for in exchange for a payroll tax increase that every business would have to pay is not going to create jobs or build prosperity in Illinois," Whitley said. "This would do more harm than good to small businesses, which would not qualify for the tax cut but would be required to pay the 3 percent payroll tax increase."

Whitley called the proposal "bait-and-switch political trickery" that should be replaced with open dialogue.

Besides the payroll tax, other taxes would be a heavy burden, business leaders say. An increase in the state tax on gaming would cost businesses about $250 million. A so-called closure of corporate income tax loopholes would cost businesses $250 million, said Jim Uszler, executive director of the Mount Prospect Chamber of Commerce.

"The state once again refuses to acknowledge that it has debts to pay. The pension debt continues to grow out of control. The Medicaid bills are unpaid. Mental health bills are not paid," said Uszler. "What does the governor do? He comes up with new programs, and where does he try to find the money to pay for it? Business. … and while businesses struggle to provide health care for their employees."

Uszler said instead of providing incentives, the governor wants to penalize businesses that can't afford health care.

Jerry Roper, president and CEO of the Chicagoland Chamber of Commerce, said he and a committee intend to work on solutions that could help the state and the business community without new taxes on businesses.

"There's just too much at risk if we don't come together with the business community, the governor and the General Assembly," said Roper.

Richard Greene, CEO of the Naperville Area Chamber of Commerce, said the new budget proposal was "heavy on new taxes but light on new solutions."

"He's (Blagojevich) trying to camouflage the new taxes by talking about all the other budget situations and problems," Greene said.