CHICAGO — The Illinois Senate adjourned a one-day session Thursday after the Democratic majority failed to muster enough support to win passage of a $3.8 billion general obligation issue to cover state pension payments owed in the current fiscal year.
A three-fifths supermajority vote of 36 in the Senate is needed for any new borrowing authorizations. Democrats hold 37 seats but some oppose the plan and others were absent Thursday so Republican support was needed. SB 3514 — which authorizes the bonding — and its amendments were held in executive committee when it became clear a vote would fail.
"The Senate president has maintained all along that this will require bipartisan support. When it was clear that there continues to be no support from Republican members, he deferred a vote on the legislation until later in the fall session," said John Patterson, a spokesman for Senate President John Cullerton of Chicago.
The Senate and House return to work in mid-November for their annual fall veto session. Democratic Gov. Pat Quinn is hoping to win support for the measure now that the state election is history. The state is facing an up to $15 billion budget gap going into fiscal 2012 next July and did not fund the fiscal 2011 pension payments. Some of the state's pension funds said the lack of monthly payments state has forced them to sell off assets to cover expenditures.
Illinois sold $3.5 billion of five-year GO notes to cover much of its fiscal 2010 pension payment. The state's mammoth unfunded pension liabilities of $62.4 billion and its reliance on borrowing to cover the fiscal 2010 payments are factors that contributed to a series of rating downgrades.
Earlier this year, the House approved a $3.7 billion pension borrowing plan but the Senate did not vote on it before adjourning its regular spring session. The revised legislation calls for borrowing up to $3.8 billion through the sale of eight-year GOs with no principal payments in the first two years.
The state would retire $100 million in the third year, $300 million in the fourth year, $600 million in the fifth year, $900 million in the sixth and seventh years, and $1 billion in the eighth year.
Any delay into the new year when a new General Assembly convenes would make it harder to win passage. Several Democrats lost their Senate seats, as did several in the House. House Democrats hold 71 seats but that majority will fall to a 64-54 split when the new Legislature is sworn in. A total of 71 votes are needed to pass the pension bonds in that chamber.
Moody's Investors Service rates the state's $25 billion of GOs A1 with a negative outlook, while Fitch Ratings rates them A with a negative outlook and Standard & Poor's rates the state A-plus, but it has the credit on negative watch.