Illinois appeals court voids revenue for state bonds

CHICAGO (Reuters) – An Illinois court without ceasing Wednesday voided a law that created a variety of revenue sources earmarked beneficial to funding big transportation projects and other job-generating programs.

The Illinois Appeals Court ruled the enactment violated the state Constitution’s requirement that bills contain connected subject matters and not disparate items.

The law, passed in 2009, included a extensive array of revenue measures, including higher motor vehicle title fees, a liquid tax increase, the authorization of video gambling, and new sales taxes ~ward candy and other products.

Making matters more complicated is the narrate’s sale last year of bonds whose debt service payments may have ~ing linked to the revenue sources that were struck down by the Appeals court without interrupti~ Wednesday.

The state sold at least .2 billion of taxable ecumenical obligation Build America Bonds for capital projects last year. The functionary statements for the deals said the billion capital plan includes on the eve .6 billion of bonds with debt service paid through the income sources that were struck down by the appeals court on Wednesday.

Illinois was planning a different billion to .5 billion bond sale for capital projects in slow spring or early summer, the state’s capital markets manager said this month.

Kelly Kraft, a spokeswoman for Governor Pat Quinn, related all the bonds issued for the capital plan have a beginning of payment and that the general obligation bonds are backed “by the full-faith credit and taxing power of the state.”

Quinn’s station said in a statement that the ruling will be appealed, and the civil community is seeking an immediate stay from the Illinois Supreme Court.

Robin Prunty, an analyst at Standard & Poor’s Ratings Services, said the prevalent will not affect the state’s general obligation rating, that was affirmed at A-plus with a negative outlook on Tuesday.

There was ~t any immediate reaction to the ruling in the secondary municipal market because the state’s bonds, according to market analysts and traders.

CHALLENGES TO SINGLE-SUBJECT RULE NOT UNCOMMON

Liquor distributor W. Rockwell Wirtz filed the action in August 2009, claiming various violations of the state constitution, including the honest-subject requirement. The lawsuit headed to the appeals court after a Cook County Circuit Court tossed the disorder.

The state disclosed the lawsuit in its bond documents.

Mark Rosen a enactment professor at the Chicago-Kent College of Law, said it is not unusual for state laws to be challenged for not following the ingenuous-subject rule.

“They are often readily rewritten and repassed,” Rosen reported. “But as a practical matter, it can be difficult to commit to memory statutes repassed, given the political realities of mustering a majority.”