SPRINGFIELD, Ill. (Associated Press) -Continuing pension problems and government gridlock earned Illinois another reduction in its credit rating Wednesday.
Standard & Poor's Ratings Services said it lowered Illinois' rating a notch because of "weak pension funding levels and lack of action on reform measures." The firm also said the financial outlook for Illinois is negative, in part because the state's temporary income tax is scheduled to expire in 2015.
Lower ratings can raise the interest rate Illinois must pay when borrowing money.
The downgrade, from A+ to A, leaves Illinois with the nation's second-lowest rating from S&P. California is rated A-, but it has earned a "positive outlook" from the firm.
Moody's rating service has also warned that it may lower Illinois' rating.
Gov. Pat Quinn said in a statement that the downgrade is no surprise but still serves as evidence that state leaders must fix public pension systems. Illinois' retirement systems have a huge gap between the money available and what they will eventually pay out in pensions. The roughly $85 billion shortfall is the largest in the country.
Quinn called legislators into special session earlier this month, but they couldn't agree on what to do, largely because of a dispute about whether to transfer some pension costs to school districts. The Chicago Democrat said he's asking legislative leaders to meet with him early next month to resume talks.
"The only thing standing between Illinois and comprehensive pension reform is politics," Quinn said. "We must put politics aside."
Trying to close the gap costs the state more money each year, leaving less for other government needs. Pension payments this year will make up 20 percent of state government's general spending, compared with 13 percent three years ago.
Continuing pension problems have earned Illinois another reduction in its credit rating.
Standard & Poor's Ratings Services announced Wednesday that it is lowering Illinois' rating a notch. The decision is based on weak funding for government pensions and a "lack of action on reform measures."
Only California has a lower rating from S&P, but the service says the outlook for California is positive. Illinois falls into the "negative outlook" category.
The Moody's rating service has also warned that it may lower the state's rating.
Lower ratings can raise the interest rate Illinois must pay when borrowing money.
Illinois politicians aren't the only ones commenting on the state's credit rating being lowered. The governor of Wisconsin is talking about it, too.
Gov. Scott Walker says the bad news shows the "stark contrast" between Illinois and Wisconsin.
The Republican governor says Illinois leaders failed to take action, while Wisconsin balanced its budget and made long-term reforms.
Walker has tried to use Illinois' economic problems to lure businesses to his state.
Illinois Comptroller Judy Baar Topinka believes the continued delay will cost Illinois. She released a statement in response to Standard & Poor's lowering of the state's bond rating.
"Today's disappointing announcement by Standard & Poor's further highlights the importance of addressing Illinois' massive fiscal challenges. As Chief Fiscal Officer, I cannot stress how imperative it is that the Governor, Labor and Legislative leaders come to the table to address these problems. Standard & Poor's has provided yet another cautionary note that cannot be ignored, and Illinois has a responsibility to hear the message being sent. "
Illinois Senate and House Republican Leaders Christine Radogno and Tom Cross also released a statement on the topic:
"When the Democrats adjourned the special session on pensions two weeks ago, we stood together and said we should not leave Springfield until we pass comprehensive pension reform to address our crisis. We continue to be ready to address the problem, armed with ideas and solutions that could work. We cannot wait until after the election, or even after the Governor's grassroots' tour. The time for action is now. S & P's downgrade today cited our ‘lack of action on reform measures'. This is a clear signal that we must work on a comprehensive bill that solves our pension problem—not a piecemeal approach. The blame game must end, let's get to work."
Illinois retirement systems have the country's largest gap between the money available and what they'll eventually pay out in pensions. Officials have been deadlocked for months over what to do.
http://www.myfoxchicago.com/story/1...s-lowers-illinois-credit-rating-over-pensions
Illinois & California, the two lowest credit ratings in the country, wonder what they have in common?
Standard & Poor's Ratings Services said it lowered Illinois' rating a notch because of "weak pension funding levels and lack of action on reform measures." The firm also said the financial outlook for Illinois is negative, in part because the state's temporary income tax is scheduled to expire in 2015.
Lower ratings can raise the interest rate Illinois must pay when borrowing money.
The downgrade, from A+ to A, leaves Illinois with the nation's second-lowest rating from S&P. California is rated A-, but it has earned a "positive outlook" from the firm.
Moody's rating service has also warned that it may lower Illinois' rating.
Gov. Pat Quinn said in a statement that the downgrade is no surprise but still serves as evidence that state leaders must fix public pension systems. Illinois' retirement systems have a huge gap between the money available and what they will eventually pay out in pensions. The roughly $85 billion shortfall is the largest in the country.
Quinn called legislators into special session earlier this month, but they couldn't agree on what to do, largely because of a dispute about whether to transfer some pension costs to school districts. The Chicago Democrat said he's asking legislative leaders to meet with him early next month to resume talks.
"The only thing standing between Illinois and comprehensive pension reform is politics," Quinn said. "We must put politics aside."
Trying to close the gap costs the state more money each year, leaving less for other government needs. Pension payments this year will make up 20 percent of state government's general spending, compared with 13 percent three years ago.
Continuing pension problems have earned Illinois another reduction in its credit rating.
Standard & Poor's Ratings Services announced Wednesday that it is lowering Illinois' rating a notch. The decision is based on weak funding for government pensions and a "lack of action on reform measures."
Only California has a lower rating from S&P, but the service says the outlook for California is positive. Illinois falls into the "negative outlook" category.
The Moody's rating service has also warned that it may lower the state's rating.
Lower ratings can raise the interest rate Illinois must pay when borrowing money.
Illinois politicians aren't the only ones commenting on the state's credit rating being lowered. The governor of Wisconsin is talking about it, too.
Gov. Scott Walker says the bad news shows the "stark contrast" between Illinois and Wisconsin.
The Republican governor says Illinois leaders failed to take action, while Wisconsin balanced its budget and made long-term reforms.
Walker has tried to use Illinois' economic problems to lure businesses to his state.
Illinois Comptroller Judy Baar Topinka believes the continued delay will cost Illinois. She released a statement in response to Standard & Poor's lowering of the state's bond rating.
"Today's disappointing announcement by Standard & Poor's further highlights the importance of addressing Illinois' massive fiscal challenges. As Chief Fiscal Officer, I cannot stress how imperative it is that the Governor, Labor and Legislative leaders come to the table to address these problems. Standard & Poor's has provided yet another cautionary note that cannot be ignored, and Illinois has a responsibility to hear the message being sent. "
Illinois Senate and House Republican Leaders Christine Radogno and Tom Cross also released a statement on the topic:
"When the Democrats adjourned the special session on pensions two weeks ago, we stood together and said we should not leave Springfield until we pass comprehensive pension reform to address our crisis. We continue to be ready to address the problem, armed with ideas and solutions that could work. We cannot wait until after the election, or even after the Governor's grassroots' tour. The time for action is now. S & P's downgrade today cited our ‘lack of action on reform measures'. This is a clear signal that we must work on a comprehensive bill that solves our pension problem—not a piecemeal approach. The blame game must end, let's get to work."
Illinois retirement systems have the country's largest gap between the money available and what they'll eventually pay out in pensions. Officials have been deadlocked for months over what to do.
http://www.myfoxchicago.com/story/1...s-lowers-illinois-credit-rating-over-pensions
Illinois & California, the two lowest credit ratings in the country, wonder what they have in common?