Capitol - Your Illinois News Radar » Moody’s again warns state on budget gridlock
SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
To subscribe to Capitol Fax, click here.
Moody’s again warns state on budget gridlock

Thursday, Mar 30, 2017

* From a Moody’s press release…

The State of Illinois’ (Baa2 negative) credit rating is vulnerable to further downgrades as “grand bargain” talks to resolve an almost two-year budget impasses have broken down, and intensifying liquidity pressures have tripled the state’s chronic backlog of unpaid bills to a record $13 billion, Moody’s Investors Service says in a new report.

“Illinois is at a critical juncture and its leaders must choose between further credit deterioration and drift without compromise, or the potential for stabilization. With a budget consensus, Illinois could quickly secure its financial position,” said Ted Hampton, a Moody’s Vice President – Senior Credit Officer.

The report, “Illinois (State of): Record Bill Backlog Signals Critical Juncture for State’s Leaders,” notes Illinois is the lowest-rated state and is seven notches lower than the median Aa1 state rating. Illinois’ credit weakness incorporates very large unfunded pension liabilities, the two-year political standoff, and its long-running reliance on payment deferral to manage operating budget imbalances.

The state’s bill backlog reached a record $13 billion on March 20, according to the state comptroller, and if no agreement is reached it could approach $28 billion by the end of FY 2019. The lack of an agreement to raise revenue, which is at the center of the state’s fiscal impasse, means that Illinois taxes and other revenues are insufficient to cover its operations.

Failure to reach a consensus before the current legislative session adjourns on May 31 would signal political paralysis, leaving Illinois on a path toward unsustainable fiscal challenges that will heighten the risk of creditor-adverse actions. These could include borrowing from debt service funds, depleting available non-operating cash, or prioritizing core operating needs over debt service.

While the state’s growing liquidity pressures have not yet impacted its ability to pay bondholder debt, the state’s chronic underfunding and payment deferral is running into political and legal limits, notably at the state’s public universities, where Illinois has appropriated $1.5 billion less than it normally would have.

While Illinois’ current fiscal year operating deficit is $5.7 billion, the state could quickly begin stabilizing its finances once budget balancing measures have been reached. Liquidity would be promptly restored because Illinois’ financial pressures have been driven by gridlock, rather than economic conditions beyond the government’s control.

And while the “Grand Bargain” appears to be stalled in the legislature, Moody’s believes the revenue measures in the deal, combined with spending restraints that keep payment deferrals from recurring, could improve Illinois’ financial prospects.


- Posted by Rich Miller        

  1. - AnonymousOne - Thursday, Mar 30, 17 @ 9:12 am:

    But our governor and his supporters says we’re winning?!

  2. - Anonymous - Thursday, Mar 30, 17 @ 9:16 am:

    What’s it going to take?

    How does one person hold 13 Million Illinoisans hostage without any accountability for another year and a half?

    GOP need to support Radagno & save their party and IL.


  3. - RNUG - Thursday, Mar 30, 17 @ 9:17 am:

    In a talk to RSEA yesterday, Dan Long said he expected the rating houses would take further action this year, depending on what happened with the Grand Bargain and/or a budget getting passed. He also did a good overview of the numbers and what it would take, revenue wise, to right the ship of state.

    So this really isn’t a surprise. We all know what needs to happen: a budget with additional revenue.

  4. - Arock - Thursday, Mar 30, 17 @ 9:17 am:

    It takes at least two to Tango.

  5. - @misterjayem - Thursday, Mar 30, 17 @ 9:20 am:

    “as ‘grand bargain’ talks to resolve an almost two-year budget impasses have broken down”

    This use of the passive voice makes Illinois budget nightmare sound like the result of a natural disaster or some other Act of God. Not so.

    This is deliberate.

    While one may be able to argue about whether the benefits of Gov. Rauner’s strategy will one day outweigh the pain inflicted upon the state and people of Illinois, no one should pretend that this is not his explicit strategy.

    – MrJM

  6. - Mr. K - Thursday, Mar 30, 17 @ 9:21 am:

    Apparently, Rauner hasn’t indicated to Moody’s that the GOP is “winning” — so, obviously, this warning is incorrect.

    Clearly, Moody’s has no idea what they’re talking about. It’s just more noise. Rauner’s got the signal, though. And it’s hot. Hot.

  7. - Oswego Willy - Thursday, Mar 30, 17 @ 9:25 am:

    ===It takes at least two to Tango.===

    Nope. Sorry.

    “How do I know?”

    Candidate Rauner made the continual downgrades a cornerstone of “Pat Quinn failed”…

    Also, Rauner himself said he’s winning.

    You can’t win at something you don’t take Credit for…

    So, there’s that too.

  8. - NorthsideNoMore - Thursday, Mar 30, 17 @ 9:32 am:

    Raise Taxes tp 5% or so, cut a few deals on WC and term limits, freeze Prop taxes for 2 years. Move along nothing to see here folks.

  9. - Hit or Miss - Thursday, Mar 30, 17 @ 9:33 am:

    I see another credit rating downgrade by the Moody’s, Fitch, and S&P to be highly likely some time in June. As a taxpayer I see higher interest costs for the state for many years in the future.

  10. - Anon221 - Thursday, Mar 30, 17 @ 9:35 am:

    From the article: “The lack of an agreement to raise revenue, which is at the center of the state’s fiscal impasse, means that Illinois taxes and other revenues are insufficient to cover its operations.”

    You don’t raise revenue by property tax freezes. You don’t raise revenue with term limits. You don’t raise revenue by refusing to honor contracts. You don’t raise revenue by leaving Federal matching funds on the table. Rauner’s ROIs for Illinois are abysmal, but he’s “winnin’”. He has a gambling problem and we as a state are paying the high price for his “addiction”.

  11. - Anon - Thursday, Mar 30, 17 @ 9:38 am:

    Bruce is makin’ a lot of money for his bond holdin’ buddies.

  12. - Ducky LaMoore - Thursday, Mar 30, 17 @ 9:38 am:

    ===It takes at least two to Tango.===

    Actually, in this case it takes 30 and 60 to tango. Or perhaps 36 and 72.

  13. - Anon - Thursday, Mar 30, 17 @ 9:40 am:

    ===Raise Taxes tp 5% or so, cut a few deals on WC and term limits, freeze Prop taxes for 2 years. Move along nothing to see here folks===

    Papa Bruce didn’t get the memo.

  14. - City Zen - Thursday, Mar 30, 17 @ 9:46 am:

    Has a ratings agency ever met a tax hike it didn’t like?

  15. - wordslinger - Thursday, Mar 30, 17 @ 9:49 am:

    This is the first I can recall the rating agencies raising the possibility of “borrowing from debt service funds.”

    Under current law, I don’t think that’s possible for state bond debt. That’s why shorting pension contributions and stiffing state contractors have been the preferred methods of deadbeat borrowing.

    Anyone know if there is any wiggle room to tap debt service funds? If so, that would seem to require a highly unlikely agreement among the governor, comptroller and treasurer.

  16. - zatoichi - Thursday, Mar 30, 17 @ 9:50 am:

    ===It takes at least two to Tango.===
    5 at a table would get the dance going.

  17. - RNUG - Thursday, Mar 30, 17 @ 9:50 am:

    == Raise Taxes tp 5% or so … ==

    Although the math says it needs to be higher, the politics say it will be no more than 4.99%, with new service taxes and assorted fees making up the rest of the needed revenue.

  18. - The Dude Abides - Thursday, Mar 30, 17 @ 10:01 am:

    The Charlie Brown football analogy is accurate with this Governor. In his latest campaign commercial Rauner doesn’t mention workman’s comp reform but he’s big on term limits. I remember when workman’s comp reform was a big precondition for a budget. The Governor is being disingenuous and dishonest with the public and the media isn’t doing their job calling him out on it. In late February he said that he wanted to stay out of grand bargain negotiations so not to derail a possible agreement. When March arrived and it appeared that they were close to a deal he abruptly killed the deal. I don’t hear much talk from GOP members about term limits because they aren’t crazy about it either. The Governor is intentionally throwing those things out there to muddy the waters.
    If we ever pass term limits we need to include a provision to make it easier to recall a Governor. No legislative approval needed to get a Recall Amendment on the ballot. Just like buying a car that’s a lemon, in electing Rauner we’ve bought ourselves a lemon and he will be with us until January 2019 and continue to run this state into the ground and there appears to be no recourse. I don’t have a big problem with Illinois joining 15 other states that have term limits but we need a full and balanced budget a lot more than we need term limits. Term limits will not attract business to come to Illinois, that’s just nonsense for the Governor to suggest that. What will attract business is a state that is on sound fiscal health, and under the Governor’s leadership the state is becoming sicker by the day.

  19. - don the legend - Thursday, Mar 30, 17 @ 10:04 am:

    “I don’t have time for these Madigan controlled rating agencies, I got me some campaignin to do”.

  20. - Realist - Thursday, Mar 30, 17 @ 10:12 am:

    At this point there is no fixing Illinois. We are a failed state (past tense). The best we can do is try to slow down the bleeding while we start the long process of reconfiguring and creating a new state from the ashes. That new state cannot include Rauner or Madigan. It cannot include legislators like Jimenez who seem to have no ability to have original and independent thoughts. We desperately need a convention, and we need to institute an expedited way to run politicians out of Springfield if they don’t do their jobs.

  21. - City Zen - Thursday, Mar 30, 17 @ 10:13 am:

    ==The best we can do is try to slow down the bleeding while we start the long process of reconfiguring and creating a new state from the ashes.==

    Can we be West West Virginia?

  22. - Juice - Thursday, Mar 30, 17 @ 10:14 am:


    The debt service funds can be tapped if a law is passed by the General Assembly to borrow from it or sweep it. (It’s been done once before)

    Changes could also be made to limit the amounts that need to be held in reserve from the funds.

  23. - Anon - Thursday, Mar 30, 17 @ 11:31 am:

    === “leaders must choose between further credit deterioration and drift without compromise, or the potential for stabilization.” ===

    The only way Republicans can opt for further credit deterioration in good conscience is by dismissing Moody and the other rating agencies as liberal propagandists who are out of touch with reality.

  24. - thechampaignlife - Thursday, Mar 30, 17 @ 12:03 pm:

    ===Can we be West West Virginia?===

    Wester Virginia

    The better question: can we get a court order giving the ILGA a deadline by which they must “make appropriations for all expenditures of public funds by the State” (Art VIII, Sec. 2(b)) and, if that deadline is not met, put appropriations into common law receivership?

  25. - Realist - Thursday, Mar 30, 17 @ 3:54 pm:

    Ha! I like “Wester Virginia!” I also like “West-South Carolina!” Actually Illinois once fell under the authority of the governor of W. Virginia. I say it’s time to return to that!

  26. - wordslinger - Thursday, Mar 30, 17 @ 4:25 pm:

    – Actually Illinois once fell under the authority of the governor of W. Virginia.–

    WV admitted to the union 1863, Illinois 1818

  27. - City Zen - Thursday, Mar 30, 17 @ 5:06 pm:

    ==Ha! I like “Wester Virginia!” I also like “West-South Carolina!”==

    Wouldn’t it be “North West South Carolina”??

    I also prefer Wester Virginia.

  28. - Brother Bill - Thursday, Mar 30, 17 @ 7:35 pm:

    Rauner will soon change is tune is he is smart. As the ratings decline with his poll numbers he will get the blame. Madigan only has to win in his district Rauner has to win the state. Good luck with that.

Sorry, comments for this post are now closed.

* Reader comments closed until Tuesday
* Rauner complains it's "hard to overcome" the "biased" Illinois media
* Question of the day: Golden Horseshoe Awards
* Rate Pritzker's new digital ad
* Recent endorsements: Raoul, Biss, Newman, Villivalam
* Joe Berrios' new radio ad features Jesse White, more attacks on Kaegi
* A make-work program for property tax appeals lawyers?
* Rauner tax hike claim ruled "Mostly False"
* Lawsuits expose more problems at Quincy veterans' home
* Could a Moody's methodology change push Illinois into junk status?
* Republicans get into the "holiday spirit"
* Jesse White's GOP opponent: "I'm extremely ordinary"
* Friday open thread
* Yesterday's stories

Visit our advertisers...





* The Sunday Spin: Politics with Rick Pearson Ful.....
* Illinois’ legislative conflicts law could be be.....
* The Sunday Spin: Politics with Rick Pearson Ful.....
* Elizabeth Hess/Left is Right: Do your homework .....
* Rich Miller/Capitol Fax: Can Rauner really take.....

* No more valedictorian, class ranks at Kankakee High School
* Police: Illinois man dies after crashing ATV in New Mexico
* 14 millionth book for U of I library is professor's work
* Iowa homeless shelter sees high demand for beds
* Police in Illinois will begin roadside drug tests
* Canadian company closes on site for new ag equipment plant
* Food stamps cut to tens of thousands in Illinois
* Top member of Cook County prosecutor's office resigns
* Vatican issues new rules for relics in saint-making process
* Portion of Illinois courthouse's stained glass dome falls

* Food stamps cut to tens of thousands in Illinois
* Statehouse Insider: Holiday cheer from Rauner to Madigan
* Lawmaker's daughter gets probation in political rival attack
* Gov. Rauner unveils Bicentennial Pepsi can
* Video gambling numbers level off in Springfield
* Judge: Video gambling profits must be split with operators
* Under the Dome Podcast: "Objection! (to nominating petitions), Pritzker endorsements
* Schoenburg: Jones leads fundraising in 13th Democratic primary
* Governor candidates want action on Legionnaire’s outbreak at veterans home
* Schoenburg: Pritzker foundation gave $50 million in 3 years

* Like our roundup? Share it around.
* Chicago lawyers: not a diverse lot
* A legal setback for Jimmy John's in wage-theft case
* A health setback for Hunter Harrison punishes CSX stock

* Man charged with trying to kidnap girl, 10, from front porch in Cicero
* Snowy owls, a rock star of the species, roosting in the Chicago area
* STEINBERG: Trump dislikes being investigated; so did Al Capone
* US soldier ambushed in Niger wasn’t captured
* Man, 75, found dead in Clearing is season’s first cold death
* Nikola Mirotic’s five-game tear could be his wanted ticket out of town
* Mundelein boy charged with pointing replica rifle at drivers
* Kremlin says Putin thanked Trump for CIA tip on bombings
* Dear Abby: Dad’s obsessed with his will and who gets what
* Treasury chief can’t rule out shutdown, but expects deal

* Year after unveiling, what’s latest on Tiger Woods’ Chicago golf project?
* Teen delivering Tribune shot dead on Southwest Side
* Power outage halts flights at Atlanta international airport
* Dog survives Indiana plane crash that killed 3 people, another dog
* With Dodgers and Yankees now positioned for a Bryce Harper pursuit, Nationals stick to the blueprint
* Name released of man shot dead by concealed carry permit holder
* Chicago to get additional federal prosecutors to help combat violent crime
* Panthers owner Jerry Richardson made inappropriate sexual, racist remarks: report
* Villa Park man dies after crashing ATV in New Mexico, police say
* Doug Jones says don't expect him to always side with Senate Democrats

» State Week: Why Are People Still Dying From Legionnaires At Illinois Veterans Home?
» Top Three Challenges For Homegrown Star Taking Over Chicago Schools
» Illinois Women Tell Their #Metoo Stories
» Illinois Issues: A Personal Story
» Key Question For Democrats: To Billionaire, Or Not To Billionaire?
» Pritzker To Be First On Primary Ballot
» 3 Years, 13 Legionnaires’ Deaths At Illinois Veterans’ Home
» Protesters Disrupt Meeting, Call For Palos Trustee To Quit Over ‘Racist’ Comments
» Chicago Hospital First To Sue Over Bad Rating
» Cook County Republican Files For Illinois Treasurer Seat

* Andy Shaw: Is Illinois ready to attack bureaucratic bloat and save money?
* UIS Perspectives: Educating leaders in education
* Food stamps cut to tens of thousands in Illinois
* Our View: City should enlist public input in cuts
* Statehouse Insider: Holiday cheer from Rauner to Madigan
* Schoenburg: Bernie-backing Gronemeyer vs. Clinton delegate Mazzotti for Dem post
* Lawmaker's daughter gets probation in political rival attack
* Scott Reeder: Assaults should never be swept under the rug
* Ed Rogers: Shelby channels Atticus Finch, saves the day in Alabama
* Gov. Rauner unveils Bicentennial Pepsi can

* Mary Jo Stanley, of The Stanley Foundation, passes away
* Bungalow will be razed for Rivermont expansion
* Granite City couple killed in house fire
* Herald & Review coat drive keeping kids warm for nearly 30 years
* Shop With a Cop
* PFOP: In 1955, downtown Bloomington 'dressed in holiday style'
* Goodfellow Fund donors 12/17/17
* The best Decatur-area light displays? Right this way
* PHOTOS: H&R News and Feature Images of the Year 2017
* 5 Questions with ... Kyle Karsten of Decatur's Salvation Army

* 2 candidates gone after challenges in Lake County Board races
* The Latest: Vikings crushing Bengals 24-0 at halftime
* Athletic facilities proposed for Lincolnshire office complex
* Israel to probe fatal shooting of Palestinian paraplegic
* Villarreal wins at Celta as Fornals scores his 1st goal

* Efforts continue to have Warrenville Post ...
* Editorial: Roskam gets gun vote right, Hul...
* Kendall GOP chief to challenge Kinzinger i...
* Slew of suburban Democrats seek to challen...
* This RSS feed URL is deprecated
* High school football: Randy Hultgren lauds...
* Suburban Democrats line up to challenge Ro...
* Strong early filing for Illinois attorney ...
* Letter to the editor: Hultgren should oppo...
* Tax cuts for Scrooge McDuck? Dispelling my...

* This RSS feed URL is deprecated...

* This RSS feed URL is deprecated...

* Bling for the budget- and design-conscious
* Standing on the shoulders of ancestors.
* Sketchbook.
* Whenever the fight for democracy reaches a crossroads, look south.
* Sunday, Sunday.
* Rahm on Colbert.
* Sketchbook.
* A Black friend and a Jew lawyer.
* Trump’s banned words. Use them and pass them on.
* Sun-Times calls for democracy in Chicago. Don’t tell us. Tell Cullerton.

* Illinois Awarded Funds to Offer Advanced Training on Detecting Impaired Driving
* Illinois EPA Announces Upcoming Household Hazardous Waste Collection Events
* IEMA Highlights Emergency Preparedness for People with Access and Functional Needs in May - Ready Illinois website offers preparedness tips for people, caregivers
* First Lady Launches Illinois Family Connects
* Governor and Lt. Governor Unveil 2016 Journal of Local Government Shared Service Best Practices

* Samsung and Xiaomi reportedly also bringing Windows 10 Always Connected PCs
* Samsung Galaxy S9+ leaked! Net Neutrality repeal & more – Pocketnow Daily
* How to Scan a QR Code Using the Camera on the iPhone or the iPad
* Netflix will look for a repeat play in 2018 after a strong year
* Off-beat: the first Best Buy location reopens in Puerto Rico
* iPhone X sales may not impress for holidays, but will they be enough?
* Samsung Galaxy Note 8 X 99AVANT Special Edition costs $1,828

* Lull in Manny Machado rumors, but plates shift underneath
* Sporcle Saturday: The richest free agent deals in White Sox history
* Former White Sox players return to rep team
* White Sox news that doesn’t involve Manny Machado
* Former White Sox players return to rep team
* The cracks in the White Sox-Manny Machado rumors
* Hahn mum on any White Sox-Machado talks

Main Menu
Pundit rankings
Subscriber Content
Blagojevich Trial
Updated Posts

December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
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

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