* The feds stick their noses into a state fight…

Federal highway officials told Gov. Rod Blagojevich’s administration Wednesday that Illinois’ new high-profile ethics law conflicts with bidding requirements that must be followed to get road money from Washington.

Backers of the state law, which takes effect Jan. 1, maintain the issue can be easily addressed with follow-up legislation but that it might mean lucrative road-construction contracts would be exempted.

The ethics reforms, which were supported by President-elect Barack Obama, aim to prevent a practice known as pay-to-play politics by banning major campaign contributors from landing lucrative state contracts.

Blagojevich, whose prolific fundraising from state contractors inspired the state ban, raised the federal concerns as he vetoed the legislation earlier this year and asked the General Assembly to accept his proposed changes, said Lucio Guerrero, the governor’s spokesman.

The governor’s concern was, indeed, in the veto message, way at the bottom. He vetoed this bill because he wanted to continue raising money from road contractors.

* The Federal Highway Administration explains…

“These provisions are not consistent with the economical and efficient use of federal-aid funds,” wrote Stoner, who is based in Springfield. “They limit the pool of potential bidders and impose requirements unrelated to the qualifications of contractors to perform the work in a competent and responsible manner.”

The highway administration will not authorize federal funding for projects once the law and executive order take effect in January, Stoner wrote.

But…

“We think we can work out something. We just don’t know what form that will take,” [a Federal Highway Administration spokesman] said.

OK, so it may not be all that bad after all.

* The House sponsor of the ethics law adds…

“I see the (FHWA) letter as nothing more than a minor roadblock on the road to a more ethical Illinois,” said state Rep. John Fritchey, D-Chicago.

They should be able to clear this up with a simple trailer bill next month, as long as the governor doesn’t use one of his patented amendatory vetoes to “improve” the new legislation.

* Meanwhile, it wasn’t that long ago when gaming expansion was supposed to help pay for a new capital bill. Big trouble is brewing in that industry, however, and the casinos make a good case that the statewide smoking ban is to blame

The struggling economy has dealt a bad hand to the nation’s usually robust gambling business, a downturn made even worse in Illinois, where the state’s nearly year-old smoking ban has proved unhealthy to casinos. […]

The big gambling states— Nevada, New Jersey and Mississippi—are off 5 percent to 7 percent in casino revenue. But the picture is worst in Illinois, where casino revenue is down 20.3 percent this year. […]

…across the border in Indiana, revenues are down by only three-quarters of a percent, according to the American Gaming Association.

“They have basically the same economy, the same weather” as Illinois, Swoik said. “The only difference is the smoking ban.”

Rather than sit and play a machine or a table game for hours on end, smokers have to walk outside to take frequent breaks. So, while attendance is down only slightly, revenues per person are way off, and that is not happening in smoker-friendly Indiana.

* And there’s more trouble for the long-dormant 10th casino license…

Rosemont shouldn’t get the state’s last available casino license because the people running the suburb have “not earned the trust and confidence of the public,” the nation’s oldest citizens’ crime-fighting group will tell state gambling regulators today.

“While Rosemont’s $435 million bid for the 10th casino license is tempting, particularly in these tough times, in our view the inability of the Illinois Gaming Board to address the concerns about alleged mob ties is enough to disqualify their application,” Chicago Crime Commission president J.R. Davis says in a statement being delivered to the board.

Internal Gaming Board investigation documents I obtained years ago claimed that putting a casino in Des Plaines would be almost as “dangerous” as siting a casino in Rosemont, because the alleged outfit guys could just drive the mile or three down the road. But that never seems to get mentioned.

The Des Plaines developer’s latest bid is about a quarter of the Rosemont bid. That developer has campaign finance ties to Attorney General Lisa Madigan, who has also strongly opposed the Rosemont bid. That’s something else which rarely gets a mention.

* And there doesn’t seem to be any way to satisfy the goo-goos…

Rosemont Mayor Bradley Stephens, who succeeded his father after his death, has said he will pass laws banning village employees from working at the casino, village contractors from working for the casino and trustees from gambling at the casino.

Davis called Rosemont’s assurances “superficial.”

* Kinda sorta speaking of the capital bill, Greg Hinz touts the possibility of a gas tax funding mechanism…

Some insiders say Mr. Madigan wants to wrap funds for infrastructure into a wider income-tax hike that would serve other state needs. I consider that a bad idea for several reasons, not least among them that even now, he might not be able to pass one over a certain veto by Mr. Blagojevich.

On the other hand, Mr. Blagojevich hasn’t said much about a gas tax itself, which in some ways is less a tax than a road users fee.

Some surely would squawk. But at my corner gas station, the price of a gallon of regular is half what it was just a few months ago. Bumping the price up a nickel or a dime a gallon wouldn’t draw nearly the reaction it would have a few years ago.

Metropolis 2020, the big-business civic group, actually is campaigning for a 12.5-cent-a-gallon hike. When inflation is taken into account, the action only would put the state back where it was in 1990 and would be sufficient to fund a $14-billion statewide capital bill, according to the group.

I don’t know what the magic number is. But it sure does look like a lot of stars have aligned behind some gas-tax action now. If lawmakers don’t act soon, the next window of opportunity could be way far away.

That may well happen, but funding is only half the problem, and probably the easiest aspect to deal with. The real problem is guaranteeing that the capital plan money will be spent fairly and equitably. Nobody trusts the governor, plain and simple.

* Semi-related…

* Faulty license plates in the mix among Illinois drivers

* State spending $60,000 in search for defective license plates

* The bill that won’t die