My poor Land of Lincoln! With a credit rating already the lowest of any state, the credit rating of Illinois has been downgraded by Fitch to A-.
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.
“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.
Go here to The Chicago Tribune to read the dismaying rest. The reaction of the powers that be in Illinois to all of this has been similar to that of Homer Simpson when he purchased a van despite already being a bankruptcy waiting to happen. Substitute a high speed rail system between Saint Louis and Chicago that makes no economic sense and the analogy is perfect. Illinois is de facto bankrupt, and eventually it will be de jure bankrupt.