Lawmakers send cigarette tax increase to governor

SPRINGFIELD, Ill. -- Illinois lawmakers began passing legislation Sunday that would balance the budget by raising taxes on cigarettes and casinos, borrowing money and laying off government employees.

A cigarette tax increase of 40 cents a pack was sent to Gov. George Ryan on an 82-33 House vote. The increase is expected to generate about $230 million a year.

The higher casino tax, expected to raise about $135 million, was approved by the House 81-33. It was sent to the Senate, which has approved a slightly different version of the bill.

Legislators were expected to vote later on blocking a costly tax break for businesses and borrowing about $750 million that would be repaid with money from a lawsuit against the tobacco industry.

But maneuvering over gambling slowed down lawmakers' work on the second overtime day of the session.

Gambling supporters pushed a plan to take an unused casino license and auction it off, generating hundreds of millions of dollars for the state. The license, one of 10 in Illinois, is tied up in a legal dispute.

It failed in the Senate, 21-30.

'The last hurrah'

Senate President James "Pate" Philip, R-Wood Dale, said he planned to wrap up the legislature's work whether the bill passed or not.

"This is the last hurrah," he said. "We're not staying any longer."

Top officials have struggled for months to craft a budget plan that could win legislative approval in a high-stakes election year.

State revenue has plummeted as expenses climbed. For the first time in almost 50 years, Illinois government will take in less money than the year before, creating a shortfall of at least $1.35 billion in the upcoming budget.

The General Assembly already has approved a plan to spend at least $53 billion. It provides less money for most state services, including education and medical services to the poor. The exact impact depends on how much money the state has for the fiscal year starting July 1.

Ryan warned Saturday that revenue continues to fall, and he probably will have to make cuts from the budget lawmakers send him. Closing a prison and mental institutions are strong possibilities, since Ryan proposed those cuts last week.

He also called for cutting 6,500 state jobs, but lawmakers have since approved an early retirement plan that will encourage many workers to leave voluntarily and save about $64 million.