Standard and Poor’s has lowered their rating on bonds issued by the state of Illinois.
Home of the worst-funded pension system, Illinois had the rating on its general- obligation debt cut one level by Standard & Poor’s and may face more downgrades, Bloomberg Businessweek reported.
Illinois was dropped from an A+ rating to an A rating, including a warning from S&P analysts that Illinois has a negative outlook.
State Rep. Tom Cross, R-Oswego, and State Sen. Christine Radogno, R-Lemont, issued a joint statement reacting to the downgrade:
When the Democrats adjourned the special session on pensions two weeks ago, we stood together and said we should not leave Springfield until we pass comprehensive pension reform to address our crisis. We continue to be ready to address the problem, armed with ideas and solutions that could work. We cannot wait until after the election, or even after the governor’s grassroots’ tour. The time for action is now. S & P’s downgrade today cited our "lack of action on reform measures." This is a clear signal that we must work on a comprehensive bill that solves our pension problem—not a piecemeal approach. The blame game must end, let’s get to work.
In a statement, analysts at S&P noted "the downgrade reflects the state's weak pension funding levels and lack of action on reform measures intended to improve funding levels and diminish cost pressures associated with annual contributions."
State Treasurer Dan Rutherford also issued a statement Tuesday, noting that the cost of general obligation bonds the state plans to issue in September will go up due to the new rating.
Just as I said last week after we received a sobering warning from Moody’s, I urge the legislature to act decisively towards comprehensive, constitutional, and fair pension reforms that will reverse this situation. It’s not even two years since the largest income tax increase in Illinois history, and those revenues have already been consumed by the escalating cost of the state’s pension systems. Taxpayers are justifiably frustrated and angry over Springfield’s lack of action to protect their dollars.
, who's seeking election to the 98th District State Senate seat, also reacted on Tuesday, calling the downgrade an "outrage."
He issued the following statement:
Years of ineffective leadership in Springfield have caused businesses and families to flee and have left us with an outstanding debt that it will take our state years to recover from. S&P's downgrade follows Moody's recent credit downgrade, citing weak funding levels for pensions as the primary basis for their decision.
Pension reform is the can that we just keep kicking down the road and now, we're paying the price for inaction. Gov. Quinn and his allies have had every opportunity to do something substantive to begin to fix Illinois pension crisis and they have failed.
Illinois is the second-worst credit risk in the nation with no signs of changing course. Real reform in Springfield will require real leadership - new leadership. And it's time for Illinois taxpayers to take back control of their state and their money and elect people to the state legislature that will fight for them and work to reform our broken pension system.
Illinois can't survive another two years under Mike Madigan's destructive fiscal policies. We need to make a change now.