Did you know Riverbender.com is free for you thanks to our awesome advertisers? We noticed you're using an ad block software. Help us spread the word and give our sponsors some exposure by disabling your ad blocking service for Riverbender.com.
dir="ltr" style="line-height: 1.38; margin-top: 0pt; margin-bottom: 0pt;">Moody’s Investors Service said Friday they’re still looking negatively at Illinois for a possible downgrade despite the budget and tax hike imposed by the legislature.
One issue Moody’s raised is the uncertainty of funding for K-12 districts “since [schools districts] will not receive revenue appropriated by the new budget until a separate, evidence-based funding model is enacted.”
Gov. Bruce Rauner said Friday he’s certain schools will open.
Click here for summary
“Schools are going to open,” Rauner said. “We’re going to make sure schools get open, and we’re going to make sure that it’s done on a basis that’s fair for taxpayers all across the state and it doesn't benefit only one community at the expense of residents of other communities.”
The Democrats’ evidence-based school funding model, Senate Bill 1, passed the legislature in May but the Senate has still not sent the bill to the governor.
A spokesman for Senate President John Cullerton, D-Chicago, has said there are still discussions about when to send the bill to the governor after a procedural hold was placed on it back in May.
Moody’s said, “Any delay would further pressure school districts, including Chicago Public Schools.”
The Republican funding reform plan, which the GOP says has the same formula as the Democrats’ plan just without a hidden Chicago Public Schools bailout, was never brought up for a vote.
Ratings agency S&P put out a report earlier this week that said Illinois’ odds of being downgraded to junk “has substantially diminished” because of the budget and tax hike imposed by the legislature.
However, in their Friday report, Moody’s said the tax increase doesn’t negate the uncertainty that remains and the state is still being reviewed for a possible downgrade to junk.
Mercatus Center at George Mason University’s Eileen Norcross earlier this week said it’s no wonder the state isn’t out of the woods.
“Because, again, all of these moving pieces. You’ve got a backlog of bills, they’re not even sure they have the total on those backlog of bills. You aren’t really addressing the pension liability seriously,” Norcross said. “So I think they’re still taking a negative critical look at Illinois’ credit worthiness.”
The Moody’s report said “the state’s ability to generate sustained surpluses to prevent further growth in its backlog remains unclear.”
S&P said, “It is largely because of the bill backlog, poorly-funded pension systems, and ongoing political dysfunction that the state's rating is well below that of peer-comparison states with similar economic profiles.”
Fitch Ratings has yet to issue an update. Their last update July 3, before the tax hike and budget override, said, “The Rating Watch would be resolved within six months based on an assessment of the state's fiscal trajectory as it starts fiscal 2018.”
Illinois has $130 billion in unfunded pension liability, and it’s growing every day. As of Thursday, Illinois Comptroller Susana Mendoza’s office reports the backlog of unpaid bills at more than $14.8 billion.