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No ratings bump, but Fitch revises Illinois outlook from Negative to Stable

Wednesday, Jul 31, 2019 - Posted by Rich Miller

* A small bit of good news. From a press release…

Fitch Ratings has affirmed the state of Illinois’ Issuer Default Rating (IDR) at ‘BBB’ and revised the Outlook to Stable from Negative.

Additionally, Fitch has affirmed the ‘BBB’ ratings on the state’s outstanding GO bonds, and the ‘A-’ ratings on the Build Illinois senior and junior obligation sales tax revenue bonds, which are linked to the state’s IDR based on state dedicated tax analysis.

The Rating Outlook for the above bonds has been revised to Stable. […]

The Outlook revision to Stable reflects key developments over the last three months for the state including an unanticipated revenue surge in April 2019 that positioned the state to resolve a sizable fiscal 2019 mid-year budget gap and enact an on-time fiscal 2020 budget. The positive April revenue surprise seen in Illinois, and other states, supported a significant increase in fiscal 2020 estimated revenues, easing the path to budget adoption and allowing the state to reduce (but not eliminate) reliance on non-recurring measures. The state now has a plausible and achievable 2020 budget plan, leaving the state better positioned from a fiscal perspective, and the potential for a rating downgrade in the near-term has receded. The recent gains, however, are somewhat tenuous and their sustainability hinges on the state’s actions over the next several years, particularly around the November 2020 ballot initiative on the graduated individual income tax.

Illinois’ ‘BBB’ IDR and GO ratings continue to reflect an ongoing pattern of weak operating performance and irresolute fiscal decision-making that has produced a credit position well below the level that the state’s broad economic base and substantial independent legal ability to control its budget would otherwise support. The state’s elevated long-term liability position remains a key credit challenge.

More at the link.

…Adding… Deputy Gov. Dan Hynes…

Illinois is already much stronger than we were a year ago, and it’s refreshing that Fitch is recognizing the good news and progress we’ve made so far. We know we have a long way to go, but we are committed to improving our long term fiscal stability and building an economy that works for everyone.

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A possible work-around of the bluenoses

Wednesday, Jul 31, 2019 - Posted by Rich Miller

* We’ve all seen the recent stories…

* Winnetka approves resolution halting cannabis sales until officials can examine local ordinances

* Lake Forest and Lake Bluff open to banning recreational marijuana sales

* Suburbs say no to recreational marijuana - Naperville, Libertyville and Bloomingdale vote themselves weed-free.

* Are suburbs going to allow sale of marijuana? So far more say ‘no’ or leaning no

* Northbrook board voices initial approval of first recreational cannabis business proposal

* But there won’t be that many dispensary licenses anyway…

The new law would allow the state’s 55 existing medical marijuana dispensaries to open new retail shops on their current sites, and open a second site elsewhere — but only if local officials allow it.

In addition, applications for up to 75 new dispensaries will be due by Jan. 1, 2020, and are to be awarded by May 1, 2020, so entrepreneurs will want to know which areas will allow them to operate.

So, that’s 190 dispensaries in a state of 12.74 million people with 1,299 incorporated cities, towns and villages, 102 counties and 1,432 townships.

* More from today’s Tribune…

In other states with legal pot, such as California and Colorado, where bigger cities tend to allow it, the majority of local governments ban pot sales. That results in large rural areas with no access to retail shops, which encourages a continued illegal market.

If the same thing happens in Illinois, [Chris Lindsey, legislative analyst for the Marijuana Policy Project] said, it would make a good argument for allowing home delivery, so people who have trouble travelling will have access.

Thoughts?

…Adding… Greg Hinz…

The wife of one of the architects of Illinois’ new law legalizing recreational marijuana [Rep. Kelly Cassidy] has landed a big job with an Elmhurst-based cannabis company.

Revolution Florida, a sister company of Illinois-based marijuana grower and dispensary Revolution Enterprises, named Candace Gingrich vice president and head of business development for the firm’s newly expanded operations in the Sunshine State. […]

Cassidy said in a phone interview she sees no conflict of interest in her spouse accepting the post, and rejected the notion that the job appears like a reward for services rendered.

“I sought an ethics opinion and got it cleared” by the House ethics officer, Cassidy said. Beyond that, she added, Revolution “has gone above and beyond to make sure Candace had no role in Illinois, just to cover appearances.”

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