S&P Downgrades Illinois Credit Rating To Worst In Nation

When I heard a major credit rating agency had downgraded Illinois Friday, the term “death spiral state” quickly came to mind.

And then my thoughts turned to the tens of millions of dollars Illinois taxpayers might be on the hook for down the road.

Ray Long and Monique Garcia reported on the Chicago Tribune website Friday:

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.

(Editor’s note: Italics added for emphasis)

Illinois now has an “A-” rating with a negative outlook from S&P. Among other major credit rating agencies, Moody’s ranks Illinois last among the 50 states and Fitch ranks it 49th but on watch for a possible downgrade.

Regarding the state’s huge pension funding gap, Mark Peters wrote on the Wall Street Journal website Friday:

S&P estimates the pension system in the coming year will see assets fall to 39% of future obligations.

(Editor’s note: Italics added for emphasis)

Hardly any talk about the crisis in the local mainstream media outlets this weekend. Amazing. I can’t understand why more Illinois residents aren’t up in arms over this humongous financial mess the state is in.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Garcia, Monique and Long, Ray. “Illinois credit rating sinks to worst in nation.” Chicago Tribune. 25 Jan. 2013. (http://articles.chicagotribune.com/2013-01-25/news/chi-illinois-credit-rating-sinks-to-worst-in-nation-20130125_1_action-on-pension-reform-robin-prunty-illinois-credit). 27 Jan. 2013.

Peters, Mark. “S&P Cuts Illinois Credit Rating.” Wall Street Journal. 25 Jan. 2013. (http://online.wsj.com/article/SB10001424127887324539304578264293106044944.html). 27 Jan. 2013.