The entire 2011 construction season is in jeopardy due to what is referred to as the "Wirtz decision" that was handed down by the Illinois Appellate Court for the First District earlier this year.

At issue are a collection of four laws enacted by the state in 2009 to fund the $31 billion "Illinois Jobs Now!" capital development program.  These laws amended the Video Gaming Act and the Capital Spending Accountability Law, as well as amendments to the Illinois Lottery Law, the State Finance Act, the Use Tax Act, the Service Use Tax Act, the Retailers' Occupation Tax Act, the Motor Fuel Tax Law, the University of Illinois Act, the Riverboat Gambling Act, the Liquor Control Act, the Environmental Protection Act, the Vehicle Code and the Criminal Code.

In short, they did things ranging from raising taxes on alcohol and candy to authorizing video poker games in bars and other private establishments.  One Rockwell "Rocky" Wirtz, owner of the Chicago Blackhawks and Wirtz Beverage Illinois, took offense and filed suit, alleging that the legislation violated the "single subject rule" of the Illinois Constitution which requires that legislative bills be confined to a single subject.

On Jan. 26, the appellate court handed down its ruling, agreeing with Wirtz.  In doing so, the court invalidated the increased taxes on wine, beer, alcohol and spirits.  In addition, the court invalidated the higher tax rates imposed on certain candy.  The court also invalidated the legislation that provided the Illinois Department of Revenue with the authority to conduct the lottery through a management agreement with a private manager, and to run a pilot program of lottery ticket sales over the Internet.  Certain fees and fines imposed under the Vehicle Code were also invalidated, as was the grant of jurisdiction to the Illinois Gaming Board to administer and enforce video gaming laws.

Illinois Attorney General Lisa Madigan has appealed the decision to the Illinois Supreme Court.  The court has agreed to hear the case on an expedited timetable and granted a stay in the interim, requiring retailers to continue to collect the questioned taxes.

The problem now is that no one seems to know what the term "expedited" means to the Supreme Court, when a decision might be rendered and what to do legislatively in the meantime.

Pursuant to the expedited schedule, the state submitted its brief outlining it's appeal before the court-imposed March 25 deadline.  Wirtz has until April 25 to respond.  Then the state has until May 2 to respond to Wirtz's brief.  At some point after that, the court will render its verdict.  This process commonly takes many months to play out but, as was seen in the recent case to decide whether or not Rahm Emanuel was qualified to run for mayor of Chicago, it can happen very quickly.

Resolving this matter is a priority agenda item for the Illinois State Chamber of Commerce.  Todd Maisch is the chamber's vice president of government affairs.

"No one knows for certain when the Supreme Court will make a decision," Maisch said.  "The situation is very muddled, very serious, but it's been impossible to get a consensus on the way forward at this point."

Tim Garvey, executive director of the Southern Illinois Builders Association, agrees. He says that the simplest solution is for the Supreme Court to overturn the appellate court ruling, but if and when that might happen is anyone's guess.

"Even if - after the oral arguments are made in May - they were to determine that the law did not violate the single subject rule, it's already put a real crimp in the 2011 construction season," Garvey said.  "And, if the legislative session is scheduled to conclude on May 31, there is no guarantee that the Supreme Court will rule before then, allowing time for the General Assembly to correct the situation if necessary.  So that means that we'll probably lose the current construction season if the subject is not addressed by the end of the session.  Then we're back to the new General Assembly session next winter.  So right now, this whole thing has just got everything hung up in the works," he added. 

Senate President John Cullerton has introduced legislation that would repeal the video poker authorization and add a $1 tax to the pack of cigarettes in an attempt to at least partially stabilize the funding base for "Illinois Jobs Now!."  Under the 2009 law, counties and home rule cities could opt not to allow video poker within their boundaries and some did.  The Illinois Chamber opposes Cullerton's bill, however.

"We'd be very concerned about that," Maisch said.  "We're hearing from a lot of different businesses that have made substantial investments in trying to bring video poker around and essentially being good partners with the state in making video poker work for the capital program.  If video poker is rejected, there'd be an awful lot of businesses that made investments on good faith, and they're going to be out of an awful lot of money.  We think that's a huge fairness issue," added Maisch.

Aside from that proposal, there doesn't seem to be much of a consensus on what to do, according to Maisch.  Some in the legislature want to wait for the Supreme Court's decision and then respond to that.  Others, he says, want to be more proactive and try to save the construction season through legislative action.

"I think that those of us who are interested in infrastructure investment would wish that the four leaders and the governor would spend a little more time together, reach consensus on a course of action and then go," Maisch said.

This article, by Alan J. Ortbals, originally appeared in the April 2011 edition of the Illinois Business Journal.

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