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Recession-proof? Some in Springfield wonder

Posted January 18, 2008 10:00 pm

Tim Landis

 Conventional wisdom says state government makes Springfield recession-proof.

But not everybody is convinced, especially when there's political gridlock at the Statehouse and the state budget is in trouble.

Six years after her own retirement, Joyce Lanham Rodgers still sympathizes with the uncertainty facing state employees.

"It's really tough. They are really just there sitting on the fence," said Rodgers, who worked for state government for more than 18 years before joining a wave of workers who took early retirement in 2002.

The state of Illinois remains by far Springfield's biggest employer. The 17,400 state employees at the end of November compare to 3,769 workers at the next largest employer, Memorial Health System.

And Springfield does generally fare better in difficult economic times.

Unemployment rates typically remain below the state and national averages, and home sales are not prone to the dramatic swings of larger markets.

University of Illinois economist J. Fred Giertz said Friday he stands by an October analysis that Illinois is less likely to fall into recession than the country as a whole, because the real-estate downturn is not as severe here as in other areas of the country. Illinois also continued to add jobs last year, primarily in the services, travel and health-care industries.

But Giertz said even a mild slowdown would hit hard at a state budget already in worse shape than at the start of the 2001 recession.

"(In) 2001, we went into recession when we had $1.5 billion in the coffers. (Now) we're basically already running on empty. We're running below empty," he said.

Springfield's loss of 4,400 state jobs in the past decade - primarily the result of early retirement incentives in 2002 - helped inspire a five-year, $5.2 million campaign to make the city less reliant on state government.

"We recognize that, even though the state is a declining industry, it is still a real influence. But it's also reminded us to focus on competitiveness, so that we can better weather economic slowdowns," said Brad Warren, executive vice president of the Greater Springfield Chamber of Commerce.

The Quantum Growth Partnership of the chamber is scheduled to report Wednesday on the first year of its Q5 campaign, which aims to create or retain 4,500 jobs in Sangamon County between 2007 and 2012.

Still, national economic news on housing and mortgage problems has an effect, said Phil Chiles, president of the Capital Area Association of Realtors.

"On a regular basis, I'll have people say to me, 'The market is so bad. I was thinking about buying, but I guess I shouldn't. I have to ask them what they base that on," said Chiles.

Local Realtors this week kicked off a "Buy Now" campaign intended to remind potential buyers that mortgage rates are a relative bargain and that loans are readily available to people with good credit.

About 650 local agents have been asked to wear "Buy Now" buttons, and the association also plans a marketing campaign.

Chiles said local home sales probably will rank 2007 among the third or fourth best years on record when final sales numbers are compiled. The area's surplus of homes, which had been as high as 2,000 in August, had dropped to 1,800 at the end of November, he said.

Average time on the market was down to 67 days in November compared to about 80 early in the year.

"It's a message that we want to get across," he said, adding that state employees will be among the key targets of the campaign.

"I think people get a little bit worried when the legislature and governor can't agree on anything, especially people who work for the state," he said.

Springfield financial adviser Brad Lakner has a foot in both the buyer and seller markets. He is looking to buy a new home and plans to put his existing home up for sale. Lakner said there are plenty of choices in homes and mortgages for those willing to shop a little.

"This is about the fourth home I've had, and it's still a good real-estate market," he said. "It's appears around here it's both a buyer's and a seller's market."

Tim Landis can be reached at (217) 788-1536.

An economic snapshot

November unemployment:

Springfield area: 4.4 percent

Illinois: 5.2 percent

Nation: 4.8 percent

Existing home sales

Springfield area: Up 6.2 percent in November; 2007 year-to-date sales down 2.8 percent

Illinois: Down 20.4 percent in November; 2007 year-to-date sales down 16.3 percent

Nation: Up 0.4 percent in November; 2007 year-to-date down 20 percent

Median home sale price, November 2007 compared to November 2006

Springfield: $94,900, down 4 percent

Illinois: $193,000, down 3 percent

Nation: $210,200, down 3.3 percent

Average annual state government employment in Springfield, 1997-2007

1997: 21,800

1998: 21,700

1999: 20,800

2000: 19,700

2001: 20,000

2002: 20,000

2003: 17,300

2004: 17,200

2005: 17,200

2006: 17,200

2007: 17,400 (preliminary through November)

Sources: Capital Area Association of Realtors, Illinois Association of Realtors, Illinois Department of Employment Security

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