Illinois gives The Advisory Board Co. a $2.6M tax break

Under a 2015 agreement between the Department of Commerce and Economic Opportunity and The Advisory Board Co., the state gave a tax credit worth millions of dollars in exchange for 55 jobs.

In July 2015, The Advisory Board Co., a technology and research firm based in Washington, D.C., signed an agreement with the state of Illinois to hire 55 upper-level management employees from 2015 through 2017. In exchange for these promised hires, the Department of Commerce and Economic Opportunity, or DCEO, gave Advisory Board a $2.6 million tax break under the Economic Development for a Growing Economy, or EDGE, tax credit program.

The agreement provided that Advisory Board would hire 55 new employees over a three-year period: 18 directors in 2015, 18 managers in 2016, and 19 directors in 2017. Salary information for the new employees was redacted from the document.

Under the deal, Advisory Board also agreed to a capital investment at the 227 W. Monroe building in Chicago and 10 years of lease payments for an unknown amount of money.

Illinois’ EDGE program has given out over $1.3 billion in tax credits since 2001, in many cases to large corporations.

And Advisory Board is no exception.

In 2014, Forbes estimated Advisory Board’s enterprise value at $2.5 billion. Advisory Board has also had high-profile employees. In 2009, Jeffrey Zients, former CEO at Advisory Board, was appointed to serve as then-President Barack Obama’s chief performance officer; Zients would later go on to serve as acting director of the Office of Management and Budget and as director of the National Economic Council. And Obama tapped Aneesh Chopra, formerly the managing director at Advisory Board, to serve as the federal chief technology officer.

White-collar workers prosper while blue-collar jobs disappear

Advisory Board clearly has no problem attracting high-profile employees, especially in upper management, and it shouldn’t need a handout from the state to hire talent in Illinois. Illinois’ tax policies and high workers’ compensation costs don’t make the state a welcoming home base for any employers, but the EDGE program allows the state to lure major corporations to set up jobs, favoring one set of workers over another.

For years, Illinois has been hemorrhaging blue-collar manufacturing jobs, yet has been growing in white-collar, service sector jobs. In 2016, Illinois lost 35,000 union members, and from December 2015 to December 2016, Illinois lost 7,700 manufacturing jobs. But overall, service industry and leisure and hospitality jobs are on the rise in Illinois.

EDGE hasn’t helped the problem at all. The DCEO has claimed that through EDGE, the state has created 34,000 jobs; however, it has not significantly improved the overall jobs numbers of the state economy. It was only in February 2017 that the state surpassed its pre-recession jobs peak from September 2000. The state has also seen a steady decline of blue-collar jobs, losing 300,000 since 2000. However, service industry and white-collar jobs have since grown at a steady pace. DCEO’s deal with Advisory Board is further proof that the state government is playing favorites and supporting some companies over others. And there is little evidence that the money Illinois is pouring into EDGE is effective.

EDGE is set to expire in April, but lawmakers are looking for ways to keep the corporate handouts going. State Rep. Michael Zalewski, D-Riverside, and state Sen. Pamela Althoff, R-McHenry, have proposed separate plans to revamp and extend EDGE. Zalewski’s proposal would rebrand the EDGE program as the Business and Employment Development Tax Credit Act and unlike the current EDGE program, the new tax credit program would have no sunset provision, making it permanent. Zalewski’s plan is supported by the Illinois Chamber of Commerce.

Rather than continuing to dole out taxpayer money to handpicked companies, lawmakers should seek to enact the real reforms that will make companies want to invest in the state. Illinois residents already have one of the heaviest tax burdens in the country, and they shouldn’t be forced to pick up Advisory Board’s tax bill. Lawmakers should allow EDGE to expire, permanently.