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Governor takes new casinos off budget table
By Dave Beery and Joseph Ryan | Daily Herald Staff

Gov. Rod Blagojevich is renewing his push to lease out the Illinois Lottery to a private company.


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Published: 7/31/2008 2:32 PM | Updated: 7/31/2008 10:44 PM

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The unrelenting feud between Gov. Rod Blagojevich and House Speaker Michael J. Madigan overshadowed the governor's unveiling Thursday of a new, $25 billion plan to improve roads, transit and schools across the state -- without new gambling to fund it.

Blagojevich altered course Thursday by paring his capital plan down from $34 billion and by backing off his push to build new casinos in the Chicago area. Instead, he urged legislative leaders meeting with him in Chicago to pay for a scaled-down capital plan by leasing the state lottery and tapping into state tax revenue generated by rising gasoline prices.

But Madigan again was conspicuous by his absence from Thursday's session, which drew sharp criticism from Blagojevich. And Rep. Barbara Flynn Currie, representing Madigan at the meeting, dashed cold water on the governor's plan, questioning the wisdom of leasing a lottery that she said lawmakers originally sold to voters as a means to pay for education, not infrastructure. Blagojevich, in turn, disparaged Currie as a Madigan "minion" who lacks authority to negotiate during leadership meetings.

Currie also did little to dampen Blagojevich's assertion that the Speaker hopes to push for an income-tax increase after the November election. Currie said a "modest" tax rate hike, coupled with a constitutional amendment allowing the state to apply a higher tax rate to the highest earners, enjoys substantial support among House members. Madigan has said in recent weeks he will not push a tax increase this year, but he has not categorically ruled out such an effort in 2009.

Acknowledging the lack of political support for his original plan of authorizing three new casinos and thousands of slot positions at race tracks, Blagojevich renewed his push to lease out the Illinois Lottery to a private company for billions of dollars up front. Senate President Emil Jones, House Republican leader Tom Cross and Senate Republican leader Frank Watson all said after Thursday's meeting that they think their members will be receptive to the governor's revised plan.

Blagojevich, Senate Democrats and Republican leaders have framed their push for a large public works program as a means to create hundreds of thousands of jobs and stimulate the state's economy.

Former U.S. House Speaker Dennis Hastert, recruited by Blagojevich months ago to draft and sell a capital program, joined the governor in addressing reporters after Thursday's meeting. Hastert noted again that more than $9 billion in federal funds are available for state infrastructure projects once Illinois officials come up with a state match.

Watson told reporters he urged Blagojevich to sign an ethics bill sitting on his desk as a condition of support from the legislative leaders. Blagojevich said he's willing to link the two but also tried to turn the ethics question against Madigan.

"I think it's unethical to stand in the way of creating jobs and putting people back to work," he said. "It's unethical to raise taxes on people."

Cross also ripped the idea of higher taxes, calling it "absolutely the last thing that anybody in the state of Illinois should be talking about."

The governor did not say when lawmakers might vote on his new plan. Nor did he provide details on how he would fund it. The House defeated a lottery-lease proposal this spring. Legislators have adjourned their spring session and are not due back in Springfield until Nov. 11, a week after the general election. The governor holds the authority to call a special session to vote on this new plan, but he did not say he will do so. Calling such a session could be politically delicate because two more days in session would automatically trigger politically embarrassing pay raises for legislators before the Nov. 4 election.

Questions remain, too, about the availability of gasoline-related revenue and about legislators' acceptance of using gas tax and sales tax revenue generated by motor fuel sales. In years past, the governor's own budget staff suggested that rising gas prices did not create a sales-tax windfall because residents cut back on other purchases accordingly. And, some lawmakers have been reluctant to divert gasoline revenue from general-fund purposes.

"There are certainly issues with taking money out of our already depleted general revenue fund," Rep. Elaine Nekritz, a Northbrook Democrat, said Thursday.

But all officials acknowledged the need for a capital program.

"The people of the state of Illinois are the ones who lose if this doesn't get done," Hastert said.

Thursday's meeting took place at the same time that scores of social service providers across the state are reeling under massive budget cuts to substance abuse treatment and rehabilitation programs. Cuts have also hurt transit providers in Chicago, such as Pace and Metra, and forest preserve agencies.

Blagojevich cut about $1.5 billion from the state's budget after House Democrats failed to support revenue increases. The House did vote to restore some funding, but didn't identify where the money would come from. Jones has refused to return to Springfield to call such measures for a vote.

The governor's move away from new casinos on Thursday came a week after a Daily Herald three-part series that examined the casino industry in Illinois.

The report revealed how casinos are rolling out tighter slot machines to regain profits as fewer gamblers hit the old riverboats. The examination also highlighted how Illinois lags other Midwestern states in providing treatment to addicted gamblers even as it reaps billions of dollars from legalized gambling.

Following that report, several suburban lawmakers expressed concern about moving forward with casino expansion and a desire to increase funding for treatment and research.