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Fitch downplays outmigration, warns Democrats

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Illinois

Out-migration of residents from Illinois has accelerated in recent years, but is part of a near century-old trend that has not hurt the state’s economic growth, Fitch Ratings Inc. said in a report released Monday. […]

The issue of people leaving Illinois became part of the campaign that saw Democrat J.B. Pritzker defeat one-term Republican Gov. Bruce Rauner. Rauner contended taxes pushed by Democrats, including Pritzker’s call for a graduated-rate income tax to replace the state’s mandated flat-rate tax, would further an exodus of residents.

The report said since 2010, 400,000 more people left Illinois for other parts of the country than located within the state from other parts of the United States.

“This domestic net out-migration trend has accelerated in recent years, though it continues a nearly century-old trend. Illinois’ net domestic migration rate based on annual (federal) Census population estimates has almost doubled from an annual loss of five people per 1,000 residents in 2011 to nearly nine people per 1,000 residents in 2017,” the report said.

Still, Fitch said even with the recent acceleration in out-migration, it is a “long-established phenomenon that has not prevented the state’s economy from continuing a long pattern of overall growth.” The report said one research study that compiled migration data going to 1900 said the state has seen “virtually uninterrupted” out-migration since the mid-1920s with rates in the late 1970s and early 1980s comparable to what Illinois is currently seeing.

* The Illinois News Network’s story had a different focus…

A credit-rating agency used a post-election report to reminded Illinois Democrats poised to retake control of state government about the party’s track record of “poor fiscal decisions.”

Fitch Ratings already had a negative outlook for Illinois’ credit, which is a notch above junk status. In report released Monday, the agency noted that the “return of single-party control to Springfield does not signal an end to the state’s credit challenges.”

It noted a laundry list of mistakes Democrats made last time and the ongoing cost of some of those decisions.

“Between 2003 and 2014, the state operated under single-party control with two different Democratic governors and sizable Democratic majorities in the General Assembly,” the report said. “Over that span, the state’s credit quality deteriorated considerably. In that 11-year span, Illinois made various poor fiscal decisions.”

* The full report also noted this…

The state of Illinois’ ‘BBB’ Issuer Default Rating (IDR) reflects an ongoing pattern of weak operating performance and irresolute fiscal decision-making. […]

Under Fitch’s “U.S. Public Finance Tax- Supported Rating Criteria,” the assessments of three of Illinois’ four key rating drivers (revenue framework, expenditure framework and long-term liability burden) imply an IDR at least in the ‘A’ category, if not for the operating performance weakness. […]

Significant governance weakness primarily distinguishes Illinois from even those other U.S. states with similarly sized long-term liability burdens. Absent the governance concerns, Illinois’ fundamental credit profile implies a rating at least one category above the current IDR.

The accompanying chart…

In other words, better fiscal stewardship at the top could lift the state’s credit rating.

posted by Rich Miller
Monday, Dec 3, 18 @ 3:42 pm

Comments

=better fiscal stewardship at the top=

Not just at the top.

Comment by Anon Monday, Dec 3, 18 @ 3:51 pm
Pritzker said he wants to address outmigration in a manner with which I agree: raising taxes on the highest incomes and lowering property taxes by getting more state income for school funding. This is extremely difficult, as we’ve seen, but he and the GA may be in the best historical position to do it.

Legal marijuana tax revenue could also help lower property taxes.

The Rauner way is to rip the savings out of middle class workers and take away union rights. That failed grandly.

Comment by Grandson of Man Monday, Dec 3, 18 @ 3:58 pm
If only we had elected a fiscal conservative who believed in free market principles.

Comment by Blue Dog Dem Monday, Dec 3, 18 @ 4:05 pm
==but is part of a near century-old trend that has not hurt the state’s economic growth==

I think Fitch may be missing the point just a smidge.

Comment by Arsenal Monday, Dec 3, 18 @ 4:10 pm
What isn’t mentioned often enough is that regionally, some areas of illinois are much worse off than others and than the state overall. Outmigration and economic loss in some areas has lead to disastrous loss of property values, local EAV meaning Ed funding, and a demographic shift when middle income wage earners are replaced by the low income highly subsidized and high need citizens.

Comment by Tequila Mockingbird Monday, Dec 3, 18 @ 4:12 pm
Does the outmigration include the folks who had to move to Atlanta, Dallas, and Phoenix to keep their job at State Farm? Perhaps State Farm President Tipsord should be asked as he is now on the gov’s Job Creation and Economic Opportunity Committee. /s

Comment by Nearly Normal Monday, Dec 3, 18 @ 4:35 pm
Some good news: Fitch saw right through Martire’s POB proposal.

Comment by City Zen Monday, Dec 3, 18 @ 5:13 pm
Just overheard at the checkout in the grocery. One going to Montana (checkout person)….the customer was retiring to FL. Both do not have state income tax.

Comment by Top of the State Monday, Dec 3, 18 @ 10:03 pm
==Both do not have state income tax==

While you’re correct about Florida, Montana has a progressive income tax with a fairly high top rate, and I believe they tax all retirement income, including SS. Montana does not, however, have a sales tax.

Wouldn’t it pay for the state to better know who is moving out (and not moving in), and why?

Comment by Stuntman Bob's Brother Monday, Dec 3, 18 @ 10:33 pm
So of all the “lost” residents since 2010, how many were retirees??

Comment by truthteller Tuesday, Dec 4, 18 @ 6:24 am
It’s amazing that, ten years after the financial crisis, the credit rating agencies are treated as authoritative in any way whatsoever.

Comment by Anon Tuesday, Dec 4, 18 @ 10:27 am