Mt. Vernon Register-News

State News

June 6, 2013

Quinn calls pension session after credit downgrade

(Continued)

SPRINGFIELD — —

Quinn said he had contacted Madigan and Senate President John Cullerton about the pension session. Anderson confirmed there is no deal, but said there's time to seal one before lawmakers ride back into town.

Madigan and Cullerton — both Chicago Democrats, like Quinn — adopted differing plans to catch up over 30 years on the debt after decades of state underfunding of employee retirement programs, but neither proposal got approval in the opposite chamber.

"Moody's provides more damning evidence that we can't afford a continual stalemate on pensions," Cullerton spokeswoman Rikeesha Phelon said.

Moody's tagged its downgrade to legislative indecision.

"Our rating now assumes the government will not take action to reduce the state's pension liabilities any time soon," the Moody's statement said. "The Legislature's political paralysis to date shows not only the magnitude of Illinois' unfunded benefit liabilities, but also the legal and political hurdles to legislation that would make pensions more manageable."

It was a similar story on Monday, the first business day after the General Assembly's curtain, when Fitch Ratings dropped its score from "A'' to "A-".

A third agency, Standard & Poor's, said Thursday that it would keep its mark at "A-" for now because when it last issued a downgrade in January, it predicted action this spring "was unlikely given the poor record of the past two years and the lack of consensus on a plan."

Downgrades cost Illinois millions of dollars extra in interest costs when officials sell government bonds to raise money, primarily for long-term construction projects. Such bonds, backed by general tax revenue, are still highly stable investments, but such high debt makes markets jittery.

Cullerton and Madigan differ on a pension approach. Cullerton worries about complying with the Constitution's restrictions on diminishing promised pension benefits, so his idea would reduce perks but would give workers a choice on which to forgo. Public-employee labor unions back it.

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