* That should have been the headline of today’s Capitol Fax, but I sent it out before I came up with the idea. [Reference here.] Oh, well. Such is life.

What I mean by that is the lottery lease and pension bond deal could have freed up a bunch of budet cash, as I told my readers this morning. It could have been an escape route for budget writers. But now yous can’t leave…

Illinois House Speaker Michael Madigan said Tuesday he “strongly rejected” the idea of leasing the lottery to a private vendor so the state can pay down its crushing pension debt. […]

“I think it’s safe to say we aren’t even close, not even close, to having any kind of budget done,” said House Republican Leader Tom Cross of Oswego. […]

Instead, Tuesday’s meeting was devoted to Blagojevich’s plan for leasing the Illinois lottery to a private operator and issuing $16 billion in pension bonds. The bond proceeds and an estimated $10 billion from the lottery lease would be used to pay down the $40 billion owed to the five state-funded pension systems.

* More…

Senate President Emil Jones Jr. said it was “rather foolish” to reject the pension plan. “The other caucuses don’t want to do it, which seems ridiculous to me, because if we do a bond issue and sell the lottery, we’ll cut down on the indebtedness we have with the pension. And we save money,” he said. “Maybe they’ll come to their senses and realize that we have this obligation.”

Senate Minority Leader Frank Watson and his caucus members haven’t taken a final position on leasing the lottery, said his spokeswoman Patty Schuh, but they have “serious reservations.” “Sen. Watson’s concerned that it’s perhaps being proposed not for pension relief, but rather for budget relief, to free up cash for the governor to spend.”

* And…

Madigan said he hopes other legislative leaders eventually embrace the budget approved last month by the House, but Nix said that budget plan is not balanced. Madigan has said his budget plan boosts education spending by 7 percent, but Nix questioned whether it would lead to school cuts.

In fact, Nix flat-out said that the Madigan budget would lead to education funding cuts. The budget, she said, “will actually results in cuts to education.” She repeated that line several times. Here’s the audio…

* This e-mail came from inside the administration yesterday when I asked for an explanation of why the governor would cut education funding instead of other areas of the budget…

By his own admission, the speaker’s budget has a $600-plus million deficit (our analysis shows it at roughly $624 million). The only new spending in his budget that can help close that gap is his $410 million increase for education. Because his budget already underfunds contractual obligations to areas such as union contracts, which we are legally bound to pay, he leaves nothing else on the table to cut other than an additional $200 million in education funds in order to fully eliminate his deficit.

* Meanwhile, this AP story looks at the overtime session squabbling…

If lawmakers had to hang out at the Capitol five days a week with little to do, their frustration levels could climb sharply. Some would be away from their regular jobs. They would miss local meetings. They’d be paying for Springfield hotels and meals out of their own pocket, since daily expense payments stopped after the Legislature’s May 31 deadline.

That might put pressure on legislative leaders to agree to something — anything — to end the impasse. House Speaker Michael Madigan, D-Chicago, has negated that potential advantage for Blagojevich by calling his members to Springfield only two or three times a week.

Um, OK, then what’s Emil Jones’ reason for taking a week off?

More…

But [yesterday’s leaders] meeting did include a 20-minute discussion of who was the better third baseman, the Cardinals’ Ken Boyer or the Cubs’ Ron Santo, said House Minority Leader Tom Cross, R-Oswego.

Gee, I wonder who distracted everyone with that topic?

*** UPDATE *** In case you missed it yesterday, here are my notes from what the leaders told the media as they walked out of the guv’s office…

Madigan regarding the governor’s involvement with the utility rate issue: “The governor has never taken any interest in that issue… To my knowledge he’s never been around the issue.”

Nix: Madigan’s budget “actually results in cuts in education.”

Nix: “Not entirely accurate” that Lottery lease is off the table now. Madigan said that he did not support it, but his members weren’t here today so he wasn’t able to caucus on the issue. The issue has not been surveyed in his caucus, so we think that there may still be open to negotiation. “The other leaders had some questions, but actually did not rule it out.”

Nix: “The House Democrats did not understand what they voted for” (regarding budget), so they should be brought back to town and be informed that they had voted to cut education funding.

Nix: “They’re getting paid to work, so they should be able to be here without a special session.

Watson: “I just don’t know for sure whether the governor really truly wants to get out of here… If he did, we’d be focusing on the budget, we’d be talking about the issues of revenue and spending.”

Watson: Not getting message that GRT is dead. He talked about it “several times” today.

Watson: Too many people in the room. 25 last week, 30 today.

Madigan: House spending is not going to go over the 3 percent in the House-approved budget.