Ill. Senate passes budget that shorts pensions

Friday, May 7, 2010

(SPRINGFIELD, Ill.) -- Democrats in the Illinois Legislature began pushing forward Thursday with a budget that would shortchange troubled pension systems and give the governor broad new power over spending.
The Illinois Senate approved it 31-26 early Friday morning, just hours after the 2,300-page plan was introduced. It moves to the House, which is considering a similar proposal.
Democratic leaders said they weren't happy with the proposal but had little choice. Rank-and-file legislators won't approve a tax increase or major spending cuts, they say.
"We have not had the will, the fortitude to do the right thing," said the budget's sponsor, Sen. Donne Trotter, D-Chicago.
Republicans, who largely have been shut out of budget talks, condemned the proposal.
"This is nowhere near being a sincere effort at being fiscally responsible," said Sen. Matt Murphy, R-Palatine.
The two parties are so divided that they couldn't even agree on whether the measure would raise or lower state spending. Trotter said it would reduce spending by about $2 billion but provided no details to support that claim.
The state owes government pension systems $3.7 billion but can't come up with the money. So Democratic leaders propose delaying the payment until January.
They hope that after the fall election, it will be easier to reach a deal on borrowing the money, raising taxes or taking other action.
Pension officials object. They note that delaying the payment means giving up months worth of interest that could be collected if the $3.7 billion were invested.
To keep checks going out to retirees, the pension systems probably will have to spend between $100 million and $200 million of their assets, said William Atwood, executive director of the Illinois State Board of Investment. That would put the systems, already underfunded by about $80 billion, even further behind.
Atwood said he also worries January will arrive and officials still won't be able to find the pension money. The retirement systems could end up with no money at all, he said.
Instead of approving spending program by program, the budget would create huge lump sums and let Gov. Pat Quinn decide how to spend it. With money tight, that means he will have to cut some services.
The measure also would let him dip into special-purpose state funds and spend the money as he sees fit.
Republicans ridiculed the idea of voting on a budget that even Trotter acknowledged he hadn't had time to read. They pointed out that in March, the Senate unanimously approved legislation requiring a four-day review period before voting on budget bills.