Tuesday, March 15, 2011

Senate to consider new funding for construction plan

By Jamey Dunn and Lauren N. Johnson

The Illinois Senate will likely consider a cigarette tax increase this week as part of a new version of the capital construction plan, while the House looks at doling out the money it estimates the state will bring in next fiscal year.

Senate President John Cullerton told reporters today that he plans to push for a $1-a-pack cigarette tax increase to help pay for construction projects because the state’s capital plan is tied up in a lawsuit. Cullerton said the increase would be used to replace the most controversial funding source of the plan: the legalization of video gaming in bars and restaurants across the state, which has yet to be implemented.

“We’re not going to deal with video gaming. We’re going to let the courts deal with that issue. We’re going to reenact the other taxes except for video gaming. We’ll let the courts decide on whether or not they want to keep that or not,” Cullerton said.

Rocky Wirtz, owner of the Chicago Blackhawks hockey team, as well as Wirtz Beverage, a liquor distribution company, sued the state, calling the capital bill unconstitutional because it contained provisions on multiple topics. The Illinois Constitution requires lawmakers to stick to one subject for each piece of legislation, so they cannot force votes onto an unpopular measure by attaching it to a popular one. An appellate court sided with Wirtz, and the Illinois Supreme Court is now considering the case.

Wirtz's suit also claimed that the original measure unfairly raised taxes on wine and spirits much more than the increase on beer. Cullerton said he plans to make the increase for all types of alcohol equal in the new legislation. He said all the other original funding mechanisms, including sales tax increases on some candy and hygiene products and fee increases, would be included in the reworked plan.

When asked whether he thought it would be difficult to pass a cigarette tax increase so soon after an income tax increase, Cullerton said lawmakers must do something or the bonds already sold to fund projects would be “in jeopardy.” He said the new revenue proposal would bring in about $300 million.

“There’s a challenge to the capital bill in the Supreme Court. If they overturn it, we won't have any funding for the bonds that we’ve sold or the bonds we want to sell, so we are responding to the concerns raised by the lawsuit,” Cullerton said.

When asked if he thought the new plan could get enough votes in the House, Cullerton said it would need bipartisan support. “I don’t have an agreement [with the House leaders], but I have hopes that we will have enough votes in the House.” He said he plans to call a cigarette-tax-hike bill for a committee vote this week.

Since it became clear that video gaming would be highly controversial and difficult to implement, lawmakers have been quietly searching for a way to replace it as a revenue source for the capital plan. The cigarette tax has lacked the needed backing to make it through the House, and so have large gaming expansion bills, which have been pitched as another option. However, the chance to replace video poker, or at least a reason to put pressure on lawmakers to consider other options, may be a blessing in disguise for those who would like to see the plan backed by a different funding source.

Meanwhile, a House committee plans this week to take up the task of distributing funds for next fiscal year’s budget to different areas of state government. The House settled on a revenue estimate last week, and now those expected funds will be split up among appropriations committees, such as elementary and secondary education, higher education, human services and public safety, so they can start planning the House’s budget proposal.

Rep. John Bradley, a Marion Democrat and chairman of the House committee dealing with House Resolution 156, the measure that will be used to distribute the money, said he is in talks with legislators on the funding each area. The controversy that is bound to arise around doling out the money, however, may be heightened because some describe the House’s general revenue estimate of $33.2 billion as “conservative” and claim that the low number is the product of a politically driven desire to cut the budget.

“I think that they’re being conservative. The expectation is that revenues would be somewhat higher,” said Fred Giertz, an economics professor with the University of Illinois who testified before the committee earlier this month. He said that a $34.8 billion estimate from the legislature’s Committee On Government Forecasting and Accountability is probably the most realistic projection of revenues for the next fiscal year.

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