CHICAGO - Ahead of this week's special session of the General Assembly, Illinois Gov. Rod Blagojevich enlisted Chicago's business community to press the House Democratic leadership to pass a long-stalled partially bond-financed capital budget.

Blagojevich called a sputtering economy the most pressing issue facing the state in pushing for passage of a proposed $25 billion capital works program known as Illinois Works that would provide new funding for infrastructure projects, school construction, and bridge and road work.

"The state desperately needs a capital budget" to invest in infrastructure that would in turn create jobs and combat a 6.8% state unemployment rate, Blagojevich said in an address yesterday hosted by the Chicago City Club, a local business organization. "I ask you, the prominent people of the Chicago City Club, to help us forge a compromise."

The governor cited a Southern Illinois University study that reported a $25 billion capital plan would create 443,000 new full-time jobs, $32 billion in economic activity, and more than $2.3 billion in state and local tax revenues.

While Blagojevich called for the business community to pressure lawmakers to embrace a compromise plan during a special session set on the issue for Wednesday, he singled out House Speaker Michael Madigan, D-Chicago. Tensions between the Democratic governor and House leader have escalated over the last year, with the two trading verbal jabs and Madigan himself boycotting recent leadership meetings.

The governor had praise for Madigan's counterpart in the Senate, President Emil Jones, D-Chicago, who introduced him. Jones has remained loyal to the governor despite criticism from some in his caucus over Blagojevich's governing style that favors news statements over negotiation.

The Senate has already approved a capital spending plan and most recently endorsed various revenue-raising measures, including a $16 billion pension bond issue, to help shore up the state's $59 billion operating budget. The House passed appropriations but did not approve the pension bond issue or a sweep of non-general fund accounts, prompting the governor last month to veto about $1.4 billion from the operating budget.

It appears little might be accomplished during the upcoming special session. Madigan spokesman Steve Brown said there's little new before the House for it to vote on. A controversial lottery lease remains part of the capital proposal and Brown said, "There is no agreement on details and safeguards for projects."

Blagojevich had earlier pushed for support of a capital budget that over several months had grown to about $34 billion. It relied on $7 billion from the partial leasing of the Illinois Lottery; $800 million in up-front funds from the issuance of three new casino gaming licenses, including $500 million from Chicago that would receive a license; and $7.8 billion of new general obligation borrowing, in addition to local and federal matching dollars.

Amid opposition from several factions, including the Chicago officials who were upset with the size of the up-front casino license payment, the governor scaled back the plan to $25 billion after the expanded gaming measures were dropped.

The new plan earmarks $14.4 billion for roads, $4.1 billion for education facilities, $3.4 billion for public transit and rail, $800 million environment and water, $310 million for state facilities, $100 million for health care facilities, $425 million for economic development, and more than $1.4 billion for other projects.

The latest proposal comes after seven months of work on a capital plan led by former Republican U.S. House Speaker Dennis Hastert and former Democratic congressman Glenn Poshard at the request of Blagojevich, after nearly two years of failed negotiations with lawmakers on how to fund a capital program.

The state has lacked a major infusion of capital dollars since the $12 billion Illinois Works program, approved in 1999, and officials have warned that without new funding the state risks the loss of $9 billion in federal matching dollars for capital projects.

While support is strong for a capital plan, the feud between the governor and Madigan remains a key obstacle. Some lawmakers also want measures included in the capital bill that would limit the governor's discretionary power to award funds. The measures are sought due to concerns that Blagojevich would withhold state grants to punish critics. The governor has so far refused to sign recently approved ethics legislation banning political contributions from large state contract holders.

Blagojevich was accused in federal court testimony of rewarding a political contributor with a state job during the trial of his former top fundraiser, Antoin Rezko, who was later convicted of trading state investment business and jobs for contributions. The governor has not been charged with any wrongdoing.

The governor yesterday also restated his position against an income tax increase, floated by some to help shore up the state's operating budget and to increase funding for education, saying he would veto any income tax increase approved this year or next.

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