SPRINGFIELD — Illinois fell to the bottom of all 50 states in the rankings of a major credit ratings agency Friday following the failure of Gov. Pat Quinn and lawmakers to fix the state’s hemorrhaging pension system during this month’s lame-duck session.
Standard & Poor’s Ratings Service downgraded Illinois in what is the latest fallout over the $96.8 billion debt to five state pension systems. The New York rating firm’s ranking signaled taxpayers may pay tens of millions of dollars more in interest when the state borrows money for roads and other projects.
Illinois received its bottom-of-the-pack ranking when it fell from an “A” rating to “A-minus.”
That’s the same rating as California, but California has a positive outlook. Illinois’ fragile overall financial status netted it a negative outlook, putting it behind California overall. The ratings came out now because Illinois plans to issue $500 million in bonds within days.
Exactly how much Illinois’ credit-rating slide ultimately will cost taxpayers is unknown until the demand for the state’s bonds is measured in the markets. But Rutherford estimated the state will pay $95 million more in interest than if Illinois had a AAA rating, which is much higher.
Even before the downgrade was revealed, Quinn said in Chicago the “pressure is higher than ever” to solve the pension problem because “credit rating agencies are screaming at the top of their voice” for final action.
The Democratic governor and lawmakers couldn’t cut a pension deal despite his deadline forthe outgoing legislature to act before the new General Assembly was sworn in Jan. 9.
On Friday, Quinn called for lawmakers to take up legislation sponsored by Senate President John Cullerton, D-Chicago, that combines two rival pension plans emerging from the House and Senate. Both rein in costs by reducing benefits, an action unions have argued is unconstitutional.