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* Alex Ruppenthal at the BGA…
In an effort to promote diverse businesses, Illinois three years ago passed a law that required companies receiving state tax breaks to report how much work they did with minority- and women-owned vendors.
But since the law went into effect, 119 companies that had more than $150 million shaved from their tax bills have not submitted any such reports, a Better Government Association examination has found. And of the 61 firms that did file the required reports, nearly three-quarters reported none of the data the law was intended to gather.
The problems with the state’s largest job incentive program are in large part due to the administrations of both Illinois Gov. J.B. Pritzker, a Democrat, and his Republican predecessor, Bruce Rauner, failing to enforce the law, according to the sponsors of the legislation.
Both administrations allowed the tax breaks to continue even after companies failed to submit the forms. For those firms that did submit reports, the administrations interpreted the law to mean the companies only had to file paperwork with the state even if the forms were mostly blank of critical information.
The resulting lack of any significant data intended to detail how much major multinational companies seeking taxpayer help are spending on minority- and women-owned vendors has angered both legislative sponsors. Following BGA inquiries, they said they will call for tougher actions by the Illinois Department of Commerce and Economic Opportunity, the state agency that oversees the program.
“We’re asking the enforcement body, which is the Department of Commerce, to tell these companies, ‘If you’re filing these reports, you should be filing them with data,’” said state Rep. Will Davis, a Democrat from suburban Homewood and co-sponsor of the changes to the state’s Economic Development for a Growing Economy, or EDGE, jobs program. “That’s the expectation.”
Illinois Sen. Cristina Castro, a Democrat from Elgin who sponsored the Senate version of the bill, said the language in the law is clear, and she is disappointed it has been interpreted so favorably to companies seeking taxpayer assistance.
“We’re giving you state tax dollars. Where are you trying to expand the diversity when it comes to minority-owned spending?” asked Castro. “It’s terrible.”
The law states companies “shall … submit to DCEO an annual report containing the information” on “actual spending for female-owned, minority-owned, veteran-owned, and small business enterprises.”
Lauren Huffman, a spokeswoman for DCEO, said the agency has interpreted the law to exclude, or grandfather, any company that received tax breaks prior to the passage of the 2017 measure. She said the law also doesn’t mandate companies collect minority data they don’t already collect.
“We will continue to work with EDGE companies to expand compliance with the 2017 law,” Huffman said in an emailed statement, “and look forward to working with the General Assembly to determine where changes could be made to the current statute and to enhance diversity reporting by Illinois companies and their contractors.”
A spokesman for Pritzker declined to answer questions about the state’s failure to collect the data, offering only a statement about how the governor is “deeply committed” to diversity in state contracts.
If he’s that “deeply committed” he’ll force a change. Pronto. I am fed-up to my eyeballs with this bureaucratic nonsense. If the law needs fixing, fix the law. Until then, take the most aggressive enforcement route possible and stop making excuses.
posted by Rich Miller
Tuesday, Sep 29, 20 @ 9:16 am
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The law doesn’t meed fixing. It just needs to be enforced. This is a real opportunity — this week — to significant increase investment in minority companies and the communities that need that private sector investment the most.
Just enforce the law and require every company that requests am EDGE tax certificate from DCEO to file a report on their voluntary supplier diversity programs similar to what the utilities and energy suppliers file every year here:
https://www.icc.illinois.gov/filings/mwvs/default.aspx
Big change. Doesn’t cost the state a dime. Come on Administration! Do the right thing!
Comment by Dan Johnson Tuesday, Sep 29, 20 @ 9:23 am
Keep in mind that existing signed contracts cannot be changed by subsequent changes in the law. So any changes would need to be prospective for new applicants or recipients. It would be wise for current recipients to comply voluntarily.
Comment by 4 percent Tuesday, Sep 29, 20 @ 9:25 am
At least one Black Caucus Member is working diligently on this…I know of at least two white lobbyists (one female, one male) who have been told directly by a Black Legislator that the Legislator is happy to talk with the client when a black lobbyist calls them. It sound unethical to me but it is happening.
Comment by Fan Tuesday, Sep 29, 20 @ 9:34 am
Fed up with bureaucratic nonsense?
That made me laugh out loud. facepalm.
I will stop there, and hope this is allowed to post.
Comment by weeds Tuesday, Sep 29, 20 @ 9:36 am
=== It sound unethical to me===
Lemme guess. You’re white.
Comment by Rich Miller Tuesday, Sep 29, 20 @ 9:43 am
Of course Rich he’s white, there aren’t alot of black nor brown lobbyist in Springfield and thats a huge problem because sometimes people who are black and brown can tell their clients exactly what’s going on and how maybe it can be addressed. And those companies if they can’t show how they have complied with the law should pay the state back.
Comment by Austinman Tuesday, Sep 29, 20 @ 10:01 am
4 percent: existing signed contracts aren’t relevant to whether an agency is under a new statutory obligation to only release a tax certificate when a new requirement is met by the recipient. And if an agency is under that interesting impression that a statute is unconstitutional (which is what you mean when you say ‘can’t'), the agency can get an opinion from the AG or get sued by a recipient. An agency does not have the authority to simply decline to enforce a statute because the agency believes the plain language of the statute is unconstitutional. The General Assembly and the Governor disagree with that interpretation (that’s why it is a Public Act) and it is up to other actors, not the agency, to show a statute is unconstitutional.
Comment by Dan Johnson Tuesday, Sep 29, 20 @ 10:18 am
One possibility for guaranteeing compliance: nobody gets a tax break until they’ve submitted the form and actually, you know, demonstrated a good-faith effort to contract with minority- and female-operated enterprises.
Another possibility: if you (a) don’t submit your form/ submit an essentially blank form, or (b) don’t make a serious effort to improve contractual business with minority/female-owned enterprises, you have to pay back that “break.”
Enforcement is easier if non-compliance has teeth.
Comment by dbk Tuesday, Sep 29, 20 @ 10:47 am
“the administrations interpreted the law to mean the companies only had to file paperwork with the state even if the forms were mostly blank of critical information.”
This doesn’t pass the smell test. Who would write a law stating it’s ok to submit incomplete paperwork? That’s just ludicrous. Pretty sure if I submitted my tax return with missing information the IRS would come knocking.
Comment by Cubs in '16 Tuesday, Sep 29, 20 @ 11:03 am
To be fair, if a company doesn’t have any program, they don’t have to create one under the law. They just have to report whatever voluntary supplier diversity spend they actually are doing. So if a company wants to report a zero spend, they can do that. It does take some time to ramp this up. OTOH it has been three years so get with it corporate America.
The troubling thing is the agency decided that 95% of the companies don’t have to file a report *at all* because of the red herring ’signed contract’ argument explained by 4 percent above. The agency just doesn’t have the authority to do that.
The law is very clear. If a company wants their corporate welfare (typo: EDGE tax credit), they must file a report with DCEO before DCEO may issue a tax certificate for that year. DCEO does not have the legal authority to say well, only for companies that sign up for a sweet deal after 2017.
Comment by Dan Johnson Tuesday, Sep 29, 20 @ 11:10 am
=== the agency has interpreted the law to exclude, or grandfather, any company that received tax breaks prior to the passage of the 2017 measure. ===
No reasonable person believes that’s true; sounds like an ex post facto explanation for why DCEO has not been doing their jobs.
What does Spillane think?
Comment by Thomas Paine Tuesday, Sep 29, 20 @ 11:13 am
Time to stop issuing free passes for this. I wonder if it is possible legally to recover any of the taxes waived for those who filed no paperwork at all.
Time to clean house at DCEO. It’s one thing to say “if it ain’t broke, don’t fix it”; it’s entirely different to find proof that it’s broken and STILL do nothing.
Comment by Mr. Smith Tuesday, Sep 29, 20 @ 1:00 pm
I have a hunch a lot of exempt positions over at DCEO are still filled with Rauner appointees, and that those Rauner appointees aren’t following laws they don’t agree with ideologically, just like the Rauner administration.
===- Thomas Paine - Tuesday, Sep 29, 20 @ 11:13 am:===
They can explain it after they’ve been fired.
If you give an explicit instruction to a person that holds an exempt position, and that person then turns around and doesn’t follow it, you should fire them. Imagine all of the other laws they are ignoring that you didn’t catch them on.
I am a broken record at this point, but the Pritzker Administration didn’t fire enough Rauner appointees when they came into office and now it’s impacting their ability to govern.
Comment by Candy Dogood Tuesday, Sep 29, 20 @ 1:02 pm
Candy DoGood- Current Governors own, heard it many times. If the Governor’s people head the department then they have failed to insure their employees are doing their work diligently. In the Union sector that would be ‘we have to protect that individual even if they aren’t up to snuff.’
Comment by Arock Tuesday, Sep 29, 20 @ 2:16 pm