CHICAGO -Illinois Gov. Rod Blagojevich yesterday scaled back his long-stalled $34 billion capital budget and dropped a proposal to fund the plan by adding three more casinos across the state, including one in Chicago.

After meeting with a group of legislative leaders yesterday, Blagojevich announced he would cut $9 billion out of the capital plan and drop the gaming expansion proposal, one of the three major revenue sources for the capital project.

Under the revised plan, funding would come largely from a lease of the Illinois Lottery and sales tax revenue on gasoline sales.

Blagojevich announced the compromise as increasing hostility between top House Democrats and the Democratic governor has led to a deadlock on passing a capital budget. While support for the plan is generally strong among legislators, differences remain over how to pay for it. Yesterday after the meeting, House Majority Leader Barbara Flynn Currie again expressed doubts about leasing the lottery. The House rejected the plan earlier this year.

Under the new plan, a partial lease of the Illinois Lottery would raise about $7 billion to finance education construction projects and mass transportation investments. Another $150 million from expected excess gasoline tax revenue would repay $1.6 billion in borrowing, and other $100 million from expected excess revenue from the state sales tax attached to gasoline sales would pay for $1.3 billion in additional projects, according to the governor's office.

"Our bridges, while among the safest in the nation, need an influx in capital to ensure that we continue to keep them safe," Blagojevich said in a statement released after yesterday's meeting. "Plus, we continue to get additional indication from Washington, D.C., that the Highway Trust Fund would run low on funds, and we need to get in line. That's why I am proposing a compromise to gain more support from House Democrats and pass Illinois Works this fall."

The governor said he would decide over the next few days whether to call a special session.

The gaming expansion piece of the plan was expected to raise $800 million in upfront funds from the issuance of three new gaming licenses, as well as another $6.2 billion in ongoing revenues that would have paid debt service on general obligation borrowing included in the plan. Under the original plan, Chicago was to have paid $500 million for a casino license - a fee thatChicagoMayor Richard Daley had recently criticized as too costly.

The current capital plan includes investing $14.4 billion in roads projects, $4.1 billion in education facilities, $3.4 billion in public transit and rail, $800 million in environment and water projects, $310 million in state facilities, $100 million in health care facilities, $425 million in economic development, and more than $1.4 billion in other infrastructure projects across the state.

The state has lacked a major infusion of capital dollars since a $12 billion Illinois Works program approved in 1999, and congressional officials have warned that without new funding the state risks the loss of federal matching dollars.

Also yesterday, Washington, D.C.-based Judicial Watch announced it has filed separate open records lawsuits against Blagojevich and Senate President Emil Jones over documents related to so-called pork barrel spending and "secret side deals" between Blagojevich and other state lawmakers.

Judicial Watch said it originally requested documents related to pork spending in February and March of this year, and the Illinois Senate denied the request, citing "privacy interests," while the governor's office failed to respond at all, the group said. The lawsuits were filed in the Circuit Court of the Seventh Judicial Circuit in Sangamon County, Ill., to force compliance with the state's open records law.

Judicial Watch says it began investigating public spending policies in Illinois after a series of articles reported deals between Blagojevich and state lawmakers.

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