Illinois Hit With Downgrades As State Goes More Than 50 Days Without Budget
From Bloomberg News
Illinois Gov. Bruce Rauner, agreed last week with lawmakers to designate pumpkin the official state pie. Reaching consensus on a budget is proving to be more difficult, and that's starting to ripple into the bond market.
The Chicago school district's credit rating was cut to junk on Aug. 14 as it waits on state help to close its deficit. Public university bonds may be downgraded, and securities sold by Chicago's convention center slid after lawmakers failed to approve a deposit needed for debt bills. Even Rauner said he wouldn't be surprised if there's another cut to Illinois's bond grade, which is already lower than any other state.
"As long as the budget impasse continues, the likelihood of a further downgrade does exist," said Peter Hayes, who oversees $116 billion, including some Illinois holdings, as head of municipal securities at New York-based BlackRock Inc. The company isn't buying state bonds amid the impasse.
Illinois has gone 50 days without a spending plan since the fiscal year started July 1 and there's no end in sight. Rauner, the state's first Republican governor in 12 years, and the Democrat-led legislature can't agree on how to fix a $6.2 billion deficit that was left after temporary tax increases expired.
Rauner is calling for limits on the power of unions, changes to business regulations and spending cuts before agreeing to new taxes. Democrats want steeper levies on the highest earners, among other revenue-raising measures.
Illinois has had other budgetary jams, such as standoffs in the 1990s between the legislature and Gov. Jim Edgar, R, though none has lasted as long, according to the Civic Federation, a Chicago-based research group.
Read more in our daily News Update...
From Bloomberg News
Illinois Gov. Bruce Rauner, agreed last week with lawmakers to designate pumpkin the official state pie. Reaching consensus on a budget is proving to be more difficult, and that's starting to ripple into the bond market.
The Chicago school district's credit rating was cut to junk on Aug. 14 as it waits on state help to close its deficit. Public university bonds may be downgraded, and securities sold by Chicago's convention center slid after lawmakers failed to approve a deposit needed for debt bills. Even Rauner said he wouldn't be surprised if there's another cut to Illinois's bond grade, which is already lower than any other state.
"As long as the budget impasse continues, the likelihood of a further downgrade does exist," said Peter Hayes, who oversees $116 billion, including some Illinois holdings, as head of municipal securities at New York-based BlackRock Inc. The company isn't buying state bonds amid the impasse.
Illinois has gone 50 days without a spending plan since the fiscal year started July 1 and there's no end in sight. Rauner, the state's first Republican governor in 12 years, and the Democrat-led legislature can't agree on how to fix a $6.2 billion deficit that was left after temporary tax increases expired.
Rauner is calling for limits on the power of unions, changes to business regulations and spending cuts before agreeing to new taxes. Democrats want steeper levies on the highest earners, among other revenue-raising measures.
Illinois has had other budgetary jams, such as standoffs in the 1990s between the legislature and Gov. Jim Edgar, R, though none has lasted as long, according to the Civic Federation, a Chicago-based research group.
Read more in our daily News Update...