Dem leader: Credit rating agency news validates budget vote

on Jul12

12 July 2017 | 7:18 pm

A key credit ratings agency has boosted its outlook for Illinois, pointing to the passage of the state budget last week — a move a Democratic legislative leader hailed as a sign the state is moving “toward the stability it desperately needs.”

“Through a combination of spending cuts and tax increases, the budget package brings the state’s revenue and expenditure base much closer to structural alignment and reduces the near-term uncertainty that had come to characterize its financial operations,” according to a news release.

But S&P Global Ratings also said the state would “almost certainly suffer an extended fiscal hangover from the impasse, not least from its record level of unpaid bill, which will be drain on its future resources.”

The ratings agency also noted a “disconcerting lack of consensus among state officials on the way forward”

The agency affirmed its BBB- rating for the state’s general obligation bonds, the BB+ ratings on the state’s appropriation-backed debt and the BB- ratings on the state’s moral obligation-backed debt, according to the release.

“And in our view, balanced fiscal operations are for Illinois a necessary precondition to improving its prospects for longer term solvency,” according to the release. “Still, it is largely because of the bill backlog, poorly funded pension systems and on-going political dysfunction that the state’s rating is well below that of peer-comparison states with similar economic profiles.”

State Senate President John Cullerton’s office hailed the news.

“The point of this balanced budget was to end the chaos and move the state toward the stability it desperately needs,” said Cullerton spokesman John Patterson.

“Those efforts appear to have been recognized and appreciated. The Senate President remains committed to working together to overcome the challenges we face and to remind everyone just how great the state of Illinois is.”

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