Progress Illinois

Even if Illinois borrows to pay this year's annual pension contribution, the state's bond rating may take another tumble.

That's the word from Moody’s Investors Services, which issued a report Monday warning that selling another $3.75 billion in bonds to cover public employee retirement costs may not prevent another downgrade. (Maintaining a high rating, and proving Illinois is credit worthy, is important because it keeps the state's borrowing costs low.) Lawmakers have already sold $13.5 billion worth of pension-related debt over the last decade, including $3.5 billion last fiscal year.

The alternatives to borrowing are no better though, a point even Moody's concedes. Lawmakers could skip the payment entirely, costing the pension systems roughly $25 billion in future value. They could divert $3.75 billion from the General Revenue Funds, thereby starving cash-strapped agencies like the Department of Human Services. Selling bonds, on the other hand, "would at least limit deterioration in the funded status of the state’s pensions, which are the lowest-funded among state," according to the credit rating agency.

After the State Senate put off the decision for months, passing SB 3514 during the final days of the January veto session is probably the best outcome for which taxpayers can hope.

Yesterday was a busy day in the state capitol. In a historic vote, the House passed a civil unions bill, which could be signed into law as early as this week. (We covered the debate, in all of its glory, here.) In another hot-button debate, the chamber voted down a medical marijuana pilot program to the dismay of its chief sponsor, State Rep. Lou Lang (D-Skokie).

Those weren't the only bills considered. The House overwhelmingly passed a bill (SB 3538) that lowers retirement benefits for future firefighters and police officers, who were exempt from the "pension reform" legislation approved this past spring. (Because the bill included a steep ramp-up in Chicago's contributions to its pension system, Mayor Richard Daley is furious at its passage.) A bill (SB 3539) to abolish the death penalty cleared committee but was held from full consideration. State Rep. Karen Yarbrough (D-Chicago) says she is one or two votes shy of reaching a majority. (The Sun-Times editorializes in favor of the measure this morning.) And a major gambling expansion (SB 737) squeaked out of a State Senate committee yesterday. The bill, slightly reworked from the original version, would create licenses for five new Illinois casinos, boost the number of slot machines at existing Illinois river boats, and add slots at Illinois racetracks. David Ormsby provides a good overview here.

The action moves to the State Senate this morning. We will provide updates about their progress today and tomorrow.