Illinois Gov. Pat Quinn (D) has called lawmakers back into session to try to deal with the state's unfunded pension obligation. But expectations are low for a resolution, even though Democrats control both chambers and the state's credit rating is taking a beating.
Democratic Party infighting and pre-election positioning in Illinois are stalling efforts to realistically solve the state's looming $100 billion pension shortfall, deepening a fiscal crisis and forcing the state to pay more to borrow money in the future.
Moreover, there's no indication a resolution will be forthcoming any time soon, even though Gov. Pat Quinn (D) has ordered legislators back to Springfield, the state capital, for a special session on pension reform and even though Democrats control both legislative chambers.
Competing pension reform plans by the House and Senate both died in May, and, critics say, Governor Quinn has not put forward a plan of his own to remedy the state's unfunded pension obligation toward its public employees.
“People are puzzled why the governor has called a special session when no one has a plan to resolve the crisis. The governor is not really providing any leadership to make it happen, either," says J. Fred Giertz, an economist with the Institute of Government and Public Affairs at the University of Illinois in Champaign-Urbana. "It may sound good now to have a special session to deal with the crisis, but having a special session and failing again isn’t going to be much of a help for the state.”
The pension crisis deepened this week after two downgrades of Illinois' credit ratings. First, Fitch Ratings lowered to A-minus the grade it assigns to Illinois debt. Then, Moody’s Investors Services cut the state's rating on its $27 billion of outstanding general obligation bonds, from A3 to A2, and also downgraded its rating of Illinois' $5 billion in related debt.
Moody’s cited “political paralysis” in making the ratings downgrade, saying it “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 long term.” The firm said it assumes that Illinois leaders “will not take action to reduce the state’s pension liabilities any time soon.” Illinois is dead last among the states in terms of unfunded pension liabilities, after years of not socking away enough money to cover what it owes its retirees.