Bond Rating Agency Warns Illinois Of Possible Rating Cut
SPRINGFIELD, IL (IRN/KMOX) - Fitch Ratings warned Friday that it could cut Illinois’ rating. Citing a lack of public pension reform, the agency said in a statement that “the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable.” The agency says public pension reform is critical to Illinois’ fiscal position.
Gov. Pat Quinn says while there was inaction during the Lame Duck session, lawmakers are coming closer to a pension reform deal. “I talked to the Senate president yesterday, John Cullerton. He has a bill called Senate Bill 1 that’s already introduced,” Quinn said. “That’s the kind of take-charge attitude that I like to see.”
Quinn says S.B. 1 has some “new features” and “new compromises” when compared to the pension reform bill passed in the Senate last year.
As to what Quinn would say to rating agencies, “I think that it’s important that our bond rating agencies give us as much time as possible in order to stabilize the pension system,” Quinn said.
Fitch currently rates Illinois at “A” but has issued a Rating Watch Negative. Last month, Moody’s Investors Services warned it could drop Illinois’ A2 rating, also citing a lack of action on pension reform.
Illinois State Treasurer Dan Rutherford weighed in on the announcement in a statement Friday afternoon.
“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,” he warned. “Our state’s credit rating cannot afford to take another hit.”
“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,” Rutherford said.