Blagojevich proposes state tax credit

SPRINGFIELD -- Gov. Rod Blagojevich tempted lawmakers Wednesday with political sugarplums ranging from tax rebate checks for families with children to a business tax cut, but only if they agree to sell off the Illinois Lottery and support other controversial financial maneuvers.

Blagojevich unveiled few new ideas during his abbreviated 22-minute budget speech to lawmakers. Instead, several failed ideas were trotted back out for another try.

But this year -- an election year for many lawmakers, though not the governor --they're linked to a new variety of politically popular proposals at a time of increased economic uncertainty, a combination the governor's office hopes will produce a different outcome.

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"I have been and continue to be a lifelong Cubs fan, so therefore, I always seek the bright side of things as spring approaches," Blagojevich told reporters.

His budget lineup, however, is filled with proposals that whiffed.

The lottery deal was roundly rejected last year as a way to shore up pension funds. This year, the lottery deal is the financial lynch pin for a nearly $12 billion state investment in road, bridge and school construction that lawmakers have been clamoring for.

"I am convinced we can find common ground -- that old options and new approaches can and should be put on the table," Blagojevich told lawmakers. The deal involves selling off the rights to possibly 80 percent of lottery sales for the next 30 years in exchange for billions now.

Similarly, the governor again suggested selling off the rights to the annual settlement checks from a lucrative state lawsuit against cigarette makers. The upfront money from that deal could cover the $1.2 billion needed for child rebate checks and business tax cuts.

But many lawmakers were not swayed by the governor's new sales pitches.

"Is it realistic to float another idea packaged a different way that's really the old idea that went nowhere?" asked House Republican leader Tom Cross of Oswego. "That doesn't accomplish a whole lot."

An added $300 million in education funding would come from a return to higher gambling taxes, only a couple years after lowering them amid economic concerns. Once again, the governor's budget counts on the opening of a long-dormant 10th casino once destined for Rosemont.

Blagojevich also brought back his defeated idea of imposing a 3 percent tax on businesses that don't spend at least 4 percent of their payroll on health care. The money -- $417 million --would go a special trust fund to pay for Blagojevich's health care expansion plans.

Opposition from business groups and Republican lawmakers remained. They accused the governor of trying to distract the public with talk of rebates and tax cuts while raising taxes.

The Illinois Chamber of Commerce called it a "bait-and-switch on business."

"Another giveaway gimmick," was the description offered by state Sen. Matt Murphy, a Palatine Republican.

Even suburban Democrats were left scratching their heads by the business tax turnaround. Last year Blagojevich said Illinois corporations don't pay their "fair share" and proposed the biggest business tax increase in state history. It was soundly defeated.

"I'm just also intrigued that last year, the governor made business out to be the bad guys," said state Rep. Elaine Nekritz, a Northbrook Democrat. "This year, we're trying to give them a tax cut."

House Speaker Michael Madigan, a Chicago Democrat and the governor's chief political rival, said he'll announce a series of budget hearings across the state and intends to work swiftly to reach consensus on the budget.

"The people of our state simply will not tolerate another prolonged, acrimonious encore of last year," he said.

Governor's spending plan

Suburban focus: If you've got kids, the state might send you a check for $300 per child, effectively doubling the federal economic stimulus plan.

Key Details:

bull; $1.2 billion for child rebates and business tax cut paid for by selling off rights to tobacco settlement payments or other state revenue.

bull; $300 million education increase paid for by higher gambling taxes and selling off 10th casino license.

bull; $417 million tax on businesses that don't spend enough on employee health care to pay for state-offered coverage.

bull; $11 billion state investment in roads, bridges and schools financed by selling off rights to the Illinois Lottery.

bull; $16 billion in borrowing to shore up pension deficit, take advantage of lower interest rates.

bull; 3 percent across the board cuts to most state agencies.

Mark Your Calendars:

The budget the governor proposed is for the state's fiscal year that begins July 1.

Fast Cash:

Total cost of running state government is pegged at $49.7 billion.

That's $136.2 million a day.

$5.67 million per hour.

$94,559 per minute.

$1,576 per second.

Cash Cows:

The state's top taxes*

1. Individual income taxes: $10.4 billion

2. Sales taxes: $7.8 billion

3. Public utility tax: $1.86 billion

4. Corporate income taxes: $1.75 billion

5. Gas tax: $1.48 billion

6. Riverboat gaming taxes: $717 million

*amounts do not include any tax refunds

Big Blue:

The budget includes funding for two new cadet classes that would add 100 troopers to the Illinois State Police force.

Butts Down, Bottoms Up:

The state's tax take from cigarettes and other tobacco products is expected to drop $2 million to $619 million. But alcohol taxes are predicted to bring $161 million, a $2 million increase.

Accuracy:

The governor criticized lawmakers for drafting a budget last year that was based on overly rosy economic figures. The plan is $750 million in the red. But a quick look at the governor's budget book from last year shows nearly all his projections were off too.

The speech

The 22-minute speech was the shortest the governor's given to date, about half as long as most. He's been known to go nearly 90 minutes in some years.

He was interrupted seven times by applause, although one of those was because he mentioned Barack Obama -- which brought cheers -- and another was when he said he wasn't going to again propose a massive business tax like last year, which got the Republicans clapping.

Belated Valentine to Mayor Daley:

"And speaking of good places, I think Chicago is a great place to host the Olympics in 2016. Strengthening Chicago's infrastructure strengthens Chicago's bid to get the Olympics. Let's pass a capital bill, let's help Chicago win the Olympics." - Gov. Rod Blagojevich

Whoops!

The governor's budget book says $2 billion for mass transit in the tollway region (read: suburbs) will be paid for with special increased tolls on commercial trucks. The headline on that section: Funding Mass Transit by Increasing Tolls on Commercial Vehicles.

When asked about this, the governor's budget staff said it was an error and a "mischaracterization."

Pension Doomsday:

Blagojevich budget aides briefed reporters Wednesday morning. The PowerPoint presentation included a doomsdaylike running tally for how much interest the $44.5 billion pension deficit was gathering. It increased $120 per second.

-- Compiled by Amber Krosel and John Patterson