Fitch Downgrades Illinois Credit Rating
From the Chicago Tribune
A major investor ratings service further lowered Illinois' worst-in-the-nation credit rating today following lawmakers' inability to agree on money-saving reforms to the public employee pension system.
Fitch Ratings dropped Illinois bonds from an "A" rating to "A-" after lawmakers could not pass changes to a public pension system approaching $100 billion in debt.
"Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable, and that failure to achieve reform measures despite the substantial focus on this topic exacerbates concern about management's willingness and ability to address the state's numerous fiscal challenges," the ratings service wrote.
Separately, Moody's Investor Service had warned about the potential downgrade Friday, the final day of the legislature's spring session. Lawmakers went home for the summer unable to agree on pension reform. House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats, had passed dueling versions of pension reform based on different approaches.
Democratic Gov. Pat Quinn said he plans to meet with Madigan and Cullerton on Tuesday and called the downgrade "no surprise."
But a spokesman said House Speaker Michael Madigan was out of the state, and Rikeesha Phelon, spokeswoman for Senate President John Cullerton said there were no firm plans. But Phelon said Quinn had spoken to Cullerton and other leaders several times to consider the next steps.
"As I have repeatedly made clear to the General Assembly, this will continue to happen until legislators pass a comprehensive pension reform bill, and put it on my desk," Quinn said in a statement. “Every time the General Assembly misses the deadline, Illinois’ credit rating is downgraded, which hurts our economy, wastes taxpayer dollars and shortchanges the education of our children."
Fitch also gave Illinois a “Negative Outlook” because it lacks solutions to its multibillion-dollar backlog of old bills. The state just passed a $35 billion-plus operating budget, but the state comptroller predicted the backlog of older, unpaid bills could hit $7 billion within a couple of month.
Read more in our daily News Update...
From the Chicago Tribune
A major investor ratings service further lowered Illinois' worst-in-the-nation credit rating today following lawmakers' inability to agree on money-saving reforms to the public employee pension system.
Fitch Ratings dropped Illinois bonds from an "A" rating to "A-" after lawmakers could not pass changes to a public pension system approaching $100 billion in debt.
"Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable, and that failure to achieve reform measures despite the substantial focus on this topic exacerbates concern about management's willingness and ability to address the state's numerous fiscal challenges," the ratings service wrote.
Separately, Moody's Investor Service had warned about the potential downgrade Friday, the final day of the legislature's spring session. Lawmakers went home for the summer unable to agree on pension reform. House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats, had passed dueling versions of pension reform based on different approaches.
Democratic Gov. Pat Quinn said he plans to meet with Madigan and Cullerton on Tuesday and called the downgrade "no surprise."
But a spokesman said House Speaker Michael Madigan was out of the state, and Rikeesha Phelon, spokeswoman for Senate President John Cullerton said there were no firm plans. But Phelon said Quinn had spoken to Cullerton and other leaders several times to consider the next steps.
"As I have repeatedly made clear to the General Assembly, this will continue to happen until legislators pass a comprehensive pension reform bill, and put it on my desk," Quinn said in a statement. “Every time the General Assembly misses the deadline, Illinois’ credit rating is downgraded, which hurts our economy, wastes taxpayer dollars and shortchanges the education of our children."
Fitch also gave Illinois a “Negative Outlook” because it lacks solutions to its multibillion-dollar backlog of old bills. The state just passed a $35 billion-plus operating budget, but the state comptroller predicted the backlog of older, unpaid bills could hit $7 billion within a couple of month.
Read more in our daily News Update...