News

What if the construction deal collapses?

Posted August 29, 2009 11:00 pm

By John Patterson Daily Herald Staff

SPRINGFIELD - A nearly $31 billion, decade-in-the-making political deal to finance roads, bridges and school construction now faces a litany of challenges that threaten to derail the entire pact.

First DuPage County and a growing list of suburban communities said "no" to video gambling from which the state is counting on between $300 million and $400 million a year in prospective gamblers' losses to help pay off construction loans.

Now a lawsuit filed by a Chicago liquor giant seeks to block alcohol tax increases set to take effect on Tuesday, taxes state officials expect to generate more than $100 million annually also to pay off the construction spending.

"Of course that would concern me," said state Sen. Pamela Althoff, a McHenry Republican who supported the construction plan. "The program in and of itself - the capital projects - would remain stable. The problem again would be finding revenue streams. That would be difficult in this climate. It all boils down to: Where do we get the money?"

The construction deal was heralded by Republicans and Democrats alike as a symbol of progress in the post-Rod Blagojevich era of state government. Lawmakers - primarily House Speaker Michael Madigan - had balked at entrusting Blagojevich with billions of dollars in project spending, fearing he'd reward allies, punish enemies and enrich friends. With Blagojevich removed from office following an impeachment trial and conviction in January, lawmakers pieced together a new construction plan in May and new Gov. Pat Quinn signed it the following month.

But reassembling the deal, should it fall apart financially or legally, could prove difficult.

Althoff notes the final deal came about after several earlier ideas and funding sources were nixed. Among the possible moneymakers was a gasoline tax, but it lacked support.

But the video gambling in the plan has drawn significant criticism, especially as campaign season heats up. DuPage County Chairman Bob Schillerstom is making opposition to it the foundation of his bid to win the Republican nomination for governor. His county became the first earlier this month to ban video gambling in unincorporated areas, though cities and villages are free to make their own decisions. Elsewhere, Country Club Hills, Kildeer and Rosemont all banned video gambling. Gurnee, Lindenhurst and Schaumburg are among the local communities weighing bans. The video gambling law lets local communities or local voters enact bans on having the machines in local bars, restaurants and other facilities.

The fight over the funding now moves out of village halls and city councils to a Cook County courtroom.

A lawsuit filed last week seeks to block the entire funding mechanism based on alleged constitutional flaws. Rocky Wirtz, the owner of the Chicago Blackhawks and manager of liquor wholesaler and distributor Wirtz Beverage Illinois, sued state officials to block the Sept. 1 tax hikes.

Wirtz attacks all aspects of the deal, contending the gambling provisions violate state and federal law and there's no justification for the "vastly disproportionate increases in the tax on wine and spirits compared to beer."

The state tax on a six-pack of beer is increasing 2.6 cents, a 25 percent increase. But the tax on wine and whiskey increases 90 percent: 13 cents more on a bottle of wine and 80 cents more on a fifth of whiskey.

Wirtz also claims the myriad aspects of the deal violates the state constitution's requirement that all laws be confined to one subject area.

Quinn's spokesman declined to comment on the lawsuit and the governor has so far urged the media not to overreact to a few communities banning video gambling.

But there are consequences if the deal falls apart.

The litany of construction projects lawmakers touted upon the deal's approval would not happen, projects like a long-stalled Algonquin bypass and overdue improvements to Route 59 near Naperville and Aurora. Many suburban lawmakers who said they were leery of video gambling said they ultimately supported the deal because the local projects made it worthwhile.

Quinn himself reneged on his avowed gambling opposition in signing the deal and has faced criticism since. Whether everyone involved would be quick to repeat those votes should it become necessary remains to be seen.

One suburban lawmaker who voted for the construction deal said with so much at stake he's convinced lawmakers would quickly approve another plan.

"Worst case scenario, we could use casino expansion to replace video poker," said state Sen. Terry Link, a Waukegan Democrat.

Link has long supported expanding the number of casinos in the state and said it could be an alternative to video gambling if one is needed. "I don't think you would have the backlash you're seeing video poker," Link said. "I think we're prepared."

The state's share of the $31 billion construction spending plan amounts to $16 billion, with federal and local money covering the rest. Here's how the state comes up with more than $1 billion a year to cover the financing for the next 20 years. • $150 million from the road fund, which primarily gets money from gasoline taxes. • $322 million from vehicle fees including: How it's funded - Certificate of title fees increase from $65 to $95 - Transfer of registration fees increase from $15 to $25 - Passenger and truck B registration fees increase from $79 to $99 - Drivers' license fees increase by $20 to $30. • $162 million from alcohol and candy taxes: - Candy, soft drinks taxed at 6.25 percent rather than 1 percent. - 2.6 cents more per six pack of beer - 13 cents more per bottle of wine - 81 cents more per fifth of whiskey • Nearly $400 million from video gambling Source: State Web site, legislative documents, Daily Herald reports