By Karen Pierog
CHICAGO (Reuters) - Illinois will have to delay a $560 million November payment to its pension funds, and may also delay or reduce a similar payment in December, state Comptroller Leslie Munger said on Wednesday, blaming a cash crunch stemming from the state's budget impasse.
"The fact is that our state simply does not have the revenue to meet its obligations," Munger told a news conference in Chicago.
Despite the delay, state pension funds will be paid in full by the time fiscal 2016 ends on June 30 using money from heftier revenue months in the spring, she said. Illinois has the worst-funded pensions and lowest credit ratings among the 50 states.
The state is making monthly payments on bonds, which are a top priority for the limited state dollars, according to Munger. She said her office is also required under 14 court orders and federal consent decrees to make payroll and pay for certain healthcare and social services at fiscal 2015 funding levels even though fiscal 2016 revenue will be $5 billion less due to lower income tax rates that took effect on Jan. 1.
Munger urged the governor and state lawmakers to approve a budget that would allow Illinois to regain its fiscal footing.
The battle between Republican Governor Bruce Rauner and
Democrats who control the legislature has left Illinois without
a budget for the fiscal year that began on July 1.
The pension delay underscores the severity of Illinois' fiscal crisis, which has been exacerbated by the lack of a state budget.
Illinois' debt service payments on bonds total $3.4 billion
in fiscal 2016, while payments to its five retirement systems
total $6.8 billion, according to a May budget analysis by the
Chicago-based Civic Federation.
A spokesman for the Illinois Teachers' Retirement System (TRS), the largest of the state's five pension funds, said the delayed payments would not affect the $46 billion pension fund's operations or imperil the distribution of annuities to the 103,000 retired teachers now drawing pension checks.
"If they say we'll get the money by the end of the year, that's terrific," TRS spokesman Dave Urbanek told Reuters. "We have enough money on hand in the trust fund now to pay all the pension payments."
He added that the fund will probably have to sell "a few more assets" to bolster cash flow going forward than it had planned.