CHICAGO (AP) — Illinois' already disastrous financial situation worsened Friday as another credit rating agency downgraded its rating to the worst of any state in the country, blaming lawmakers' ongoing failure to resolve a multibillion-dollar pension crisis.
Standard & Poor's rating service said Friday that the rating on the state's general obligation bonds was downgraded to A- from A. The agency also gave an A- rating to $500 million in general obligation bonds that the state plans to release next week. The agency says the outlook is negative, an indication it could take the unusual step of further downgrading the state if conditions don't improve.
The downgrade is just the latest warning from the New York bond houses about the state's ongoing credit deterioration. It means taxpayers will likely pay a higher interest when the state issues bonds, or borrows money, for big items such as construction projects.
Speaking at a press conference on an unrelated topic Friday, Democratic Gov. Pat Quinn said "the pressure is higher than ever" for lawmakers to pass pension reform — something they failed to do during a special legislative session last year and in a lame duck session that ended earlier this month, despite urgent pleas from Quinn and other leaders.
"We've got to put our seatbelts on here and understand the rating agencies won't give us better marks until the legislature passes Senate Bill 1 and gets the job done," Quinn said, referring to a recently proposed pension reform bill. "That's really the message the credit rating agencies are screaming at the top of their voice. I've heard it, and I think the members of the legislature need to hear it as well."
Illinois has a $96 billion unfunded liability in its five state-employee pension funds, due to decades of shorting or skipping its pension payments. To catch up, the state must allocate nearly one-third of its general revenue annually to pensions, putting a squeeze on money for services such as education and health care.