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Ethics, smoking, casinos and the gas tax

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Illinois

* The feds stick their noses into a state fight…

Federal highway officials told Gov. Rod Blagojevich’s administration Wednesday that Illinois’ new high-profile ethics law conflicts with bidding requirements that must be followed to get road money from Washington.

Backers of the state law, which takes effect Jan. 1, maintain the issue can be easily addressed with follow-up legislation but that it might mean lucrative road-construction contracts would be exempted.

The ethics reforms, which were supported by President-elect Barack Obama, aim to prevent a practice known as pay-to-play politics by banning major campaign contributors from landing lucrative state contracts.

Blagojevich, whose prolific fundraising from state contractors inspired the state ban, raised the federal concerns as he vetoed the legislation earlier this year and asked the General Assembly to accept his proposed changes, said Lucio Guerrero, the governor’s spokesman.

The governor’s concern was, indeed, in the veto message, way at the bottom. He vetoed this bill because he wanted to continue raising money from road contractors.

* The Federal Highway Administration explains…

“These provisions are not consistent with the economical and efficient use of federal-aid funds,” wrote Stoner, who is based in Springfield. “They limit the pool of potential bidders and impose requirements unrelated to the qualifications of contractors to perform the work in a competent and responsible manner.”

The highway administration will not authorize federal funding for projects once the law and executive order take effect in January, Stoner wrote.

But…

“We think we can work out something. We just don’t know what form that will take,” [a Federal Highway Administration spokesman] said.

OK, so it may not be all that bad after all.

* The House sponsor of the ethics law adds…

“I see the (FHWA) letter as nothing more than a minor roadblock on the road to a more ethical Illinois,” said state Rep. John Fritchey, D-Chicago.

They should be able to clear this up with a simple trailer bill next month, as long as the governor doesn’t use one of his patented amendatory vetoes to “improve” the new legislation.

* Meanwhile, it wasn’t that long ago when gaming expansion was supposed to help pay for a new capital bill. Big trouble is brewing in that industry, however, and the casinos make a good case that the statewide smoking ban is to blame

The struggling economy has dealt a bad hand to the nation’s usually robust gambling business, a downturn made even worse in Illinois, where the state’s nearly year-old smoking ban has proved unhealthy to casinos. […]

The big gambling states— Nevada, New Jersey and Mississippi—are off 5 percent to 7 percent in casino revenue. But the picture is worst in Illinois, where casino revenue is down 20.3 percent this year. […]

…across the border in Indiana, revenues are down by only three-quarters of a percent, according to the American Gaming Association.

“They have basically the same economy, the same weather” as Illinois, Swoik said. “The only difference is the smoking ban.”

Rather than sit and play a machine or a table game for hours on end, smokers have to walk outside to take frequent breaks. So, while attendance is down only slightly, revenues per person are way off, and that is not happening in smoker-friendly Indiana.

* And there’s more trouble for the long-dormant 10th casino license…

Rosemont shouldn’t get the state’s last available casino license because the people running the suburb have “not earned the trust and confidence of the public,” the nation’s oldest citizens’ crime-fighting group will tell state gambling regulators today.

“While Rosemont’s $435 million bid for the 10th casino license is tempting, particularly in these tough times, in our view the inability of the Illinois Gaming Board to address the concerns about alleged mob ties is enough to disqualify their application,” Chicago Crime Commission president J.R. Davis says in a statement being delivered to the board.

Internal Gaming Board investigation documents I obtained years ago claimed that putting a casino in Des Plaines would be almost as “dangerous” as siting a casino in Rosemont, because the alleged outfit guys could just drive the mile or three down the road. But that never seems to get mentioned.

The Des Plaines developer’s latest bid is about a quarter of the Rosemont bid. That developer has campaign finance ties to Attorney General Lisa Madigan, who has also strongly opposed the Rosemont bid. That’s something else which rarely gets a mention.

* And there doesn’t seem to be any way to satisfy the goo-goos…

Rosemont Mayor Bradley Stephens, who succeeded his father after his death, has said he will pass laws banning village employees from working at the casino, village contractors from working for the casino and trustees from gambling at the casino.

Davis called Rosemont’s assurances “superficial.”

* Kinda sorta speaking of the capital bill, Greg Hinz touts the possibility of a gas tax funding mechanism…

Some insiders say Mr. Madigan wants to wrap funds for infrastructure into a wider income-tax hike that would serve other state needs. I consider that a bad idea for several reasons, not least among them that even now, he might not be able to pass one over a certain veto by Mr. Blagojevich.

On the other hand, Mr. Blagojevich hasn’t said much about a gas tax itself, which in some ways is less a tax than a road users fee.

Some surely would squawk. But at my corner gas station, the price of a gallon of regular is half what it was just a few months ago. Bumping the price up a nickel or a dime a gallon wouldn’t draw nearly the reaction it would have a few years ago.

Metropolis 2020, the big-business civic group, actually is campaigning for a 12.5-cent-a-gallon hike. When inflation is taken into account, the action only would put the state back where it was in 1990 and would be sufficient to fund a $14-billion statewide capital bill, according to the group.

I don’t know what the magic number is. But it sure does look like a lot of stars have aligned behind some gas-tax action now. If lawmakers don’t act soon, the next window of opportunity could be way far away.

That may well happen, but funding is only half the problem, and probably the easiest aspect to deal with. The real problem is guaranteeing that the capital plan money will be spent fairly and equitably. Nobody trusts the governor, plain and simple.

* Semi-related…

* Faulty license plates in the mix among Illinois drivers

* State spending $60,000 in search for defective license plates

* The bill that won’t die

posted by Rich Miller
Thursday, Dec 4, 08 @ 9:45 am

Comments

So If Rosemont is denied the license, the ‘bad guys’ would only drive as far as Des Plaines? What a crock. The ‘bad guys’ will go wherever the new casino is built and try to make their connections. Does anyone honestly think they are not there in the current casinos? The law enforcement community will just have to watch over a new location.

It has been proven time and time again that gambling is a poor tool for economic development.

Get the tenth license producing and can any thoughts of further expansion. Just make sure it goes where it will develop the maximum revenue.

Comment by Plutocrat03 Thursday, Dec 4, 08 @ 10:01 am
So what have we learned thus far…smokers drink more and gamble more than non-smokers. Which should tell you smokers have more issues that they do all these things to “relieve” whatever it is that is bugging them.

Comment by Segatari Thursday, Dec 4, 08 @ 10:03 am
With EJ gone, it should be easier (but still difficult) to pass a veto-proof capital construction bill with specific named projects or firewalls around the money where it couldn’t be diverted by the executive branch. It’s not an ideal solution, especially considering the agencies that would administrate the work are controlled by the governor.

Comment by Six Degrees of Separation Thursday, Dec 4, 08 @ 10:07 am
The closing of the parks & historic even after the revenue and appropriations bills were passed will just reinforce the lack of trust. Although the historic site funding was lined out by the gov, the parks funding was retained and then he still closed most of the parks. That show of power won’t sit well.

Comment by Pot calling kettle Thursday, Dec 4, 08 @ 10:24 am
Let’s see; Illinois casinos are obscenely profitable, by providing rigged games for their patrons; their executives and owners are getting rich. Yet they want a state exception to the smoking ban that all other businesses have to live by. They value profits more than the health and welfare of their employees and patrons. There is a policy problem with local governments’ becoming too addicted to gambling taxes! Like the income tax, they are not stable.

Comment by Legaleagle Thursday, Dec 4, 08 @ 10:32 am
Hinz is spot on, with one exception.

The tax should not be flat per gallon. Instead it should be a % based on the price of a gallon. As the price of gas goes up, revenue would go up, and this would allow more bonding, so the state would have more money to spend.

Comment by Leroy Thursday, Dec 4, 08 @ 10:35 am
Leroy-

And when the price crashes from $4.10 a gallon to $1.48, you lose almost 2/3 of your bonding ability. Be careful what you plan, and what you wish for. Steadiness and predictability in revenues, to the extent possible, would be preferred by most planners.

Comment by Six Degrees of Separation Thursday, Dec 4, 08 @ 10:43 am
So it looks like the Governor was right about the ethics law after all. I know its hard but sometimes it is better to listen once in a while rather than just talk all the time.

Comment by Bill Thursday, Dec 4, 08 @ 10:52 am
As long as we have legislators plotting ways to feed our wasteful government, we will only postpone what needs to be done.

Or do you people think Illinois is being ran efficiently?

You think GM is inefficient, bloated and unable to meet demand? Imagine what would happen if our state government had to face reality! Our state government is ran more poorly than GM, but uses our wages as the escape route by taking more from us to postpone what we all know is the inevitable.

No bailout can save this state. No casino, no tax increases, no new fiscal funding mechanism will fix this state. Since 2005, there has been a mile-wide blinking neon sign that reads, “STOP SPENDING!”, yet elected officials refuse to plan together enough to curtain the disaster that has been unfolding since then.

It isn’t just the current governor who isn’t trusted when it comes to our money - the entire state government apparatus has no trust.

Every little legislator who wishes upon a star to postpone the coming fiscal reality needs to grow a pair and stand up for Illinois taxpayers and businesses. The political pandering parade needs to end. We all know it.

Just as my stand concerning GM - not one more dime to Illinois state government until it’s leaders decide to lead, cinch the spending belts, make reforms happen and demonstrate a respect for the money we already send them by the buckets.

We will not get the changes we need out of these morons until we starve them into action.

Comment by VanillaMan Thursday, Dec 4, 08 @ 10:58 am
Mr. Miller, sir,
I believe Six was responding to Leroy’s suggestion that the tax be a % of the price.
Six degrees is very seldom wrong.

Comment by Bill Thursday, Dec 4, 08 @ 11:00 am
Whoops, beat me to it.

Comment by Bill Thursday, Dec 4, 08 @ 11:01 am
So what happes when the price of gas goes up as fast as it has gone down?

How pleased with an additional .12/gal would we be when gas returns to over 4.00 per gallon?

VM has it right. Stop spending. The day of finding the least objectionable tax are gone. They are all objectionable.

Comment by Plutocrat03 Thursday, Dec 4, 08 @ 11:13 am
Six degrees is very seldom wrong.

Endorsed by Bill! Thank you for the honor.

Comment by Six Degrees of Separation Thursday, Dec 4, 08 @ 11:33 am
Is Stephens willing to ban political campaign contributions from people who make money from the casinos (owners, employees, contractors)?

Comment by Carl Nyberg Thursday, Dec 4, 08 @ 12:16 pm
What are we talking about with “mob” influences? Skimming before taxes? It doesn’t matter where the casino is for that to happen. It just depends on who’s running the casino and law enforcement.

The Chicago Outfit skimmed off Vegas casinos into the 80s. Sam Giancanna had casinos in Mexico, Iran and Central America.

Comment by wordslinger Thursday, Dec 4, 08 @ 1:32 pm
so Baise and the IMA were dead-on when they opposed the capitol bill in its early stages because they didn’t believe gaming revenue was sufficient. whitley later jumped on the same bandwagon. guess the business guys knew something about finance.

Comment by 4 percent Thursday, Dec 4, 08 @ 4:09 pm