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Pritzker pushing tax incentive package for electric vehicle industry – Crain’s Chicago Business

Gov. J.B. Pritkzer is making a huge bet on the electric-vehicle manufacturing industry, unveiling an incentive package worth hundreds of millions of dollars that may be the largest in state history.

Included are a wide range of tax breaks, from payroll credits and exemption from utility and some sales taxes to assistance with job training and favored treatment in obtaining government permits and road construction funds.

Pritzker wants the much-anticipated package approved in the General Assembly’s two-week fall veto session, which opens next Tuesday, Oct. 19.

The package is aimed at keeping Ford’s Chicago assembly plant and Stellantis’ similar Belvidere facility in operation and poised to win as the American auto industry races to convert from gasoline-powered to electric vehicles.

It’s also intended to lure new companies to the state, big and small, but especially Samsung, which is weighing bids from Illinois and Ohio to build an enormous battery factory that officials here want to go across the road from electric truck producer Rivian and which reportedly could employ as many as 7,500 workers.

The Pritzker camp has been signaling much of the summer that a big proposal was on the way, one that they believe builds on the recently approved green-energy package. It certainly is big—especially for a state government entirely run by left-leaning Democrats.

“Time is of the essence. We know companies now are making decisions that will have implications for decades,” Andy Manar, deputy governor for economic development, told me in a phone interview.  “We have to make our best efforts to show them that Illinois is the best place for their business.”

The proposal, to be introduced in bill form in the next few days, is the product of months of discussions with industry leaders and, more recently, legislative leaders including state House Speaker Emanuel “Chris” Welch and state Senate President Don Harmon. The latter haven’t yet committed, but, “They understand the timing” after Ford Motors last announced billions of dollars in electric-vehicle facilities in Tennessee and Kentucky, facilities which received hundreds of millions of dollars in incentives from each state, Manar said.

Illinois Manufacturers’ Association President Mark Denzler termed the package “a very good step forward.”  Some further discussions are necessary, he added, but the plan if approved will help Illinois compete for the type of facilities that have been going elsewhere. 

The centerpiece of Pritzker’s plan is a refundable state income tax credit of 75% or 100% of withholding from workers at electricity manufacturing and supply plants, for up to 15 years. The larger, 100% figure would apply to newly hired workers at a facility located in an “underserved area” of the state. 

Belvidere, the South Side Ford Plant and Normal all are located in underserved areas.

Companies also would get refundable credits of 25% or 50% of withholding from current workers if a minimum number of net new employees was added. For a large manufacturer, that would be at least 500 new jobs created over a 60-month period, paired with a capital investment of at least $1.5 billion.

Other incentives:

• Training costs would be eligible for an income-tax credit, 25% in some cases and 50% in underserved areas.

• A sales tax exemption would be granted to qualifying companies on their purchase of building materials.   They’d also be exempt from state utility taxes on electricity and natural gas.

• Half to 75% of taxes on wages of construction workers who build EV facilities would be waived.

• The state will establish a tax force to study ways to expedite permits, and promises to prioritize any needed road construction.

Asked directly if the incentives are enough for Illinois to compete, Manar replied, “That will be determined.”  He added, “We listened to the stakeholders.”

Credit recipients would have to report on diversity in hiring and on their board composition, and outline a plan to boost hiring of minorities.

One thing not in the package is relief from local property taxes. Sources say Chicago Mayor Lori Lightfoot objected to doing that at a time when she’s raising property taxes to pay for pension costs.

That possible break will have to be “the subject of broader discussion,” Manar said.

As is the case with the incentives for data farms that Pritzker pushed through the Legislature, the EV package would require contractors building electric-vehicle facilities to reach labor peace agreements with local unions.  But there is nothing in the package now that would apply to people who work in the plant after construction.

The manufacturers’ Denzler said he’d like to see both property-tax relief and something to lower utility bills in the package. The latter is particularly important to battery manufacturers such as Samsung that have high power demands in the manufacturing process.

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