Ill. Gov. Suspends Lawmakers Pay Amid Pension Logjam

CHICAGO — Illinois Gov. Pat Quinn Wednesday announced he is suspending pay for lawmakers until they address the state’s pension crisis.

Quinn said he would use his line-item veto power to write lawmakers’ stipends and salaries out of the new fiscal 2014 budget until they have sent him a comprehensive pension reform bill.

The move came the day after a special legislative commission charged with breaking the logjam on pension reform failed to meet Quinn’s deadline for addressing what he called the state’s central crisis.

Illinois has a $95 billion unfunded pension liability, the worst in the country, with only a 40% funded ratio. Lawmakers’ failure to solve the state’s pension crisis before adjourning their regular session at the end of May drove two ratings downgrades. All three rating agencies assign a low single A rating to the state’s general obligation debt and a negative outlook.

“For two years we’ve had this General Assembly fail to act,” Quinn said at a press conference in downtown Chicago. “There is a principle as old as the Bible: You don’t get your wages when the job isn’t finished,” he said. “This is the leverage the taxpayers need to get this done.”

Quinn also said he would not take his own salary until he signs into law a reform solution.

The House and the Senate have the ability to override Quinn’s veto with a supermajority.

After the announcement, Illinois Comptroller Judy Baar Topinka said she has requested a legal review of the move. “While I understand and appreciate the governor’s focus on pension reform, real questions have been raised about the legality of his action,” Topinka said, citing a section of the state constitution that prohibits changing the salary of members during their terms.

The review should be completed before lawmakers are set to receive their next paychecks on August 1.

House Speaker Mike Madigan, D-Chicago, made the rare move of agreeing with Quinn, saying in a statement that he hopes the strategy works. For some, Madigan’s statement was a signal that a vote to override Quinn would not be called in the House.

Senate President John Cullerton, D-Chicago, called the governor’s move political grandstanding and unproductive. “Our efforts on pensions will continue until we’ve reached our goal,” he said in a statement. “In the meantime, the work of the pensions conference committee shouldn’t be undermined or deterred.”

The downgrades and negative headlines of pension inaction drove up the state’s already steep penalties to borrow when it sold $1.3 billion of general obligation bonds late last month. The spread on the deal’s 10-year uninsured bond to the Municipal Market Data benchmark scale rose to 164 basis points from 141 on a sale in June.

The most recent gridlock is over two plans. One, sponsored by Cullerton, asks employees and retirees to accept cuts in exchange for preserving their retiree healthcare subsidies. Madigan sponsored a separate plan that imposes direct cuts and offers double the savings.

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