Illinois Gov. Rod Blagojevich proposed refinancing pension debt to take advantage of lower interest rates and put $16 billion toward the $43 billion state pension funding gap, according to a statement on the governors website. The move would even out annual payments and allow the state to reach a 90% funded status 12 years earlier than current projections, according to the statement, which was released Wednesday in conjunction with the governors 2009 budget address. Mr. Blagojevich issued pension bonds in 2003, when rates were similarly low. Since then, the state has paid out $1.9 billion on that bond, but has earned $5.2 billion in investment income. Thats a net benefit of $3.3 billion for the state. Last year, Mr. Blagojevich proposed issuing pension obligation bonds and leasing the state lottery to create $26 billion to shore up the pension funding gap.