By Richard Wronski, Chicago Tribune reporter
March 5, 2013
The Illinois Tollway this year will go full speed on a $12 billion construction program, touting it as a jobs generator that will put an estimated 120,000 people to work over 15 years.
But while additional billions in increased tolls already are adding up, the job numbers don't.
A close look at analyses cited by the Illinois State Toll Highway Authority only accounts for about 82,500 jobs, and even that relies on "wildly optimistic and unfounded" assumptions, one independent expert said.
Since the 2008 recession, political leaders have launched campaigns they say will spur the economy and generate jobs. That's been a theme of Gov. Pat Quinn, who appoints the toll authority board and its leadership. The tollway says the $12 billion Move Illinois capital program is meant to "create jobs, stimulate local economies and provide the congestion relief customers want and need."
Tollway officials tout a potential $21 billion economic boon. But that's about the same amount as the tolls that will be paid.
Several economists who reviewed the program not only question the validity of the job calculations — they also challenge the notion that there's even going to be a net economic benefit.
For them, Move Illinois is a "zero-sum" exercise. That is because the program takes money from the pockets of toll payers and puts it in others' pockets — specifically, of those who would benefit from highway construction and related development.
"When people estimate a fabulously large economic benefit, most of the time it's completely false," said Matthew Rousu, an economics professor at Susquehanna University in Pennsylvania. "You're merely shifting money from one part of a region to another."
Tollway officials said several formulas and models were used for its job creation estimates, and that there was no single source for the 120,000 jobs number.
But a Tribune examination of hundreds of pages of documents and reports cited by the toll authority showed it coming up 37,500 jobs short.
The toll authority says that's because the capital program includes other reconstruction and work needed to maintain the rest of the 286-mile system.
The agency is trying to be conservative in its estimates, Executive Director Kristi Lafleur said. The tollway said a formula from the president's Council of Economic Advisers predicts the Move Illinois program will produce as many as 130,000 jobs.
"We tried … to be reasonable in our expectations and honest with the public," Lafleur said. "These are useful tools but there's no assurance. We will be tracking (the projects) to see the ultimate impact on the economy."
She added, "Time will tell whether that (120,000-job) projection proves to be the case, but when you spend 12-plus billions of dollars ... there is clearly a positive economic impact and job creation is part of that."
A major toll hike
Move Illinois is the toll authority's biggest-ever construction program. The agency's last major capital initiative, called the Congestion-Relief Program, started in 2005 under then-Gov. Rod Blagojevich and cost $5.8 billion. Much of the existing system was rebuilt and open-road tolling was implemented. The Veterans Memorial Tollway (I-355) southern extension was also built. That program is about 86 percent complete, according to the toll authority.
Move Illinois is financed by the 87.5 percent toll increase on passenger vehicles that went into effect Jan. 1, 2012. The tolls for trucks are scheduled to increase by 60 percent from 2015 to 2017, and they will be tied to the consumer price index after that.
Because most of the toll revenue that funds Move Illinois is generated locally, the program is essentially just shifting money around, economists say.
"If you spend money on the tollways, where is that money coming from? It's not as if this is brand-new money," said Robert Baade, an economics professor at Lake Forest College. "If people have to spend more money on tolls, then they have less to spend on other things. It comes at the expense of other economic activity."
Rousu agreed that the net impact will be close to zero.
"You are taking a small amount of money from everybody who drives (on tollways) — maybe $10 a week," Rousu said. "That's $500 less per year that individual has to spend. So they don't go out to eat as often, don't buy extra tickets to a play or don't send their kids to ballet lessons."
Critics caution that economic impact studies can be easily inflated to suit the needs of the people who sponsor and pay for them, and to make politicians look good.
"People who are pushing projects want a big number," said Robert Chirinko, a professor of finance at the University of Illinois at Chicago, who contends the toll authority's jobs numbers are inflated. "When you hear these job figures, you have to wonder."
To pay for Move Illinois, the toll authority anticipates taking in about $20.8 billion in toll revenue from 2012 to 2026.
About 74 percent of that money will pay for construction or debt service on new and existing bonds issued to fund that construction, the agency said.
One of the key components of Move Illinois is the Elgin-O'Hare Western Access project. Plans call for widening and lengthening the existing Elgin-O'Hare Expressway and building a new toll road along O'Hare's western border from the Jane Addams Memorial Tollway (Interstate 90) to the Tri-State (I-294).
On July 14, 2011, Quinn announced a report from an advisory council, which he appointed, that recommended the new project.
The report concluded that the Elgin-O'Hare project would produce "significant job creation," accounting for 65,000 permanent jobs by 2040.
The report said 13,450 jobs will be created annually during construction.
"This project along with the new western terminal at O'Hare will provide Illinois with the greatest potential for economic growth than any other planned project in the state," the report said.
The toll authority now puts the cost of that project at $3 billion, although previous estimates have ranged higher.
Officials say the project will someday provide access to the proposed western terminal at O'Hare, but there are no plans to build such a facility at this time.
'Jobs, jobs, jobs'
The report's job conclusions are based largely on assumptions that the Elgin-O'Hare will spur commercial, industrial and hotel development in 30 suburbs, and in Cook and DuPage counties in general.
The report contends that 70 percent of the "new jobs" would be in communities west of O'Hare, chiefly suburbs "with direct frontage and access to the improvements."
Consultants who wrote the report calculated the job numbers based on a review of current land use and development potential for thousands of parcels in the area, officials said.
The report predicts that Itasca would be the biggest job beneficiary.
Located at the heart of the Elgin-O'Hare project, Itasca would gain 9,100 jobs from new commercial development and hotels, the report concludes.
But the report also says jobs will be created in communities that won't get any direct economic development benefit from the Elgin-O'Hare.
The document lists 11 suburbs that it says have no "net new development potential" from the project. Two of those suburbs are Hoffman Estates and Villa Park.
Yet the report contends that those 11 alone will gain 1,350 jobs from the project.
Four other suburbs, including Elmhurst, might have "limited" new development potential, stemming from some commercial impact.
Still, the report estimates that these communities will gain 2,900 jobs from the Elgin-O'Hare.
Officials at Chicago-based SB Friedman, which provided employment and economic research for the report, said other factors were used to calculate the job numbers when there was no predicted real estate development.
The communities might gain jobs from other sources such as the service or government sectors, or from a hospital, for example, said Ranadip Bose, a senior project manager for Friedman.
He acknowledged it's difficult to make the projections. "No one can be perfect. What we tried to do is be as realistic as possible," Bose said.
In addition to the Elgin-O'Hare project, toll authority officials say the rebuilding and widening of the Jane Addams (I-90) will be another significant jobs generator.
The three-year project, estimated to cost nearly $2.4 billion, will create "or sustain" as many as 11,500 jobs, according to the toll authority.
Another major tollway project is the construction of a new interchange at the Tri-State and I-57.
The $604 million project will support as many as 4,000 jobs during construction and create or sustain as many as 2,000 permanent jobs, the agency says.
The toll authority's consultants, al Chalabi Group Ltd. of Chicago and CDM Smith, provided the job estimates.
Another critic of the Move Illinois program is a former toll authority board member, Bill Morris, ex-mayor of Waukegan and onetime state legislator.
The outspoken Morris, a finance expert, had been appointed by Quinn but was bounced after criticizing last year's toll increase as excessive.
"The new excuse to spend taxpayer or ratepayer money is simply to say 'jobs, jobs, jobs,' but it would be interesting to test the numbers, both the projections and the actual numbers," Morris said.
"Public works projects should be done because of public need, not as a job creation program."
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