Moody’s Lowers Illinois’ Credit Rating Over Budget Impasse
A major credit rating agency has downgraded Illinois' rating to two levels above "junk'' status, citing the "political gridlock'' that's prevented the state from getting a balanced budget for more than a year.
Moody's Investors Service lowered Illinois' rating Wednesday on $26 billion in debt by one level, to Baa2. The downgrade also affects $2.75 billion in revenue bonds. Moody's noted Illinois has a multibillion-dollar budget gap and its bill backlog is likely to exceed a previous record of $10 billion.
Illinois had the worst credit rating of any state even before the current impasse between Republican Gov. Bruce Rauner and majority Democrats.
Rauner released a statement Thursday regarding the bond rating.
“When the General Assembly adjourned without passing a balanced budget, the Administration warned the super majority in the legislature there would be consequences," he said. "This report underscores the need for real structural changes to repair the years of unbalanced budgets and deficit spending by the majority party on Illinois’ finances. Every rank-and-file Democrat who blindly followed the Speaker down this path is directly responsible for the downgrade.”
“This credit downgrade is disappointing because it is avoidable,” said Illinois State Treasurer Mike Frerichs, in a statement of his own. “Illinois remains a good investment, but the focus on non-budgetary items is driving up the cost of government. Higher interest rates when we borrow money mean fewer dollars for teachers, child care workers, and others who serve our most vulnerable. I continue to urge Governor Rauner and the Illinois General Assembly to put their differences aside and get a budget in place before more people are hurt.”
Lawmakers adjourned their spring session last month without approving a budget for the second straight year. The lower rating means taxpayers pay more when Illinois borrows money.