"While legislative action on pension reform could occur during the current legislative session and various bills have been filed, we believe that legislative consensus on reform will be difficult to achieve given the poor track record in the past two years," analysts said.
Moody's Investors Service gave Illinois its worst rating of any state in January 2012. Earlier this month — days after lawmakers left the lame luck session without a pension deal — Fitch Ratings changed Illinois' financial outlook to "negative" from "stable," an indication that a ratings downgrade could be coming.
In its report Friday, Standard & Poors analysts said even if Illinois is able to pass pension legislation soon, the state is likely to face a legal challenge, so it could be years before the budget situation or the unfunded liability improve. That, along with an income tax increase that's scheduled to expire on Jan. 1, 2015, contribute to the state's negative economic outlook.
Illinois Treasurer Dan Rutherford, a Republican who's indicated he may challenge Quinn in the 2014 race for governor, said lawmakers' inaction "has our great state headed for a fiscal disaster."
"It is beyond irresponsible to let this continue," he said.