Looming junk-bond status
Illinois currently sits just a step above junk-bond status. Since Gov. Rauner has taken office, our state’s bond rating has been downgraded seven times. Moody’s Investors Service as well as S&P Global Ratings have warned that Illinois could fall into junk bond status on July 1, 2017. No state in the history of the nation has ever been downgraded to junk-bond status.

A credit downgrade means that the state will have more difficulty borrowing money in the future and will likely be forced to pay higher interest rates on money it does borrow.

The investment firms noted that the state’s backlog of bills and pension debt is a key reason for the downgrade. The backlog of bills has crept above $15 billion, and the state’s pension debt is $130 billion. Moody’s noted that Illinois’ unfunded pension liability for five of its retirement programs increased by 25 percent in the fiscal year ending June 30, 2016.

To stabilize the rating, Moody’s said lawmakers need to agree on a budget that “more closely aligns revenues and spending, without relying on unsustainable fiscal measures.”

The state’s first general obligation bond payment of FY18 is due on July 3.

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