As the Illinois pension crisis hit home again Friday with another Wall Street credit downgrade, state Treasurer Dan Rutherford predicted $95 million in taxpayer costs and further inaction from state lawmakers to solve the problem.
"I don't think that these negative notices - watches, warnings and downgrades - is what's gonna cause [action on pension reform]" Rutherford said Friday.
"I think the action is gonna come when these numbers are gonna start to hit home, when it has become realistic that only $600 million - and that's a lot of money - in additional revenue is coming in and $940 million more in pension payments."
The gap between those projected numbers along with the state's $97 billion unfunded pension liability also struck fear into the Standard & Poor's credit agency, which downgraded Illinois bonds to an A- rating with a negative outlook Friday, giving the state the worst credit rating in the nation.
"If less action is taken, one of three things has to occur," Rutherford said. "Either [lawmakers] go out and borrow the spread - the $340 million dollars - which is very bad. Two, they raise more revenue - taxes or fees - which is very bad. Or three, cut the budget by $340 million."
As Illinois surpasses California as the country's worst credit risk and is set to issue $500 million in bonds Wednesday, Rutherford fears the costs to taxpayers could be substantial.
"This downgrade just occurred today, but prior to this our estimate is - compared to where we are today, compared with a AAA rating - it will cost the taxpayers about $95 million more in interest than if we had a better bond rating," he said.
The downgrade on Wall Street follows a largely lethargic lame-duck session earlier this month that passed no pension reform, despite a deadline set by Gov. Pat Quinn.
"That was on Jan. 9 - inaction," Rutherford said Friday of the deadline. "Two days later, Fitch put us on a negative watch. Moody's had us as 50th of the worst states in the nation. Today, Standard & Poor's has moved us from 49 to 50."
The treasurer also said that "the problem with Illinois is the leadership we have in Illinois today." So what would Rutherford - who is considering a 2014 run for governor - have done differently?
"I would have not given the income tax increase two years ago without forcing the issue of resolving the problem," he said. "You don't agree to one piece and hope the rest of it comes along. I would've suggested put revenue on the table, have it as part of the negotiation. But you don't give this thing more money until you solve the problem."
And what are the treasurer's thoughts on Senate Bill 1, the current proposition in the Legislature to solve the pension crisis?
"I'm very open to discussing that," he said. "I think the idea of having those kind of substantive, and appear to be fair [discussions]...I'm very open to that. But we can't set dates and not meet them."