The Illinois Senate yesterday approved a bill authorizing the sale of $16 billion of general obligation pension bonds to help bring down the state’s $42 billion unfunded pension liability, sending the measure to the House where it faces tougher opposition.
The bill required a three-fifths super majority — because it involves new debt issuance — and received it in a 37-21 vote. Democrats control both chambers but don’t hold a super-majority in the House, so at least five Republican votes would be needed to pass the measure. Democratic House Speaker Michael Madigan also has raised questions over the bond issue and it’s unclear whether he will support it.
Under the plan proposed by Gov. Rod Blagojevich as part of his operating budget, the state would issue $16 billion of debt to bring the pension’s funded ratio up to 75% from its current level of 63%. The state’s $10 billion 2003 pension bond issue brought the ratio up from 48%.
The governor also wants to restructure the long-term amortization schedule to increase annual payments by $300 million, putting the system on track to reach a funded ratio by 2033 — 12 years earlier than the current plan — at an overall savings of $34 billion in contributions. The state would use bond proceeds to cover about $500 million from an upcoming payment owed to the system — a move Republicans yesterday blasted.
