SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
To subscribe to Capitol Fax, click here.
S&P raises state credit outlook to “developing”

Tuesday, Dec 10, 2013

* From S&P…

Standard & Poor’s Ratings Services revised its outlook on Illinois to developing from negative. In addition, we affirmed our ‘A-’ rating on the state’s general obligation (GO) bonds outstanding. A developing outlook indicates that we could raise or lower the rating during the two-year outlook horizon.

“The change reflects the consensus reached on pension reform, which we believe could contribute to a sustainable path to fiscal stability,” said Standard & Poor’s credit analyst Robin Prunty. “Although we view the consensus achieved by Illinois on this difficult issue as positive from a credit standpoint, the developing outlook reflects the implementation risk — legal and budgetary — associated with various provisions of the pension reform, as well as the overall structural budget challenges facing the state,” added Ms. Prunty.

At the same time, Standard & Poor’s assigned its ‘A-’ rating and developing outlook to Illinois’ GO bonds, series of December 2013.

In addition to normal budget pressures facing the state, the statutory reduction of current personal and corporate income tax rates on Jan. 1, 2015, highlights a difficult budget climate over the next two years.

If pension reform moves forward and the state takes credible action to achieve structural budget balance beginning in fiscal 2015, we believe a higher rating would be warranted.

Conversely, if the pension reform is declared unconstitutional or invalid, or implementation is delayed and there is a lack of consensus and action among policy makers on the structural budget gaps and outstanding payables, we believe there could be a profound and negative effect on the state’s budgetary performance and liquidity over the two-year outlook horizon.

While a developing outlook is unusual for a state, it reflects the magnitude and scope of pension and budgetary issues facing Illinois.

If this thing is declared unconstitutional and there’s no immediate “Plan B” on the table, the bond houses are gonna freak, as S&P made perfectly clear today.

Of course, we could’ve had a “Plan B” measure included in the pension bill, as Senate President John Cullerton agreed to do well over a year ago. But Speaker Madigan, the Chicago newspaper editorial boards and the Civic Committee were all against that idea. I’ll never fully understand why, either.

* From a press release…

Governor Quinn issued the following statement regarding today’s announcement that Standard & Poor’s ratings agency has improved its outlook on the state of Illinois’ bonds from “negative” to “developing.”

This is the first positive movement for Illinois bonds in years and is the direct result of the bipartisan, comprehensive pension reform legislation that Governor Quinn signed into law last week. On Friday, Moody’s called the new pension reform law a “credit positive” and said it “may be the largest reform package implemented by any U.S. state.”

“I am pleased the ratings agencies are recognizing that Illinois is moving in the right direction,” Governor Quinn said. “As I’ve always made clear, one of the many reasons to resolve Illinois’ pension crisis was the negative impact it had on our bond rating, which cost taxpayers more money to finance critical repairs and improvements to roads, bridges and schools.

“This improved outlook will be the first of many positive developments towards a revitalized and stronger Illinois,” the Governor said.

Fitch retained its “negative” outlook the other day.

- Posted by Rich Miller        

  1. - wordslinger - Tuesday, Dec 10, 13 @ 11:48 am:

    LOL, things are always “developing,” aren’t they?

  2. - Six Degrees of Separation - Tuesday, Dec 10, 13 @ 11:51 am:

    Well, I guess they could always sell the tollway and Starved Rock State Park…

  3. - Oswego Willy - Tuesday, Dec 10, 13 @ 11:54 am:

    I have a “GPS” in my car, and when I go off the path, it tells me it’s “recalculating”.

    Why do I think of this being the same as my “GPS”?

  4. - walkinfool - Tuesday, Dec 10, 13 @ 11:58 am:

    Offering plan B to the court could have undercut the “emergency” arguments for plan A, and offered them an easier path out of a very difficult case.

    And plan B simply would not have done enough to address the crisis. It would truly have been what Rauner claims, a delay causing worse future problems.

    I’m guessing that’s the thinking.

  5. - Robert the Bruce - Tuesday, Dec 10, 13 @ 12:02 pm:

    To walkinfool’s point: Perhaps they also figured that a plan B (cullerton’s plan) could be passed shortly after the court strikes down plan A. Not sure it’ll be that easy.

  6. - RNUG - Tuesday, Dec 10, 13 @ 12:06 pm:


    a) Illinois finally broke their gridlock on pensions

    b) We aren’t so sure this will do the job

    c) We’re waiting to see if there is a income tax extension

    d) Yes, we’ll push the latest Illinois GO bonds

  7. - A guy... - Tuesday, Dec 10, 13 @ 12:07 pm:

    As Yogi Berra said “When you get to a fork in the road…take it”. Plan B would have offered a fork in the road that certain people didn’t want. The rating agencies would have reacted more coolly to such a fork in the road. Time will tell how supremely this was vetted.

  8. - RNUG - Tuesday, Dec 10, 13 @ 12:14 pm:

    walkinfool - Tuesday, Dec 10, 13 @ 11:58 am:

    I don’t think a Plan B in the legislation would have mattered to the emergency argument. The various leaders made enough public comments undermining the supposed urgency of the situation.

  9. - Old and in the Way - Tuesday, Dec 10, 13 @ 12:29 pm:

    Talk about tone deaf! Senator Biss sent this out to his constituents. My sister sent it on to me but you really have wonder just how the senator thinks this will go over given his role in undermining pension security for so many of his constituents! And his guest experts……really callous.

    I wanted to send you a quick email tell you about two events my office is hosting in the coming days.
    The first is a seminar this Wednesday hosted by Central Management Services (CMS) to help explain changes to retiree health coverage for public workers.
    The second is the last in our Critical Issues Series, this time about ways to help workers find retirement security when their employers offer them no options. I’m excited to be joined by a fantastic panel, and look forward to hearing your thoughts on this important topic.
    Panelists: Lucy Mullany, Senior Policy Associate with the Heartland Alliance and Coordinator of the Illinois Asset Building Group; Spencer Cowan, Vice President of the Woodstock Institute; and Scott Adams, labor specialist who was instrumental in passing a similar piece of legislation in California.
    Please let my office know if you have any questions at 847-568-1250, and I look forward to seeing you soon!

    Senator Daniel Biss
    9th District – Illinois
    District Office
    3706 Dempster Street • Skokie, IL 60076
    847-568-1250 (Phone) • 847-568-1256 (Fax)
    Springfield Office
    M121 Capitol Building • Springfield, IL 62706
    217-782-2119(Phone) • 217-558-0715(Fax)

  10. - Union Man - Tuesday, Dec 10, 13 @ 12:38 pm:

    -Talk about tone deaf! Senator Biss sent this out to his constituents.-

    What a tool.

  11. - catrike - Tuesday, Dec 10, 13 @ 1:09 pm:

    “If this thing is declared unconstitutional and there’s no immediate “Plan B” on the table, the bond houses are gonna freak, as S&P made perfectly clear today.”

    And you can bet the Supremes read the newspapers.

  12. - Decaf Coffee Party - Tuesday, Dec 10, 13 @ 1:18 pm:

    Ty could not have written it any better…

  13. - Obamas Puppy - Tuesday, Dec 10, 13 @ 1:53 pm:

    Because MJM really cares about pension policy…NOT

  14. - Decaf Coffee Party - Tuesday, Dec 10, 13 @ 1:53 pm:

    I was referring to S&P’s message, not Rich’s conclusion…

  15. - Anonymous - Tuesday, Dec 10, 13 @ 3:08 pm:

    “….Developing….” Has a third world ring to it, eh?

  16. - PublicServant - Tuesday, Dec 10, 13 @ 3:20 pm:

    @catrike - The Supremes read the constitution too. Better have plan B ready.

  17. - wordslinger - Tuesday, Dec 10, 13 @ 3:20 pm:

    You know what else is “developing?”

    The criminal prosecution of S&P for prostituting their hard-earned good name to defraud investors around the world and inflict misery on the planet for their indispensable role in the subprime MBS Great Hustle.

    Couldn’t have happened without them. The AAA ratings were the trigger.

    I’ll believe the prosecutions when I see them. When it comes to the Masters of the Universe, b-s talks, money walks.

  18. - Rod - Tuesday, Dec 10, 13 @ 3:39 pm:

    First off lets be clear here,Standard & Poor’s Ratings Services has not changed its rating for the State. Second aside from the legal challenge to the SB1 report/pension reform there is the very big issue of an actuarial analysis of the savings for the State.

    S&P, Fitch, and Moody’s want to see the actuarial analysis. If the analysis reveals limited real savings for the state from 2014 to 2016 the reaction will I suspect not be good. The TRS limited actuarial that Rich linked to on Nov 30 did not indicate awe inspiring savings for the State early on in the 30 year reform plan. But Greg Harris has made other claims which can be seen at

    Harris is claiming the deal will result in “Current liability will be[ing] reduced by an estimated $21.4 billion when the plan takes effect.” This however does not mean an actual savings of $20 billion when the plan takes effect. A careful reading of what Harris put out indicates actual cash saving for the first three years of under $2 billion. If that turns out to be the case it won’t thrill the rating agencies.

  19. - Jimbo - Tuesday, Dec 10, 13 @ 4:01 pm:

    I’m curious whether the effect on ratings of passing this law only to have it thrown out will be worse than doing nothing. I’m quite certain it will be worse if they spend the “savings” before it is tossed. Do we really think they won’t?

  20. - Arthur Andersen - Tuesday, Dec 10, 13 @ 4:42 pm:

    Reading this rating stuff, I’m reminded of an employee appraisal process that changed the rating “Needs Improvement” to “Developing” in an attempt to be more constructive and affirming.

    Rod, to be clear, there is no $20b savings from the pension bill on Day 1. The accrued, and unfunded, liabilities, arguably reduce at that time, but unless you are John Filan, you can’t save money until you spend it.

    There will be zero savings in FY 2014 because the bill doesn’t take effect until June 2014 in part (last month of FY14) and January 2015 in part (FY15.) If the estimates are good, FY15 and 16 contributions under the new law should reduce by around $2b or a bit more than the old law. FY17, when the new EAN actuarial valuation method kicks in, with $7b of negative savings, is unclear to me.

    Receiving the real numbers on this from the actuaries could be interesting.

  21. - Demoralized - Tuesday, Dec 10, 13 @ 4:47 pm:

    ====If the analysis reveals limited real savings for the state from 2014 to 2016 the reaction will I suspect not be good.==

    You aren’t going to get huge savings that quickly with anything.

  22. - Jimbo - Tuesday, Dec 10, 13 @ 5:06 pm:

    I’m on chrome with ABP disabled and all I see is the blue background too.

Sorry, comments for this post are now closed.

* Today
* We interrupt this break for a special announcement...
* Yesterday's blog posts

Visit our advertisers...







Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

        * Domino’s Pizza now accepting Google Wallet
        * OnePlus One exterior design, StyleSwap covers revealed with latest leak
        * IK Multimedia’s iLoud is a Bluetooth speaker even a musician can love
        * How to sync bookmarks with two iCloud accounts
        * The best timekeeping iOS apps
        * The past and promise of the Apple TV
        * Sony Xperia Z2 and Z2 tablet owners can avail of free movies and games

        * Would You Leave Your Job if Your Employer Paid You to Quit?
        * Report: Facebook is announcing a mobile ad network on April 30
        * Lady Gaga Breaks G.U.Y. Down in 10 Helpful GIFS
        * Kindle For Samsung Announced By Amazon And Samsung
        * Raspberry Eye Is The Hackers Version Of Google Glass
        * Download Music and TV Shows in Sequential Order with uTorrent
        * Ultimeyes App Will Help Improve Your Vision

        * Adrian Nieto-John Danks battery an arranged marriage
        * Podcast: Jonah Keri Talks White Sox (and Expos)
        * White Sox Minor League Update: April 20-26
        * Danks heads to mound in series opener against host Tigers
        * White Sox 16, Rangers 2: No sweep, no normalcy
        * Strikeout stands after White Sox challenge
        * Dunn unimpressed with .304 batting average

        Main Menu
        Pundit rankings
        Subscriber Content
        Blagojevich Trial
        Updated Posts

        April 2014
        March 2014
        February 2014
        January 2014
        December 2013
        November 2013
        October 2013
        September 2013
        August 2013
        July 2013
        June 2013
        May 2013
        April 2013
        March 2013
        February 2013
        January 2013
        December 2012
        November 2012
        October 2012
        September 2012
        August 2012
        July 2012
        June 2012
        May 2012
        April 2012
        March 2012
        February 2012
        January 2012
        December 2011
        November 2011
        October 2011
        September 2011
        August 2011
        July 2011
        June 2011
        May 2011
        April 2011
        March 2011
        February 2011
        January 2011
        December 2010
        November 2010
        October 2010
        September 2010
        August 2010
        July 2010
        June 2010
        May 2010
        April 2010
        March 2010
        February 2010
        January 2010
        December 2009
        November 2009
        October 2009
        September 2009
        August 2009
        July 2009
        June 2009
        May 2009
        April 2009
        March 2009
        February 2009
        January 2009
        December 2008
        November 2008
        October 2008
        September 2008
        August 2008
        July 2008
        June 2008
        May 2008
        April 2008
        March 2008
        February 2008
        January 2008
        December 2007
        November 2007
        October 2007
        September 2007
        August 2007
        July 2007
        June 2007
        May 2007
        April 2007
        March 2007
        February 2007
        January 2007
        December 2006
        November 2006
        October 2006
        September 2006
        August 2006
        July 2006
        June 2006
        May 2006
        April 2006
        March 2006
        February 2006
        January 2006
        December 2005
        April 2005
        March 2005
        February 2005
        January 2005
        December 2004
        November 2004
        October 2004

        Blog*Spot Archives
        November 2005
        October 2005
        September 2005
        August 2005
        July 2005
        June 2005
        May 2005


        RSS Feed 2.0
        Comments RSS 2.0


        * Internal memo says Illinois Medicaid paid $12 m.....
        * Former Illinois death row inmate details diffic.....
        * 'Quinnocchio' character latest example of troll.....
        * Keep your promise, IL policy group tells lawmakers..

        * Mayors' group pushes for Illinois pension reform
        * WWII ship group wants better Evansville dock
        * Officials: HIV infections on rise in southern Ill.
        * Violent weekend leaves 8 dead in Chicago
        * Search goes on for southern Illinois jail escapee
        * 2 die, 3 hurt in fiery Champaign County crash
        * Kayaker, 26, dies after Fox River accident
        * Kids get codeine in ER despite risks, guidelines
        * Official: 5 children wounded in Chicago drive-by
        * Arrest made in death of Chicago man in Utah

        * Addiction experts: Illinois budget cuts could hurt drug treatment
        * Comptroller Topinka reports $125K in income
        * Bernard Schoenburg: Durbin, Oberweis spar over earmarks, minimum wage
        * Statehouse Insider: It doesn’t always add up in the General Assembly
        * Chicago casino plan draws more support at legislative hearing
        * Video gaming may get its own exclusion list
        * U of I officials seeking to prevent retirement rush
        * U of I asks state legislators to prevent retirement rush; could affect 200 at UIS
        * 2015 tax rates still far from settled
        * Strip club tax brings in much less than expected

        * Hillshire, TreeHouse buying companies
        * Kraft recalls some Oscar Mayer wieners
        * Census: People are leaving all six Chicago-area counties
        * Trixie and Chad have kids!
        * Quinn administration funds Diana Rauner's nonprofit

        * In violent weekend, at least 8 dead, 37 wounded in shootings across Chicago
        * In violent weekend, at least 7 dead, 37 wounded in shootings across Chicago
        * Police SUV flips in crash on S. Side
        * Part of man’s ear bitten off by underage girlfriend’s brother
        * In pre-Easter march, Chicago religious, community activists call for peace
        * 5 kids hurt in drive-by on South Side
        * In violent weekend, at least 7 dead, 36 wounded in shootings across Chicago
        * Credit card fraud boss threatened rival would be ‘cut into pieces’: feds
        * In violent weekend, at least 7 dead, 35 wounded in shootings across Chicago
        * Casino bill must include  Chicago — and safeguards

        * Dad of girl, 11, shot with friends: 'I was scared I'd lose my baby girl'
        * Amid weekend violence, 6 children shot Sunday night
        * Cubs won't make 100-year-old fan wait until next year
        * No joke, Chicago is America's funniest city
        * 2 officers hurt in police SUV crash
        * Logan Square residents lament discovery of abandoned baby's body
        * Man in fatal DUI crash was nearly 3 times over the legal limit, prosecutors say
        * Police: Husband and wife -- both officers -- dead in apparent murder-suicide
        * 'Nothing is ever without hope,' ailing George tells Catholics on Easter
        * Man held on $1 million bail in Friday shooting

        * Illinois Medicaid Paying For The Dead
        * Wait Continues For Schools' Fate Under Proposed New Formula
        * Illinois Finally Gets 'No Child Left Behind' Waiver
        * U Of I: Illinois Pension Overhaul Had Costly Mistake
        * Fish fry dinners bring food, community to Catholics during Lent
        * Listen To State Week - April 18, 2014
        * Murray Center Advocates Win Appeals Decision
        * Employment Improves, But Illinois Still Lags U.S.
        * Nine Illinois lawmakers vote to fund Obama library - but only five members in attendance
        * WBEZ's Student Stories

        * Elizabeth Powers: ‘Easy’ savings in human services? Not really
        * Our Opinion: Don’t drag feet on drone regulation
        * Bernard Schoenburg: Durbin, Oberweis spar over earmarks, minimum wage
        * Bernard Schoenburg: Durbin, Oberweis spar over earmarks, minimum wage
        * Statehouse Insider: It doesn’t always add up in the General Assembly
        * Statehouse Insider: It doesn’t always add up in the General Assembly
        * Armenta L. Johnson: Advocate for quality education to avoid segregation
        * Catherine Walters: Prairie Center Against Sexual Assault notes anniversary, awareness month
        * Video gaming may get its own exclusion list
        * U of I asks state legislators to prevent retirement rush; could affect 200 at UIS

        * Daily business briefing: Charter trying to acquire competitor's assets
        * $10K grant will help university serve veterans
        * Decatur motorcyclist killed in collision
        * Lane closures on U.S. 67 near Camanche
        * Williamson County Regional Airport eyes new terminal building
        * BFD still searching for cause of Saturday fire
        * Simon Institute to host symposium on creative economies
        * Rain, storms return to region
        * Thunderstorms possible Monday afternoon
        * East St. Louis families escape apartment fire

        * The 10th District money race
        * Aurora Democrat calls out IHSA
        * Lawyers: Ill. hazing law vague, unconstitutional
        * Ill. House OKs lower-cost hunting bill for seniors
        * Quinn’s running mate takes new consulting job

        * Gutierrez: If no immigration reform passes...
        * Jesse Jackson Jr. Changes Prisons, Could B...
        * Jesse Jackson Jr Moved to Alabama Prison C...
        * Gutierrez Warns GOP Obama Will Take Action...
        * Why You Should Care About Immigration - Ne...
        * Inmates Sent To Solitary Confinement For H...
        * Xavier Becerra And Luis Gutierrez On Depor...
        * Jesse Jackson Jr. transferred to minimum s...
        * GOP running out of time on immigration ref...
        * School board elections on April 23 Nine ca...

        * Loading Koch Industries Website Too Many T......
        * Maryland and DC among worst for food aller......
        * Cleveland State University to reestablish ......
        * Convicted political boss Al Sanchez runnin......
        * Candidates make last filings for local, st......

        * Illinois Lt. Gov. Simon opposes pension le......
        * Dillard Odd Man Out on Pension Deal Reaction...
        * Sen. Mark Kirk sides with Rauner on pensio......
        * Governor's race infighting threatens pensi......
        * SCHOONERS - Home of Everyone's Favorite Be......

        * The U.S. Government Is Undermining Internet Security
        * The White Sox Report: Attendance Already In Check
        * SportsMonday: Six Degrees Of Playoff Losses
        * Attendance Already In Check
        * Inside The Mind Of A Man Who Killed His Family
        * Sean Burns. Fair tax.
        * These members of the $20 million a year club paid the same Illinois state income tax rate as you did.
        * Chicago Wildfire Catch On With ESPN
        * Cracking The Chicagoland Code 7: We Don't Care How They Do It In New York
        * Who Is The Best Tree Climber In Illinois?

        * Governor Quinn Statement on Easter
        * Governor Quinn Announces Investments to Conserve Lake Michigan Shoreline - Visits Volunteer Beach Clean-up to Announce Investments That Will Support Environmental Education and Stewardship Projects
        * Governor Pat Quinn Takes Clemency Action
        * Proposed Rules for Compassionate Use of Medical Cannabis Pilot Program Act Filed
        * Adopt-A-Highway Spring Cleanup Begins Today - Annual Event Honors Earth Day, Tackles Roadside Litter After Harsh Winter

            Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller