CHICAGO - Illinois Lieut. Gov. Pat Quinn - who would take the reins of state government if the General Assembly acts to remove Gov. Rod Blagojevich - yesterday named a former federal prosecutor to lead an ethics panel with the charge of overhauling state government.

"I think we need to fumigate state government," Quinn said yesterday following a sold-out luncheon address at the City Club of Chicago in which he announced the formation of the panel to be led by Patrick Collins. Collins led the federal government's case against former Gov. George Ryan, who was convicted in 2006 of corrupt practices during his tenure as secretary of state.

The panel, which will include roughly a dozen members, is expected to come up with recommendations aimed at reforming state government either legislatively or by executive order. The move comes as a House vote to impeach the governor is expected as soon as later this week.

The governor was arrested on various pay-to-play charges last month, including an allegation that he attempted to personally profit from his ability to name President-elect Barack Obama's Senate replacement. He has so far resisted calls to resign. The charges are forcing the state "to focus like a laser" on reform, Quinn said.

Collins, a partner at Perkins Coie, said based on his 12 years of experience as a prosecutor he believes Illinois politics from the local to the state level is steeped in a "culture of corruption." He hopes to complete a report with reform ideas by early April. "The time is now to do something."

Collins said campaign finance reforms are likely to be a key part of the package since every public corruption investigation he has worked on involved campaign fundraising abuses. The governor is charged with seeking $2.5 million in campaign contributions from various businesses and individuals that were to benefit from state financing help or legislation by the end of last year.

New ethics rules that took affect last week ban large state contractors from donating to the state's constitutional officers. It is unclear how lawmakers might react to sweeping ethics and campaign reforms, given the difficulties in reaching consensus on the most recent rules.

Should Quinn become governor, the most pressing operational issue he faces is a looming $2 billion to $2.5 billion deficit in the $59 billion fiscal 2009 budget, and pressure will be on to craft a fiscal 2010 budget.

Quinn acknowledged in his remarks the state's record $4 billion backlog of bills and said the state needs to preserve its credit by promoting economic development. He offered few specifics, however, saying that if he takes office he would work with state budget officials, the comptroller, and the treasurer to determine the scope of the state's fiscal mess.

The fiscal costs of the political turmoil resulting from the governor's scandal contributed to negative credit action from all three rating agencies in recent weeks.

Fitch Ratings downgraded Illinois to AA-minus from AA, in part due to concerns the scandal might impede its ability to resolve the deficit. Standard & Poor's put the state's AA long-term rating on negative CreditWatch for similar reasons. Moody's Investors Service assigned a MIG-2 on the $1.4 billion note issue that sold last month, down from the MIG-1 rating on the state's last note issue in April. The state treasurer said the downgrades added $20 million in interest costs to the deal.

On the legislative front, the House special impeachment committee continues to meet to discuss impeachment. House leaders have said the chamber could vote as soon as this week. If a majority of members vote for impeachment, a trial would held in the Senate where a two-thirds majority would be needed to remove the governor.

The most pressing political issue awaiting Quinn is the vacant Senate seat. Blagojevich late last month named former state comptroller and attorney general Roland Burris to the post, amid widespread calls to leave the seat open given the taint of the pending charges.

Yesterday, the Secretary of the Senate refused to accept Burris' nomination certificate from a Blagojevich aide because it lacked the signature of Illinois Secretary of State Jesse White. Burris has asked the Illinois Supreme Court to force White to sign the certificate. Burris will meet this week with U.S. Senate leaders. Although Senate Majority Leader Harry Reid, D-Nev., has said Democrats would not seat Burris today, he has not ruled out the possibility.

Quinn yesterday noted his decades-long friendship with Burris but called his decision to accept Blagojevich's nomination a "mistake."

Quinn said he believes only a nominee not selected by the governor should be seated and wants the General Assembly to pass legislation setting a special election to fill the seat which could be done as soon as this spring. He wants the legislation to include a provision that would allow a future governor to name a replacement until the special election.

In other developments yesterday, U.S. District Court Judge James Holderman granted U.S. attorney Patrick Fitzgerald's request for a 90-day extension to April 7th to indict Blagojevich, citing the complexity of the case.

The Federal Bureau of Investigation arrested the governor on Dec. 9 along with his then-chief of staff John Harris on pay-to-play charges outlined in a 76-page criminal complaint. Federal prosecutors had faced a 30-day deadline to seek a formal indictment.

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