Friday, November 05, 2010
 
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Senators deadlocked on pension borrowing

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[November 05, 2010]  SPRINGFIELD -- A controversial $4.1 billion pension borrowing proposal is still on hold after the Illinois Senate returned to Springfield two days after a contentious general election.

For months, Illinois lawmakers have discussed borrowing as a way to make the state's annual payment to its five public employee pension systems. The Pew Center for the States recently reported that as of 2008, Illinois is one of the worst states at contributing to its pension systems.

The current proposal would allow state government to sell up to $4.1 billion in bonds that would have to be paid off with interest in eight years. The state would likely borrow less money as a result of changes that Gov. Pat Quinn inked earlier this year to pension benefits for new state employees.

State government has struggled in years past to meet its scheduled yearly payment to the state's five public employee pension systems. The borrowed money would allow state government to make this year's contribution but would become "hard debt" that state government would owe to lenders with interest.

A Senate committee heard discussion on the borrowing proposal, but Senate President John Cullerton, D-Chicago, withdrew the proposal before a committee vote.

State Sen. Dave Syverson, R-Rockford, said Illinois Senate Democrats, most of whom support pension borrowing, are ignoring their own campaign messages from this week's election.

"They obviously haven't learned from even their own campaigns, in which they kept campaigning on fiscal responsibility, and the very first measure after the election is to do record amounts of borrowing and no possible means to pay that money back," he said.

State Sen. John Sullivan, D-Rushville, a supporter of the borrowing plan, said borrowing would help avoid dipping into funds that pay schools and state vendors.

"Our options are not like they're 'good' and 'bad.' It's 'bad' and 'worse.' And so what we're trying to do is free up some money that we can pay ... the businesses and entities that are doing business with the state," he said.

State Sen. Larry Bomke, R-Springfield, said he opposes the borrowing plan because it adds debt and does not provide a long-term solution to the state's financial woes.

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He said that without borrowing, the state would have to free up funds to make the pension obligation.

"You'd have to find the money. You'd have to cut programs to pay the pensions. There's no statutory requirement that we pay any of these programs. There is (a statutory requirement) that we pay the pensions," he said.

In May, the Illinois House passed the proposal by just one vote. Retiring state Reps. Bill Black, R-Danville, and Bob Biggins, R-Elmhurst, joined Democrats in supporting the proposal.

Since then, Senate President John Cullerton has repeatedly said his chamber lacks the votes to pass the proposal, despite the extraordinary majority Democrats currently have in the Illinois Senate.

State Sen. Mike Frerichs, D-Champaign, said Republican leadership is hindering passage of the proposal.

"I think it's going to take Republicans who are serious about fiscal discipline and putting money into our pension system. And then we'll come together and find a way through revenue and cuts to have a balanced budget. But right now, we need to make that payment into the pension system," he said.

The Illinois Senate would need a three-fifths majority to pass the borrowing proposal. If the Senate passed the proposal, it would go to Quinn for consideration.

The pension borrowing plan under consideration is Senate Bill 3514.

[Illinois Statehouse News; By KEVIN LEE]

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