An Illinois bill to sell up to $4.1 billion in pension obligation bonds is being included in a budget deal among state Democratic legislative leaders that would increase state income taxes to 5.25% from 3%, in an effort to bolster the state’s credit rating.
The Illinois Senate is currently in a lame-duck session, and Senate President John Cullerton, the bond bill’s sponsor, said he expects a vote on the proposal before the session ends Jan. 11.
The revenue generated from the proposed bond sale would go to three statewide pension plans. About $2.358 billion would go to the $33.2 billion Illinois Teachers’ Retirement System, Springfield; $960 million to the Illinois State Board of Investment, Chicago; and $777 million to the $12.9 billion Illinois State Universities Retirement System, Champaign.
The bond sale had been in legislation passed by the Illinois House on May 25 but had not been approved by the state Senate.
Asked about his concern regarding whether additional borrowing would further damage the state’s bond rating, Mr. Cullerton’s spokesman John Patterson said in an e-mailed response: “The larger package the Senate president is working on would allow the state to pay its bills on time and re-establish a sound fiscal footing. That would send a strong, positive message to current and prospective creditors.”