*** UPDATE 1 *** From Catherine Kelly in the governor’s office…
“Fitch’s action further demonstrates the importance of reaching bipartisan agreement on a truly balanced budget and changes that will grow our economy and bring new jobs to our state.”
*** UPDATE 2 *** From John Patterson, spokesman for Illinois Senate President John Cullerton…
While unfortunate, this was expected.
The looming threat was among the many reasons why the Senate is working on a comprehensive budget and reform plan. The goal is to end the nearly two-year impasse and restore financial stability.
If there’s a silver lining, it would be that hopefully this adds to the growing urgency to pass the Senate’s plan and get a comprehensive budget for the state.
*** UPDATE 3 *** Treasurer Michael Frerichs…
“Our credit rating suffers because the leaders in the General Assembly and the Governor will not negotiate an honest budget,” Frerichs said. “This singular focus on non-budgetary items is silently ripping money out of the pockets of everyone who lives in this state.”
“Borrowing costs money. Borrowing without a budget costs even more money. We know a budget will bring down our borrowing costs and yet we still have a leadership team that chooses not to negotiate. We can do better.”
*** UPDATE 4 *** Democratic Governors Association…
“Bruce Rauner’s failed governorship continues to hurt Illinois jobs and cost Illinois families,” said DGA Communications Director Jared Leopold. “Over and over again, Governor Rauner has sacrificed Illinois’s economy to protect his special interest friends. Today, Illinois families and business are paying
* And from Illinois Working Together Campaign Director Jake Lewis…
“To borrow a phrase from Fitch Ratings, Bruce Rauner has been an ‘unprecedented failure’ as the governor of Illinois. Today’s downgrade, the sixth under Gov. Rauner, is yet another indicator of the damage the governor has inflicted on Illinois and its people during his time in office. According to Fitch, the budget impasse has ‘fundamentally weakened’ the state. It will take years for Illinois to recover from Rauner.
“As residents and college students flee Illinois in record numbers, it is time for the governor to do something he has failed to do in his first two years in office: listen. The governor must drop his extreme political agenda for good and work to pass a responsible, fully-funded budget.”
[ *** End Of Updates *** ]
* From Fitch Ratings…
Fitch Ratings has downgraded the following ratings of the state of Illinois:
–Issuer Default Rating (IDR) to ‘BBB’ from ‘BBB+;
–$25.9 billion in outstanding general obligation (GO) bonds to ‘BBB’ from ‘BBB+’;
–$431 million Illinois Sports Facilities Authority sports facilities bonds (state tax supported) to ‘BBB-’from ‘BBB’;
–$2.6 billion Metropolitan Pier and Exposition Authority McCormick Place expansion project bonds to ‘BBB-’ from ‘BBB’;
–$267.8 million city of Chicago motor fuel tax revenue bonds to ‘BBB-’ from ‘BBB’.
The Rating Watch Negative is maintained.
Fitch warned it would downgrade the ratings if the state didn’t have a budget by the end of January.
* The explanation…
KEY RATING DRIVERS
The downgrade of Illinois’s IDR and related ratings reflects the unprecedented failure of the state to enact a full budget for two consecutive years and the financial implications of spending far in excess of available revenues, which has resulted in increased accumulated liabilities and reduced financial flexibility. Even if the current attempts at a resolution to the extended impasse prove successful, Fitch believes that the failure to act to date has fundamentally weakened the state’s financial profile.
The Negative Watch reflects Fitch’s expectation that the state’s implementation of a solution, whether temporary or permanent, will be a challenge in the current political environment and that in the interim the state will continue to delay and defer payments in lieu of balancing the budget. While Fitch acknowledges that there is a plan being developed in the state Senate that contains elements that could ultimately resolve the impasse, its passage is uncertain and the timing of implementing solutions is unknown. Fitch expects to resolve the Rating Watch within the next six months based on an assessment of the state’s fiscal trajectory as it starts fiscal 2018. If the state continues on the current path, a further downgrade would be warranted.
Illinois has failed to capitalize on the economic growth of recent years to bolster its financial position. Rather, the decision to allow temporary tax increases to expire and the subsequent failure to develop a budget that aligns revenues with expenditures have resulted in a marked deterioration in the state’s finances during this time of recovery. Once again, the state has displayed an unwillingness to utilize its extensive control over revenues and spending to address numerous fiscal challenges.
* Fitch projects revenue performance will “continue to track slow economic growth,” and claims it is “unlikely that reductions in state spending alone would be sufficient to achieve budgetary balance given the magnitude of the current budget gap.”
* Oof…
Operating Performance: ‘bbb’ factor assessment
Illinois’ operating performance, both during the great recession and in this subsequent period of economic growth, has been very weak. The failure to address a long-standing structural budget gap with permanent and comprehensive solutions, whether revenue or expenditure, has left the state with an gaping hole in its operating budget and increasing budgetary liabilities.
* On the Senate’s “grand bargain”…
The state Senate has put forth a series of bills that have the potential to lead to a compromise that will resolve the impasse. The Senate bills include raising the state income tax and other revenue measures, debt issuance to reduce accumulated budgetary liabilities, pension reforms, aid to Chicago public schools, and non-budgetary reforms sought by the governor, including a freeze on property taxes, workers compensation reform, and some form of term limits. These proposals, if they proceed through the full legislature and are signed by the governor, have the potential to meet the requirements to stabilize the Illinois IDR and related ratings. However, their passage is uncertain as is the timing of the implementation of any solutions.
Yep.
* A look ahead…
RATING SENSITIVITIES
BUDGET SOLUTIONS: Failure to enact a balanced budget for fiscal 2018 would result in a further downgrade. Successful implementation of measures to enact a structurally balanced budget and reduce accumulated budget liabilities would stabilize the credit.
LIQUIDITY: The rating is sensitive to a material reduction in the state’s ability to manage within available revenues through discretionary payment deferrals. Furthermore, failure of the state to make its statutorily required debt service transfers as scheduled, 12 months in advance on a rolling basis, would result in an immediate downgrade of the rating to below investment grade because it would suggest that the state’s liquidity pressures are presenting a risk to bondholder interests that has not been evidenced to date.
- Biscuit Head - Wednesday, Feb 1, 17 @ 3:20 pm:
Great. Just what we need - a downgrade in ratings means fewer buyers will buy them.. We continue to dig the hole deeper.
On this other hand, this is the kind of news that tends to be noticed mostly by the 1.4% Perhaps some of BVR’s social circle could call him and encourage him to pay attention to his hobby. /s
- Delimma - Wednesday, Feb 1, 17 @ 3:23 pm:
I thought business acumen was one of the governor’s selling points when he ran for office. Certainly seems like destroying one’s credit rating would be a bad business decision.
- ANONANON - Wednesday, Feb 1, 17 @ 3:26 pm:
It’s all Madigan’s fault. Thanks CK. (snark)
- don the legend - Wednesday, Feb 1, 17 @ 3:27 pm:
The Governor obviously understands the bond market. His decisions to date have guaranteed this downgrade. He’s staked 50 million so far to see the downgrade to its conclusion. He is fine with this.
- Reality Check - Wednesday, Feb 1, 17 @ 3:28 pm:
“I’ve been successful at everything I’ve ever done.” - Bruce V. Rauner
- sal-says - Wednesday, Feb 1, 17 @ 3:29 pm:
Dearest Governor:
Sorry, but this is all on you. Present your Constitutionally and State Law mandated Balance Budget before further destruction of IL occurs. Seems as tho we’re about one flush away from being a third-world country.
As your flack Catherine Kelly said: “As always, the governor will continue to advocate for the best interests of the people of Illinois.”
Start acting like it. Thank you.
Sincerely,
sasl-says
- Henry Francis - Wednesday, Feb 1, 17 @ 3:30 pm:
Bruce Rauner, 2014:
Reality: Pat Quinn Has Seen Illinois’ Credit Rating Downgraded 13 Times, And Our GDP Growth Is Among The Worst In The Midwest
Bruce Rauner, 2017: ?
- Keyser Soze - Wednesday, Feb 1, 17 @ 3:30 pm:
I know, I know, states can’t claim bankruptcy. But, is there another name that can be used? Kaput comes to mind.
- Anon - Wednesday, Feb 1, 17 @ 3:32 pm:
I guess maybe we should stop running Illinois like a business.
- CS - Wednesday, Feb 1, 17 @ 3:33 pm:
Can we just dissolve the state and have the states bordering Illinois absorb us?
- Arsenal - Wednesday, Feb 1, 17 @ 3:33 pm:
What a frustrating mess.
Is there such a thing as a last straw?
- Crispy - Wednesday, Feb 1, 17 @ 3:36 pm:
Illinois’ “Rauner Downturn” continues; that should be the Democrats’ messaging on this, anyway. Maybe the shame, combined with the looming threat of a shutdown, would help pressure the governor to come to the table, and quit trying to scuttle a deal through back channels. Or not. (Hey, daring to dream.) We just have to wait while the Dems put some coal in the hopper to get their communications apparatus fired up, lol. …
- Ducky LaMoore - Wednesday, Feb 1, 17 @ 3:37 pm:
When you elect a billionaire governor (or president for that matter) who claims to be unencumbered by “special interests,” it doesn’t take long to figure out that we the citizens are the “special interests”. And what he really meant was, “I can do whatever I want and there’s not a darn thing you can do about it.”
- Norseman - Wednesday, Feb 1, 17 @ 3:39 pm:
Fitch announces the creation of a new low credit rating to accommodate the depth of Illinois’ credit status. This action was necessitated when Illinois’ Governor, Bruce Rauner, and the General Assembly failed to fund state government for the 3rd straight year.
- Gruntled University Employee - Wednesday, Feb 1, 17 @ 3:41 pm:
Do you recon Brucie and the Big Brains have figured out a way to “short sell” Illinois?
- RNUG - Wednesday, Feb 1, 17 @ 3:46 pm:
-Norseman-
I believe that new rating would be fff?
- Linus - Wednesday, Feb 1, 17 @ 3:46 pm:
All the Bs in BBB and bbb stand for ‘Bruce.’ And ‘beyond belief.’
- Hit or Miss - Wednesday, Feb 1, 17 @ 3:50 pm:
Every time the bond rating goes down the cost of issuing a bond goes up for the taxpayer. Can the taxpayers of Illinois afford continued downgrading?
- Arsenal - Wednesday, Feb 1, 17 @ 3:51 pm:
I suppose destroying the state’s economy over a political feud *does* count as “Shaking Up Springfield”.
- Huh? - Wednesday, Feb 1, 17 @ 3:58 pm:
Two steps above junk bond rating. Didn’t 1.4% comment that he doesn’t care about bond ratings?
- Oswego Willy - Wednesday, Feb 1, 17 @ 4:03 pm:
===“Fitch’s action further demonstrates the importance of reaching bipartisan agreement on a truly balanced budget and changes that will grow our economy and bring new jobs to our state.”===
Oh “ck”, that’s a bit lazy…
Hows about redialing that Rauner Word Jumble so you can at least give the impression some effort was made.
To that Update.
Notice, “ck” sees zero urgency, only that it’s reforms accepted bipartisanly.
No concern for Illinois.
At all.
- Lucky Pierre - Wednesday, Feb 1, 17 @ 4:09 pm:
Mr Speaker maybe Fitch’s words can convince you that the proposal sitting in the Senate does not address the Governor’s “personal agenda”
According to Fitch
” The State Senate proposals, if they proceed through the full legislature and are signed by the Governor, have the potential to meet the requirements to stabilize Illinois IDR and related ratings. However, their passage is uncertain as is the timing of implementation of any of the solutions.
Yep sure sounds like Fitch is familiar with the obstruction of the Speaker and agrees with the Governor that reforms are necessary. The Speaker used to agree in 2012 when he said everyone agrees the pensions are unsustainable.
- Henry Francis - Wednesday, Feb 1, 17 @ 4:10 pm:
Gov is tweetin’ how a new digital application process at IDFPR is saving over $1,600 a day!! I don’t have a calculator handy, but I assume that is more than enough to cover the higher yields on the bonds. #whatmeworry
- Norseman - Wednesday, Feb 1, 17 @ 4:12 pm:
Well said Willy.
Adding, CK, your boss doesn’t understand the concept of bipartisanship. Have Rauner watch carefully. Cullerton and Radogno are demonstrating what it looks like. Their effort may fall short, but they deserve high praise for the effort.
- Keyrock - Wednesday, Feb 1, 17 @ 4:13 pm:
“Oh “ck”, that’s a bit lazy…
Hows about redialing that Rauner Word Jumble so you can at least give the impression some effort was made.”
–That’s unfair OW. Effort was made. The word “Fitch’s” was added before the Word Jumble was turned on.
- Oswego Willy - Wednesday, Feb 1, 17 @ 4:13 pm:
To Patterson…
===If there’s a silver lining, it would be that hopefully this adds to the growing urgency to pass the Senate’s plan and get a comprehensive budget for the state.===
“Urgency”… “Growing Urgency”
Patterson makes “ck” look passive to the state needing a budget.
“Importance” to… ===balanced budget and changes that will grow our economy and bring new jobs to our state.”===
… shows concern for Raunerism, not the state’s situation.
That Rauner Word Jumble continues to show any concern for the state.
Patterson? Well said.
- Anonymous - Wednesday, Feb 1, 17 @ 4:14 pm:
What success this governor has brought to our state! I wonder if he ever thinks about the legacy he’ll leave behind and how he’ll be touted in the future. I guess he doesn’t give a hoot (obviously). But Quinn is looking like a real statesman in comparison.
Critics can cry Madigan all they want but the buck stops in this state with our fearless leader, Governor Rauner. He is the face of our state. Where is the leadership? Where is the direction? I’d be embarrassed if I were him.
- Oswego Willy - Wednesday, Feb 1, 17 @ 4:18 pm:
- Norseman -, thanks…
To this from you…
===Cullerton and Radogno are demonstrating what it looks like. Their effort may fall short, but they deserve high praise for the effort.===
That’s the missing element “ck” continues to make benign.
Rauner himself made clear, and I went out of my way to applaud the Governor to it, that Radogno, Cullerton, the Senate, major props. Then “ck”… Rauner Word Jumble silliness.
- Lucky Pierre -
Your lack of acknowledging that Rauner has not said he’d sign any compromise clean is noted.
Rauner applauded their work, but gave no indication that the work was complete and easily singable by him.
So… there’s that.
- Nick Name - Wednesday, Feb 1, 17 @ 4:26 pm:
“…and changes that will grow our economy and bring new jobs to our state”
Word salad lite.
- Lucky Pierre - Wednesday, Feb 1, 17 @ 4:26 pm:
OW you think Rauner tipping his hand on the Senate compromise would help it pass? I don’t
- Oswego Willy - Wednesday, Feb 1, 17 @ 4:33 pm:
===… you think Rauner tipping his hand on the Senate compromise would help it pass? I don’t===
Geez, Louise, this Post is about not having a budget and downgrading the state’s rating, the days of tipping hands and misdirection are over.
Keep up, it’s time to get a deal, not tipping hands or worried about sending signals.
Enough. Rauner wants the Senate deal, then commit to something that will get a deal.
“..,you think Rauner tipping his hand on the Senate compromise…”
It’s like you are utterly clueless, like “ck” it seems, that these faux posturing of faux positions of strength are leading to more downgrades.
At least “ck” is getting paid (at least until the 28?) to sound ridiculous…
- Rich Miller - Wednesday, Feb 1, 17 @ 4:35 pm:
===Rauner tipping his hand on the Senate compromise would help it pass? I don’t===
He did tip his hand - when the IL Chamber opposed every bill in the package, including the ones it supported. And when the “Institute” came out against it.
- Arsenal - Wednesday, Feb 1, 17 @ 4:35 pm:
==Yep sure sounds like Fitch is familiar with the obstruction of the Speaker and agrees with the Governor that reforms are necessary.==
Ahhhh ha ha ha ha ha. Thanks for reminding us all that “This event shows that MY policy and political beliefs have been right all along!” has always and will always be the most popular opinion in the world.
- Arsenal - Wednesday, Feb 1, 17 @ 4:37 pm:
==OW you think Rauner tipping his hand on the Senate compromise would help it pass? I don’t==
What a sad statement about the Governor, if true.
- Oswego Willy - Wednesday, Feb 1, 17 @ 4:42 pm:
- Lucky Pierre -
===Keep up, it’s time to get a deal, not tipping hands or worried about sending signals.
Enough. Rauner wants the Senate deal, then commit to something that will get a deal===
Rich pointed out the reality.
Either you believe that John Tillman has gone full rogue on Rauner, or Rauner is using his vertical integration to left-handedly rebuke his own words in the well of the House.
If Rauner gets behind and decides to get on board to an agreement the Senate can pass and be agreeable to even put pressure on the House, why the heck wouldn’t he?
Because of a faux tipping of a hand?
- Arsenal - Wednesday, Feb 1, 17 @ 4:45 pm:
If Rauner wants the Senate deal, saying so will only help him. It’ll either pass- in which case he gets to run for re-election without that albatross- or it won’t, but no one can blame him.
If it passes while he stays silent, his only hope is that Madigan takes all the blame, but that seems unlikely with IPI and the Chamber whipping against it.
- Arsenal - Wednesday, Feb 1, 17 @ 4:53 pm:
That last bit should say “If it FAILS while he stays silent”.
- Demoralized - Wednesday, Feb 1, 17 @ 4:54 pm:
==Yep sure sounds like Fitch is familiar with the obstruction of the Speaker and agrees with the Governor that reforms are necessary. ==
You must have read a different analysis than I did. Seems to me their main concern is the inability to cut spending and raise revenues, specifically pointing out the folly of letting the tax increase expire. I didn’t catch the analysis that said things like term limits were necessary to improve the state’s credit rating.
- Demoralized - Wednesday, Feb 1, 17 @ 4:57 pm:
==when he said everyone agrees the pensions are unsustainable.==
You’re really stuck on this pension thing aren’t you. I mean, even the IPI realizes you can’t do anything to change current pensions and that the only thing that can be done is to change the system for new employees and offer current employees the option to change if they wanted and if they didn’t they stayed on the same plan they are on now. Heck, if the IPI can get to that point I’d think even the most hyper partisan being such as yourself could get there.
- don the legend - Wednesday, Feb 1, 17 @ 4:57 pm:
Governor Rauner is fine with this downgrade. He knew it was coming and is putting in at least $50,000,000.00 to see it through.
- My New Handle - Wednesday, Feb 1, 17 @ 5:01 pm:
Of course Rauner needs to tip his hand about reaching a budget agreement. That is what a governor is supposed to do. It is called leadership. All we have seen if the governor’s metaphorical hand is its metaphorical middle finger.
- Yellow Dog Democrat - Wednesday, Feb 1, 17 @ 5:02 pm:
I just want to point out to CK and others that not only did Fitch make no mention of the failure to enact the Rauner Agenda, the triple underlined the fact that it was the failure to enact a budget that was leading to the budget downgrade.
Moreover, they explicitly argue that the state has direct control over its ability to balance the budget simply by raising revenue and cutting costs. In other words, no Voodoo economics that grow us out of this mess by keeping taxes low for millionaires is needed.
This document is one of the harshest indictments of Bruce Rauner I have read.
- Lucky Pierre - Wednesday, Feb 1, 17 @ 5:08 pm:
OW as usual you only criticize Rauner’s silence on the Senate deal not the Speakers. Consistency is not your strong suit
- Oswego Willy - Wednesday, Feb 1, 17 @ 5:15 pm:
===…as usual you only criticize Rauner’s silence on the Senate deal not the Speakers.===
Rauner isn’t silent. IPI is Rauner nixing it.
Can you read?
You have “ck” and the Word Jumble saying nothing about the budget, but the agenda.
I’m consistent. Rauner isn’t, lol
- Lucky Pierre - Wednesday, Feb 1, 17 @ 5:20 pm:
Why no word from the Speaker?
- wondering - Wednesday, Feb 1, 17 @ 5:24 pm:
Paraphrasing the idol of the right, the venerable Ronald Reagan…..Is Illinois better off than it was two years ago when Quinn left and Rauner arrived? That is all there is….no Fitch genuflection in the direction of anti-unionism.
- Ducky LaMoore - Wednesday, Feb 1, 17 @ 5:25 pm:
@Lucky P
What’s Durkin got to say about the Senate work?
- Anonymous - Wednesday, Feb 1, 17 @ 5:28 pm:
Given the makeup of the Senate the Il Chamber of Commerce objecting to the Senate billl should help it pass
- Oswego Willy - Wednesday, Feb 1, 17 @ 5:37 pm:
Rauner, in 2014…
===“Illinois’ credit rating has been downgraded 13 times under Pat Quinn and now, because of his failed leadership, our state’s economy and finances are still broken. Pat Quinn put special interest politics ahead of Illinois workers. We need to change direction before it’s too late.” – Rauner campaign spokesperson Mike Schrimpf […]===
In two years, Rauner has had 6 downgrades… and counting.
Governor Bruce Rauner fails.
Candidate Bruce Rauner tells me so.
- Lucky Pierre - Wednesday, Feb 1, 17 @ 5:38 pm:
Pension reform is in the Senate compromise Demoralized
- Leading InDecatur - Wednesday, Feb 1, 17 @ 5:49 pm:
Is is the way it is because .01% ers want to the way it is… Interest rates are still too low to make a lot on capital.
RaunerCo is crashing the bond rating so he and his pals can make more on bonds… This will continue until they’re called on it. Who is buying these bonds, who, who?
- Lucky Pierre - Wednesday, Feb 1, 17 @ 5:51 pm:
Governor, Senate President and Treasurer all weigh in on this serious development. The Speaker’s office is silent as usual.
- Oswego Willy - Wednesday, Feb 1, 17 @ 5:54 pm:
- Lucky Pierre -
Bruce Rauner failed.
The candidate Rauner has shown, Governors own downgrades.
So… there’s that.
- Oswego Willy - Wednesday, Feb 1, 17 @ 5:56 pm:
Oh, and - Lucky Pierre -….
Leader Durkin?
- Generic Drone - Wednesday, Feb 1, 17 @ 6:04 pm:
Fitch’s downgrage Illinois bond rating to FUBAR!
- Arthur Andersen - Wednesday, Feb 1, 17 @ 6:39 pm:
Leading in Decatur, you sound a lot like a guy we used to call the Owl. Who? Who?
We’ve had the lesson about Rauner and bond rates/prices several times here. Go get a copy of “Investing for Dummies” and read it cover to cover before posting that tripe.
- Lucky Pierre - Wednesday, Feb 1, 17 @ 7:27 pm:
OW do you think Leader Durkin can get the Senate bill discharged from the rules committee? What power does he have to call this? Take a break from your constant deflection and full time job apologist for the Speaker. He has people that are supposed to do that for him full time although they are also not exactly master communicators. What is their message again?
- Oswego Willy - Wednesday, Feb 1, 17 @ 7:43 pm:
===…do you think Leader Durkin can get the Senate bill discharged from the rules committee===
Can the Treasurer? And yet you cited his response…
===He has people that are supposed to do that for him full time although they are also not exactly master communicators===
Ok. I dunno what you want.
Maybe the Speaker and Leader Durkin will have a joint statement, just for you.
- Tom Servo - Wednesday, Feb 1, 17 @ 9:06 pm:
Truth: If Rauner held the last piece of toilet paper on Earth, I would graciously welcome the rash. Ugh. For the sake of sake, please stop campaignin’ and start governin’/ownin’.
- City Zen - Wednesday, Feb 1, 17 @ 9:18 pm:
Keep cashin’ those union checks, Jake!
- walker - Wednesday, Feb 1, 17 @ 11:13 pm:
Rauner has tipped his hand in many ways, sending negative messages to Republican legislators. Whether he simply wants more on every piece, or is committed to further delay on any deal, is unclear.
- peon - Wednesday, Feb 1, 17 @ 11:58 pm:
Fitch’s key ratings drivings say it all. It’s simple revenue, expenditures, and debts. Basic math is step #1.