By Joanne von Alroth Karen Pierog
SPRINGFIELD, Ill. May 31 The Illinois
legislature ended its spring session without final action on two
major proposals to reform its deeply underfunded pension system
- leaving the state's weak credit rating at risk of sinking
The state capitol's two most powerful politicians - House
Speaker Michael Madigan and Senate President John Cullerton,
both Democrats - were unable to find a compromise to address the
state's $100 billion unfunded pension liability.
With Illinois' credit rating the lowest among U.S. states,
lawmakers vowed to continue working toward some resolution. But
no path toward compromise and no timetable emerged as first the
House and then the Senate gaveled their spring sessions to
Moody's Investors Service midday Friday reiterated a warning
that Illinois' A2 credit rating could be cut if pension reform
stays elusive. And Robert Amodeo, portfolio manager at Western
Asset, a firm with $460 billion in assets under management, said
bond holders will be watching closely for next steps.
"If talks break off, the market place will penalize them,"
House Speaker Madigan, in remarks before adjourning his
chamber at around 7:30 p.m. Friday - well ahead of the midnight
deadline for the spring session - held out hope for compromise.
"I don't think we should take our lack of success today as a
reason to give up," Madigan said in his end-of-session address
to the House. He referred to "huge problems" that remain without
mentioning pensions by name.
But Tom Cross, the House minority leader, reminded members
that the inconclusive adjournment was reminiscent of past
failures on pension reform. "I feel like I'm hearing the same
speeches I heard a year ago," Cross said.
"How are we going to sell bonds? What is it going to cost
us?" Cross asked.
And Cullerton, during a brief press conference following
adjournment, offered no ready answer on how to end the standoff.
"I don't know," he said. "I've tried everything."
GAY MARRIAGE, CASINOS ALSO STALLED
Pension reform was not the only casualty of the stalled
Bill after bill fell by the wayside: A vote on gay marriage
was put off until the fall, and a revamped effort to expand
casino gambling fizzled.
Even a relatively minor plan that would have required the
state's community colleges and universities to carry the cost of
funding their employees' pensions died in the Senate on Friday.
Late Friday, the legislature did manage to complete passage
of a $35.4 billion general fund budget for the fiscal year that
begins on July 1. The budget passed over the objections of
Republican lawmakers who contended the plan locked in increased
spending that would force the state to stop the scheduled
partial roll back of a big income tax rate increases in 2015.
But on the big issue of the legislative session - pensions
-the state's two most powerful legislative leaders showed no
apparent effort at compromise on positions they had held for
weeks. The bill Madigan sponsored opts for unilateral cuts in
retirement benefits for current and retired state workers,
teachers, legislators, and college and university employees to
reap the maximum cost savings.
Madigan's bill, which the unions have vowed to challenge in
court on constitutional grounds, would immediately reduce the
state's unfunded liability by $21 billion, according to
actuarial analyses by the state's pension funds.
Cullerton, meanwhile, was pushing a bill passed by his
chamber that would generally allow workers to retain access to
state-sponsored healthcare in retirement if they opt for pension
Cullerton's plan, which has the backing of public labor
unions, would shave the state's nearly $100 billion unfunded
pension liability by only $9.13 billion.
Governor Pat Quinn, a Democrat, has kept a low profile
throughout the legislative session. He issued a statement
decrying the failure to pass a major pension bill.
"This is wrong," Quinn said. "I will call the legislative
leaders together in the coming week to forge a comprehensive
pension reform agreement."