It’s Official: State’s credit now tied for worst in the nation
Moody’s Investors Service lowered Illinois’ bond rating recently, pointing to the state’s inability to address its financial problems, including an unbalanced budget, billions in unpaid bills and faltering revenues. Moody’s said the failure to tackle Illinois’ fiscal issues “underscores a chronic lack of political will that indicates further erosion of an already weak financial position.”
With the new rating, Illinois has now tied California for the worst credit in the nation from Moody’s. It’s also anticipated that the other two major credit rating agencies will soon downgrade Illinois.
What this means for Illinois? A lower state credit rating usually translates into higher costs when the state tries to borrow money.
Though the bond rating was lowered, Moody’s did note that Illinois possesses several “credit strengths,” including a strong ability to raise revenue and reduce expenditures. It also noted Illinois’ diverse economy with higher-than-average wealth levels is an asset.
However, Moody’s said the state’s reliance on delaying payments to vendors, Illinois’ extremely large unfunded long-term liabilities—including pensions and retiree health care—and its use of non-recurring resources to finance state spending, pose serious risks to the state’s rating.
Moody’s pointed to “infighting between the executive and legislative branches,” as directly contributing to “both the erosion of the state’s finances and the widening of severe pension funding gaps.” It also reinforced, “The longer solutions to the state’s challenges are deferred, the more difficult they will become to implement.”
Despite these issues, Moody’s highlighted progress in certain areas. Specifically, a bipartisan pension reform measure that reduces benefits for new state employees. As a result, the minimum retirement age is increased to 67 (up from as low as 55), employees will no longer be allowed to “double-dip,” or collect benefits from one state plan while accruing benefits under another, and limits were placed on the salary that could be used to calculate benefits. Moody’s also cited new revenue generators related to video gaming, vehicle fees and taxes on alcoholic beverages and other products, which will go to help finance debt related to the state’s capital improvement program.
Illinois has now had 10 “hard” ratings downgrades since Democrats took control of state government in 2003. Illinois saw its credit ratings drop three times during Rod Blagojevich’s six years in office. In less than 18 months in office, Pat Quinn earned seven credit rating drops, or more than twice as many as his running mate, in less than one-third the time.
In contrast, from 1983 through May 2003, the state was only downgraded six times and several of those were offset by subsequent upgrades. Illinois was last downgraded under a Republican governor in 1995, and that was followed by four subsequent upgrades from 1997 to 2000 under Republicans.
When Blagojevich took over, Illinois had its best credit rating on record with one major rating agency, AA+ (Fitch ratings).
Radogno: Northeastern Illinois residents invited to review Go To 2040 plan
In the 41st District DuPage, Will and South West Cook County open houses are scheduled for:
Tuesday, June 15, 2010
6:00 to 8:00 p.m.
DuPage County Government Center Auditorium
421 N. County Farm Road
Wheaton, IL 60187
Wednesday, June 23, 2010
6:00 to 8:00 p.m.
Will County Office Building
2nd Floor Board Room
302 N. Chicago St.
Joliet, IL 60432
Tuesday, July 27, 2010
6:00 to 8:00 p.m.
Moraine Valley Community College
Fogelson Theater
9000 W. College Parkway
Palos Heights, IL 60465
The open house will feature a short presentation highlighting the plan, followed by a question-and-answer period moderated by CMAP staff. Formal public comments will also be accepted. Residents may review the plan and submit feedback on the GO TO 2040 Web site www.goto2040.org beginning June 11 through August 6, 2010.
CMAP was established in 2005 as the regional planning organization for the northeastern Illinois Counties of Cook, DuPage, Kane, Kendall, Lake, McHenry and Will. The organization is responsible for developing GO TO 2040, metropolitan Chicago’s comprehensive regional plan to develop and implement strategies to address the massive growth projected for the region.
The plan is scheduled for completion in 2010 and is expected to shape the region’s transportation system and development patterns, while also addressing factors that will impact the environment, economic development, housing, education, and human services.
Legislature passes budget, pension bonding scheme fails to advance
Senate lawmakers used their time in Springfield last week to override
an amendatory veto of McPier reform legislation, approve a controversial
STAR bond measure, advance tax amnesty legislation and budget bills,
but did not consider a measure to borrow $4 billion that would be used
to finance the state’s pension obligations.
The planned state budget—contained in House Bill 859 and SB 1215—has been sent to the governor. The measures will increase state spending by $1 billion over the previous year, spending about $6 billion more than the state will take in. In addition, more than $6 billion in bills from the current fiscal year will be left unpaid. No Republicans supported the deficit budget.
Another bill, Senate Bill 3660, would give Gov. Pat Quinn more discretionary authority on how to spend state revenue. Proponents claim it could result in as much as $300 million in savings, but others are skeptical, pointing out that Quinn promised to shave $1 billion from spending last year, but failed to do so.
The legislation would also allow the state to take out a loan against money it is slated to receive from a national tobacco settlement, which could produce $1.2 billion. That move is controversial because the state already uses money from the tobacco settlement to fund other state programs.
Read more: Legislature passes budget, pension bonding scheme fails to advance
Illinois House passes state budget measures
May 26, 2010
As the May 31 deadline to move legislation with a simple majority vote approaches, the Illinois House has taken action on a number of budget measures.
Notably the House sent to the governor the planned state budget and advanced a controversial pension bonding measure that would allow the state to borrow up to $4 billion to cover next year’s payments to Illinois’ state-financed retirement systems. The pension borrowing measure, Senate Bill 3514, had failed previously in the House, and its future in the Senate is uncertain.
The state budget is contained in House Bill 859, which had previously passed the Senate. The measure will increase state spending by $1 billion over the previous year, spending about $6 billion more than the state will take in. Rather than reduce spending, majority Democrats plan to borrow the money through a variety of gimmicks, including the pension borrowing, raiding special accounts and borrowing against the state’s share of tobacco settlement funds. In addition, more than $6 billion in bills from the current fiscal year will still be left unpaid.
Most Republicans opposed the pension borrowing plan, pointing out that Illinois has borrowed extensively in the last seven years, and any additional borrowing is fiscally irresponsible. Rating agencies have already warned the state that Illinois’ credit rating is likely to drop soon to match California’s worst-in-the-nation rating. Opponents also point out that the proposed plan will be much more costly to taxpayers than a borrowing plan that was adopted last year, because payments are structured to initially cover only interest and then skyrocket in later years.
Sen. Radogno teams up with Nike and the Reuse-A-Shoe program
May 24, 2010
Worn out sneakers are usually destined for the garbage bin, but Sen. Radogno is encouraging local residents to take their worn-out kicks and donate them to a worthy cause.
Radogno is participating in Nike’s Reuse-A-Shoe program, which recycles old athletic shoes and uses the recycled material to build athletic surfaces and playgrounds. The senator said that finding constructive uses for shoes that would normally end up in landfills is an innovative way to promote environmental awareness and encourage sustainability.
“If your home is anything like my home, there are extra pairs of shoes lying around that you’re just going to throw away. Now people can bring those shoes to my office and donate them to a great cause,” Radogno said.
The program is sponsored by Nike, but Radogno stressed that all brands are welcome. The only requirement is that they are athletic shoes, they must not contain metal, spikes, nor can the shoes be damp.
Shoes can be dropped off at Senator Radogno’s district office at 1011 State Street Ste. 210, in Lemont, IL, Monday through Friday, from 9:00 – 4:30. Questions can be directed to 630-243-0800 or you can visit www.letmeplay.com/reuseashoe, for more information on the program.
The Reuse-A-Shoe program has recycled more than 24 million pairs of old athletic shoes, and created more than 300 sport and playground surfaces.
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Lemont
1011 State Street
Ste. 210
Lemont, IL 60439
630-243-0800
630-243-0808 (Fax)
cradogno@sbcglobal.net
Springfield
309 A Statehouse
Springfield, IL 62706
217-782-9407
217-782-7818 (Fax)
