CHICAGO -Illinois Gov. Rod Blagojevich signed an executive order yesterday, effective at the start of next year, banning campaign contributions to the state's constitutional officers and members of the General Assembly from companies or individuals with state contracts worth at least $50,000.

The governor's surprise action yesterday - that some warn could spur a legal challenge - not only puts into law legislation passed this spring by the General Assembly, but it also broadly extends the new rules to include all state lawmakers. The original legislation only banned businesses with at least $50,000 in state contracts from contributing to the constitutional officer who holds sway over the awarding of their contracts. Several constitutional officers already impose some limits.

Although investment bankers face regulatory bans on contributions of any significant size to elected officials who influence the selection of firms for bond work, law firms and financial advisers do not, and would be affected by the order. While legal and advisory firms could not contribute, individuals could still donate unless they own a 7% equity share in the firm, serve in an executive position, or stand to receive at least 7% of the contract's worth. While national regulators require investment banks to report political committee contributions, the order would extend such disclosure to the state level.

Blagojevich then used his amendatory veto powers to rewrite the original bill, using its shell to propose a series of new reforms that would revise how legislative pay raises take effect and ban lawmakers from holding paid positions with any unit of state, county, or municipal government with the exception of police officer, firefighters, local elected offices, and educational positions. Also, lawmakers and their spouses would be required to disclose any lobbying activity for boards, commissions, or units of local government.

Blagojevich has in recent months attacked legislators from Chicago who hold second jobs with the city or county governments. If the governor had left the bill intact and tacked on the proposed changes, it was expected that the General Assembly would vote to override his amendatory veto.

"I have waited more than three years to get the Illinois General Assembly to send me a vehicle that I could act on that would reform a system that takes care of itself at the expense of the people," Blagojevich said at a news conference yesterday before leaving to attend the Democratic National Convention in Denver. "We are long overdue for laws that place restrictions on campaign contributions, end the tradition of legislator double dipping, shine a light on legislative pay raises, and strengthen disclosure laws."

The governor referred to a statement he made three years ago that he would seek ethics and campaign reforms that would "rock" the system. Since his original comments, his administration has increasingly come under scrutiny for alleged ethical lapses that include trading state jobs and contracts for campaign contributions.

The allegations have appeared in federal documents and testimony in connection with the U.S. attorney's Operation Board Games probe of Illinois state government. The governor's former campaign fundraiser and adviser Antoin Rezko was recently convicted of corruption. Blagojevich has not been charged with any wrongdoing.

The governor was under pressure to sign the ethics legislation sent to him in May and faced a deadline of this week. If he did not act, the measure would become law. By using his executive order powers, Blagojevich put into law the contribution ban some thought he would reject because of the long list of large contract holders who have contributed to his campaign fund. But he also extended the ban to cover the attorney general, state treasurer, and state comptroller. All are Democrats and several are considered potential challengers.

The governor's relationships with many of his fellow Democratic lawmakers who control both the Senate and House, especially House Speaker Michael Madigan of Chicago, remain strained and the new proposals are likely to only contribute to the rancor. Such an escalation of tensions would come as the governor is trying to persuade lawmakers to work out a compromise to a proposed $25 billion, partially bond-financed capital program.

Representatives for Madigan and Senate President Emil Jones of Chicago were not immediately available to comment on the governor's proposals. It appears unlikely either would vote to accept the changes.

Illinois Campaign for Political Reform director Cindi Canary said the governor's action provides a mixed bag, but added that she disagreed with his rewrite of the legislation. "These are certainly proposals we could debate and put in legislation but I don't think it's a good idea to do it through an amendatory veto," she said.

Canary also raised concerns over the state's ability to enforce the rules imposed through the executive order and whether they would hold up to a legal review should their constitutionality be challenged. \

Various concerns include whether the governor has the right to include lawmakers in the ban on contributions from contractors since they do not play a formal role in awarding contracts. A lawyer for the Blagojevich administration who authored the changes said they believe they can impose the ban because it is the Central Management Services department that awards contracts.

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