Let's go back to May 2005. Rod Blagojevich wasn't in a Colorado prison cell, he was still in his first term as Illinois’ Governor. 2005 was the top of the housing boom, so the economy was humming along and tax revenue was flowing in. The unemployment rate was 5.9%, not as good as the national average at that time, but significantly better than today's 9.2% rate.
We keep hearing IL's public sector unions blame the legislature for missing pension payments. While I agree that the State shares responsibility in the underfunding and promising over-generous benefits, that's not the entire picture.
Illinois has a May 31st deadline to pass fiscal bills, so they can be enacted January 1st of the next year. Governor Blagojevich, Speaker Madigan, and Senate President Jones had a plan to spend the annual pension payment on more social programs instead of investing the payment in the pension system. Today we call it a "pension holiday." The plan also included pension sweeteners and the infamous government-pensions-for-union-bosses scheme. It was passed by Democratic Party members in both the House and Senate on May 31st, 2005. Details can be found in Senate Bill 27.