By Joanne von Alroth and Karen Pierog
SPRINGFIELD, Ill., June 19 (Reuters) - In the first sign of compromise after weeks of political impasse, Illinois lawmakers in a special session on Wednesday set up a rarely used conference committee in an effort to fix the state's woefully under-funded pension system.
Legislative leaders agreed to a July 9 deadline for action on the state's $100 billion pension under-funding, and the state's Democratic governor, Patrick Quinn, said he plans to call legislators back for another special session in early July.
Quinn called the 10-member, bipartisan committee "a crowbar to break legislative gridlock," and said he expects to see a comprehensive pension reform bill on his desk by July 9.
Quinn called Wednesday's special session after House Speaker Michael Madigan and Senate President John Cullerton, both Democrats, failed in recent weeks to agree on a pension-reform solution.
The conference committee is made up of five members each from the House and Senate, named by party leaders in each chamber. A proposal will have to get a simple majority to pass out of the committee and on to the full House and Senate, where a simple majority vote in each chamber would send it to the governor for signature.
The Illinois General Assembly last turned to a conference committee to hash out a legislative compromise in December 2005.
Lawmakers said they believe the conference committee could clear the logjam.
"I think this has the potential to be different because we're in a different position than we've been in throughout this arduous journey," said Democratic representative Elaine Nekritz, who has been the Illinois House point person on pension reform. "We were going to have to come together -- and that's what this conference committee is about. I feel there's finally a real commitment to do that."
Any solution will have to be able to restore the state's finances, Nekritz said. Illinois has seen its credit downgraded several times during the pension crisis, and it now has the lowest credit rating among U.S. states.
Illinois is in the midst of a $31 billion capital improvement program, partly funded by the sale of bonds. It is set for a planned sale of $1.3 billion of general obligation bonds next week.
Madigan has favored unilateral cuts to retirement benefits to reap the greatest savings - an approach labor unions have said violates the Illinois Constitution. Cullerton has advocated a plan, backed by the unions and passed by the Senate, that gives workers and retirees choices between reduced benefits and continued access to state-sponsored healthcare in retirement.
Another plan that addresses only one of the state's five pension funds - State Universities Retirement System - is being pushed by the heads of universities as a way to save as much as Madigan's approach, while having a better chance of withstanding a constitutional challenge in court.
The plan calls for higher worker pension contributions, gradually shifting pension payments currently made by the state onto the universities and community colleges, and linking pension payment increases to inflation. Union officials said Tuesday they dislike that plan as well.
Members of the conference committee include Democratic Representatives Elaine Nekritz, Michael Zalewski and Arthur Turner; Republican Representatives Darlene Senger and Jill Tracy; Democratic Senators Daniel Biss, Kwame Raoul and Linda Holmes; and Republicans Deputy Senate Leader Matt Murphy and Assistant Senate Leader Bill Brady.
Raoul will serve as committee chair. Because Democrats have a super majority in each chamber, they make up the majority of the committee.
Illinois Pension Deadline: Gov. Quinn Sets July 9 Deadline For Reform Deal