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* Bloomberg…
Without federal aid, Illinois credit pressures are mounting, and the state may have to borrow more even as officials seek to cut spending and balance the budget, according to S&P Global Ratings.
The coronavirus has exacerbated the worst-rated state’s challenges, including already large budget gaps and weak demographics, as the economic toll of the pandemic hurt revenue collections and increased costs.
“With the need for additional borrowing, an elevated bill backlog, and lingering substantial structural imbalance, Illinois could exhibit further characteristics of a non-investment-grade issuer,” S&P analysts Carol Spain and Geoffrey Buswick wrote in a report published Monday. S&P rates Illinois BBB-, one level above junk, with a negative outlook. […]
But S&P warned that the state will have difficulty repaying a large borrowing within the three-year Fed facility timeline, and taking out a loan to repay a short-term borrowing would increase the state’s fixed costs. The state has strong market access supported by the MLF, according to the report.
Subscribers have the full report.
* Barron’s…
llinois is the lowest-rated state in the U.S., with S&P grading it one tier above junk at BBB-. S&P’s bulletin isn’t an official warning about a downgrade (known as a watch), but the analysts do have a negative outlook assigned to the state’s credit rating, indicating they think a downgrade is more likely than an upgrade over the next year or two.
While Illinois has taken some steps to shore up its finances—a graduated income tax will be on the ballot this November—they may not cover the gap of income lost to the coronavirus pandemic. State officials have repeatedly warned about potential cuts to state services and funding, including educational funding.
“Illinois will likely cut spending if there is no further federal assistance by the end of September,” S&P analysts wrote in their bulletin. “We expect that [the state] will enact some budget cuts in fiscal 2021, but these will not likely be timely enough or sufficient to address the entire budget gap.”
* Bond Buyer…
Analysts will be closely watching for the results of the November referendum and action the legislature might take during its annual veto session slated for later that month.
“We expect lawmakers will act based on the outcome of the graduated income tax measure, likelihood of federal assistance, and revised fiscal estimates,” the report said.
The warning signs watched closely by rating agency analysts are also coming from the state’s growing bill backlog that stood at nearly $7.7 billion Monday. That’s up from $5.4 billion at the start of the fiscal year July 1 and the highest since fiscal 2018.
The backlog hit a high of $16.7 billion as the bills mounted in 2017 from the state’s two-year budget impasse and the state faced litigation from health providers.
posted by Rich Miller
Wednesday, Sep 23, 20 @ 10:24 am
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=officials seek to cut spending =
What officials?
Comment by Donnie Elgin Wednesday, Sep 23, 20 @ 10:44 am
Vote for the Fair Tax says WALL St.
Comment by Precinct Captain Wednesday, Sep 23, 20 @ 10:57 am
Consolidate a nation leading 7,000 units of local government says main street before you ask for more tax dollars.
Comment by Lucky Pierre Wednesday, Sep 23, 20 @ 11:02 am
==state’s growing bill backlog that stood at nearly $7.7 billion Monday==
We still haven’t paid off the $6 billion bond that was issued to pay down the bill backlog. So we still owe somewhere over $12 billion on unpaid “bills”.
Comment by City Zen Wednesday, Sep 23, 20 @ 11:34 am
Yes that part about spending cuts was amusing. No need to do that when you can still borrow. All is well, just as Kevin Bacon assured us.
Comment by Captain Obvious Wednesday, Sep 23, 20 @ 11:41 am
Vote for the Fair Tax says Main street… to Wall street.
Comment by Dotnonymous Wednesday, Sep 23, 20 @ 11:50 am
The backlog of bills is the killer. Without that, and with good management and no expansion of programs the present 4.95% tax should be plenty.
The backlog of bills is bipartisan but Pritzker has to ‘lead’ on this issue when others have not. It is just getting out of control.
Yet, even though he is pushing for a graduated income tax I do not see where he is making a strong statement that programs will not be expanded, that costs will be held to something like the CPI and that additional money will go to this backlog.
That is a big mistake for all of us in Illinois.
Comment by Unconventionalwisdom Wednesday, Sep 23, 20 @ 12:09 pm
But yet we have the money to send out not one, but two mailers regarding mail in ballots.
Comment by Blue Dog Dem Wednesday, Sep 23, 20 @ 12:19 pm
Maybe chip away at that amount owed by keeping Daylight Savings time. It should save some cash. SB533.
Comment by All this Wednesday, Sep 23, 20 @ 1:03 pm
The mailers announcing mail- in- ballots is a function of the Sec of State.
Comment by M Wednesday, Sep 23, 20 @ 2:09 pm
As strange as I find it, I have to agree with LP about the need to rethink and consolidate units of government. I am surprised that Pritzker has not initiated an effort in this area.
Comment by striketoo Wednesday, Sep 23, 20 @ 4:15 pm
== As strange as I find it, I have to agree with LP about the need to rethink and consolidate units of government. I am surprised that Pritzker has not initiated an effort in this area.==
Rauner wanted this. The governor doesn’t have the power to do anything about this
Comment by Two to tango Thursday, Sep 24, 20 @ 8:55 am