Updated 08/29/12 – 6:21 p.m.

CHICAGO (CBS) – Illinois, which already has one of the worst-in-the-nation credit ratings, was lowered even further on Wednesday by the Standard & Poor’s rating agency, citing the state’s failure to address its massive pension problems.

The lower its rating, the more interest a state must pay when it borrows money by selling bonds.

The service says its decision is based on weak funding for government pensions and a “lack of action on reform measures.”

Only California has a lower rating from S&P, but the service says the outlook for California is positive. Illinois falls into the “negative outlook” category.

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Illinois retirement systems have a huge gap between the money available and what they’ll eventually pay out in pensions. The roughly $85 billion shortfall is the largest in the country.

Trying to close that gap costs the state more and more money each year, leaving less for other government needs. Moody’s noted pension payments this year will make up 20 percent of state government’s general spending, compared to 13 percent three years ago.

CBS 2 Chief correspondent Jay Levine reports Illinois Republicans attending the party convention in Tampa used the downgrade to blast the state’s Democratic leaders.

But the first salvo was fired by Wisconsin Gov. Scott Walker, who issued a statement saying, “Political leaders in Illinois kicked the can down the road, raised taxes, and ignored fiscal realities. Now, they’re realizing the consequences of their actions.”

Illinois Gov. Pat Quinn, for once, agreed with Walker.

“Before, we were warning; now it’s a reality, it’s not a good thing, and it’s regrettable that our legislators did not act promptly when they had a chance. But we just have to keep pushing them,” Quinn said. “We cannot have, in our state, $83 billion of pension liability.”

Predictably, the political finger-pointing over failing to pass pension reform continued.

A spokesman for House Speaker Mike Madigan charged Republican lawmakers blocked pension reform efforts.

In Tampa, Republican House and Senate leaders Tom Cross and Christine Radogno said, “the blame game must end. Let’s get to work.”

State Treasurer Dan Rutherford, who must deal directly with the consequences, when he borrows money to issue bonds, drew a parallel to a 16-year-old just getting his driver’s license.

“If you go out and you do this bond issuance for 30 years, this little kid, at 16 years old, will be 46 years old by the time that debt’s paid off, and at significantly more interest, because the stewards of our government in Illinois today didn’t do the right thing.

The only state with a credit rating worse than Illinois’ is California, but their credit rating outlook is positive; Illinois’ outlook is negative, with no improvement in sight until and unless lawmakers pass major pension reform.

When and if that’ll happen is anybody’s guess.

Quinn called legislators into special session last week, but they couldn’t agree on what to do, largely because of a dispute about whether to transfer some pension costs to school districts.

Rutherford said last time he went to market with an $800 million bond issue, the interest costs were $70 million higher than states with good bond ratings would pay. Those costs will go even higher with the latest credit downgrade.

Rutherford said he supports Quinn’s attempt to find compromise on pension reform, and said legislative leaders seem oblivious to the financial pressures on the state.

The Associated Press contributed to this report.