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Illinois' inaction on pensions in rating agency crosshairs

The Chicago Tribune | by Karen Pierog | August 22, 2012

CHICAGO (Reuters) - Illinois lawmakers' inability to reform a woefully underfunded public retirement system at a special session last Friday is likely to weigh on the state's already relatively low credit ratings.

"We are in the process of reviewing the total credit picture, including the budget, pensions, etc," Standard & Poor's Ratings Services analyst Robin Prunty said on Tuesday.

S&P, which rates Illinois A-plus with a negative outlook, put the state on notice in March that it could face a multiple-notch general obligation rating downgrade if there is no "credible progress" in taming its huge $83 billion unfunded pension liability and on tackling a structural budget imbalance.

Governor Pat Quinn, a Democrat, called lawmakers back into a special session last Friday that also produced no solution for the worst-funded state pension system in the United States amid political squabbling and labor protests.

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