Caterpillar's problems not limited to big businesses in Illinois

Posted8/7/2022 1:00 AM

Caterpillar, Boeing and Citadel -- plus, the Glenview-based Highland Ventures, parent company of the former Family Video chain -- all announced recently they plan to join the Illinois business exodus. After the shock, there was lots of economic analysis about lost jobs and prestige.

Then came the quiet, unsettling thoughts from the state's small business owners: If Illinois state leaders for a decade ignored Cat's calls to fix high taxes, regulations and costs, what hope do I have for progress?


Illinois' small businesses have accounted for nearly 70% of the state's job creation since 2011. They are the ones you know best: your local bakery, your mom-and-pop mechanic, the small factory in the industrial park. They are the cornerstones of their communities, and they are less able to absorb the compounding demands of state leaders.

Plus they are mostly invisible to Springfield: they don't get stories in The Wall Street Journal and The Washington Post when they move -- or close.

Zach Meiborg is one of them. He grew his trucking, warehousing and logistics company in Rockford, Illinois, from 15 employees to 350 in a little over a decade. He invested heavily in Illinois and kept his workers busy and off unemployment during the pandemic.

Around the same time Boeing announced its departure from Illinois, Meiborg decided to move his family to Houston and open a branch of his company in Texas as a hedge against the instability in Illinois. His reasons are similar to those of the big companies: $650 million in new business taxes imposed while trying to recover from the pandemic, high costs, Gov. J.B. Pritzker's overreaching COVID-19 mandates and lack of unemployment reform.

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Now his focus is on investing in the Texas branch.

Meiborg's company brings in $90 million in annual revenues. A new branch means further economic growth. Illinois loses it. Texas gains it.

Many of Meiborg's employees are giving up on Illinois and asking to transfer to the Texas branch. Illinois loses them. Texas gains them.

But the losses can be stopped.

Meiborg echoed other business leaders and said current political leadership does not understand the damage their decisions are causing, such as new taxes on job creators because they failed to fix the deficit in the state's unemployment trust fund.

Businesses of all sizes can flourish if state leaders make some simple reforms. Reforms that political leaders could implement to start making change now include:


• Balance the state budget: Illinois state leaders increase spending every year. Every year since 2001 they spent more than they received -- 21 years of budget deficits. Public pensions eat about one-fourth of that budget yet are owed $313 billion, according to Moody's Investors Service, that taxpayers someday will be forced to pay. The fiscal mess comes at the cost of basic services such as public safety and child welfare, which have been cut by 20% since 2000.

• Cut the regulations: With 278,475 regulatory restrictions and requirements -- double the national average -- Illinois has the third-most heavily regulated business environment in the nation.

• Stop the tax hikes: Rather than balance the budget and cut down on taxes, Pritzker passed another 24 tax and fee hikes when he took office in 2019 that cost taxpayers over $5 billion. Now there's a threat of another $2,100 average property tax hike and untold costs on businesses as state leaders push Amendment 1.

Big companies that don't have roots as deep as the corner baker can be assigned a variety of motives for being lured by other states -- even when they clearly warned a decade earlier what changes they needed. But when small business owners decide their kids need to change schools and Illinois is no longer worth the business struggles, somebody better listen.

And it better be Illinois' politicians: stop shrugging, start reforming.

• Matt Paprocki is president of the Illinois Policy Institute.

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