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Illinois Supreme Court Grants Stay On Capital Bill Ruling

FEB 1, 2011 10:24pm ET
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CHICAGO — The Illinois Supreme Court on Tuesday granted the state’s request for a temporary stay against enforcement of a lower court decision invalidating the state’s $31 billion capital budget and the funding streams that support capital borrowing.

The state sought the stay as it prepares a petition asking the state Supreme Court to review the case. The state expects to submit the request by Feb. 14.

Allowing the lower court ruling to take effect would “wreak havoc” on state operations and finances, the attorney general’s office warned Friday in its request for a temporary stay.

The Illinois Appellate Court last week struck down the 2009 law that established the funding streams to repay borrowing for the public works program. That action, in turn, voided other pieces of legislation related to the capital program including one that appropriated the actual funding for projects.

The court ruled that the legislation violated the state constitution’s single subject clause. The action reversed a lower court’s dismissal of the lawsuit filed by Wirtz Beverage Illinois LLC in August 2009 shortly after Gov. Pat Quinn signed the law. Wirtz supported the state’s request to stay enforcement.

The state sold more than $3 billion of taxable general obligation Build America Bonds to support its capital budget last year and planned to sell about $1.5 billion of debt for capital projects this spring. Another $2.5 billion of bonding was planned for fiscal 2012 depending on the availability of revenues that flow to the capital projects fund. Most of those revenues – which come from expanded gaming, and tax and fee increases on motor vehicle titles, license plates, liquor, candy, and personal hygiene products – were invalidated by the appellate ruling.

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