* The Daily Herald starts off our coverage of the governor’s budget proposal…

The $60 billion budget - a new state record for spending if enacted - also calls for selling the Illinois Lottery and borrowing $16 billion to shore up the shaky state worker pension system, a new payroll tax on companies that don’t offer health care to employees and revamping riverboat casino taxes. But the Regional Transportation Authority would not receive a requested bailout, and it’ll be up to lawmakers to propose a way to pay for a transportation-centered capital spending plan.

All of that new money for schools and health insurance would flow from a new tax on businesses’ gross receipts the administration projects will fetch $2.6 billion in the first year and $6.3 billion once fully implemented.

* It looks like the Tribune either broke the traditional embargo or did what I did and got a budget book through back channels. Their story is the most complete in the mainstream media…

The gross receipts tax would include a 0.5 percent levy on the transaction of goods and a 1.8 percent levy on service firms, to generate $3 billion in the next budget year and $6 billion yearly when fully operational. The tax would be imposed on revenues that business takes in, regardless of profitability, sources said. […]

Revenues from the gross receipts and payroll taxes would help fund Blagojevich’s recently unveiled Illinois Covered health-care plan, which is eventually aimed at helping 1.5 million uninsured and underinsured state residents get health-care coverage. The administration says the cost of that plan would be low in the next fiscal year. When fully implemented, the administration says the cost would be $2.1 billion a year, through critics contend the figure could go much higher.

Actually, the budget book I have estimates the annual cost by Fiscal Year 2011 (which starts in three years) to be between $3.2 and $4 billion a year. Anyway, as I told you yesterday the budget offers up $1.5 billion for schools in the first year, but as the Tribune correctly notes…

(T)he $6,020 per-student figure Blagojevich is proposing falls short of the $6,405 figure that state education finance advisers recommended two years ago.

* Copley has more details on smaller aspects of the governor’s education plan…

# Allocating $60 million to expand early-childhood programs and reach 12,000 additional children. Another $10 million would go to early-childhood program providers.

# Setting aside $40 million to pay “quality teachers” to go to or stay at schools that are underperforming or hard to staff.

# Working with teacher unions and school officials to create a “performance pay” program recognizing good teachers and schools where students improve their academic performance.

# Encouraging school districts to consolidate.

# Creating a statewide teacher-mentoring program.

# Creating a new program to serve homeless students.

* Back to the Daily Herald story, which points out that the governor will not propose any direct property tax relief today…

“More money is good, it’s hard to squabble over that,” said state Sen. James Meeks, a Chicago Democrat who dropped his bid to challenge Blagojevich for governor last year after Blagoejvich promised to reform education funding. “But reform has to include property tax relief.”

* Senate President Jones supports the gross receipts tax, but Sen. James Meeks says that his SB 750, which includes an income tax increase and property tax relief, is still on the table…

Meeks said Jones assured him that S.B. 750 would be kept alive as “a backup” plan to the gross receipts tax.

* And Sneed claims the governor is prepared to play some hardball…

Word is Blago told insiders during a hush-hush meeting that if his proposal to insure all Illinois residents who lack coverage does not pass, there will be no money for capital infrastructure and construction programs and other special projects.

* You can watch the budget address on the General Assembly’s website, or you can tune into your local public television station, which should be carrying it live. I’ll be on PBS starting at noon to help with the lead-in and wrap-up coverage.