THIS TENTH LICENSE WILL GENERATE MORE THAN $350 MILLION DOLLARS

IT IS TIME THE TAXPAYERS FINALLY BENEFIT FROM THAT $350 MILLION DOLLARS.

AND IN FUTURE YEARS, THIS TENTH LICENSE, WILL GENERATE OVER $100 MILLION DOLLARS EVERY YEAR — MONEY WE CAN USE TO INVEST IN SCHOOLS, BETTER HEALTHCARE, AND PUBLIC SAFETY.

AS FOR THE NINE EXISTING CASINOS – UP, RUNNING, AND GOING STRONG —

LAST YEAR THEIR TOTAL REVENUES EXCEEDED $2 BILLION.

IT’S TIME FOR THEM TO ANTE-UP. WE ARE GOING TO ADJUST THE EXISTING RATE SCHEDULES FOR CASINOS TO PROVIDE $115 MILLION IN NEW REVENUES.

AND CASINOS MAKING EXORBITANT AMOUNTS OF MONEY CAN HELP EVEN MORE. CASINOS WITH ADJUSTED GROSS REVENUES OF $250 MILLION OR MORE WILL BE REQUIRED TO PAY A 20% WINDFALL SURCHARGE. THIS WILL PROVIDE AN ADDITIONAL $48 MILLION TO THE TAXPAYERS — THE VERY PEOPLE WHO GAVE THE CASINOS THE PRIVELEGE TO OPERATE IN THIS STATE.

AND THERE’S A LOT MORE THAT THIS BUDGET SETS RIGHT.

OUR BUDGET ALSO PROPOSES RAISING UNIVERSITY OUT-OF-STATE TUITION TO THE SAME LEVEL OF OUR NEIGHBORING STATES. FOR EXAMPLE, UNIVERSITY OF WISCONSIN STUDENTS FROM OUT OF STATE PAY $14,000 PER YEAR MORE THAN IN-STATE STUDENTS.

BY CONTRAST — OUT-OF-STATE STUDENTS WHO ATTEND THE UNIVERSITY OF ILLINOIS PAY ONLY $8,604 MORE THAN IN-STATE STUDENTS.

THE UNIVERSITY OF ILLINOIS IS VIEWED AS ONE OF THE BEST VALUES IN THE COUNTRY, FOR THE CITIZENS OF ILLINOIS WHO INVEST IN IT NOT ONLY WITH TUITION DOLLARS BUT ALSO WITH THEIR TAX DOLLARS, IT WILL REMAIN SO.

BUT, BY ENDING THE SUBSIDY TO OUT-OF-STATE STUDENTS , WE WILL GENERATE $20 MILLION.

AND FINALLY, FAIRNESS MEANS CLOSING THE CORPORATE LOOPHOLES THAT ALLOW CORPORATIONS TO SKIRT THEIR OBLIGATIONS TO THE STATE WHILE REGULAR, HARDWORKING PEOPLE DIG DEEP INTO THEIR POCKETS, WEEK IN WEEK OUT.

MOST CORPORATE LOOPHOLES HAVE BEEN ON THE BOOKS FOR DECADES. BUT WHAT MADE SENSE IN 1955 DOES NOT NECESSARILY MAKE SENSE TODAY.

SOME BUSINESS INCENTIVES — NECESSARY THEN, AREN’T NECESSARY NOW.

EVEN RECENT CORPORATE SALES TAX EXEMPTIONS CAN QUICKLY BECOME OBSOLETE.

IN THE EARLY 80S THE GOVERNMENT HELPED THE GRAPHIC ARTS INDUSTRY GET OFF THE GROUND WITH A TAX EXEMPTION ON EQUIPMENT.

THE PERSONAL COMPUTER WAS JUST MAKING ITS ENTRANCE INTO THE BUSINESS WORLD.

PRINTING WAS STILL VERY EXPENSIVE. AND GRAPHIC ARTISTS WEREN’T WELL PAID.

TAX INCENTIVES HELPED JUMPSTART WHAT IS NOW A FLOURISHING TRADE EMPLOYING HUNDREDS OF THOUSANDS WITH ARTISTIC TALENT IN HIGH-PAYING JOBS. THIS IS TRULY AN ACCOMPLISHMENT.

BUT TIMES HAVE CHANGED. TODAY THE SITUATION HAS REVERSED.

THE EQUIPMENT GRAPHIC ARTISTS USE NOW IS RELATIVELY INEXPENSIVE.

BY ELIMINATING THIS LOOPHOLE-WE CAN FREE UP $3.6 MILLION PER YEAR WHICH COULD BE PUT TO BETTER USE SOMEWHERE ELSE.

OTHER LOOPHOLES INCLUDE THE ROLLING STOCK EXEMPTION, THE MANUFACTURER’S PURCHASE CREDIT, THE INTERIM USE OF PERSONAL PROPERTY PRIOR TO SALE EXEMPTION, THE COAL, OIL AND DISTILLATION EQUIPMENT EXEMPTION, AND THE REPLACEMENT VEHICLES EXEMPTION.

ALL TOTALED CLOSING THESE LOOPHOLES WILL SAVE THE STATE $127 MILLION.

IN ADDITION WE ARE TARGETTING OTHER LOOPHOLES. LET ME GIVE YOU A LIST.

THE RESEARCH AND DEVELOPMENT CREDIT;

THE TRAINING EXPENSE CREDIT;

LIFE HEALTH INSURANCE GUARANTEE ASSOCIATION TAX OFFSET;

THE FOREIGN INSURER RATE REDUCTION;

THE REPLACEMENT RATE REDUCTION;

AND THE STANDARD EXEMPTION.

CLOSING THESE LOOPHOLES, SOMETHING THAT SHOULD HAVE BEEN DONE A LONG TIME AGO, IS WORTH $65 MILLION TO THE STATE.

WE ARE ALSO GOING TO ADJUST THE NET OPERATING LOSS DEDUCTION.

CURRENTLY, BUSINESSES ARE ALLOWED TO ADJUST THEIR TAXES RETROACTIVELY, BASED ON CURRENT LOSSES — AND GET BACK TAXES THEY PAID DURING THE GOOD YEARS.

WE ARE ONE OF 27 STATES THAT ALLOW THIS LOOPHOLE.

AND OURS IS MORE GENEROUS THAN MOST.

OTHER STATES LIMIT THIS PRACTICE TO TWO YEARS. THIS BUDGET PROPOSES THAT WE ADOPT THE FEDERAL STANDARD. IT WILL SAVE US $20 MILLION AND MUCH MORE IN THE YEARS TO COME.

THE NATURAL GAS TAX IS ANOTHER POORLY FORMULATED TAX LAW. OUR LAWS PLACE ILLINOIS NATURAL GAS AT A COMPETITITVE DISADVANTAGE WITH NATURAL GAS PRODUCED IN OTHER STATES.

WE TAX NATURAL GAS PRODUCED IN ILLINOIS. NATURAL GAS PURCHASED OUT OF STATE IS NOT.

THIS LAW ENCOURAGES BUSINESSES IN ILLINOIS TO BUY THEIR NATURAL GAS FROM OUT OF STATE COMPANIES. CLOSING THIS LOOPHOLE WILL SAVE US $70 MILLION AND HELP US PUT THE ILLINOIS NATURAL GAS INDUSTRY ON A MORE LEVEL PLAYING FIELD.

DID YOU KNOW THAT WE ARE THE ONLY STATE AMONG OUR NEIGHBORS THAT ALLOWS PEOPLE TO BUY AND SELL SMALL PRIVATE PLANES AND NOT PAY TAXES?

SOMETIMES A PLANE IS BOUGHT PURELY AS A TAX SHELTER.

I SAY, LET’S PUT A STOP TO THESE SHENANIGANS AND SAVE THE STATE OF ILLINOIS $26 MILLION.

ILLINOIS CURRENTLY HAS AN ESTATE TAX. IT APPLIES PRIMARILY TO THE 158 LARGEST ESTATES IN ILLINOIS. THAT MEANS THAT .0003% OF ILLINOIS FAMILIES ARE SUBJECT TO THE ESTATE TAX.

THIS BUDGET DOES NOT PROPOSE INCREASING IT.

WHAT WE DO PROPOSE, HOWEVER, IS DECOUPLING THIS STATE TAX FROM THE FEDERAL TAX.

DOING THIS WILL GENERATE $35 MILLION IN FISCAL YEAR 2004.

ELEVEN OTHER STATES HAVE ALREADY CLOSED THIS LOOPHOLE.

WE SHOULD ALSO REQUIRE THE PREPAYMENT OF CIGARETTE TAXES TO IMPROVE COMPLIANCE. THIS WOULD SAVE THE STATE $50 MILLION DOLLARS.

CLOSING THESE LOOPHOLES IS FAR BETTER THAN RAISING TAXES ON WORKING MEN AND WOMEN.

I KNOW EACH ONE OF THESE LOOPHOLES HAS ITS OWN TEAM OF LOBBYISTS.

THEY WILL DO EVERYTHING IN THEIR POWER TO PERSUADE YOU NOT TO ACT. THEY WILL TELL YOU THAT IT WILL DRIVE BUSINESS AWAY. DON’T BELIEVE THEM.

NONE OF THESE TAX LOOPHOLES ARE WHAT KEEP BUSINESS IN ILLINOIS.

WHAT KEEPS BUSINESS IN ILLINOIS IS THE QUALITY OF OUR WORKFORCE, WHICH THIS BUDGET INVESTS IN.

WHAT KEEPS BUSINESS IN ILLINOIS IS OUR SAFE COMMUNITIES, WHICH THIS BUDGET INVESTS IN.

WHAT KEEPS BUSINESS IN ILLINOIS, IS OUR HOSPITALS AND HEALTH CARE FACILITIES, WHICH THIS BUDGET INVESTS IN.

WHAT KEEPS BUSINESS IN ILLINOIS IS OUR EDUCATIONAL SYSTEM, WHICH THIS BUDGET INVESTS IN.

AND WHAT KEEPS BUSINESS IN ILLINOIS IS OUR LOW INCOME AND SALES TAXES, WHICH THIS BUDGET PROTECTS.

THIS BUDGET, DOES HOWEVER, PRESERVE A WIDE ARRAY OF TAX EXEMPTIONS FOR BUSINESS. EVEN THOUGH WE ARE FACED WITH THE WORST FISCAL CRISIS IN THIS STATE’S HISTORY, WE ARE ONLY CLOSING LOOPHOLES THAT NO LONGER MEET THE NEEDS OF A 21ST CENTURY ECONOMY. THAT’S WHY WE ARE PRESERVING EXEMPTIONS LIKE THE EDGE TAX CREDIT — WHICH HELPS ATTRACT BUSINESS AND JOBS TO ILLINOIS.

TAX EXEMPTIONS AREN’T GRANTED BY RIGHT. THEY SHOULD BE GRANTED BY REASON. THIS BUDGET, FOR THE FIRST TIME IN DECADES, STARTS TO MAKE SENSE OF THE TAX CODE, AND MAKES SURE THE TAXPAYERS GET THE MOST FOR THEIR MONEY.

ONE TAX CREDIT THAT DOES HELP WORKING FAMILIES IS THE EARNED INCOME TAX CREDIT. IT BELONGS ON THE BOOKS AND IT WILL STAY IN MY BUDGET.

TODAY, I HAVE DETAILED TOUGH SPENDING CUTS, NEW SPENDING PRIORITIES AND CLOSED LOOPHOLES OUR STATE CAN NO LONGER AFFORD.

BUT I’M NOT DONE QUITE YET.

MORE REFORM IS NEEDED TO INSURE THAT HERE IN ILLINOIS WE USE OUR ASSETS WISELY.

THERE’S BEEN A LOT OF DISCUSSION ABOUT THE PENSION FUND REFINANCING.

THE LONG AND THE SHORT OF IT, IS THAT WE ARE REFINANCING SOME OF OUR $35 BILLION DEBT TO TAKE ADVANTAGE OF LOW INTEREST RATES.

THE EMPLOYEES OF THE GOVERNMENT OF ILLINOIS HAVE FIVE PENSION FUNDS.

PREVIOUS ADMINISTRATIONS UNDERPAID THESE PENSIONS FOR MORE THAN TWO DECADES AND USED THAT MONEY FOR OTHER SPENDING, CHOOSING TO PASS ALONG THE BURDEN OF MAKING UP THE DIFFERENCE.

THE REFINANCING OF OUR PENSION BONDS MEANS CONVERTING $10 BILLION OF AN EXISTING $35 BILLION DEBT INTO BONDS, WHICH WE CAN LOCK INTO AT TODAY’S MUCH LOWER INTEREST RATES.

I THINK SOME OF YOU MAY HAVE ALREADY HEARD ABOUT THIS.

I’D LIKE TO THANK THE LEGISLATURE FOR PASSING THIS PROPOSAL.

AS YOU KNOW, YOU JUST SAVED THE STATE $1.9 BILLION.

BUT USING OUR ASSETS MORE WISELY ISN’T EASY, WHICH IS PROBABLY WHY PREVIOUS ADMINISTRATIONS HAVEN’T BOTHERED, EVEN THOUGH THAT HAS COLLECTIVELY COST THE TAXPAYERS BILLIONS OF DOLLARS.

UNFORTUNATELY, NOT ALL OF OUR DEBT IS GOOD DEBT. WE DO HAVE A BACKLOG OF UNPAID TAX REFUNDS OF ALMOST $800 MILLION.

RIGHT NOW WE OWE $79.5 MILLION DOLLARS IN INTEREST ON UNPAID TAX REFUNDS TO CORPORATIONS. EVERY WEEK, WE ARE ACCRUING $565,000 IN INTEREST .

WE SHOULD REDUCE THAT RATE TO A MORE REALISTIC LEVEL OF 3%.

THAT MEANS IF CORPORATIONS OWE US MONEY, THEY PAY 3%. AND IF WE OWE THEM MONEY, WE PAY 3%.

THAT WOULD SAVE THE STATE $11 MILLION DOLLARS.

WE CAN ALSO USE OUR ASSETS TO GENERATE NEW MONEY THROUGH MEANS OTHER THAN REWORKING DEBT. THERE’S AN OLD SAYING: WHEN TIMES ARE HARD, YOU DRINK BEER, NOT CHAMPAGNE.

THE TOLLWAY BUILDING HAS BEEN DESCRIBED AS THE TAJ MAHAL OF ILLINOIS. THE TAJ MAHAL IS KNOWN AS ONE OF THE EIGHT WONDERS OF THE WORLD. THE TOLLWAY BUILDING IS A WONDER OF WASTE, EXCESS, AND ARROGANCE.

TODAY I’M GIVING IT A NEW LABEL: FOR SALE. THE SALE OF THE TOLLWAY BUILDING WILL GENERATE $30 MILLION.

AND THAT IS NOT THE ONLY PROPERTY WE WILL SELL. ALSO ON THE AUCTION BLOCK AS OF TODAY IS PROPERTY AT THE ELGIN MENTAL HEALTH CAMPUS THAT WE ANTICIPATE WILL GO FOR $3 MILLION.

RECOGNIZING THE CHALLENGING BUDGET PICTURE, WE CAN ALSO TAKE BETTER ADVANTAGE OF OUR ASSETS THROUGH THE SALE AND LEASEBACK OF SOME STATE FACILITIES, LIKE THE THOMPSON CENTER.

THIS WOULD GENERATE AN ADDITIONAL $200 MILLION.

BY THE WAY, WE DON’T NEED PRIME REAL ESTATE IN DOWNTOWN CHICAGO. IF ANYONE WANTS TO PURCHASE THE BUILDING OUTRIGHT, WE’D BE MORE THAN HAPPY TO MOVE SOMEWHERE ELSE.

I’VE SPENT MORE THAN AN HOUR TELLING YOU WHAT WE ARE GOING TO DO.

NOW LET ME SPEND A FEW MINUTES TELLING YOU WHAT WE ARE NOT GOING TO DO:

WE ARE NOT RAISING THE INCOME TAX.

WE ARE NOT RAISING THE SALES TAX.

WE ARE NOT RAISING CONSUMER FEES.

WE ARE NOT CUTTING EDUCATION, HEALTH CARE OR PUBLIC SAFETY.

WE ARE NOT GOING TO CONTINUE THE RAMPANT, UNEXAMINED OVER-SPENDING THAT HAS MARKED THE LAST DECADE.

IN FACT, WE ARE INVESTING TO MAKE OUR SCHOOLS BETTER, OUR COMMUNITIES HEALTHIER, AND OUR STREETS SAFER.

WE COULD HAVE USED THIS CRISIS AS AN EXCUSE TO TAKE THE EASY WAY OUT, AND RESORT TO THE TIRED OLD APPROACHES OF RAISING TAXES AND SLASHING SPENDING.

WE DID NOT DO THAT.

WE PROTECTED AVERAGE PEOPLE. WE LEARNED HOW TO DO MORE WITH LESS.

THIS BUDGET REQUIRES A GREAT DEAL OF SACRIFICE. BUT THE CUTS WE PROPOSE AND THE REVENUE WE CAN GENERATE ARE REASONABLE, WISE AND PRUDENT.

THERE IS SOMETHING IN THIS BUDGET EACH OF YOU PROBABLY WON’T LIKE.

THAT’S WHAT HAPPENS WHEN YOU FACE A $5 BILLION DEFICIT.

BUT KEEP IN MIND, THE CONSTITUTION REQUIRES US TO BALANCE THE BUDGET. SO WHEN YOU SAY “DON’T CUT THIS” OR “SPEND MORE ON THAT,” DON’T FORGET THAT EVERY DOLLAR YOU TAKE AWAY IS A DOLLAR WE HAVE TO TAKE FROM SOMEWHERE ELSE.

IN OTHER WORDS, WE’RE ALL GOING TO HAVE TO ACCEPT SOME CUTS AND SOME CHANGES WE DON’T REALLY LIKE.

NOW, I KNOW THIS HAS BEEN A LONG ADDRESS.

MARK TWAIN ONCE SAID, ” IF I HAD MORE TIME, I WOULD HAVE WRITTEN A SHORTER STORY.” THE SAME HOLDS TRUE WITH SPEECHES.. WELL, I’M NO MARK TWAIN.

AND EVEN WITH THE EXTRA TIME YOU GRANTED US TO PREPARE THIS BUDGET, SOLVING THE WORST FISCAL CRISIS IN OUR HISTORY TAKES SOME TIME TO ACHIEVE, AND SOME TIME TO EXPLAIN.

I ALSO FELT IT WAS IMPORTANT TO SPELL OUT HOW — BY WORKING TOGETHER — AND BY PUTTING PARTISANSHIP ASIDE — WE CAN SOLVE THIS FISCAL CRISIS.

AND HOW WE CAN MAKE ILLINOIS A BETTER PLACE TO LIVE.

OUR STATE FACES THE LARGEST DEFICIT IN OUR HISTORY. THIS BUDGET BLUEPRINT ELIMINATES IT.

OUR STATE IS WEIGHED DOWN BY GOVERNMENT WASTE. THIS BUDGET BLUEPRINT ELIMINATES THAT TOO.

OUR STATE HAS BEEN PLAGUED BY POOR ACCOUNTING AND WEAK FINANCIAL MANAGEMENT. THIS BUDGET BLUEPRINT REQUIRES AGENCIES, FROM THE VERY FIRST DAY OF THE YEAR, TO ESTABLISH A 2% RESERVE TO PREPARE FOR THE UNCERTANTIES OF REVENUE AND OF THE REAL WORLD.

THE REMAINING 98% WILL GO THROUGH A QUARTERLY ALLOTMENT SYSTEM, SO WE DON’T JUST MANAGE ANNUALLY, BUT DAY IN, AND DAY OUT.

IN OTHER WORDS, FOR THE FIRST TIME IN A LONG TIME, SOMEONE IS GOING TO BE MINDING THE STORE.

I’M EVEN RENAMING THE BUREAU OF THE BUDGET — THE GOVERNOR’S OFFICE OF MANAGEMENT AND BUDGET — SO WE CAN PREPARE OUR BUDGETS WITH AN EYE TOWARDS BETTER MANAGEMENT, LONG-TERM PLANNING, AND DOING MORE WITH LESS. SPENDING MONEY WISELY REQUIRES DISCIPLINE. WE’RE GOING TO PROVIDE THAT DISCIPLINE.

THIS BUDGET PROTECTS OUR INVESTMENTS IN EDUCATION, IN HEALTH CARE, AND IN PUBLIC SAFETY.

IT BALANCES THE BUDGET WITHOUT RAISING THE INCOME TAX, THE SALES TAX, OR CONSUMER FEES.

IT LEAVES MONEY FOR OUR RAINY DAY FUND. DESPITE FACING A $5 BILLION BUDGET DEFICIT, WE WERE ABLE TO BALANCE THIS BUDGET AND SET ASIDE $50 MILLION DOLLARS AND PLACE IT IN A RAINY DAY FUND. AND THAT’S JUST A DOWN PAYMENT ON A LONG-TERM INVESTMENT IN THE FUTURE OF THIS STATE.

THIS BUDGET IS AN OPPORTUNITY. IF WE SEIZE THE OPPORTUNITY, IF WE PUT ASIDE PARTISAN DIFFERENCES, IF WE WORK NOT FOR THE FEW, BUT FOR THE COMMON GOOD, WE CAN OVERCOME THIS FISCAL CRISIS AND START MOVING OUR STATE FORWARD.

PERHAPS EVEN MORE IMPORTANTLY, BY WORKING TOGETHER TO BALANCE THIS BUDGET IN A FAIR, HONEST WAY, WE CAN GIVE THE PEOPLE THE KIND OF

GOVERNMENT THEY CAN START BELIEVING IN AGAIN.

THIS IS A UNIQUE TIME.

A TIME OF WAR. A TIME OF RECESSION. A TIME OF FISCAL CRISIS. A TIME WHEN WE ARE STILL REELING FROM YEARS OF A CULTURE THAT EMBRACED CYNICISM AND ABANDONED IDEALISM. YET IT IS ALSO A TIME OF GREAT OPPORTUNITY.

WE ARE DEMOCRATS. WE ARE REPUBLICANS. WE ARE FATHERS AND MOTHERS, SONS AND DAUGHTERS. WE BRING DIFFERENT EXPERIENCES TO THE JOB OF LEGISLATING AND GOVERNING. BUT AS DIFFERENT AS WE ARE, WE SHARE A COMMON MISSION. WE ARE HERE TO PURSUE THE PUBLIC GOOD.

AT THIS TIME IN OUR HISTORY, THIS PURSUIT REQUIRES THE COURAGE TO CHANGE.

IT IS EASY TO CRITICIZE. IT IS HARDER TO LEAD.

IT IS EASY TO QUESTION. IT IS HARDER TO FIND ANSWERS.

IT IS EASY TO TEAR DOWN. IT IS HARDER TO BUILD.

THE PEOPLE OF THIS GREAT STATE ASK US TO WORK AS HARD AT OUR JOBS AS THEY DO AT THEIRS. IT IS TIME TO LEAD.

THE BUDGET I HAVE DETAILED FOR YOU TODAY IS MADE OF NUMBERS, FACTS AND FIGURES. BUT LET US NEVER FORGET, IT IS ALL AT THE SERVICE OF PEOPLE.

EVERY DECISION WE MAKE ON THIS BUDGET AFFECTS THEIR WALLETS, THEIR HEALTH, THEIR SAFETY, AND THEIR CHILDREN’S FUTURES.

IT IS OUR JOB TO PROTECT THEM. IT IS OUR JOB TO PASS A BUDGET THAT DOESN’T JUST KEEP THEM IN MIND, BUT HELPS THEM GET AHEAD.

BECAUSE WHEN THE GOOD OF THE PEOPLE AND NOTHING ELSE, DRIVES OUR DECISIONS AND DICTATES OUR ACTIONS, THE ONLY THING WE CAN ACHIEVE IS A BETTER ILLINOIS.

AT THIS TIME, AT THIS PLACE AND AT THIS HOUR, LET US EMBRACE CHANGE. FROM EVERY CORNER OF ILLINOIS, WE COME TO THIS GREAT CHAMBER. LET US NOW WORK TOGETHER TO BUILD AN ILLINOIS AS GOOD AND AS HONEST AS THE PEOPLE WHO LIVE IN IT.

THANK YOU. GOD BLESS YOU.