How far should the state of Illinois go to attract investment within its borders? How much should it spend to create a single job? What guidelines should it impose for grants and loans? Should it be in the job-creation business at all?
Subsidies were awarded non-competitively without targeting specific industries. In some cases, subsidies were given to firms that did not need them.
Audit manager C. Edward Gilpatric of the auditor general’s office called it “the most consuming and demanding audit I’ve ever worked on. I’ve never done one on this level. It’s complex; they’ve got more than 100 programs.”
The auditor general’s staff was generally pleased with the tourism program, finding it “well managed in terms of research, planning, and execution.” Perhaps DCCA should also be lauded for its romantic way with the facts. Consider this ad, placed in a European magazine: Over a photograph of a pensive Ernest Hemingway, the legend reads, “This is dedicated to everybody who thinks Chicagoans can only write cheques.” Below is copy speculating that the mature writing of Hemingway–who grew up in Oak Park, and promptly left it–was inspired by the young Ernest’s visits to the Field Museum and its Hall of African Mammals. “Chicago. The American Renaissance” reads the tag line.
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The auditor general had the most trouble with DCCA’s capital subsidies. Take the case that comes up in any conversation about DCCA: that behemoth of subsidized industry, the Diamond-Star Motors Corporation, a joint venture of Mitsubishi Motors of Japan and Chrysler Motors. Located in Normal, Diamond-Star has cost Illinois taxpayers a bundle, the only question being just how big that bundle is. The summary accompanying the auditor general’s report says, “The estimated direct and related costs to the State included $64.2 million in training and labor, $132.3 million in transportation and infrastructure improvements, $15.8 million in financing, and $34.1 million in tax credits and abatements.” Also taking into account subsidies to be footed by local and federal agencies, the auditor general’s report estimates a public cost of $86,669 per job created.
None of these figures would appease the auditor general. “The guideline setting a maximum cost of $5,000 per direct job created was exceeded,” says the report. “Had the guidelines been followed, the upper limit of DCCA’s subsidies to DSM would have been less than $15 million.” Furthermore, “DCCA’s file for Diamond-Star Motors did not contain the standard application and review documents that normally accompany grants and loans. DCCA’s rules and administrative processes were bypassed. There was no assessment of need . . .
DCCA gave Caterpillar $3 million for job training in a year when Caterpillar gave $3 million to charity. “They gave Ford a training grant, $750,000 in 1988; Ford had $856 million in profits for the quarter, and annual profits over $3 billion that year. Why is the state supporting enormously profitable firms?” said Gilpatric.
