Moody’s: Illinois Budget Could Undo ‘Significant Progress’

The credit rating agency Moody's says Illinois is at risk of undermining progress toward better finances. It says the failure to extend current income tax rates could lead to a worsening deficit.

Moody's said because lawmakers failed to stop an automatic tax cut scheduled for the end of the year, Illinois could have to increase its backlog of unpaid bills. The state already has the lowest credit rating in the nation.

Republicans say this shows Illinois needs to further reduce costs, but Democratic Senate President John Cullerton said there isn't that much left to cut.

"I mean we've cut Medicaid with the SMART Act, we've cut pensions with the pension bill we passed, we had cut education for like four or five years in a row, until we were able to maintain it for the last two years," he said.

Cullerton said that just leaves things that people don't want to cut.

"They just want you to get rid of the fraud and waste, whatever that means," he said. "So it's going to come down to the revenue, and I think the rating agencies will hopefully point that out. It might help."

Indeed, Moody's said that the lower tax rate could lead to a structural deficit. It says that could reverse "significant progress" the state has made in reducing billions of dollars worth of unpaid bills.