Two days after enacting his fourth state budget, Illinois Governor JB Pritzker on Thursday announced an upgrade to Moody’s Investor Services bond ratings, the second in less than a year.
“Fiscal responsibility pays off,” Pritzker said. “Illinois was in a deep hole in the years leading up to my appointment as governor, and with the General Assembly, step by step, we are putting Illinois on a solid fiscal footing.”
The Wall Street credit rating agency’s upgrade to Baa1 from Baa2 on outstanding general government bond bonds comes after Moody’s last upgrade in June 2021. S&P also raised the rating the state at BBB in July 2021 and gave the state a positive outlook. Fitch Ratings has the status at BBB-minus but has assigned a positive outlook and reviews the latest budget.
Pritzker held a last-minute press conference in Chicago, his second of the day, to take a victory lap on the upgrade. The Democratic governor, facing a re-election battle in November, touted improvements in the state’s financial rating and debt repayment during his tenure in at least one campaign television ad.
“A credit upgrade means Illinois will likely pay a lower interest rate, saving taxpayers hundreds of millions of dollars in years to come,” Pritzker said.
The governor attributed the upgrade to the state reducing its structural deficit four years in a row by paying down short- and long-term debt; eliminating $17 billion in backlogs of unpaid bills; reducing net pension liabilities by $15 billion and adding $500 million more to pension systems than required by law and due to contributions made to the state fund for bad days.
The rating of a government’s bonds is a way of measuring its credit quality – a higher rating usually means the government can borrow at a lower interest rate. Moody’s said the upgrade “reflects the state’s strong tax revenue growth over the past year, which has expanded its ability to rebuild financial reserves and increase payments for unfunded liabilities.”
The ratings agency said the state was on track to end the fiscal year “with its strongest fund balance in more than a decade,” and said the increase in pension contributions from the state showed an “increased commitment to pay its largest long-term liability”. ”
There are obvious challenges ahead, Moody’s warned, including heavy long-term liability and fixed cost burdens, which have put the state in a weaker financial position than other states. Moody’s also noted that Illinois’ economy has grown over the past decade at a slower rate than most states and will continue to do so due to its population loss.
Last year, the government recorded its first bond rating upgrade in more than 20 years.
Despite the latest update, Pritzker haters, including Illinois Senate Republican Leader Dan McConchie, R-Hawthorn Woods, said the Democratic governor was unaware that this year’s budget included $16 billion. federal dollars.
“If he were to stay in office next year, he would face a major hangover after federal money dried up and state spending hit an all-time high,” McConchie said in a statement.
Pritzker denied that claim during his press conference, saying his signed budget already used lower revenue estimates.
“We’re still coming out of a pandemic, but there are major injections into the economy by the federal government happening across the country,” Pritzker said. “But we expect growth in the state, and we’ve projected a lower level of revenue and, therefore, lower spending to meet the revenue we’ve gotten.”