It’s a mixed bag when it comes to the cost to do business in Illinois, but one thing does stick out -- the higher cost of labor in the Land of Lincoln. That’s according to a report from Moody’s commissioned by the Illinois Commission on Government Forecasting and Accountability.

COGFA Executive Director Dan Long said the report, which is an independent forecast for the state, indicates several risks for Illinois, including the continued budget problems.

Long said one risk is people continuing to move out of the state and how that can impact several sectors from state and local governments to the consumer laden industries.


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“Obviously if your population is not growing you’re going to impact spending which can impact the amount of money we can get from sales tax revenue,” Long said.

The Moody’s report says the uncertainty stemming from the ongoing financial crisis threatens to discourage firms from locating or remaining in the state.

Long said it may take longer to rebound both population and job growth because of the state’s shaky finances.

“Any kind of uncertainty which is brought about by state finances, because we have a huge backlog of unpaid bills approaching $9 billion and companies realize that the way that will get paid off is perhaps you raise taxes,” Long said.

Long said that uncertainty is impacting Illinois’ unemployment rate which is increasing while the national average is decreasing.

The Moody’s report says businesses in industries such as manufacturing and transportation could be weary of coming to Illinois and have their taxes increased to help pay off Illinois’ growing deficit.

Meanwhile the Moody’s report says providing special tax incentives may not be the fix as “[t]here is a recurring pattern of such behavior in Illinois, and it is not clear whether business incentives will generate enough money to pay back these costs.”

The report suggests Illinois “focus on more broad-based income tax reforms, and provide firms more certainty as to what their future tax burdens might be.”

The report also says while the state has lower business costs than Wisconsin and Michigan, it’s higher than those in neighboring Missouri and Indiana. However, “labor is on the expensive side,” Moody’s says.

(Copyright WBGZ Radio / )