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IL: Week in Review — Shaky credit, pension punt, new Legislature, old problems

By   /   January 11, 2013  /   No Comments

By Benjamin Yount | Illinois Watchdog

SPRINGFIELD  — It could be the week of “I told you so” in Illinois.

Lawmakers, as expected, failed to act on pension reform early in the week. And Illinois’ credit, as expected, suffered by week’s end.

Credit downgrade

Fitch Rating Service on Friday put Illinois on its negative watch list after lawmakers failed to even vote on a pension reform proposal.

The statement from Fitch says Illinois has six months to act before the rating service will review its rating of the state’s credit.

But it is not just Illinois’ $96-billion pension debt that is troubling Fitch. The statement also specifies Illinois’ nearly $9 billion in unpaid bills and a dependence on late payments to manage the budget.

WE’RE BROKE: Pallasch says credit downgrade should be surprise to no one.

Gov. Pat Quinn’s office does not disagree.

“The Fitch report speaks for itself. This should be required reading for every member of the new General Assembly. We have an emergency and it’s not going away,” said Quinn budget spokesman Abdon Pallasch.

Illinois lawmakers reintroduced pension reform legislation, but no one at the Capitol expects any action for months.

“Today’s announcement by Fitch is disappointing but not surprising,” said Illinois Comptroller Judy Baar Topinka “Our state has seen its credit downgraded 12 times in four years, and we’ve been told that further inaction will bring more of the same. Our state and its taxpayers cannot afford delay – we must act now to address our staggering fiscal challenges.”

State Sen. Dave Syverson, R-Rockford, said Illinois lawmakers need to listen to the warnings from groups like Fitch, and approve a long term pension solution.

“If lawmakers OK another temporary solution, like a tax increase or more borrowing, the bond houses will downgrade us again,” Syverson said Friday.

Pension punt

There was a flurry of activity at the beginning of the week. The97th General Assembly ended with plenty of talk about pension reform, but zero action.

Lawmakers could not come together behind the Nekritz-Biss reform legislation. That plan would have tweaked cost-of living-adjustments for public retirees, required more money from local schools and governments for their public workers’ retirement benefits, and would have tried to fully fund Illinois’ five pension systems in 30 years.

GIMME SOMETHING: Gov. Pat Quinn pleaded with lawmakers to do something on pension reform.

When the Nekritz-Biss plan failed, Quinn proposed an unelected commission to tackle pension reform.

“This is basically a recognition … that we need a new mechanism or structure to deal with this issue,” Quinn said at a late Tuesday committee hearing.

State Rep. Eliane Nekritz, the Northbrook Democrat who tried for months to shepherd pension reform through the Legislature, would only say the governor tried.

“There are clearly members who would prefer not to vote on pension reform,” Nekrtiz said. “This is an alternative to that.”

A legislative panel OK’d Quinn’s commission idea, but lawmakers didn’t even attempt a vote on the House floor.

New Legislature

Many of the faces are the same, and almost all of the problems are the same, but there is a new General Assembly in Illinois.

RAISE YOUR HAND: The new Illinois House of Representatives takes their oaths of office Wednesday.

A new House and Senate took their oaths of office on Wednesday.

Democrats enjoy even more power than usual in the new General Assembly, with super-majorities in both the House and Senate.

But there was little party bragging during the inaugural ceremony. Instead top Democrats focused on the difficult pension and budget realities facing the state.

“We have to call upon our inner resolves to dedicate ourselves to the solution of these problems,” House Speaker Mike Madigan said.

Senate President John Cullerton said the new General Assembly will have to find a way to balance pension obligations with the needs of 13 million people in the state of Illinois.

“We are on the verge of our state budget being turned into a financial plan that funds pension benefits, not essential services,” Cullerton said.

The 98th General Assembly begins its two year session in earnest in February.

Contact Benjamin Yount at Ben@IllinoisWatchdog.org

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