*** UPDATE 1 - 11:20 am *** The House is now in session. Listen or watch here.

*** UPDATE 2 - 11:28 am *** Both parties are now going to caucus and committees will start at 12:30 pm.

*** UPDATE 3 - 11:41 am *** From a lobbyist…

We’re holding a press conference today at 12:00 in the blue room announcing supplemental approps bills to restore the DNR funding cuts. I expect both statewide and local advocates plus legislators.

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* When the legend conflicts with reality, print the legend…

The famous hug last month between Gov. Blagojevich and House Speaker Michael Madigan at the Democratic convention did not signal a full-blown detente.

But in its wake, the unthinkable has happened: Madigan signaled a willingness to entertain one of Blagojevich’s boldest ideas.

Madigan called the House back into session today to consider a proposal he rejected long ago: privatizing the lottery to pay for a sorely needed statewide road, transit and school construction program.

Actually, Madigan has been talking about a Lottery lease with his members for several weeks, as I and others have previously reported. Days before “the hug,” Madigan told State Fair attendees that “the prospects look very, very good” for a Lottery lease deal.

* Anyway, on to today’s session. Finke probably has the best MSM coverage…

Illinois House members return to Springfield today with plans to lease the Illinois Lottery, restore some money cut from the budget and to override Gov. Rod Blagojevich’s amendatory veto of a major ethics bill.

* But…

[Rep. Gary Hannig] said he does not expect the House to take up a spending bill that would allocate money to capital projects.

“We would have to engage the Senate and the governor’s office to do that,” Hannig said. “We could send something over to the Senate, but it wouldn’t really be a compromise. Why would you want to put out false hopes?”

* The House Republicas want a deal on a capital spending package by Oct. 1st…

Republicans complain that while the speaker and governor could finally agree on how to raise the revenue for the capital plan, the Democrats have not listed in detail how they’ll spend the money.

“Not talking about spending certainly begs the question is this real when the complete package is revenue and spending,” said Rep. Cross.

If there are no spending specifics, lawmakers cannot return home before the election to tout their accomplishments. The Republicans want a capital bill with spending details by October 1.

* And this is heartening….

But Madigan–who has said publicly he doesn’t trust Blagojevich–reportedly wants it written in a capital bill that the terms of any lottery lease must be approved by State Treasurer Alexi Giannoulias and Illinois Comptroller Dan Hynes. Both Giannoulias and Hynes identify themselves as Blagojevich opponents.

On Tuesday afternoon, a spokesman for the governor’s office released a statement about those terms:

“We don’t see any problem with that. It’s a good first step for them to at least agree in substance with leasing the lottery”.

* Fund sweeps…

Hannig said the House is looking at taking $250 million from such programs, although the amount could be slightly higher by the time representatives vote on a bill.
That’s less than half of the $530 million Blagojevich wanted to use earlier this year.

* Vetoes…

The best-known amendatory veto involves House Bill 824, which would ban campaign contributions from people or companies that do more than $50,000 a year in business with the state. Although the ban applies to all statewide officials, the measure was mainly directed at Blagojevich, who collects large sums from those contractors.

* Patterson has some analysis…

What about schools? The lottery provides roughly 3 percent - $600-some million - of all K-12 public education spending annually. So far, lottery lease plans have called for setting aside a portion of the upfront payment to ensure the education budget is not shorted.

Insiders take: To outsiders this two-day session rightly appears rather incremental. But to insiders any indication that House Speaker Michael Madigan and Gov. Rod Blagojevich are working together would be monumental. The two have been bitter rivals but at the Democratic National Convention in Denver were prodded into a public hug in an alleged show of unity.

The optimist says: This could be a good-faith effort among the state’s Democratic leaders to move ahead and put political gridlock behind them.

The skeptic says: Only the House is returning for a vote. The Senate is not, so this is a long way from being a deal. And the House is only considering the money-raising side of the equation, not the project-spending side that is sure to create its own controversies.

* Governor Blagojevich is having a 10:30 press conference to talk about the ethics bill. He gave us all a preview today via a letter to the SJ-R…

Instead of creating jobs, instead of working to expand access to health care, instead of building schools and fixing bridges and instead of protecting taxpayers from higher taxes, some lawmakers are more concerned with simply taking care of their own.

Helpful.

* The House will likely address this problem via the special fund sweeps…

A drug treatment center in Elgin is laying off staff members and eliminating beds because of state budget cuts, the group that runs the center announced Tuesday.

A spokeswoman for Lutheran Social Services of Illinois said a $1.4 million state funding cut means five staff members in Elgin have been told their jobs are being eliminated.

The cuts also mean the halfway house and residential treatment programs at the Elgin site will each eliminate one bed. That could mean as many as 38 fewer people being treated between the two programs each year.

Lutheran Social Services, one of many agencies providing counseling and treatment on behalf of the state, announced Tuesday a total of 21 staff cuts between its programs in Elgin and Chicago and urged lawmakers to restore funding.

* Related…

* Bost: Little good news from Springfield

* An average guy can end corruption

* Schools reduce transportation, but not because of gas prices