Message from the President

January 8, 2007

It doesn’t take a seasoned political analyst to realize Illinois’ November election results do not bode well for the business community. A prognosticator would no doubt speculate that the overwhelming balance of political power that is now clearly in the hands of members of the Democratic Party represents a mandate to continue imposing burdens upon employers. These are most likely to take the form of higher business costs resulting from legislation to mandate workplace rules, expand benefits, demand prevailing wage contracts, impose project labor agreements, authorize card check for organizing the workplace and similar items that remain on organized labor’s agenda. Employers should anticipate that, because the state’s fiscal house is still in disorder and Governor Blagojevich’s campaign pledge of no new income or sales taxes for “the hardworking families of Illinois,” new revenue schemes are likely to be directed at them. In addition there are many new, expansive and expensive government programs being championed by Democrats filled with election night glee.

Labor Victories
The swift passage of another round of minimum wage increases during the lame-duck November session of the General Assembly is a perfect example of such unfettered will. The minimum wage will increase one dollar July 1, 2007. It will be followed by a schedule of twenty-five cent per hour increases that dictates Illinois employers pay $8.25 in 2010. The new law will likely guarantee Illinois a higher minimum wage than required by federal law, even if the new US Congress raises the minimum wage in 2007 as predicted.

The minimum wage increase campaign has been at the forefront of organized labor’s political agenda and is a key ingredient in the formula for unionizing more workers. While easily overlooked, it isn’t just the low wage employee who stands to gain by the higher minimum, because some labor contracts have escalating pay scales tied to the minimum wage. It is also assumed a higher floor will result in escalated wages for other employees. From the perspective of union officials seeking to enroll thousands of new members, nothing succeeds like having political victories to demonstrate results and motivate followers.

Although there have been clear economic consequences to Illinois’ high production costs, as demonstrated most recently by the 1000 Maytag workers who will not be returning to the Herrin plant in the New Year, there have yet to be any significant political consequences for anti-business policies or rhetoric. The next significant test of political sentiment over job opportunities versus union influence will be revealed during the upcoming Chicago aldermanic races where the debate over union membership, wages, work rules and healthcare benefits are likely to be pronounced. The forces that drove the “big box ordinance” through the city council and forced Mayor Daley to exercise his veto power for the first time made gains in November, and they have momentum.

Mayor Richard M. Daley has promoted a favorable business climate in Chicago by being accessible, attentive, investing in capital improvements, engaging the civic leadership in cooperative undertakings and providing stability. His pending re-election is a virtual guarantee. However, given the reception employers has experienced with the city council in recent months there are legitimate concerns about the volatility and hostility that may emerge in the post-Daley era.

Illinois Chamber members should pay close attention to what transpires in the Chicago municipal campaigns because there is much at stake and results will have implications for the Statehouse. Corporate leaders and business owners need to recognize the changing dynamics of Illinois’ politics have once again placed the state at the center of nationwide labor initiatives coming from Washington D.C. International unions’ playbooks are bankrolled with hundreds of millions of dollars in political and organizing funds. The Chicagoland Chamber has taken a keen interest in the spring 2007 elections and is challenging Chicago aldermen who are pursuing anti-business policies. If you are interested in the city council elections and wish to help the pro-business campaign, contact me (dwhitley@ilchamber.org or 312-983-7103) or Jerry Roper (jroper@chicagolandchamber.org or 312-494-6710) to help the “Business Alliance for Public Policy,” the name for the Chicago city elections project.

Illinois Republican Party
It was a disastrous November election for Republicans. Chamber endorsed candidates Topinka for Governor, Peraica for Cook County Board President, Judges McGlynn and Powers for Appellate Court positions and candidates for five important state senate seats lost their races. All five fifth district judges appointed to southern Illinois courts since 2004 by reform minded Supreme Court Judge Lloyd Karmeier failed to be elected to their judicial offices, and momentum for legal reform in Illinois suffered a severe setback.

To what extent any national voting trends may have reflected Illinois voters’ choices has already been given much post election critique; my view is one of frustration about Illinois voters’ tolerance for an ongoing climate of political corruption and mediocrity. The opportunity to change the course of government was present, but voters chose not to take it. I think Illinois voters were disillusioned and disengaged in statewide and local elections this year.

Total voter turnout was only 46%, a full 6% less than the two previous gubernatorial elections. Over 10%, nearly 350,000 ballots, of the gubernatorial vote went to the unknown Green Party candidate. Low voter turnout and a sizable third party count suggest a considerable level of dissatisfaction with the two main party candidates. In a significant number of jurisdictions I conclude disgust is a more accurate characterization. This is obvious from the fact that 15% or more of voters in 18 counties, 6 Chicago wards and 2 Cook County townships chose to vote for the Green Party candidate. Third party candidates traditionally receive only 3-5% of the vote. In this election the protest vote was significant because the disgusted voters appeared in both the traditionally Democratic townships like Oak Park and Evanston as well as in traditionally solid Republican counties like Peoria and DeKalb.

Judy Baar Topinka failed to inspire any significant number of new voters from beyond her core base of primary voters. She also needed to connect with suburban voters and that did not happen. Governor Blagojevich’s voter satisfaction fell off from his 2002 in all regions except Chicago where his support remained solid. The big difference in this election was money. Republicans did not even raise enough money to counter and neutralize the Governor’s negative ads that ran uncontested for weeks, let alone have money for positive issue-focused ads that could have differentiated the Topinka candidacy.

State Senate Minority Leader Frank Watson suffered severe losses in his legislative caucus. A net loss of five seats without a single victory means the Republican perspective can be ignored in the Senate Chamber, for there is no leverage for compromise. After four tough years doing an exemplary job establishing an effective minority party caucus that was bolstered by talented members and a strong streak of solidarity, Senate Republicans have been marginalized.

House Minority Leader Tom Cross’ caucus only lost one seat during an overwhelmingly Democratic election. Maintaining the integrity of his caucus certainly enhances his stature in the next General Assembly session. Unlike Senator Watson, Leader Cross retains a modicum of leverage because, while the margin is not close, some votes still require an extraordinary majority to become law. House roll calls are more often bi-partisan as vote trading to protect targeted legislators is easier when twice as many representatives vote than senators. Representative Cross has matured well in the leader’s chair over the last four years and is prepared to rise to the challenge as the primary focus of Republican legislative influence shifts to his caucus.

In the political vernacular launched by television’s election night visuals, Illinois has been a “blue state” (predominately Democrat) since Bill Clinton’s first presidential election in 1992. The number of Illinois voters who self-identify as Republicans has been steadily eroding. The last totally dominating election for Republicans was 1994 when the GOP won every statewide office and controlled both houses of the General Assembly. Twelve years later there has been a 180 degree reversal in favor of the Democrats. Based on the numbers of pure party affiliation, Illinois campaigns have not been competitive for Republicans since 1998 when George Ryan survived a close finish in the Governor’s race. November 2006 exit polls revealed only 31% of Illinois voters are self-identified as Republican. Democrats accounted for 46% and Independents made up the remaining 23%. I interpret the 2006 election results to say the GOP cannot win statewide until the party and its candidates can restore appeal to suburban voters, Independents and disengaged non-voters, and build bridges to Hispanic voters.

Illinois Democratic Party
Things did not change much for the Democrats as they already held the centers of political power in Illinois, but they did emerge from the 2006 election stronger than ever. In particular Democrats solidified their presence in the Chicago suburbs, the key political battleground in this election.

In Illinois, it is the Governor who has historically set the agenda. It remains to be seen what Governor Blagojevich will bring forth in his second term, but he set the tone on election night by declaring “You haven’t seen anything yet!” If the first term is an indication of his priorities, the big issues will remain healthcare and education. He has been a healthcare program expansionist, so it is likely he will do more for those currently dependent upon government funded programs and for the uninsured population. Some health-related programs launched in the first term have failed to flourish, so it will be interesting to see what happens with them. Education funding for public schools and especially for early childhood education, but not higher education, has been his other major priority.

The Governor’s biggest challenge continues to be building a budget that supports significant new spending for health and education while meeting pension obligations and paying vendors on a timely basis. Even as state government employment, operations and management changed significantly, the budget dilemma remains problematic.

President Emil Jones’ Democratic caucus now controls 37 of 59 Senate seats. If this caucus were to hold firm, they could even override a gubernatorial veto. While that would be unlikely with a Governor of the same party, it is possible Senator Jones’ long-stated ambition to raise the state income tax to significantly increase school funding could run counter to Governor Blagojevich’s campaign promise not to raise the income or sales tax rates during his second term.

Although they are election season allies, President Jones has been aggressive about sparring with labor unions over his desire to assure access for more minorities into trade union apprentice programs and jobs. The stand-off kept some union objectives from moving forward during the last session of the General Assembly. Now that President Jones has enhanced his standing, one wonders if there will be an accommodation in the new legislative session.

Democratic legislators may champion imposing higher fees, taxes and special assessments on employers to satisfy social costs associated with increased healthcare and education spending. Or they may choose to embrace Topinka’s expanded gambling gambit or resurrect Blagojevich’s proposals to lease the lottery and introduce video poker at the corner bar.

Independent minded Senator and Reverend James Meeks has proven adept at pressing for more education funding. Majority Leader Debbie Halverson and Representative Mary Flowers have championed the campaign for expanded government funded healthcare for the uninsured.

House Speaker and Democratic State Party Chairman Michael Madigan remains the central character on stage even if -- like the Wizard of Oz -- he is most often seen as the man behind the curtain. In many ways he is the last defender of the power and roles associated with the institution that is the Illinois General Assembly at a time when many individual members have acquiesced to assuming bit parts in a process that has increasingly been delegated and usurped by three individuals, the Speaker, the President and the Governor.

Speaker Madigan is universally respected for his depth of concern about issues as well as being a political strategist. He has on occasion demanded fiscal restraint, served as an effective broker of legislative compromise, and often been a moderating influence on law making. While many damaging anti-business legislative proposals have gotten attention in the last four years, it is worth noting that many bad bills considered detrimental did not make it to the finish line.

Thanks to the dogged pursuit of the US District Attorney of Northern Illinois and the work of investigative reporters, political commentators and exceptional editorial writers, Illinoisans have had a steady diet of political sleaze for over six years. Since the Democrats hold the political power it is incumbent on them to bring about long overdue ethics and campaign finance reforms.

This year Illinois Democrat candidates undoubtedly benefited from the national electorates’ desire to send a message to President Bush demonstrating dissatisfaction with the war in Iraq. In 2008 Democrat candidates for the state legislature are likely to once again benefit from national circumstances if “favorite son” Barack Obama appears on the party’s national ticket.

Illinois Chamber
What now for the Illinois Chamber? Obviously, the political balance in the General Assembly has tipped more heavily toward Democrats and presumably the policy and philosophical influences of their political allies: the trial lawyers and organized labor. It is not the most favorable legislative environment for pro-business legislation.

However, the public policy issues that dominate the employer agenda have not changed. It is no less important and, indeed, probably more important than ever that the employer perspective be organized, prepared and well articulated. The Illinois Chamber remains uniquely positioned to effectively perform this role.

Major issues remain on the horizon that the business community must be prepared to address, defend, oppose, and champion. Several multi-billion dollar public policy items are on the 2007 agenda for the General Assembly, including how to prioritize and fund big-ticket issues such as:

pension payment obligations the legislature has been skipping and reforms they have avoided
healthcare for the uninsured
adequate and timely pay for Medicaid vendors
transportation-based infrastructure needs
all other infrastructure needs, including educational institutions
the state and local mix or “swap” of funds for education and associated property tax issues
public higher education tuition increasingly pricing out lower and middle income kids
new government accounting standards that will reveal true costs associated with long term healthcare expenses for government employees

The Chamber’s role as a highly credible resource for research with the intellectual capacity to develop timely and reliable documentation explaining the employer’s perspective is more important than ever. In particular, Chamber members’ commitment to tax policy work, economic development incentives, healthcare options, workers’ compensation reforms, education outcomes, job training and infrastructure needs are critical to this process.

There are three other tasks the Illinois Chamber must pursue. First, it should be apparent to everyone that the financial resources available to the Governor in the 2006 campaign were overwhelming and key to his victory strategy. The members of the Illinois Chamber cannot wait to launch into a significant new round of fundraising and grassroots organizing.

Second, it should be obvious that the weakness of the GOP to effectively compete in the 2006 elections suggests there is a lack of leadership and a vacuum the Illinois Chamber should actively seek to address. Now is the time to develop and pursue a new vision for Illinois’ future. The Illinois Chamber is uniquely positioned to present compelling ideas, provide inspirational leadership and build a grassroots approach to reaching business and community leaders who are frustrated by the failure of this state’s political leadership to acknowledge the reality that job growth and economic prosperity are fundamental to the state’s future. Illinois still has 106,000 fewer people employed than in November 2000 when Illinois reached a peak. It is estimated Illinois employment numbers won’t return to that level until 2008, when we’ll be at least three years behind national trends.

Third, we must find Democratic legislators and leaders within Illinois government who are genuinely interested in helping create an environment in Illinois that promotes prosperity and job growth. A high-growth economic future for the people of Illinois should be a bi-partisan objective. The Illinois Chamber must identify and build bridges to those in the majority party who understand the importance of pro-growth policies and are willing to work with employers to create economic opportunity and a brighter future.

To change the course of current public policy, the Illinois Chamber will focus on cultivating members; we must develop and nurture grassroots issue-focused employer networks to demonstrate an active presence in individual legislative districts. We must offer this organization as an agent of change that is unwilling to accept mediocrity, abhors the culture of corruption that continues to permeate our state and has no tolerance for complacency about Illinois’ economic future.

The Illinois Chamber will tackle these issues in practice as well as in policy: seminars, publications, conferences, and research reports on such topics as workers’ compensation, economic development, healthcare, business tax burden, legal and judicial reform, and the future of bio-tech in Illinois are all in development for delivery to the Illinois business community in 2007.

We invite you to be involved; we implore you to get engaged with us as advocates for defending and growing business in Illinois. We invite you to encourage like-minded individuals who understand the need to participate in the important public policy debates that will guide the future of our great state to join the Illinois Chamber, NOW.