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S&P whacks Illinois for its “persistent crisis-like budget environment”

Friday, Apr 6, 2018 - Posted by Rich Miller

* From the Twitters…



* Yevette was right…

As state bonds go to market, S&P is slamming the “persistent crisis-like budget environment” under Bruce Rauner’s failed leadership.

Rauner has failed to propose a balanced budget as governor, and he forced the state through an unprecedented 736-day budget crisis where bipartisan lawmakers ultimately overrode his reckless vetoes.

“Bruce Rauner creates crises, destroys state finances and slashes services for over a million while trying to force his failed agenda on our state,” said Pritzker campaign spokeswoman Jordan Abudayyeh. “This governor’s fiscal mismanagement has failed Illinois, and people across the state and country are taking notice.”

* More

S&P gave Illinois’ bonds a stable outlook. [Gabe Petek, managing director of S&P Global Ratings] said that’s because the budget lawmakers passed last summer, which included a $5 billion income tax increase, helped alleviate some of the funding pressures.

“The good news is that they held us stable,” Gov. Bruce Rauner spokesperson Rachel Bold said in an email, “but we clearly have some work to do.”

Rauner: Hooray for the tax hike! /snark

* Back to the story

Moody’s gave Illinois’ bonds a Baa3 rating with a negative outlook.

“The state’s credit outlook is negative, based on our expectation of continued growth in the state’s unfunded pension liabilities, the state’s difficulties in implementing a balanced budget that will allow further reduction of its bill backlog, and elevated vulnerability to national economic downturns or other external factors,” a Moody’s report said. […]

Moody’s noted the state’s bonds could get an upgrade if lawmakers take steps to reassure investors. Those steps would include adopting a plan to fund pension obligations, making progress in lowering the state’s bill backlog, and enactment of a sustainable, balanced budget.

Factors that could lead to a downgrade, Moody’s said, would be larger structural imbalance leading to a build-up of unpaid bills, pension holidays, or difficulties in managing a national recession, trade war or reductions in federal Medicaid funds.

Three of those last five factors are out of the state’s control.

       

23 Comments
  1. - Texas Red - Friday, Apr 6, 18 @ 3:09 pm:

    Meanwhile Madigan and Rauner are focused on what’s really important namely re-election !


  2. - Annonin' - Friday, Apr 6, 18 @ 3:12 pm:

    Hey!
    GovJunk is a new grand pappy. Let’s be nice.
    Wonder if he is bringin’ back Cubans for all us serfs?


  3. - Oswego Willy - Friday, Apr 6, 18 @ 3:14 pm:

    Hmm…

    ===“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===

    Gov. Rauner… you own these warnings, and the crisis that brings them now.

    Mike Schrimpf tells me do.


  4. - @misterjayem - Friday, Apr 6, 18 @ 3:14 pm:

    Woohoo — The Illinois budget environment is only ‘crisis-like

    – MrJM


  5. - VanillaMan - Friday, Apr 6, 18 @ 3:15 pm:

    I don’t see this changing while Bruce remains around.


  6. - Lucky Pierre - Friday, Apr 6, 18 @ 3:18 pm:

    JB is going to manage our pension crisis that is causing the budget deficit?

    Is it too much to ask for specifics from him?


  7. - Anonymous - Friday, Apr 6, 18 @ 3:20 pm:

    Didn’t Rauner say something about no good crisis goes to waste? I might not have stated his exact words, but the meaning is the same.


  8. - Anonymous - Friday, Apr 6, 18 @ 3:23 pm:

    “Moody’s noted the state’s bonds could get an upgrade if lawmakers take steps to reassure investors. Those steps would include adopting a plan to fund pension obligations, making progress in lowering the state’s bill backlog, and enactment of a sustainable, balanced budget.”

    The whole problem is Rauner does not want to fund any pension for the state workers, legislators or teachers.


  9. - RNUG - Friday, Apr 6, 18 @ 3:24 pm:

    == continued growth in the state’s unfunded pension liabilities, ==

    Doh (exclamation) … That is by design of the Edgar Ramp …and will continue for maybe another 10 years, depending on a number of factors. The rating houses have known this factor for over 20 years.


  10. - wordslinger - Friday, Apr 6, 18 @ 3:29 pm:

    –and persistent crisis-like budget environment in recent years.”–

    Don’t these Wall Street guys recognize a messiah using leverage to save the state from a death spiral? Poor Rauner, a prophet without honor in his own one-percenter land.

    Still, I’m sure Rauner appreciates the rating agencies grift. By law, continuing appropriations and bond contracts, there is zero chance Illinois could default on GO bonds. State revenues provide exponential coverage for debt service, and it gets paid first.

    Put it this way: if the GA and governors past and present could have found a way to short bond debt service or pay it late, don’t you think they would have done that by now?

    I mean, give them credit for being experts at deadbeatism.


  11. - Sue - Friday, Apr 6, 18 @ 3:32 pm:

    We never would have had the roll back in tax rates had the Dems been honest that a short term 4 year tax increase was going to solve this State’s fiscal problems and had Quinn and Madigan not spent all of the added revenue as opposed to reducing the debt. Rainer didn’t lower taxes the Dems did albeit Rauner before taking office didn’t object


  12. - AnonymousOne - Friday, Apr 6, 18 @ 3:38 pm:

    Not one thing new here. We’ll probably still be talking about this is the many years to come. Meanwhile the debt owed will be larger by the day as we all sit by and watch it grow. (hand-wringing)


  13. - Deadbeat Conservative - Friday, Apr 6, 18 @ 3:43 pm:

    =Meanwhile Madigan and Rauner are focused on what’s really important namely re-election ! =
    A wonder who re-elects officials who blow-off bills and create a crisis-like environments?? They must be a bunch of deadbeats.


  14. - Ron - Friday, Apr 6, 18 @ 3:45 pm:

    Illinois has not had a balanced budget in decades, if ever. Illinois has never funded education. Illinois has never paid for pensions.

    Yet Illinois has the 5th highest state and local tax burden in the nation.


  15. - Henry Francis - Friday, Apr 6, 18 @ 3:45 pm:

    Persistent crisis-like budget environment.

    Persistent . . . What could cause this crisis like environment to be so persistent?

    “I am the most persistent rascal on the planet.”
    -Gov. Rauner speaking to IMA Dec. 7, 2015


  16. - DBC - previously held for moderation - Friday, Apr 6, 18 @ 3:47 pm:

    - pension holidays - says Moody’s. That means skipping payments due, not paying out contractual benefits.


  17. - Oswego Willy - Friday, Apr 6, 18 @ 3:47 pm:

    ===Illinois has not had a balanced budget in decades, if ever. ===

    Google Charlie Wheeler on this.


  18. - Chicago Cynic - Friday, Apr 6, 18 @ 3:53 pm:

    “We never would have had the roll back in tax rates had the Dems been honest that a short term 4 year tax increase was going to solve this State’s fiscal problems and had Quinn and Madigan not spent all of the added revenue as opposed to reducing the debt.”

    Oh Fercrissakes. The overwhelming majority of money was used to pay our bills, pay down debt and make full pension payments consistently for the first time in years. Was there some waste? Sure. There always is. But the obligations were paid unlike this governor who racked up a billion dollars in late fees and interest that was just pushed away.


  19. - Ron - Friday, Apr 6, 18 @ 3:55 pm:

    we can thank Edgar and Madigan for most of the current disaster.


  20. - Illanoyed - Friday, Apr 6, 18 @ 3:58 pm:

    14 years of balanced budgets since it was added to the Illinois Constitution in 1970. The most recent balanced budget was 2001…


  21. - Anonymous - Friday, Apr 6, 18 @ 4:06 pm:

    =spent all of the added revenue as opposed to reducing the debt.=

    As long as the deadbeat caucus continues to pretend that spending is the same as reducing the debt, they’ll continue to win the argument against adequate revenues. Making contractual payments and paying off backlog is a will never get support as its falsely characterized as new spending.


  22. - Ron - Friday, Apr 6, 18 @ 4:19 pm:

    ^ what? Spending is spending


  23. - Michelle Flaherty - Friday, Apr 6, 18 @ 4:19 pm:

    “but we clearly have some work to do.”

    I question the Rauner administration’s comprehension of its pronoun use.


Sorry, comments for this post are now closed.


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