Pension Reform Failure Fallout: State Credit Rating Downgraded; Bill Daley Critical Of Inaction
By Chuck Sudo in News on Jun 4, 2013 10:15PM
The inability of Illinois lawmakers to solve the Gordian Knot that is that state’s unfunded pension crisis—and at this point it’s safe to call it a crisis—led to Fitch Ratings downgrading the state’s credit rating Monday. Don’t let the drop from “A” to “A-“ fool you; this isn’t good.
"Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable, and that failure to achieve reform measures despite the substantial focus on this topic exacerbates concern about management's willingness and ability to address the state's numerous fiscal challenges," the ratings service wrote.
Fitch Rating’s move is the twelfth downgrade by either them, Moody’s or Standard & Poor’s since March 2009, and Moody’s warned the state Friday another downgrade of its credit rating would happen. Analyst Ted Hampton told the Tribune “failure to enact pension reforms could drive the state's general obligation bond rating lower from A2, which is already the lowest level for a U.S. state.”
Gov. Pat Quinn, who proclaimed last year he was “put on this earth” to enact pension reform, took his lumps at the University of Chicago on the subject Tuesday.
Appearing before an Institute of Politics luncheon, Quinn said he would have done so “a long time ago” by executive order if he could. Quinn said he met with Senate president John Cullerton earlier to discuss getting pension reform legislation done. House speaker Michael Madigan did not attend that meeting, which is the major obstacle toward finding a solution. The reason the spring legislative session ended without pension reform was because Cullerton and Madigan proposed separate plans and never reached a common ground.
We also learned this about Madigan: The de facto leader of Illinois’ Democratic Party apparently doesn’t carry a cellphone. (This isn’t out of the ordinary: I didn’t have a smartphone until two years ago. It’s curious one of the more powerful politicians in the state doesn’t have one, but I digress.) Quinn said he spoke with Madigan’s wife.
“It is important for the speaker to realize that it’s important for him to work together with his counterpart in the Senate to get comprehensive pension reform done,” Quinn said.
Imagine Madigan’s wife feigning taking that down as a note.
The lack of pension reform led Bill Daley to blast Quinn for a lack of leadership on the issue. Daley told the Tribune in an interview, “They both had different ideas on this bill. So who's the one who's supposed to forge a compromise? The governor.”
“I'm just stunned that this place is totally dysfunctional,” Daley said of the statehouse. “We have a governor who is like an observer, 'It's the legislature's fault.' Well, the legislature is supposed to compromise by virtue of the governor bringing the compromise together.”
Political prognosticators believe Daley has been exploring a gubernatorial run in 2014, but may wait to announce his candidacy if and when Illinois Attorney General Lisa Madigan decides to run for governor.