Friday, January 11, 2013

Fitch Again Says Illinois Debt is Dangerously High, and Its Fiscal Reforms Dangerously Slow

Illinois -- already the state with the lowest debt rating -- is facing another downgrade from the Fitch rating service in the wake of the recent inability of the legislature to reform the state's pensions. 

From Fitch
"The Rating Watch Negative reflects the ongoing inability of the state to address its large and growing unfunded pension liability, most recently through the failure to pass pension reform in the ‘lame duck’ portion of the 97th general assembly legislature that ended on Jan. 8. Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable. The Rating Watch Negative will be resolved after an assessment of the extent to which the state takes action within the next six months that limits the impact of pension payments on the budget while bolstering pension funded levels. Failure to achieve meaningful results would lead to a downgrade of the rating."

House Minority Leader Tom Cross, who's been a strong proponent of efforts to cut the state's pension costs, issued this statement:

“Fitch’s downgrade of our bond rating is embarrassing and may cost the state more money—money that we clearly do not have. How many more times do we have to be downgraded to prompt action in the General Assembly? I have worked and will continue to work with other members in the House and Senate to pass meaningful pension reform.”

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