CHICAGO -- The longest budget impasse in recent Illinois history continued yesterday, as paychecks for state employees became the latest battleground between the governor and the Legislature.

Gov. Jim Edgar, a Republican, on Wednesday proposed the Legislature appropriate about $300 million to ensure that state employees are paid on time through the end of the month.

Democrats rejected the plan, arguing that Gov. Edgar was seeking to solidify the support of Republican legislators with backers on the state payroll for his position in the drawn-out budget battle.

"It doesn't fund all of the obligations of the state," said Steve Brown, a spokesman for House Speader Michael Madigan. "It only funds the Republican patronage army."

Dan Egler, a spokesman for Gov. Edgar, said the governor wanted to remove state employees from the danger of a partisan budget battle.

"Obviously, we're not close to an agreement yet on the budget, but the governor doesn't think state employees should be held hostage" because of the impasse, Mr. Egler said.

Also on Wednesday, Sangamon County Circuit Court Judge Susan Meyerscough denied an emergency request by the state's largest employee union to order the state comptroller to issue paychecks even if a budget has not been approved. The union is appealing.

State Comptroller Dawn Clark Netsch earlier this week told the governor and legislative leaders that a budget had to be passed by today for her to have the authority to issue paychecks on July 15 to about 10,500 state employees.

The budget deadlock also has delayed a meeting that state officials had planned to have this week with Standard & Poor's Corp. officials to present the state's budget. The rating agency on Feb. 11 placed the state on Creditwatch with negative implications due to its sagging cash balance.

"We don't have anything to show them yet," said George Hovanec, deputy state budget director.

The state has now gone the longest time without adopting a budget since the state changed to an annual from a biennial budget in 1971, according to Jack Vanderslik, director of the Legislative Studies Center at Sangamon State University in Springfield. The state's fiscal year began July 1.

The standoff continues because Republicans and Democrats remain divided on a few key issues. Republicans want to make permanent the 20% income tax surcharge that expired June 30, while Democrats want to extend the tax for only two years. Republicans also want to change the distribution formula for the tax by diverting money to the state's general funds that had been going to local governments.

Republicans also have tied any extension of the surcharge to the enactment of property tax caps on local governments in the suburbs of Chicago, but Democrats have rejected that linkage.

Still unclear at this point is how far apart the two sides are on the budget. Republicans said Wednesday that the sides are hundreds of millions of dollars apart on spending cuts in Gov. Edgar's proposed $25.6 billion budget, while Democrats maintained that Republicans only need to drop their linkage of the surcharge and property tax caps for an agreement to be reached quickly.

The lack of a budget does not effect the state's ability to make debt service payments, according to William Ledbetter, economic development chief in the Bureau of the Budget. Under state law, debt service payments on both the state's general obligation and Build Illinois outstanding debt are continuously appropriated and are not subject to annual appropriations.

Payments for outstanding civic center and McCormick Place debt are scheduled to avoid being effected by a budget stalemate, Mr. Ledbetter said.

McCormick Place payments are scheduled for December and June, while civic center payments are set for August and December. Mr. Led-better added that the August payment on civic center bonds can be made from appropriations made in the last fiscal year.

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