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Chicago lawyer John Schmidt said Thursday that as governor, he would ban state employees from accepting any gifts from companies doing business with Illinois.

Schmidt, who is seeking the Democratic nomination in the 1998 governor’s race, also said during the taping of a radio news program that if elected, he would seek a statewide income tax increase to help fund public schools. He was lacking in specifics, except for saying the proposal also would include a gaming tax hike.

Though tax increases would have to be approved by a legislature that has shown no recent inclination to do so, Schmidt said a gift ban “would be done by executive order. We don’t need big-league gift givers dealing with the state government.”

The stance on gifts adopted by Schmidt, a longtime national Democratic Party fundraising chief and key Illinois supporter of President Clinton, comes as the federal fraud and bribery trial of a top contributor to Republican Gov. Jim Edgar winds down in Springfield.

According to testimony in that case, employees of the Department of Public Aid accepted gifts of dinners, trips and cash from the owners of a firm with state contracts.

Talking about his plan as governor to ban employees from accepting such gifts during the taping of “At Issue” to air at 9:30 a.m. Sunday on WBBM-AM 780, Schmidt said: “Without that kind of a flat prohibition, you’re always going to have arguments about whether a particular gift was or wasn’t intended to influence behavior.”

But in Springfield, Edgar later said an executive order “doesn’t necessarily” remove the potential for such problems.

“There was such an order in place (at Public Aid) and, apparently, some of the employees failed to follow that. Maybe Mr. Schmidt wasn’t aware of that,” said Edgar, who returned from a Colorado vacation in which he discussed his political future with family members.

Edgar aides said the governor was drafting legislation to ban the receipt of gifts throughout state government and other agencies.

The Republican governor also said he will make his long-awaited decision in late August on whether he will seek re-election, make a bid for the U.S. Senate or retire from public life.

During the taping in Chicago, Schmidt said Edgar’s failure to persuade Republican legislators to go along with his spring session proposal for an income tax as part of a plan to reform the way public schools are funded in Illinois showed a lack of leadership.