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Democrats holding back Illinois fiscal reform: Lawmaker

Santelli Exchange: Illinois budget crisis

Illinois needs urgent legislative reform to combat its ever-growing debt crisis and Democrats are holding things up, Republican state Rep. Jeanne Ives said Wednesday. (Tweet This)

"Nobody is serious about reform down there except for Gov. [Bruce] Rauner," a Republican, she said in an interview on CNBC's "Squawk on the Street." "Michael Madigan holds all the cards here."

Madigan, the Democratic speaker of the state House, did not immediately respond to a CNBC request for comment. Democrats hold a 71-47 seat edge in the House.

The state and Chicago have been facing fiscal crises due to unfunded pension liabilities. Chicago has also recently been downgraded by several credit rating agencies, including Standard and Poor's and Moody's. The city is about $20 billion behind on its pension payments. The state is down a total of $105 billion in pension funding.

Under current state law, municipalities and localities cannot declare bankruptcy. Pending legislation could change that if approved.

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"My opinion is we need big, strong reform and we need to get it now," Ives said, without giving any specifics.

Ives said the situation might get a lot worse before politicians can be moved to action. "When you start to see massive layoffs or services dramatically cut, maybe that is the pressure point that really has to occur," she said.

Earlier this month, the governor overturned a 2013 law that would help alleviate some of the state's unfunded pension liabilities.

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Ives said there is no quick fix, and legislation, if passed, will mandate regimented reform over the next several years.

"We can't build a budget for just the next year, we need to build a budget that is good for the next generation," she said.

Reuters contributed to this report.