At the end of 2020, Illinois risked a downgrade to junk-bond status after taking emergency loans from the Federal Reserve to allay revenue losses from the pandemic. The state had almost no rainy day fund, paid an ever-higher penalty to borrow in the $4 trillion municipal bond market and Pritzker’s plan to collect more taxes from the wealthy was rejected by voters.
“The state has done a lot in recent years to right its fiscal ship,” said Amanda Kass, associate director of the Government Finance Research Center at the University of Illinois in Chicago. “Is that a blip in a long-term trend or is this the start of an upward trajectory in the state’s finances?”
The state has a history of financial missteps. Its unfunded pension liability had ballooned because it didn’t contribute enough for decades, leading it to take on billions in debt. An impasse between former Governor Bruce Rauner, a Republican, and the Democrat-controlled General Assembly resulted in the state having no budget from 2015 to 2017, sending unpaid bills soaring and creating more debt. […]
The penalty Illinois pays compared to benchmark 10-year municipal securities has remained under 1 percentage point for the last nine months, after reaching more than four percentage points in May 2020, but it’s still the highest among peers.
Yeah, well, I’ll take it.