Bomke: Pension bond flaws prevented vote

[November 06, 2010]  SPRINGFIELD -- The Illinois Senate returned to Springfield on Nov. 4 to consider a contentious pension bonding measure. However, according to state Sen. Larry Bomke, R-Springfield, after calling senators back to Springfield, at an expense of tens of thousands of taxpayer dollars, the bill was not heard on the Senate floor and no vote was taken.

Just two days after the Nov. 2 elections, Senate lawmakers traveled to Springfield with plans to vote on Senate Bill 3514. The pension bonding legislation required three-fifths approval and would have allowed Gov. Pat Quinn to sell up to $4.1 billion in general obligation bonds to finance the state’s fiscal 2011 payment to the five state pension systems.

However, the measure was sent to the Senate Executive Committee, where it failed to advance. Lacking the votes for passage, the Senate adjourned with no vote taken on the proposal. Senate President John Cullerton said the pension bonding measure will likely be revisited during the fall veto session, which begins on Nov. 16.

Though proponents of the measure said the massive borrowing plan is comparable to previous measures, Bomke explained there are significant differences.

The "backloaded" payment schedule associated with Senate Bill 3514 stands in stark contrast to the $3.5 billion in pension bonds approved in fiscal 2010, which were required to be repaid quickly. In the 2009 plan, the payments decline over five years, becoming much more affordable over time and accruing much less interest.

The payment schedule for Senate Bill 3514 would have steeply increased over time, resulting in up to $1 billion in total interest costs. The measure perpetuates a cycle of borrowing and spending that creates higher payments for future taxpayers and digs an even bigger budget hole to be addressed next year.

Bomke said the biggest problem with the borrowing proposal was the lack of a plan to pay back the loan. Senate Republicans continue to argue that other options need to be considered before borrowing, like cutting spending, Medicaid and other reforms.

In addition, Illinois' credit ratings have deteriorated in the past year, meaning taxpayers will pay more in interest costs because of the state's poor credit history. Illinois has seen more credit rating drops in less than two years under Gov. Quinn than under any other governor, including Rod Blagojevich. Illinois is now tied for the worst credit rating in the nation and has been warned by at least one rating agency that its credit standing is likely to be dropped again.

[Text from file sent on behalf of Sen. Larry Bomke by Illinois Senate Republican staff]