Liquor tax hike, video gambling struck down

By Kerry Lester

Video gambling expansion and higher liquor, candy and shampoo taxes may all be nullified as the Illinois Appellate Court found the state’s $31 billion capital construction program — and the corresponding legislation paying for it — unconstitutional.

The three-member panel unanimously found the legislation violated a provision of the constitution that requires laws to deal with a single subject.

The suit, brought by Chicago Blackhawks owner Rocky Wirtz and his family’s Schaumburg-based liquor distribution business, could affect millions in funding for a slew of suburban projects, including the Algonquin Western Bypass, Route 59 expansion in Naperville and renovation projects at Harper College in Palatine.

On the campaign trail this fall, Gov. Pat Quinn, who signed the legislation in July 2009, touted the construction program as one of his greatest accomplishments.

Roads, bridges, school additions and other infrastructure improvements would be paid through a host of different fees and taxes, along with revenue from up to 45,000 new video gambling machines in neighborhood bars and clubs and privatizing the Illinois Lottery.

Taxes on candy, soda and certain beauty products increased to 6.25 percent from 1 percent. And excise taxes on alcohol distributors increased by about 2.6 cents for a six-pack of beer, 13 cents for a bottle of wine and 81 cents for a fifth, or about 750 milliliters, of hard liquor.

Registration fees for passenger vehicles and “B” trucks were increased by $20, motor vehicle title fees increased by $40, and driver’s license fees and transfer of registration fees doubled.

Putting all of that in one bill was unconstitutional, the appellate court decided, noting in its 18-page opinion that provisions of the legislation did not “have a natural and logical connection to the single subject of revenue to the state.”

Both the governor’s and attorney general’s office quickly indicated plans to appeal the court decision, and are seeking asking the state Supreme Court to prevent the ruling from taking effect.

While that request is pending, capital projects already in progress will continue as planned, according to the governor’s office.

It is expected that the tax hikes and increased fees will remain in place until the court decides whether to grant a stay on the appellate court ruling.

If the court does not order everything to remain in place until it rules or if it affirms the appellate decision, then the secretary of state’s office will have to offer refunds to people who registered vehicles at the higher rate, said Dave Druker, spokesman for the secretary of state.

Wirtz issued a statement Wednesday saying the ruling is gratifying because the law created “a discriminatory tax on wine and spirits.”

Leaders in the General Assembly on Wednesday were assessing the implications of the court’s ruling.

A spokeswoman for House Republican Leader Tom Cross of Oswego said his office is reviewing the ruling, adding that he is committed to job growth and will work with lawmakers to try to achieve that goal.

Senate President John Cullerton, a Chicago Democrat, issued a similar statement noted that investing in jobs and infrastructure remains a “top priority.”

Suburban lawmakers offered mixed reactions.

Lake Barrington Republican Sen. Dan Duffy, who voted against the 2009 legislation, said he has maintained all along that the various funding sources should be separated into different bills, not combined into the same one.

He said lawmakers who voted against it were branded as against good roads and the like.

“I wanted to improve our roads,” but didn’t want to raise some fees or the liquor tax, Duffy said.

Yet, he said, “I don’t think anybody can celebrate one way or another. We don’t know the full impact yet.”

Rep. Elaine Nekritz, a Northbrook Democrat, said the capital projects are vital to economic growth and the court’s decision puts not only future projects in jeopardy but those that have already started.

“Lots of folks have been relying on it. There have been promises made and, in some cases, promises kept that would have to be undone,” Nekritz said. “I think we would have to go back and start from scratch.”

Work on Harper College’s student center and renovation of its engineering and technology center and hospitality program area are among the projects in jeopardy.

“As soon as we heard about this we became concerned, but we think eventually it will be ironed out with the Illinois Supreme Court or in the legislature. Our planning is continuing on as normal,” college spokesman Phil Burdick said. “Since all of these are in the planning stages. It really doesn’t affect us yet.”

Sen. Matt Murphy said he was surprised by the decision but glad to see the court support the single-issue rule required in legislation.

Like Duffy, the Palatine Republican voted against the capital project back in May 2009 and said he was concerned with all the tax and fee increases as well as the addition of video gambling in bars and other neighborhood establishments, which was one of the ways to raise money to fund the projects.

He said the General Assembly should use the opportunity to re-examine the issue and see what is truly affordable in the middle of a financial crisis.

“This may be an opportunity to revisit whether the state can afford a capital bill of this size,” Murphy said.

If the Supreme Court upholds the lower court’s ruling, lawmakers would be forced to reexamine funding mechanisms on a piecemeal basis.