* Tina Sfondeles reports…
Moody’s Investors Service on Wednesday issued an ominous report about Illinois’ finances, warning that the lack of a full year budget will more than double the state’s deficit and could lead to further credit downgrades. […]
According to the report, the partial budget will likely widen the state’s operating fund deficit with a backlog of bills likely to reach $14 billion or more — a new high — this year “absent actions by the government to align revenue and spending.”
The report says current spending authorizations, appropriations, court orders and consent decrees in the fiscal year which began on July 1 will drive expenditures up by an estimated 12 percent compared with the revenue coming in.
The report warns that the state might “resort to actions that cast doubt on an otherwise strong legal framework prioritizing debt payment, such as borrowing from funds set aside for debt service.”
Moody’s also warns that a reliance on payment deferrals to offset the budget imbalance will be hard to end, calling the payment backlog “the by-product of a weak governance structure that includes permissive laws and legal interpretations.”