ILLINOIS POLICY INSTITUTE
MEDIA CONTACT: DIANA RICKERT
email@example.com or 312-607-4977
Gov. Quinn refuses to rule out accepting federal bailout of Illinois' pension debt
CHICAGO (Sept. 25, 2012) – Last week the Illinois Policy Institute launched "NoPensionBailout.com," a national project aimed at preventing a federal bailout of state pension debt. A federal bailout would only delay the structural spending reforms critical to Illinois' and many other states' long-term fiscal health.
Since the project has launched, Illinois Gov. Pat Quinn has refused to state publicly that he would not accept a federal bailout of Illinois' pension debt.
Today, the Illinois Policy Institute is calling on Gov. Quinn to state publicly that he strongly opposes any federal bailout of state pensions as a matter of policy, and that Illinois will not seek – or accept – any federal guarantee of state pension debt, pension bonds or any other debt.
Over the past few days, the governor's press team has claimed that neither the Governor nor his team ever embraced the policy of a federal bailout, that a federal bailout for Illinois had been erroneously included in the Fiscal Year 2012 budget book, and that Gov. Quinn had long ago put this error to rest.
Here are the facts:
Illinois Gov. Pat Quinn's Fiscal Year 2012 budget was released in February 2011, and stated: "While the pension reform of 2010 improved the situation … significant long-term improvements will come only from additional pension reforms, refinancing the liability and seeking a federal guarantee of the debt…"
An original copy of the FY2012 budget is available online. At the request of the Illinois Policy Institute, the budget book on the Governor's website was edited within the past 48 hours to remove the reference to a federal bailout.
Today (Sept. 25), the Governor released the following statement: "The Illinois Policy Institute continues to incorrectly state this narrative about state’s requesting 'bailouts' ignoring that no governor is asking or has asked for any such bailout. We want to make clear, as Gov. Quinn did in early 2011, that the state of Illinois is not seeking a federal guarantee for its pensions. When a statement to that effect was discovered in an Illinois budget document in 2011, Gov. Quinn immediately made clear the sentence was entered in error and many media outlets reported the correct statement: ‘Illinois has no plans to seek a federal guarantee on any bonds or pension debt.’ We ask that everyone please update their records to reflect what was made clear in 2011…"
Today's statement from Gov. Quinn's office is in direct contradiction to the governor's own words. During a FOX Business interview in February 2011, Gov. Quinn said he included the possibility of a federal bailout of pension debt as "a precaution." From the interview: "The governor of Illinois said Friday he is not seeking a federal guarantee of his state’s pension debt, but that he included the proposal in his budget last week 'as a precaution' as he struggles to fund pension obligations for public employees …. Asked whether he could rule out pursuing it in the future, he said, 'I don’t see that happening.' "
In an October 2009 article published in Crain's Chicago Business, David Vaught, Gov. Quinn's former budget director, discussed a similar federal guarantee for pension debt. During this interview, Vaught mentioned a potential guarantee of $14 billion of Illinois pension obligation bonds. The article states the following: "…local officials have asked President Barack Obama for a few favors since he took office; but now they want a really big one: a federal guarantee of a potential $14-billion Illinois pension bond obligation issue. According to newly installed state Budget Director David Vaught, Gov. Pat Quinn recently brought up the idea with U.S. Treasury Secretary Timothy Geithner and others at the White House. The governor got a good enough reception that he 'intends to extend' his efforts, Mr. Vaught said."
The Illinois Policy Institute is aware that Gov. Quinn and Vaught's comments regarding federal relief for pension debt date back as far as 2009. This is how policy is advanced; the seeds are planted early, the ideas floated and, based on reception, either pursued, abandoned or shelved until the political winds change. For the Governor to say "is not seeking" is very different from "will not accept" a federal bailout. That is why the Illinois Policy Institute continues to call on Gov. Quinn to unequivocally reject the notion of a federal bailout for pensions. Gov. Quinn should publicly state that his administration will not pursue or accept any federal bailout under any circumstances.
Media contact: Diana Rickert (312) 607-4977.
The Illinois Policy Institute is a nonpartisan research and education organization dedicated to making our state a beacon for liberty and prosperity for all citizens. As a leading voice for economic liberty and government accountability, the Institute engages policy makers, opinion leaders and citizens on the state and local level by promoting free market principles and liberty-based public policy initiatives for a better Illinois. To learn more about the Institute or review our policy work, please visit: illinoispolicy.org.