After decades of profligate spending by leftist leaders, the chickens have finally come home to roost in Illinois.
The Land of Lincoln became the first state in the country to have its bond rating reduced to one step above “junk” status by S&P and Moody’s credit agencies.
It’s the lowest ranking ever recorded for a U.S. state and a sign of the ineffectiveness of liberal financial leadership.
Almost one year ago, S&P warned state leaders that Illinois would almost certainly lose it’s investment-grade status – unprecedented for any state – if they couldn’t agree on a budget that tackled their massive deficits. They made no progress, so S&P made the “junk” determination, followed by Moody’s.
They cited the state’s chronically underfunded pension system and the overdue bills that amount to 40 percent of the state’s entire operating budget, Bloomberg reports.
“Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance,” Ted Hampton, Moody’s analyst, said in a statement. “During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal compromise is reached.”
The country’s fifth most populous state has a record $14.5 billion surplus and has functioned without a full budget for the last two years. State college and universities and the social spending safety net has been ravaged by the deep budget problems.
Meanwhile, over the last eight years, the state has seen eight successive credit downgrades.
“The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a byproduct of its stalemated budget negotiations,” S&P analyst Gabriel Petek said in a statement. “The unrelenting political brinkmanship now poses a threat to the timely payment of the state’s core priority payments.”
The state’s Republican Governor laid the blame squarely where it belongs: the legislature and Democratic House Speaker Michael Madigan.
“Madigan’s majority owns this downgrade because they didn’t even attempt to pass a balanced budget, get our pension liability under control, and other changes that would put Illinois on better financial footing,” said Eleni Demertzis, a spokeswoman for Gov. Bruce Rauner. “The governor will continue working toward a truly balanced budget with changes to our system to grow jobs and provide real and lasting property tax relief.”
“We’re going to start to see some real pain now,” Senate President John Cullerton told reporters in Springfield on Wednesday. “We’re going to start to see downgrades. We don’t have any funding for schools. We don’t have any funding for higher end and a bunch of social programs. We don’t have a budget.”