Bond Rating Reductions to Inaction by Governor and
Legislature
The
attached document illustrates 2011 until today; it begins with the historic 66%
income tax increase, continues by plotting the dates of failed significant
legislative deadlines, and then demonstrates the related timing of action taken
by the three major ratings firms against Illinois
for the legislature’s lack of will to fix our unsustainable public pension
system.
“The
latest hit is from Fitch Ratings,” Rutherford
said. “Fitch announced on January 11 that the agency has placed Illinois ’ general
obligation bonds rating on negative watch. Fitch decided to do this because of
the state’s inability ‘to address its large and growing unfunded pension
liability.’ The next step could potentially be the downgrade of the
state’s General Obligation bond rating from Fitch. Failure to enact pension
reforms will eventually bring Illinois
to its financial breaking point, and it will be worse than any fiscal calamity
we have seen thus far in this state. Our state’s credit rating cannot
afford to take another hit.”
This
warning from Fitch is in fact the seventh warning, downgrade, or negative
outlook change aimed at Illinois ’
various bonding entities in the last year from the three ratings agencies:
Fitch, Standard & Poor’s, and Moody’s.
Rutherford
continued, “Furthermore, it has now been two years since Governor Pat Quinn’s
66% income tax hike was passed, and though it was billed as a measure that
would help solve the state’s financial problems, money matters in Illinois have
only gotten worse. On January 11, 2011, the state’s backlog of bills was
reportedly $8.5 billion. Today the state owes vendors nearly $9 billion
dollars.”
“In the past decade, the state’s bonded debt has nearly
tripled. Illinois ’
debt is colossal and growing-- our debt obligations now exceed $200
billion. It is estimated that the failure to address the state’s pension
liability is costing the state at least $17 million per day. It is beyond irresponsible to let this
continue. The state needs to rein in the pension escalation and not use
long-term borrowing as a ‘solution’ to this problem.”
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