Ill. Court Throws Out Liquor Taxes, Video Gambling

An Illinois appellate court ruled Wednesday that lawmakers have to start over if they want to raise taxes and legalize video gambling to pay for a $31 billion statewide construction plan.

A unanimous 1st District appellate court tossed out higher taxes on liquor, candy, and items such as toothpaste, along with video-machine gambling in taverns. They said the law making the changes violated the state Constitution's prohibition on bills that deal with more than one subject.

Gov. Pat Quinn, who vowed an immediate appeal to the state Supreme Court, signed the law in July 2009. It increased revenue to fund a long-awaited plan for building highways, bridges, schools and making other infrastructure improvements. Chicago Blackhawks owner Rocky Wirtz, who also heads one of the state's largest liquor distributorships, sued Quinn and other state officials over the law just before it took effect in September 2009.

"This lawsuit was always about how the legislature passed this bill and the discriminatory tax on wine and spirits," Julia Sznewajs, a spokeperson for Wirtz Beverage Illinois, wrote in a statement. "The decision affirms that and we are gratified by it."

The items taxed at higher rates by the law won't immediately drop in price while all players wait to see how an appeal proceeds.

The legislation legalized video gambling and raised liquor excise taxes and taxes on candy, some beverages, and grooming products. It also allowed for private management of the Illinois Lottery, required financial reports on capital projects from the governor's office, and even commissioned a University of Illinois study on the effect of lottery ticket purchases on families.

Not all of them had to do with state revenue, the court said.

"The wide range of topics in (the law) cannot be considered to possess a 'natural and logical connection,'" the court opinion read.

It also invalidated several companion pieces of legislation, including the mechanism for funding capital construction projects.

Quinn said he would seek a stay of the decision from the Supreme Court, putting the appellate court's decree on hold until the high court could decide the issue.

"Capital bill projects are putting thousands of people to work in every corner of the state, while supporting local business, improving our infrastructure and increasing energy efficiency," the Democratic governor said in a prepared statement.

Both Democratic Senate President John Cullerton of Chicago and House Minority Leader Tom Cross, R-Oswego, issued statements reiterating their commitment to job growth through state-sponsored construction.

Two East Central Illinois lawmakers predict the legislature will still find a way to bail out the capital plan, should Illinois' Supreme Court knock it down or refuse to hear the case.

Democratic Senator Mike Frerichs said given the importance of what's at stake, he is confident that a bipartisan group of lawmakers, with the necessary legal help will make the changes to see it through.

"We had attorneys involved the first time, but I think we'll probably look a little closer, take the opinions of the appellate court justices in mind or the Supreme Court justices in how they rule," Frerichs said. "We should be able to fix it this year."

Frerichs said it is vital that the state do what it can to improve roads and other infrastructure, and building work at the University of Illinois and other college campuses around the state.

Catlin Republican House member Chad Hays said a number of projects are pending in his district that rely on these funds, including more than $800,000 for upgrades to the David S. Palmer Arena, and funds for an education center at Kennekuk County Park. Hays said some of those dollars have already come through.

"Just last week some funding for some energy efficiency upgrades at the Danville YMCA for example were released," Hays said. "So prior to this ruling by the appellate court, some of that money was actually beginning to flow."

Hays said he has staff reviewing the appellate court's opinion, and agrees quick action on a new plan could be needed to protect projects in his district.

Illinois legislators will be back in Springfield next week.

If the Supreme Court upholds the ruling, lawmakers would have to begin anew to adopt video gambling and the tax increases necessary to pay for construction - presumably breaking legislation up into smaller pieces.

A spokeswoman for Attorney General Lisa Madigan, Robyn Zeigler, said in an email that the state will ask the Illinois Supreme Court for an immediate stay of the decision. That will be filed Thursday, Zeigler said.

(Additional reporting from the Associated Press and Illinois Public Radio)