Why is Illinois unemployment so high?

by Paul Merrion | Crain’s Chicago Business

Illinois always has been one of the last states to suffer from a recession and one of the last states to recover, but this is getting ridiculous.

Nearly five years after the recession ended nationwide, the Illinois unemployment rate is 8.4 percent, third worst in the nation… The rate is now almost 2 percentage points above the national average… Since November 2010, when the Illinois unemployment rate was 9.6 percent—just two-tenths of a point above Indiana and the national average—only New Mexico has seen a smaller decline in its unemployment rate, compared with where it was. Indiana’s rate is down 3.5 percentage points since then, while Michigan, which started higher, is down 4.1 percentage points. […]

Divvy bikes ride into bankruptcy

Mayor Rahm loves to subsidize failure.

by Thomas A. Corfman |

The Montreal-based company that supplies the Divvy bicycle-sharing program in Chicago has filed for protection from creditors, according to published reports.

The filing by the Public Bike System Co. has forced the City of Montreal, which gave the company a financial bailout three years ago, to take over the firm’s operations in that city.

The bankruptcy filing by the company, known as Bixi, will not affect operations in Chicago, which began in June, according to a spokesman for the Chicago Department of Transportation.

Illinois’ Workers Comp Reform Was Only A Weak Window Dressing

by Paul Merrion | Crain’s Chicago Business

Hard-fought reforms enacted two years ago have brought down the fees that doctors and hospitals can charge for treating injured workers, but Illinois workers’ compensation costs remain sky high.

Medical payments for workers’ compensation claims dropped only 4.6 percent in Illinois last year even though the General Assembly reduced the maximum fees for workers’ compensation-related office visits, surgery and other treatments by 30 percent in 2011 (see the PDF). That’s according to a study of 16 states by the Workers Compensation Research Institute, an insurance industry-funded think tank in Cambridge, Mass. The states were selected to represent the high, middle and low end of the cost spectrum.

Medical fees actually fell 24 percent last year, according to the study, as some providers already were charging less than the maximum amount allowed by law. But those savings largely were offset by greater use of medical services and increased spending on litigation over medical claims, second opinions by company doctors and other measures to control medical costs.

As a result, total payments per claim were down just 1 percent.

Illinois can’t afford high speed rail

Quinn really has gone off the high-speed rails this time.
by Joe Cahil | Crain’s Chicago Business

So now we know: A high-speed rail line connecting Chicago and St. Louis would cost at least $20 billion, maybe as much as $50 billion with a link to Indianapolis.

As my colleague Paul Merrion reports, those estimates come from a study released this week by the University of Illinois at Urbana-Champaign’s Rail Transportation and Engineering Center. Our high-speed-rail-loving governor requested the study.

Keep in mind that we’re talking about really fast trains — 220 miles per hour, not the 110 mph project Gov. Pat Quinn is urging Congress to fund. At 220 mph, you could get to St. Louis in a little more than two hours, less than half the current five-plus. Urbana-Champaign would be just 45 minutes away.

The U of I researchers figure those travel times would attract hordes of riders, between 8 million and 15 million annually. Amtrak’s current Chicago-St. Louis route carries less than 600,000 passengers per year.

Here’s the best part: Researchers conclude a high-speed rail system with so many passengers would operate profitably, based on estimated average fares ranging from $71 to $115.

Sounds great. Now all we have to do is find $20 billion.

ComEd wants $311 million rate hike in 2014

by Steve Daniels | Crain’s Chicago Business

Commonwealth Edison Co. moved today to raise the cost of delivering electricity to the average household by $5 a month in 2014, part of the utility’s plan to modernize its local power grid.

ComEd filed for a $311 million increase in the revenue it receives from ratepayers, a figure that ComEd executives said will be more like $335 million once recently passed legislation by the General Assembly to increase the utility’s revenue becomes law.

But ComEd executives emphasized that, despite the delivery rate hike, customer bills actually will decline in 2013 from where they are today. That’s because the cost of the energy itself, which accounts for roughly two-thirds of the normal electric bill, will fall significantly beginning in June. The average household monthly ComEd bill of $81 will fall to about $66 beginning in June before rising again to about $72 in January, when the new delivery rates kick in.

The majority of ComEd customers already are purchasing power from cheaper suppliers, mainly as a result of municipalities that bought in bulk on behalf of residents while ComEd’s power prices were substantially higher than market rates, due to old power-purchase contracts that will expire soon.

Why lawyers are hitting it rich on video gambling

by Steven R. Strahler
Crain’s Chicago Business

In just a few months, video poker is turning into a jackpot for one group: lawyers.

With gambling companies jostling for a chunk of a projected $1 billion annual market, some aren’t waiting for formalities like a license before signing up taverns, truck stops and other eligible locations for their games of chance. Aced-out competitors are suing; more than 40 lawsuits ask whether these “precursor” agreements can be sold to other operators by unlicensed parties.

Midwest Gaming Technologies LLC lassoed Lalo’s Restaurant Group’s outlet in Berwyn in 2010, but, failing to obtain a gambling license, the Norridge-based firm sold the contract last year to Gold Rush Amusements Inc. of Glendale Heights. In the meantime, Chicago-based Lalo’s signed a second contract with Lattner Entertainment Group Illinois LLC of Riverside, which installed three machines after promising Lalo’s founder Eduardo Castaneda that “if I had any problems, they will fix it,” Mr. Castaneda says.

Why you’re paying more for gas than you should

One item this article misses is that IL is a double gas tax state. IL doubles the motor fuel tax to fund programs other than roads.
– Allen


By Joe Cahill of Crains Chicago Business

If you pay more at the gas pump this summer, thank an ethanol lobbyist.

By all rights, gasoline prices should decline in coming months. Crude oil supplies are up and demand is down. Yet gasoline futures prices keep rising.

What gives? The answer, at least in part, is a federal mandate requiring refineries to mix ever-increasing amounts of ethanol with petroleum to make gasoline. In 2013, this mandate is expected to reach 13.8 billion gallons, up from 13.2 billion last year.

The mandate exists because of the politically powerful ethanol industry, which stretches from Illinois cornfields through executive suites at giant corporations like Decatur-based Archer Daniels Midland Co. to the corridors of Capitol Hill. Its lobbyists convinced Congress and the Bush administration about a decade ago that subsidizing an alternative fuel would help assure energy independence and reduce pollution. Ethanol makers needed the mandate because their product can’t compete profitably in energy markets where prices are based on the cost of a barrel of oil, which is cheaper to produce than ethanol.

By requiring refiners to buy ethanol, the mandate buttresses an industry that would struggle to survive on its own. The requirement also boosts food prices by raising demand for corn.

WeatherTech’s made-in-America success story

by Crains

The man behind WeatherTech floor mats, Dave MacNeil, is one serious car guy.

A tour of his company’s west suburban manufacturing plants finds him behind the wheel of a BMW M5, reputedly the fastest four-door sedan out there, and then a Porsche, after a stop to show off his private museum of vintage Ferraris and Mercedes. The road trip ends at MacNeil Automotive Products Ltd.’s retail showroom in Bolingbrook, where a pristinely restored 1965 Aston Martin DB5—the car Sean Connery drove as James Bond in “Goldfinger”—greets guests by the front door.

Mr. MacNeil is serious about something else, too: waving Old Glory.

In an age when much manufacturing has been outsourced to China and other low-wage nations, WeatherTech’s entire line of more than 5,000 car floor mats, rooftop cargo carriers, side-window deflectors, license plate frames and mud flaps is made in America, much of it in the 400,000 square feet of factory and warehouse space in Downers Grove and Bolingbrook he built in the past five years. He reminds everyone of that fact in an almost-impossible-to-miss outpouring of print ads, billboards and television commercials.

State bill would cut property tax hikes to 0% in bad times

by Greg Hinz

A northwest suburban legislator has introduced a bill that a lot of property owners are going to like in this time of depressed home values.

But the question is, can it pass?

Under new legislation proposed by state Rep. Jack Franks, taxes could not go up at all — not a penny — in any year in which the gross value of property in a taxing district decreases. The only exception is if voters approve a hike by referendum.

“Home values have plummeted in recent years, but the tax burden on those properties continues to rise,” said Mr. Franks, a McHenry County Democrat. “It is unconscionable that property taxes have increased as more and more homeowners are under water with their mortgages.”

Under current law, taxes can go up by the rate of consumer inflation or 5%, whichever is lower.

Mr. Franks has several co-sponsors, most of them Republicans. I suspect House leadership won’t like the bill.

But in these times, the bill could get quite a head of steam. I can hear the cheers.

Read more…