All About the Water


The governors of the Great Lakes states recently approved a request by a Wisconsin city to draw water from Lake Michigan after its existing water supply dried up. But because the city isn’t in the watershed of the Great Lakes, the two Canadian provinces that share Great Lakes water rights say the request should be denied.

Waukesha, Wisconsin will be allowed to tap Lake Michigan for up to 8.2 million gallons per day once it completes a $207 million pipeline project that would draw in lake water and return fully-treated wastewater.

Delegates for the governors of Michigan, Minnesota, Wisconsin, Illinois, Indiana, Ohio, Pennsylvania and New York gave their unanimous consent to the first formal request to divert water outside the Great Lakes basin during a meeting of the compact council.

The 2008 compact prohibits water from being sent outside the basin watershed. Communities like Waukesha, located over the line but within a straddling county, can apply under a limited exception.

The eight governors approved the request over the objection of widespread opposition. Mayors, legislators, policy-makers and citizens around the Great Lakes have worried about the precedent Waukesha’s application represented.

Waukesha is under a court-ordered deadline to provide safe drinking water by mid-2018. The city draws most of its water from a deep aquifer that is contaminated with unsafe levels of radium, a naturally occurring carcinogen. The city has a population of about 70,000 people.

Kiplinger warns that more water conflicts will flare up, citing California, India, South Africa and the Middle East among the likely areas of dispute.

Making the Most of the Middle

Business direction background with two people

The Indiana Chamber Foundation conducted research on Indiana middle-market firms nearly a decade ago and initiated programming efforts (that continue today) to help grow those companies.

Now, American Express and Dun & Bradstreet offer the Middle Market Power Index.

The latest report rates Indiana fourth for growth in the number of middle market firms – defined as between $10 million and $1 billion in annual revenues) from 2011 to 2016. The current 3,916 firms in this category constitute an increase of more than 101% from five years earlier.

While small businesses (less than $10 million in revenues in this case) comprise more than 98% of all businesses, Indiana is one of 10 states – in a somewhat Midwest-dominated category – in which middle market firms comprise a greater than average share of companies. The numbers: Illinois and Wisconsin, 1.5% share; Michigan and New Jersey, 1.3%; Indiana, Kansas, Massachusetts, North Dakota, New York and Ohio, 1.2% each.

Maybe part of the explanation for the above is that middle market firms are much more likely to be found in manufacturing (18%) and wholesale trade (17%).

Just as the Chamber found previously, these firms makes an outstanding economic contribution. While comprising just less than 1% of all businesses, they employ more than one in four workers (27%) in the private sector and contribute 26% of revenues.

Common Construction Wage Repeal Now in the Mix at the Statehouse

statehouse picIt was a welcome surprise last week when the Indiana Chamber learned that the Common Construction Wage Bill (HB 1019) was going to receive a committee hearing. The Chamber testified it was in strong favor of repealing the CCW statute, noting this has been the organization’s position for many decades.

The Chamber told the committee that CCW prevents open and fair bidding competition for public construction projects. It establishes a government-sanctioned advantage for one set of contractors and workers over all others. It requires taxpayers to pay significantly above market wages, and therefore excessive taxes, on public construction projects. And it requires the setting of a government-mandated price to be paid for construction labor that is excessive and completely unnecessary; we don’t set minimum prices to be paid on other forms of labor, construction materials or equipment.

At the core of the issue for the Chamber: CCW costs taxpayers hundreds of millions of dollars in excess and unnecessary tax burdens. Chamber members – over 80% of which are small businesses – and the rest of the business community pay over half of the excess taxes caused by CCW. The remainder is paid by farmers and residential property owners, including elderly homeowners on fixed incomes.

In testimony, Chamber President Kevin Brinegar relayed the unfortunate situation that occurred nearly a decade ago when three massive public construction projects were going on in Indianapolis at the same time: Lucas Oil Stadium, the new Indianapolis Airport and the expansion of the Indiana Convention Center.

The wage committees on those projects chose union scale. And they further chose union-only project labor agreements which effectively excluded the non-union contractors from participating. At the height of the construction of those projects, there was not enough union labor to work on all three simultaneously. And rather than go to skilled, trained Hoosiers who didn’t happen to hold a union card to fill those needs, they went to union halls in Ohio, Kentucky and Illinois. That meant literally thousands of out-of-state workers – approximately 4,000 – came to work on our projects funded by our tax dollars instead of using qualified Indiana workers. The wages paid to those individuals went back to Ohio, Illinois and Kentucky to be used in their economies, not in ours. The Chamber views this as unfair and inappropriate.

Brinegar also told the group he served on approximately 40 wage-setting committees during his 12 years on the Noblesville School Board. In a property tax-capped environment, cash-strapped local units of government, like schools, cannot afford to pay inflated costs for their construction projects.

The Chamber closed its argument by calling CCW an unnecessary and wasteful interference by government into the free enterprise system and a relic of the 1930s – a costly one that is far past time to be repealed.

Many others testified in favor of the repeal. The Anderson Economic Group said it had conducted a study in Illinois and Michigan on how much CCW added to overall costs. The Fort Wayne City Council president testified to the many projects that will be coming to Fort Wayne that could save millions of dollars if CCW is repealed. He further testified that the CCW committee process is predetermined. The former mayor of Terre Haute added that cities have been beaten up over the property tax caps; repeal of CCW would alleviate some of that problem. The Associated Builders and Contractors stated that government should not be in the business of mandating wages.

House Bill 1019 is expected to receive a final floor debate on Monday. Organized labor is mounting stiff opposition to the measure in an effort, much like in the fight over right-to-work, to protect a special, government-created privilege at the expense of taxpayers and the free market. The Chamber will be diligently working with like-minded organizations to secure passage of HB 1019.

Call to Action: Please send a brief message to your state representative in support of HB 1019 and repealing the common construction wage law. It’s quick and easy via our grassroots program!

A ‘Goliath’ Example of an Exciting Engineering Career

Think engineering jobs are mundane? Think again!

Check out this Chicago Tribune story about Goliath, the new roller coaster at Six Flags Great America in Gurnee, Ill., set to open this Saturday. It will set three records for wooden roller coasters, and it will be the steepest and fastest wooden coaster in the world.

The road to construction of this roller coaster involved engineering innovation. The article details the work of the engineers, bringing this structure to life.

Illinois Woes Continue to be Indiana’s Gain

Indiana has had more than a little success in attracting businesses to head immeditely east — from Illinois to the Hoosier state. A Rockport Register Star political reporter says the numbers show just how bad the situation is in his home state.

The Land of Lincoln is a tough place to do business to be sure.

For example, Office Depot has been capturing plenty of headlines. The company recently merged with OfficeMax, and its executives were pondering whether to use OfficeMax’s Naperville headquarters or Office Depot’s Boca Raton, Fla., site.

The Sunshine State won out. It’s not hard to figure out why.

Just consider:

  • Illinois has a corporate tax rate of 9.5 percent (7 percent income, 2.5 percent personal property replacement tax) while Florida has a 5.5 percent corporate tax rate.
  • Illinois has a personal tax rate of 5 percent while Florida has none.
  • For every $100 worth of payroll, Illinois employers pay an average of $2.81 for workers’ compensation insurance, compared to $1.84 in Florida.
  • Illinois’ minimum wage is $8.25 per hour, compared to $7.79 in Florida.

You see, it’s not just Florida that Illinois has trouble competing against. It’s just about every state that has a leg up on the Land of Lincoln.

Just consider:

  • A study conducted by the state of Oregon found that Illinois has the fourth-highest workers’ compensation rates in the nation.
  • Illinois also has the fourth-highest minimum wage in the nation.
  • Illinois’ corporate tax rates rank, you guessed it, the fourth-highest in the nation.
  • Given these numbers, it’s little wonder that Illinois has the 11th-lowest rate of entrepreneurship in the U.S., according to the Kauffman Entrepreneurial Index.

And small businesses are the major job generators in the economy.

According to the U.S. Small Business Administration, small firms employ just more than half of the private sector workforce and created nearly two-thirds of nation’s net new jobs over the past 15 years. Please keep in mind, every big company started out small.


Double the Taxing ‘Pleasure’ on April 17

There’s something ironic (not pleasant, but ironic) about Tax Freedom Day this year occuring on April 17 — the same day taxes are due. The day, according to the Tax Foundation, is when people finally work long enough to pay their taxes for the year.

The latest Tax Freedom Day took place on May 1, 2000. With the economy booming that year, Americans paid 33% of their total income in taxes. A century earlier was more pleasant with "freedom" arriving on January 22, 1900.

State tax burdens vary the tax timeframe. Indiana residents will "celebrate" on April 14, which ranks 26th nationally. As for the best of 2012:

  • Tennessee, March 31
  • Louisiana and Mississippi, April 1 (no foolin’)
  • South Carolina, April 3
  • South Dakota, April 4

And the worst:

  • Connecticut, May 5
  • New Jersey and New York, May 1
  • Washington, April 24
  • Wyoming and Illinois, April 23

Biggest UI Hole: It’s California By a Wide Margin

Indiana is unfortunately all too familiar with outstanding loans from the Federal Unemployment Account (that means borrowing money from the feds to provide unemployment benefits for state workers who have lost their jobs). At least Indiana’s balance of slightly over $2 billion owed pales to, guess who, California.

According to U.S. Department of Labor numbers at the end of February, California owed $10.2 billion of the $38.55 billion total that 28 states had borrowed from Uncle Sam. New York is second on the list with a $3.7 billion balance, followed by Pennsylvania, North Carolina, Illinois and Ohio.

California’s UI Trust Fund did not become insolvent until 2009, so the debt has been piling up quickly. Businesses suffer, however, as outstanding loan balances mean they lose credits and pay higher federal unemployment taxes until the situation is resolved.

Indiana Chamber efforts in 2011 helped move Hoosier businesses into a lower rate schedule to offset some of the increased federal payments. The move is expected to save employers a combined $2 billion through 2020.

Who else has outstanding federal balances? Florida, New Jersey and Wisconsin owe between $1 million and $2 million. Those with less than a $1 million balance (biggest balance first) are Kentucky, Nevada, South Carolina, Missouri, Georgia, Connecticut, Arizona, Colorado, Arkansas, Virginia, Rhode Island, Minnesota, Michigan, Kansas, Vermont, Alabama, Delaware and the Virgin Islands.

Business to Customers: “We Messed Up, Please Help!” (And It Worked)

This is a very encouraging article from about an Illinois pizza place, some mistakes, and some very devoted customers.

In general, begging is a tactic that PR folks tend to frown upon.

But when Nick Sarillo, CEO of Nick’s Pizza & Pub, sent an email pleading for customers to help keep the doors open at his two Chicagoland restaurants, customers didn’t just respond. They rallied.

"We doubled our sales in each restaurant for the first week and stayed at a 75 percent increase for a couple of weeks," Sarillo told Crain’s Chicago Business.

So what gives? If begging, or at least pleading, isn’t a worthwhile PR tactic—Sarillo’s publicity staff and his bank tried to talk him out of sending the email—why did this work? Gerald Baron, a blogger and principal at Agincourt Strategies, says it comes down to one word: authenticity.

"It was real," he says. "It was not a ‘strategy’ as we tend to understand it."

A genuine plea

Last fall, Nick’s was in deep trouble. In Sarillo’s email, he says, "we overbuilt and overspent," and he blames himself for "the bad decisions that got us into this mess." He gives percentages for sales drops at his Elgin, Ill., restaurant and states, "We are going to run out of cash to pay our vendors and team members over the next couple of weeks and will have to close."

Tripp Frohlichstein of MediaMasters Training says Sarillo’s direct, honest approach was "classy and smart."

"As a media trainer, it is amazing to see so many clients who realize that being honest about a situation is easier than evasion or deception," he says. "The realization that you can’t always please everyone is very important in sticking to this approach."

Drew Mendelson of Mendelson Communications says being straight with customers is vital to having a profitable business, but he notes that Sarillo’s approach won’t work for everyone.

"What Sarillo did probably works better for a privately held business that doesn’t have to answer to stockholders who might panic at the news and drive stock prices down," he says. "It also would probably have worked better if he made his announcement earlier, before things got so dire."

Mendelson says a message like Sarillo’s has to come from a CEO or, if the CEO isn’t the most personable executive, someone else in upper management. "The message has to be personal," he says.

Likewise, Mendelson says he doesn’t view Sarillo’s approach as begging.

"Sarillo wasn’t asking for charity. He was being honest. His business was beset by today’s mediocre economy and by the unforeseen problems of road construction."

Education Reaction: They Really Do These Things

We’ve noted here before some strong reporting on K-12 follies by the Education Action Group. A recent newsletter from the group was different, sadly, by the volume of news and developments across the country that reinforce the concept that far too many people still put the adults ahead of the students.

Consider the following:

  • A student in Danville, Illinois who made online comments about contract negotiations between the school district and teachers union was reportedly harassed by a teacher
  • In Franklin, New Jersey teachers seeking a larger pay raise picketed outside of the home of the school board president. The volunteer leader was not home, but his daughter was there to witness some of her own teachers "attacking" her father.
  • National Education Association membership is declining as several states have freed teachers from compulsory union membership. While union leaders have verbally (and beyond) assaulted state and local officials for cutting aid and seeking union concessions during difficult economic times, the NEA is now cutting employees and asking its affiliates to do with less.
  • Meaningful education reforms in Washington state were stopped in their tracks by Democratic lawmakers. The reaction from one major Democrat fundraiser:  “It is impossible to escape the painful reality that we Democrats are now on the wrong side of every important education-reform issue. Today, the (teachers union) is literally strangling our public schools to death with an almost infinite number of institutionalized rules that limit change, innovation and excellence." Seattle Times columnist Lynne Varner adds, “People are starting to see the light about the Democrats’ intransigence.” Refusing to stand up to the special interest teacher unions could be “a matter of political life or death” for the Dems, she adds.  

Who is “LEEDing” the Way?

Put "green" and "government" in the same sentence and the story is usually about funding fights in our nation’s capital. In this case, Washington, D.C. has been recognized as having the most LEED-certified green buildings per capita. More than 100 are used by the federal government. Colorado is the top state. Governing reports: 

The District of Columbia and Colorado have the most LEED-certified commercial and institutional green buildings per capita in the United States, according to a report released Thursday by the U.S. Green Building Council (USGBC).

D.C. easily led the nation with 31.5-square-feet of LEED-certified space per capita as of 2011, according to the report. The council highlighted the renovation of the U.S. Treasury Building, which became the oldest LEED-certified building in the country, as an example of the city’s work toward becoming a more sustainable community. More than 100 D.C. buildings used by the federal government are LEED-certified, according to a complete list of LEED projects in the United States provided by the USGBC, along with dozens of local government, private and non-profit buildings.

The city’s green-building efforts began in 2006, when the city council passed a bill requiring that all publicly-owned commercial projects be LEED-certified, according to a USGBC database of policies in all 50 states. D.C. also initiated an incentive program in 2009 for private and residential buildings to pursue LEED certification.

"This is a great accomplishment for the D.C. metropolitan region and a testament to the drive, commitment and leadership of all those who live, work and play in our community," Mike Babcock, board chair of the National Capital Region Chapter of USGBC, said in a statement. "We also realize there is still more to do and hope to effectively guide the effort by engaging, educating and encouraging the dialogue around the value of sustainability."

Colorado ranked as the top state with 2.74 square-feet of LEED space per resident. Former Gov. Bill Owens issued an executive order in 2005 requiring that all state buildings be LEED-certified, according to the USGBC. Former Gov. Bill Ritter signed legislation in 2007 that required any project receiving 25 percent or more of its funding from the state to be designed and built to high-performance green-building standards, such as LEED. Numerous municipalities, including Denver, have adopted their own green-building statutes.

Illinois (2.69 sq. ft. per capita), Virginia (2.42), Washington (2.18) and Maryland (2.07) rounded out the top five. Delaware (0.03), West Virginia (0.14) and Mississippi (0.21) sat at the bottom.

"Our local green building chapters from around the country have been instrumental in accelerating the adoption of green building policies and initiatives that drive construction locally," Rick Fedrizzi, president and CEO of the USGBC, said in a statement. "These states should be recognized for working to reinvent their local building landscapes with buildings that enliven and bolster the health of our environment, communities and local economies."