Capitol Fax.com - Your Illinois News Radar » Fitch moves Illinois from negative to positive outlook
SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Fitch moves Illinois from negative to positive outlook

Wednesday, Jun 23, 2021

* From Fitch Ratings

The Outlook Revision to Positive from Negative, reflects Illinois’ preservation of fiscal resilience given the quick and sustained economic recovery since the start of the pandemic, coupled with the state’s unwinding of certain nonrecurring fiscal measures. Recent fiscal results and the enacted fiscal 2022 budget suggest further improvements in operating performance and structural balance in the near and medium-term that could support a return to the pre-pandemic rating or higher.

Illinois’ ‘BBB-’ IDR reflects a long record of structural imbalance and irresolute fiscal decision making, resulting in a credit position well below what the state’s slow-growing but broad economic base and substantial ability to control its budget would otherwise support. The rating also reflects the state’s elevated long-term liability position and resulting spending pressure. […]

Over the long term, Fitch expects Illinois’ broad revenue base, primarily income and sales taxes, to capture the breadth of its economy and to track its slow growth trajectory. Illinois has unlimited legal ability to raise revenues. […]

Long-term liabilities are an elevated but still moderate burden on Illinois’ significant resource base, even when considering non-traditional liabilities such as the state’s accounts-payable backlog. Illinois has very limited flexibility to modify existing pension and other post-employment benefit obligations (OPEBs). […]

Illinois’ operating performance, both during the 2008 Great Recession and the subsequent economic expansion, had been very weak. Recent improvements, including reduction in accounts payable and enacting plans for early retirement of federal pandemic loans, signal improvement in budget management.

* From the governor’s office…

“Fitch’s improved outlook for Illinois is yet another sign of positive momentum for our state’s fiscal condition, a testament to strong financial management and responsible actions by the General Assembly and my administration, and a product of the state’s economic resilience,” said Governor JB Pritzker. “The story of Illinois in 2021 is that in the face of a crisis, fiscal discipline and smart economic policy pays off. I want to thank the General Assembly, especially Speaker Chris Welch and President Don Harmon and their budget negotiators for their partnership in our common purpose of bringing about long-term fiscal strength for Illinois. Together, in the face of a deadly global pandemic, we enacted a balanced budget for the third straight year of my administration, demonstrating fiscal responsibility works with a vision of governance focused on working families.”

Highlights from Fitch’s analysis:

    • “The state is prudently applying the gains to fully retire federal deficit borrowing undertaken just a few months ago, repay outstanding interfund loans used as budget balancers in prior years and drive down the bills backlog.”
    • “Recent fiscal results and the enacted fiscal 2022 budget suggest further improvements in operating performance and structural balance in the near and medium-term that could support a return to the pre-pandemic rating or higher.”
    • “Recent improvements including reduction in accounts payable and enacting plans for early retirement of federal pandemic loans, signal improvement in budget management.”
    • “The May Debt Transparency Act (DTA) report also notes $191 million in reported pending late payment interest penalties, down 40% from February 2020 ($319 million) and down 78% from the first DTA report from December 2017 ($887 million).”
    • “Broadly, the state reports a $1 billion reduction in total general fund spending for fiscal 2022 ($42.3 billion) versus the current services estimate provided in November 2020. General fund base operating spending remains flat in the fiscal 2022 enacted budget versus fiscal 2021 at $30.8 billion. Funding for K-12 and higher education is up 3%, including a $350 million increase for K-12.”
    • “Unlike recent years, the budget includes no interfund loans or sweeps.”

…Adding… Comptroller Mendoza…

“Fitch Ratings Agency’s change of outlook on Illinois’ finances from negative to positive vindicates the responsible approach my office has taken in paying down the backlog of bills from $16.7 billion in 2017 to $3.4 billion today,” Comptroller Susana A. Mendoza said. “My administration has been committed and vocal about the need to show fiscal discipline and accountability. Fitch notes the responsible approach we have taken with the General Assembly and the Governor’s office to target better-than-expected revenues to paying down debt.”

Fitch cited numbers the Comptroller’s office issues in monthly reports as a result of Comptroller Mendoza’s signature “Debt Transparency Act” (DTA) that gives state policy-makers, legislators and citizens a more comprehensive accounting of the state’s debts, including progress made in paying down late payment interest penalties run up under the previous administration.

“We are extraordinarily pleased with our hard work since passing the DTA, which allowed me to methodically tackle paying down the bill backlog quickly and effectively over the last four years,” Mendoza said. “We have been keeping the rating agencies appraised of our progress and we look forward to improved credit ratings for Illinois in the near future. In the meantime, this sends a powerful signal to the financial community that Illinois remains a good investment.”

Please note that these improved outlooks from all three ratings agencies happened before any of the federal ARP stimulus money has arrived. That will only improve Illinois’ financial standing.

…Adding… Speaker Welch…

“This improved outlook is yet another example of what our state is capable of with strong leadership and responsible economic policy decisions. All three rating agencies have upgraded Illinois’ outlook which is proof we can support families, invest in underserved communities, and be fiscally prudent at the same time. I am incredibly grateful to our House Budgeteer Greg Harris for all of his hard work, as well as the bipartisan budget working groups, for making the fiscal health of our state a top priority.

…Adding… Sen. Sims…

Fitch Ratings released a revised outlook of Illinois’ General Obligation bonds from negative to positive. State Senator Elgie R. Sims, Jr. released the following statement:

“Fitch Ratings Agency’s change of Illinois’ financial outlook from negative to positive reflects the state’s commitment to putting our fiscal house in order, which includes prioritizing paying the state’s backlog of bills - down from over $16 billion, at the height of the Rauner budget impasse, down to a normal payment cycle and nearly $3 billion today.

“As the Senate Appropriations Committee Chairman, I am committed to taking a fiscally responsible approach to our state’s finances and putting Illinois on a path toward a brighter future.

“The new outlook from Fitch highlights several key points where the General Assembly in partnership with the Governor have worked together to tackle the challenging finances of our state.

“While I am proud of the positive reports released by the bond rating agency, because they show Illinois is on the right path, I know more must be done to provide for our most vulnerable, educate our young people, keep our communities safe, create good jobs and grow our economy, this is how we will keep our fiscal house in order and I remain committed to doing the work necessary to ensure that Illinois continues to enact responsible budgets and remains on an improved path toward fiscal stability.”

- Posted by Rich Miller        

23 Comments
  1. - Candy Dogood - Wednesday, Jun 23, 21 @ 4:40 pm:

    There has been zero change to the security of Illinois general obligations bonds. There’s a reason why even with the worst ratings the bonds were still oversubscribed and entities like Fitch should feel bad for participating in a system that fleeces governments when there is next to no risk in the bonds, especially when compared to the private sector.


  2. - Oswego Willy - Wednesday, Jun 23, 21 @ 4:40 pm:

    As this positive outlook is nice, the Illinois constitution and the relationships between the state, the constitution, and the paying on bonds has still not changed.

    It’ll be exciting to see IPI and Wirepoints spin this positive as a negative…


  3. - Chicago Cynic - Wednesday, Jun 23, 21 @ 4:45 pm:

    As others have said, the ratings agencies way way way overreacted when they downgraded us to almost junk. We were never going to default on the bonds, so why are we rated junk? This is a good, overdue move.


  4. - Rich Miller - Wednesday, Jun 23, 21 @ 4:46 pm:

    ===so why are we rated junk? ===

    Um, a governor who was determined to drive us into junk territory?


  5. - Grandson of Man - Wednesday, Jun 23, 21 @ 4:52 pm:

    This is great news, brought by prudent and responsible fiscal management. Illinois deserves a federal bailout every year for all the years we paid more taxes than we got back, relative to other states.


  6. - Excitable Boy - Wednesday, Jun 23, 21 @ 4:57 pm:

    - like Fitch should feel bad -

    Feel bad? They get lots of money for being a key cog in the machine.


  7. - Mr K - Wednesday, Jun 23, 21 @ 6:06 pm:

    –Um, a governor who was determined to drive us into junk territory?–

    PTSD.


  8. - Anyone Remember - Wednesday, Jun 23, 21 @ 6:31 pm:

    “PTSD” ??

    No, accuracy!


  9. - anon2 - Wednesday, Jun 23, 21 @ 7:21 pm:

    == Fitch’s improved outlook ==
    If this keeps up, it will hurt the GOP gubernatorial premise that the State is in the dumpster.


  10. - Coco - Wednesday, Jun 23, 21 @ 8:45 pm:

    I’m curious to hear Sen. Bailey’s response. At this point, the election is Pritzker’s to lose, should he run again.


  11. - truthteller - Thursday, Jun 24, 21 @ 7:52 am:

    the “eastern Bloc” will deny the reality as what else can they do?


  12. - Teve Demotte - Thursday, Jun 24, 21 @ 8:47 am:

    This all makes some sense as revenue has outpaced initial Covid-related conservative estimates. Furthermore, the state has a significant vacancy allowance in the operating budget due to not filling positions generally. The state’s use of the federal Municipal Liquidity program during the pandemic and the subsequent greater than expected revenue has allowed the state to pay the feds. Long term, the pension problem is significant and still needs to addressed.


  13. - TinyDancer(FKASue) - Thursday, Jun 24, 21 @ 8:48 am:

    Oh, the IPI’s not gonna be happy about this.


  14. - H-W - Thursday, Jun 24, 21 @ 10:14 am:

    I am not so sure I would go all “goo-goo” just yet. Turning from negative to positive is not like being a safe bet. It is going to take a lot more fiscal responsibility and a lot of time before we rank among the upper half of state economies.

    And I am actually an optimist.


  15. - City Zen - Thursday, Jun 24, 21 @ 11:05 am:

    ==Illinois deserves a federal bailout every year for all the years we paid more taxes than we got back, relative to other states.==

    deserve a state bailout every year for all the years they paid more taxes than they got back, relative to . Sounds silly, doesn’t it, but it’s the same argument. We don’t directly get back from the government everything we put in. Such is progressivity.

    Besides, states don’t pay taxes, people do. Unless you’re advocating for a cash infusion from the federal government directly into taxpayer back accounts. I’m down for that. Because that’s not the state’s money, it’s ours.


  16. - Oswego Willy - Thursday, Jun 24, 21 @ 11:11 am:

    === deserve a state bailout every year for all the years they paid more taxes than they got back, relative to . Sounds silly, doesn’t it===

    You just described how every taxpayer who gets a refund… calculates.

    === Besides, states don’t pay taxes, people do. Unless you’re advocating for a cash infusion from the federal government directly into taxpayer back accounts.===

    (Sigh)

    If all the taxpayers in every state got back to *their* state the fair share they paid, that’s the argument.

    Subsidizing “red states” with programs, bases, installations… why not allocate back to states what the taxpayers pay in those states?

    That’s the silly argument.

    Illinois is a “giver” state, states like Alabama are “taker” states. Wonder how an Alabama would feel if the measure was what taxpayers paid in.


  17. - anon2 - Thursday, Jun 24, 21 @ 11:18 am:

    == We don’t directly get back from the government everything we put in. Such is progressivity.==

    Progressivity is one factor. Another is the structure of the U.S. Senate, which give the smallest state in population the same clout as the largest. In addition, there are a lot more small states to devise distribution formulas of federal spending that favor…small states at the expense of the bigger ones.


  18. - Last Bull Moose - Thursday, Jun 24, 21 @ 11:53 am:

    I’ve never really understood this giver state, taker state argument. Department of Defense benefits everybody, no matter where the bases are located. Do we want the Marines at 29 Palms to relocate to Illinois? I think we could find people who object to that.
    Is Social Security unbalanced because retirees move to warmer and lower cost states? So what.
    Right now everybody gets more federal spending than they pay in taxes. We can revisit this when the federal budget is balanced.


  19. - Oswego Willy - Thursday, Jun 24, 21 @ 11:58 am:

    === I’ve never really understood this giver state, taker state argument. Department of Defense benefits everybody, no matter where the bases are located.===

    Then why do states fight so vigorously for new installations (NASA, another good example) and fight twice as hard to keep what they have?

    The states understand the dollars it means


  20. - DuPage - Thursday, Jun 24, 21 @ 12:06 pm:

    @- Last Bull Moose - Thursday, Jun 24, 21 @ 11:53 am:

    === We can revisit this when the federal budget is balanced.===

    That won’t happen for a long, long time.


  21. - anon2 - Thursday, Jun 24, 21 @ 12:08 pm:

    In Illinois we also have the giver section vs. the taker section, but the taker section thinks it’s the giver.


  22. - City Zen - Thursday, Jun 24, 21 @ 1:41 pm:

    ==If all the taxpayers in every state got back to *their* state the fair share they paid, that’s the argument.==

    And if states paid income taxes, that would be a valid argument. But why stop at the state level? Why not bypass the state entirely and give that federal money back at the municipal level? I’m sure Winnetka residents would like that.

    The idea that the state is entitled to my excess federal taxes paid is folly, just as the state giving all my hometown residents their excess state income taxes back would be folly. My Chicago suburb is a big time “giver” town, yet I’m surrounded by many Chicago suburbs who are “taker” towns. Why should they get “my” state income taxes?

    Or, maybe, we’re all in this together.


  23. - Oswego Willy - Thursday, Jun 24, 21 @ 1:47 pm:

    === And if states paid income taxes===

    Your typical straw man uses to try to make a point.

    === But why stop at the state level? Why not bypass the state entirely and give that federal money back at the municipal level? I’m sure Winnetka residents would like that.===

    Arguing like a child here as we lived through a presidency and senate majority leader insinuating “bankruptcy” for states first before any bailouts during covid.

    Illinois is a giver state, Alabama is a taker state

    === we’re all in this together.===

    If you remotely even believe that, than the state bailouts should have passed unanimously in both chambers in DC and a presidential signature guaranteed.

    The fact that Trumpkins can’t see their “Red” states as takers as they want to punish “Blue” states who are givers, your constant straw man framing finds the premise you want not based on factual realities of the politics.


TrackBack URI

Sorry, comments for this post are now closed.


* Reader comments closed for a week
* Weekly COVID-19 update: The trend is not our friend
* Rate Pritzker's three new TV ads
* Question of the day
* Tinfoil hats crushed in Kane County
* Another year, another federal "strike force" for Chicago
* Kind of odd
* Unclear on the concept
* Open thread
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Pritzker campaign manager Quentin Fulks to take over Sen. Warnock's re-election bid, replaced here by Mike Ollen
* *** LIVE COVERAGE ***
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............

...............


Loading


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
July 2021
June 2021
May 2021
April 2021
March 2021
February 2021
January 2021
December 2020
November 2020
October 2020
September 2020
August 2020
July 2020
June 2020
May 2020
April 2020
March 2020
February 2020
January 2020
December 2019
November 2019
October 2019
September 2019
August 2019
July 2019
June 2019
May 2019
April 2019
March 2019
February 2019
January 2019
December 2018
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
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

Syndication

RSS Feed 2.0
Comments RSS 2.0




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