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SPRINGFIELD - In order to create new revenue to fuel a larger state budget, Gov. Rod Blagojevich wants to change the way some businesses are taxed in Illinois.

The move, similar to one three years ago, is drawing mixed reaction from lawmakers, who say the ideas have not been successful in the past.

In his budget speech Wednesday, the governor outlined plans to generate $48 million by changing the way software is taxed, ending a $25 million tax subsidy to some landfills and imposing $45 million in taxes on some gasoline-distribution companies that are now exempt. In all, the proposed changes would create an estimated $138 million.

Blagojevich said the current tax rules are unfair because they benefit business without creating jobs.

But business groups and some lawmakers responded that the governor's proposals could drive businesses out of the state or keep businesses from expanding.

"We've done enough in this state to hamstring business," said state Rep. Keith Sommer, R-Mackinaw. "The way you get out of financial difficulties is let business do what they do best, instead of hampering them."

Lawmakers against the idea called the changes incentives, rather than loopholes, the state has used to attract businesses to bring jobs to Illinois.

"It is now a joke when you go to any corporate headquarters and talk about business expansion, when you mention the state of Illinois," said state Rep. Bob Pritchard, R-Hinckley. "We're not even on their radar screen."

State Rep. Brandon Phelps, D-Norris City, is worried that changing the tax laws will hurt small businesses in his district. Some senators agreed.

Not everyone dismissed Blagojevich's proposal.

"Most of them are pretty obvious things we can close without being drastic to businesses," said state Rep. Mike Boland, D-East Moline. "I don't think it's really an anti-business budget at all."

But Senate Minority Leader Frank Watson, R-Greenville urged caution.

"We have to be very careful about what we do. He's (Blagojevich) always bashing business but the businesses in this state, small business, in particular, are the ones that create jobs," said Senate "Most of the action over the last three years have been very negative to job creation and job growth."

"You know we can talk about big corporate loopholes, but a lot of times we have unintended consequences and they hurt small businesses that really are the backbone of the economy in this state," added state Sen. Brad Burzynski, R-Clare.


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