SPRINGFIELD - Gov. Rod Blagojevich's controversial pension bonding plan lost by one vote in the Senate late Wednesday, despite state Sen. Rick Winkel's decision to split from his caucus to support the bill in exchange for concessions for the University of Illinois.
The bill needed 36 votes to pass, and got only 35.
It was a crucial victory for Senate Minority Leader Frank Watson, R-Greenville, who had urged his caucus to remain united in opposition to the bill, at least until the governor revealed his plans for the budget.
The bonding plan required a three-fifths majority to pass, while the budget bill only needs a simple majority, so Watson said the Senate Republicans had a responsibility to demand answers about Blagojevich's spending plans now.
The budget address is April 9, and the governor has been pushing hard to get the pension bond deal approved first.
The bill would allow the governor to borrow $10 billion to meet current and future pension obligations, freeing up $2 billion in the state's main checking account now and counting on investment proceeds from the rest to pay back the loan when it comes due.
Since interest rates are at a historic low, the governor believes he would be able to make more from investing the bond proceeds than it costs to borrow the money.
?This just makes good business sense,? said state Sen. Donne Trotter, D-Chicago, who sponsored the bill.
State Sen. Peter Roskam, R-Wheaton, disagreed, saying ?the risk of this is incredible.
?What happens if you are wrong about the rate at which the state recaptures its investment?? he asked.
The plan would nearly double the state's bonded indebtedness.
State Sen. Chris Lauzen, R-Aurora, said if he wrote a check for $1,000 every day, it would take 2,700 years to get to $10 billion.
Winkel said the $2 billion the plan would free up would enable the state to avoid catastrophic cuts or a tax hike that would otherwise be required to solve the state's budget deficit.
?This proposal is designed to fill about 40 percent of the budget hole, and I've not heard other alternatives that could do that.?
Winkel said he agreed to back the plan after the Blagojevich administration agreed to minimize some proposed funding cuts to the UI and perhaps back off from some legislation to give the state a lot more control over university budgets.
The fight for the pension bond deal does not end with Wednesday night's vote.
The sponsor used a parliamentary maneuver that will allow it to come up for another vote in the Senate, possibly as soon as today.
The House has already approved the bill.
You can reach Kate Clements at (217) 782-2486 or via e-mail at firstname.lastname@example.org.