September 5, 2008

House Returns Next Week to Take Up Revised Lottery Lease

Speaker Madigan has called the House back into session next week to take up his plan for a revised lottery lease proposal.   Representatives will attend session on Wednesday and Thursday to consider the capital funding proposal as well as a number of the Governor’s amendatory vetoes.

Last month, the Speaker signaled that he was taking a fresh look at the Governor’s lottery lease proposal as a viable funding source for a capital program.  He followed through on that course of action this week when he announced the session days and distributed a memo to his members outlining his proposed changes to the Governor’s bill.

The primary changes include:

• The Comptroller and the Treasurer must approve any requests for bids and the final contracts.  They also have a role in the oversight of the contract.
• Creates a new Gaming Board.  This proposal is likely to be similar to one made earlier by the Speaker during negotiations over a gaming expansion bill.
• Once put in place, the new Gaming Board will also oversee the lottery lease contract.  The Board must approve any contract entered into by the lessee.
• Campaign contributions are banned from any member of the Gaming Board as well as any entity with business related to the leasing or management of the lottery.
• Allows the option of allowing the Secretary of State to administer and distribute grants appropriated from the lease receipts.
• The lease must generate at least a $10 billion bid, with $7 billion set aside for capital projects and the other $3 billion place in an escrow account to backfill the lost revenues from the lottery.

The spending side of the program will be run in separate legislation and apparently will not be considered next week.  At this writing, the plan for spending the receipts is not altogether clear.  However, good sources indicate that funds will be spent in a three-year pay-as-you-go program.  The appropriations are almost certain to spell out specific projects and not lump sums to be allocated later.

This summer, the Illinois Chamber formed a special task force to study the lottery lease and determine whether it was a proposal that could form an acceptable program.  Given the tremendous need for a capital plan and lack of quality alternatives, the task force conclusion was favorable depending on the inclusion of important taxpayer protections.  While the Chamber has not taken a position on this new proposal, the Speaker’s new provisions relating to oversight of the bidding process, ongoing contract executions, and new ethics protections are major improvements over the Governor’s plan.

House Likely to Override AV of Ethics Bill; Senate Prospects Uncertain

The House is also likely to move to override the Governor’s amendatory veto of HB 824, the so-called “pay to play” bill.  After a tortuous journey through the legislature, the legislation was rewritten by the Governor, who added several provisions that only be described as poison pills.  Both the House and Senate need to override the veto or else the entire bill will die. 

HB 824 was originally initiated to address the widespread suspicion that the Governor’s political fundraising and government contracting operations are actually an integrated system.  The bill would prohibit businesses and individuals who receive state contracts from making political contributions to executive officer responsible for awarding those contracts.

Unfortunately for the business community, HB 824 also creates a massive new regulatory regime for any employer that even bids for a contract.  Compliance with some of the provisions will prove to be impossible.  The Chamber is working on amendments to the legislation that will greatly reduce the compliance nightmare the bill currently creates.