Friday, June 23, 2006

Going private, or not?

Gov. Rod Blagojevich is on the record saying he has no intentions of selling the state’s tollway system, a multibillion dollar idea Chicago and Indiana already pursued. At the same time, the state’s Commission on Government Forecasting and Accountability hired Credit Suisse (see links on the left) consulting firm to study the value of the Illinois Tollway. Sen. Jeff Schoenberg also scheduled four Senate committee hearings this summer, the next to be held in Springfield August 15. (You can listen to the May 26 and 31 meetings by clicking on the MP3 files to the left.)

While the governor says he has no intentions of selling the tollway, he has proposed selling another state asset, the Illinois Lottery, as a way to boost education funding (see my May 23 blog).

Want more context? Indiana reporter Pat Guinane explored the “Public to Private” trend in the June Illinois Issues. Charlie Wheeler will give another perspective, whether it’s fiscally responsible, in his column for the July/August issue.

Tuesday, June 20, 2006

Going public

Check out the House Democrats' Web site, and you’ll see three interesting links, all suggesting an emerging trend as House Speaker Michael Madigan releases information to the public in his own, interesting way. He’s usually rather tight-lipped when approached by reporters, but in the last few weeks, he’s written letters that he's also passed out to the press and posted on the Web site.

The newest post publishes the FY07 memorandums of understanding. MOUs basically formalize state money designated for so-called member initiatives, which are pet projects asked for by legislators. The memos are rather vague and don’t name any lawmakers, but they do give a dollar amount. Some initiatives fund pretty important services. For example, Rep. Larry McKeon, a Chicago Democrat, asked for $250,000 for the AIDS Foundation of Chicago to help pay for medications for low-income residents living with HIV and viral hepatitis, which is not currently covered by the state-federal AIDS Drug Assistance Programs. Other member initiatives may be a little more politically charged.

Recall the end of the spring session (see my May 2 blog), when the Latino Caucus gained leverage in budget negotiations by saying members would reject the budget unless their projects were funded. One example is $150,000 for Holy Cross Immaculate Heart of Mary Church for teen pregnancy programs.

In any case, funding everything from after-school programs to street improvements in Chicago’s 13th Ward (of which Speaker Madigan is the Democratic Committeeman) can’t hurt in an election year.

One more note: Construction projects account for the largest dollar amounts, most going to select Chicago colleges:
- Northwestern University: $8 million to finish building a new floor for regenerative medicine in the Robert H. Lurie Medical Research Center.
- DePaul University: $9 million to help build a new science center at the Lincoln Park campus.
- Loyola University Chicago: $8 million for “redevelopment” of the Mundelein Center Skyscraper Building.
- Harry S. Truman College: about $13.4 million to start construction on a new student services center, including a parking structure. “It’s not a done deal, yet,” said Truman spokesman Clifton Daniel. “We’re hopeful. We’re maybe even a little bit excited, but we’re still trying to work out where all the rest of the money is coming from.”

Friday, June 02, 2006

Horse subsidy hurdle

A few days after Gov. Rod Blagojevich signed a measure into law intending to help the state’s horse racing industry, the measure hit a hurdle. Chicago-area casinos filed a lawsuit in Will County Circuit Court arguing the new act is unconstitutional.

The act imposes a 3 percent tax on the profits of four riverboats: Empress Casino and Harrah’s Casino in Joliet, Hollywood Casino in Aurora and Grand Victoria Casino in Elgin. An estimated $36 million would go into a new “Horse-Racing Equity Trust Fund” to help improve and market the racetracks.

The complaint is filed against the Illinois Racing Board, which would administer the fund, and state Treasurer Judy Baar Topinka, who would transfer the money. The boats said they will pay the tax, but the complaint requests the money be held until the court rules whether the act is constitutional.

The casino companies gave three reasons they believe the act violates the state constitution: 1) Taxing one private industry to subsidize another ailing competing industry doesn’t count as using tax dollars for public purposes. 2) The tax is unfair because it only applies to four Chicago-area riverboats, not five others operating downstate. 3) The legislation was written to benefit particular racetrack owners with no legitimate state purpose.

Of course, the Illinois Casino Gaming Association supports the challenge. Executive Director Tom Swoik said he hasn't read the complaint, yet, but he believes the lawsuit sets a precedent and is symptomatic of a broader problem. “One of the reasons it was filed was because of the inequities the business community has in this state,” he said, adding some of the business fees the governor imposed earlier are still stuck in court.

Rep. Ruth Munson, an Elgin Republican who represents the district including the Grand Vic., said that’s exactly why she was one of the 37 reps who voted against the bill before it was sent to the governor. “What we’re saying to businesses is, if you’re very successful in the state of Illinois, we’re going to penalize you. And we’re going to give [the money] to a less successful industry, your competitor,” she said. And she warned the act would take profits away from the Grand Victoria Foundation, which wouldn't be able to donate as much to local not-for-profits.

Rep. Bob Molaro, the Chicago Democrat who sponsored the measure in the House, called from outside his doctor’s office after getting knee surgery this week. He said the lawsuit was expected, but what is unexpected is that the judges will overturn the legislation. First, he said the legislature already voted to impose a graduated wagering tax on riverboats, which is based on the casinos’ total income minus the amount they give out to winners. “Obviously, places like Elgin are paying a heck of lot more tax than places like Rock Island,” he said.

Second, Molaro said he expects the courts to take a narrow look at the issue. “[Judges] don’t get into what the business climate of the state should be,” he said. “That’s for the legislature to decide, not the courts.”

Side note Waiting for his doctor’s appointment, Molaro gave me some humble advice: “Don’t get old.”