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Court strikes down state’s $31 billion capital program

Updated: September 24, 2012 6:25AM

SPRINGFIELD — In a stunning blow to Gov. Quinn’s administration, an Illinois appeals court Wednesday tossed out the $31 billion construction program passed in 2009 that has been a centerpiece of his job-creation efforts.

In so doing, the three-member appeals panel also invalidated video poker, partial state lottery privatization, higher liquor and sales taxes and other revenues that add up to $1.1 billion, money that was designed to support massive borrowing for the bricks-and-mortar program.

Quinn vowed an immediate appeal to the Illinois Supreme Court.

Reversing a lower court’s decision, the appeals court ruled unanimously that the General Assembly’s passage of the tax and fee hikes that underwrote the construction program violated the single-subject clause of the state Constitution. That clause says a bill can only deal with one specific issue, not a multitude of them.

The law in question “began as a five-page bill addressing the narrow subject of amending the Illinois estate and generation-skipping transfer tax. As enacted on July 13, 2009, [it] grew to 280 pages covering a variety of subjects,” wrote Justice Patrick J. Quinn, who is not related to the governor.

Within that sprawling package were the legalization of video poker, a partial privatization of the lottery, a boost in sales tax on candy, soft drinks and grooming products, an increase in taxes on wine, beer and hard liquor, and a hike in vehicle registration fees. It also contained a requirement that the University of Illinois conduct a study on the effect on families that purchase lottery tickets.

“In the present case, not all of the provisions of [the law] have a natural and logical connection to the single subject of revenue to the state. For example, we discern no natural and logical connection between the subject of revenue and the amendment to the University of Illinois Act to require the university to conduct a study on the effect on Illinois families of members of the family purchasing Illinois lottery tickets,” Justice Quinn wrote.

The lawsuit upon which the court ruled was brought by Chicago Blackhawks owner Rocky Wirtz and his family’s liquor distributorship, Wirtz Beverage Illinois LLC. Wirtz also is an investor in the Sun-Times Media Group.

“This lawsuit was always about how the Legislature passed this bill and the discriminatory tax on wine and spirits. The decision affirms that, and we are gratified by it,” Wirtz spokeswoman Julia M. Sznewajs said.

Officials in Attorney General Lisa Madigan’s office said lawyers would file a motion to stall the ruling on Thursday.

“The administration intends to appeal the Appellate Court’s decision and to seek an immediate stay from the Illinois Supreme Court,” the governor’s office said in a prepared statement.

“The Illinois Jobs Now! capital program is an important part of Gov. Quinn’s plan to put Illinois back to work. Capital bill projects are putting thousands of people to work in every corner of the state, while supporting local businesses, improving our infrastructure and increasing energy efficiency,” the statement said.

“While the administration’s request for a stay is pending with the Illinois Supreme Court, capital projects already in progress will continue as scheduled. We would expect the Supreme Court to rule on the request for a stay in the very near future,” the statement said.

So far, the state has borrowed $2.2 billion in construction funds that are linked to the threatened tax and fee hikes. The state has collected $425 million from the increases. If Wednesday’s ruling stands and the original money generators don’t get re-enacted, bond holders would have to be paid with dollars from the state’s deficit-riddled General Revenue Fund that now covers state government’s day-to-day operations, said Kelly Kraft, a spokeswoman for Quinn’s budget office.

If Wednesday’s decision is not overturned, Gov. Quinn will face an unexpectedly difficult and financially uncertain spring legislative session that many observers had expected to be relatively tame. Now, after passage of the politically unpopular income-tax hike, he could be faced with scaling back the construction plan or persuading re-enactment of the stricken tax and fee increases, borrowing and video poker that has been rejected by dozens of communities.

“For those who supported this most recent tax increase and then went home and heard from their constituents, what will your reaction be to another vote on fee and tax increases, which were part of the original capital proposal?” said Sen. Matt Murphy (R-Palatine), who said it is not a certainty that Republicans in a new Legislature will agree to the same framework as before on a construction package. “We’re in a different time.”

The prospect of having to go back to the Legislature and win backing again for billions of dollars in construction borrowing is further complicated by Gov. Quinn’s push for a separate $8.75 billion borrowing package he had intended to seek this spring to whittle down the state’s backlog of unpaid bills.

“You’d like to think at a certain point we’d collectively achieve borrowing fatigue. I know I’m there personally,” Murphy said. “This is just a sticky wicket.”

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