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Posted on 06/10/2004 5:47:27 AM PDT by Know your rights

SPRINGFIELD [IL] - A sales tax on junk food and certain soft drinks may be back in play as Gov. Rod Blagojevich and legislative leaders try to reach a budget compromise.

A two-hour meeting in Blagojevich's office Wednesday produced progress, leaders said, including on the contentious issue of revenue increases needed to balance the budget.

Among the ideas under consideration is extending the state sales tax to so-called junk food and to beverages such as fruit drinks and bottled iced tea that are not currently taxed. The idea could bring in as much as $100 million for the state.

"It is in play," said Senate Republican Leader Frank Watson, R-Greenville. "We're not necessarily advocating it, but it is an issue we will discuss."

"It is certainly on the table," said House Republican Leader Tom Cross, R-Oswego. "No one has said yes. The governor said he has some concerns about it. I think it's one of those (options) with a question mark."

The junk food tax is one of a number of revenue options the four leaders are supposed to discuss with their caucus members during the next few days. Depending on the reaction of rank-and-file members, those revenues could be part of a budget compromise or could be rejected.

Wednesday's negotiating session was the first since Blagojevich blasted a legal opinion issued by Attorney General Lisa Madigan as politically motivated. Madigan said last week that a plan to mortgage the Thompson Center in Chicago amounted to issuing state debt and needed a super-majority vote in the General Assembly to proceed. The decision wiped out a $210 million source of income. Blagojevich said the attorney general was simply doing the bidding of her father, House Speaker Michael Madigan, D-Chicago.

If the speaker was upset about Blagojevich's comments, it didn't carry over to the meeting, Cross said.

"I didn't detect any tension today," Cross said. "There was no tension on that issue at all."

Madigan normally refuses to talk to reporters after these sessions, but he said Wednesday that "we made some progress today."

"I will continue to say what I've been saying all along: that the problem here is that the governor has been borrowing and spending money that the state just does not have to spend," Madigan said. "We should work to stop that."

Cross said the leaders eliminated from discussion a number of the business tax increases Blagojevich has sought, including a tax on computer software purchased by business and changing depreciation rules.

"I think a good number of those were ruled out," Cross said.

Despite reports of progress, there is still a long way to go until a budget agreement is reached. Negotiators still haven't gotten into spending details, including how much of an increase should go for education or Medicaid spending. There isn't even agreement on whether to start with the current budget and add money to programs or to start with Blagojevich's budget plan and make cuts. Blagojevich's budget called for nearly $900 million in spending increases.

However, Watson said there is agreement not to spend as much as Blagojevich initially requested.

"We don't have the income coming in to go to the governor's (spending) level," Watson said.

Lawmakers missed the May 31 deadline set by the state constitution to pass a new budget. Rank-and-file members were sent home while selected budget negotiators continued to work. Because legislators missed the deadline, Republican votes are now necessary to pass a new state budget.

Although state government has enough money in the current budget to keep operating until June 30, if a new one isn't approved by then, it will run out of money.

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