CHICAGO - Cook County's pension reform proposal died a second death in the Illinois General Assembly.
The legislation, which would overhaul the county's troubled pension system, also failed to generate sufficient legislative support last year.
The General Assembly officially adjourned May 31 without taking action on the bill. It passed the House Pension and Personnel Committee on May 20 by a 5-4 vote along party lines, with Republicans voting against it. It was sent to the House floor but was never picked up there due to a lack of support.
"I am disappointed by Springfield's lack of action on Cook County's pension reform plan," County President Toni Preckwinkle said in an emailed statement to The Bond Buyer. "We are approaching the point of no return for the Cook County retirement system. We have reached an untenable situation and doing nothing is no longer an option. I will continue to work with the General Assembly and the Governor to get our bill passed and review all options to protect the interests of Cook County taxpayers, retirees and employees."
The General Assembly is expected to return to Springfield this summer, but action on the county bill appears unlikely.
Moody's Investors Service and Fitch Ratings both have the county on negative outlook due largely to the underfunded pension plans. County Chief Financial Officer Ivan Samstein told The Bond Buyer last week that a new downgrade could cost taxpayers an additional $25 million a year in interest as the county would likely restructure $625 million of variable-rate bonds into fixed-rate debt to avoid any termination events.
Preckwinkle also pushed the bill in the final days of last year's session, where it passed the Senate but failed to win enough support in the House. The proposal was introduced again this year late in the session, facing added difficulty tied to the state Supreme Court's recent ruling that pensions are constitutionally protected.
Like Chicago, which faces its own pension crisis, Cook needs the state's authority to make any changes to its retirement systems. Also like Chicago, Cook argues that its proposed pension reform is different enough from the state's to withstand a court challenge.
The county's main pension fund has a funded status of 54% with a $6.8 billion liability. That includes health care obligations.
Preckwinkle's proposal would, among other things, allow the county to tap revenue other than property taxes to fund retirement obligations.
Moody's rates the county A1 and Fitch rates it A-plus, both with negative outlooks. Standard & Poor's rates it AA with a stable outlook.