Rivian Automotive gets $49.5 million in state tax credits for 1,000 jobs over 10 years
The car manufacturer is promising to bring more than 1,000 jobs to Normal, Ill., after being offered $49.5 million in state tax credits and more in local tax credits and abatements.
After being promised $49.5 million in state tax credits, Rivian Automotive is set to open a new plant in Normal, Ill. The Department of Commerce and Economic Opportunity claims the new plant will create more than 1,000 jobs over the next 10 years.
Rivian, a car manufacturer with facilities in Detroit and San Francisco, plans to begin producing a new line of electric vehicles at the currently unoccupied Mitsubishi Motors North America plant in Normal. Rivian paid $16 million for the plant and its contents. On top of the state tax credits, the city of Normal has offered Rivian two performance-based incentives: $1 million in local tax credits and a five-year property tax abatement.
After a tour of Rivian’s plant in Normal, Gov. Bruce Rauner spoke in favor of the deal. “This plant is an incredible asset, and now, thanks to the creativity and hard work of an American, innovative entrepreneur … we have an opportunity to create a better economic future for hundreds and hundreds of people here in Central Illinois,” Rauner said.
Unfortunately, this “better economic future” will come at the cost of both local and state taxpayers. Since its inception in 2001, the Economic Development for a Growing Economy, or EDGE, program has granted $1.3 billion in tax credits for companies, forcing the rest of the tax base to pick up the tab.
Despite this massive handout for politically connected companies, the profits have been incredibly thin; since 2001, a mere 34,000 jobs have been brought in under the EDGE program, while the state is down more than 40,000 jobs over roughly the same period.
And yet despite EDGE’s chronic failures, the program has bipartisan appeal. Although the state has still not produced a budget or enacted any of the needed reforms to address Illinois’ $130 billion pension debt, $12 billion bill backlog, crushing property taxes, or highest-in-the-region workers’ compensation costs, the Illinois General Assembly passed, and the governor signed, legislation to continue the EDGE program after it expired Dec. 31, 2016.
As the Senate continues negotiating the “grand bargain” budget deal that would include $7 billion in tax hikes, lawmakers should reconsider the Rivian deal and the EDGE program altogether. It is not effective or fair to be giving millions of dollars in state and local funds to any private company. Instead of offering tax credits to the politically connected, lawmakers should focus on passing a budget with no tax hikes. New polling commissioned by the Illinois Policy Institute shows a majority of respondents support a no-tax-hike budget and would prefer that lawmakers balance the budget through spending cuts alone. The General Assembly should heed the public consensus and a craft a new budget right away, and put EDGE on the chopping block.