Illinois Lawmakers May Return Next Week To Pass CME Tax Break

Illinois State House reporter Rich Miller is reporting on his blog, Capitol Fax, that Illinois' legislative leaders are polling their members about a possible return to the State House next week to tackle tax break legislation valued at $100 million being proposed to keep CME and Sears from moving their headquarters outside of Illinois. Gov. Pat Quinn is reportedly conditioning his support for the legislation on some form of tax relief for low-income working families.

As first reported by Rich Miller at Capitol Fax over the weekend, the deal centers on breaking up the big tax-reduction package that stalled in the Legislature last month into three separate pieces.

Piece one, according to a well-connected lobbyist, would give about $100 million a year in tax breaks to CME Group Inc., CBOE Holdings Inc. and Sears, as well as extending the corporate research-and-development tax credit and reviving the corporate loss carry-forward provision.

Bill No. 2 reportedly would raise the state’s earned-income tax credit for working folks. No. 3 would raise and adjust to inflation the standard deduction on the individual income tax.

For this deal to work, all three bills have to have enough support to make it through both houses and to Gov. Pat Quinn’s office. As his spokeswoman again repeated to me today, “We’re committed to help, so long as any deal also includes tax relief for working families.”

That could be particularly difficult in the House, where some Downstate Democrats are reluctant to back an earned-income tax credit hike, and few if any Republicans are believed to support it.

Local news reports in Indiana suggest that Carmel may be vying with Indianapolis to lure CME. The IBJ's Scott Olson says Carmel may be prepared to offer tax breaks worth $150 million to attract CME. Olson quotes from a letter penned by Carmel Mayor James Brainard that redacts the name of the company involved:

Brainard's letter said the company anticipates leasing 800,000 square feet of office space for its headquarters and 425,000 square feet for its data center, with occupancy starting in 2013. To put that into perspective, the office requirements would be larger than every downtown Indianapolis office building except for Chase Tower, which has 1.1 million square feet of space.                              

“The City of Carmel welcomes the competition and believes we offer an excellent environment for [firm's name blacked out] to grow and prosper while supporting your company’s need to compete for the best possible talent available,” Brainard wrote to executives.

The fact that CME would require an office building the size of Chase Tower to accommodate its needs makes you wonder how seriously the company is about relocating to the Indianapolis area. It's hard to imagine the company would invest money in building a new office tower for a new headquarters if its motivation for moving here would be to reduce its costs. Moreover, the company wants to complete its move by 2013. If a new building must be constructed, it seems doubtful that timetable could be met.