Governor Pat Quinn says Illinois' failure to solve its pension problem means the state will have to pay $130 million more in interest on bonds it sold this week.
Illinois got an average interest rate of five percent on the $1.3 billion bond sale -- and had to turn away many potential buyers.
Quinn spokesman Abdon Pallasch says that's better than some expected.
"But we're still paying a premium for the General Assembly's failure to pass a comprehensive pension reform bill," said Pallasch.
Rating agencies have cited the lack of a pension fix as they've repeatedly downgraded Illinois' credit -- ranking it last among the 50 states.
Quinn and other politicians have cited the low grade as they argue for cutting government employee retirement benefits.
But in a new paper, Marc Joffe -- a former employee of the Moody's rating agency -- says his statistical models show Illinois' risk of default is low.
"Illinois itself has had clean credit since 1857, so that's an incredibly long period of stable credit performance," said Joffe.
Joffe says no state has defaulted on its debt since 1933.
Illinois Public Radio's Brian Mackey contributed to this report.