Caterpillar CEO: Illinois budget hurts business

By Charles Riley, staff reporter


NEW YORK (CNNMoney) -- Illinois recently passed a budget that ticked off a lot of business people because it raised taxes on companies and individuals.

You might count Caterpillar CEO Douglas Oberhelman as among the aggrieved.

In a letter to Gov. Pat Quinn, Oberhelman says he wants to talk about how to move the state toward real fiscal reform.

He's also kinda threatening to leave for greener pastures.

"I want to stay here," Oberhelman wrote. "But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest."

Oberhelman wrote that he has received letters from governors all over the country that would welcome Caterpillar with open arms. Their arguments are "compelling," he said.

"I have been called, 'cornered' in meetings and 'wined and dined' -- the heat is on," Oberhelman said.

Presumably, Oberhelman's chief complaint is the tax hikes enacted by Illinois lawmakers in January.

Faced with a daunting $13 billion budget deficit, state legislators opted to raise personal and corporate income taxes. Companies now have to pay a 7% corporate tax rate for the next four years, up from the previous 4.8%. And Illinois businesses are already subject to a 2.5% surcharge.

Along with the corporate tax hike, lawmakers raised the personal income tax rate to 5%, up from 3%.

"The governor welcomes frank and open exchanges between the business community and government, and we are always open to new ideas that can help our businesses grow, innovate and create jobs," Quinn's office said in a statement.

Caterpillar (CAT, Fortune 500) is headquartered in Peoria, and employs 23,000 people in Illinois.

Illinois is not alone in its budget problems. States are facing a collective budget gap in the neighborhood of $40 billion.

But the Illinois budget crisis, which has been decades in the making, is arguably among the worst in the nation. The state's income tax rates had not risen since 1989.

The budget shortfall included $6 billion in unpaid bills to social service agencies, schools, contractors and others. In addition, the state's pension plan is severely underfunded. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,912.11 -70.48 -0.42%
Nasdaq 4,442.70 -2.21 -0.05%
S&P 500 1,969.95 -8.96 -0.45%
Treasuries 2.46 -0.03 -1.16%
Data as of 6:53pm ET
Company Price Change % Change
Frontier Communicati... 6.79 0.85 14.31%
Windstream Holdings ... 11.83 1.30 12.35%
AT&T Inc 36.59 0.94 2.64%
CenturyLink Inc 39.90 2.19 5.81%
Bank of America Corp... 15.34 -0.16 -1.03%
Data as of 4:03pm ET

Sections

Amgen is the latest to continue corporate America's cost cutting strategy, even as the economy is supposedly on the mend More

Amgen is the latest to continue corporate America's cost cutting strategy, even as the economy is supposedly on the mend More

Bunch o Balloons allows multiple water balloons to be filled at once. Parents are loving it -- to the tune of $645,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.