Feb 6 Failure to embrace pending legislation in the Illinois Senate to address the state’s longstanding budget problems would represent a “significant missed opportunity” and risk a credit rating downgrade and hurt economic growth prospects, S&P Global Ratings said on Monday.
S&P, which rates Illinois BBB with a negative outlook, said legislation boosting revenue and ending the state’s budget impasse could improve the near-term fiscal outlook although a rating upgrade would be at least two years away.
In a report, S&P said it takes no position on elements in the Senate legislation.
Illinois is limping its way through a record-setting second consecutive fiscal year without a complete budget due to an ongoing feud between the Republican governor and Democrats who control the legislature. A six-month fiscal 2017 budget expired on Dec. 31.
Since then, the Democratic and Republican leaders of the Senate unveiled a package of 13 bills aimed at ending Illinois’ budget stalemate and addressing the state’s deep fiscal woes. Measures include tax hikes, cost-saving pension changes, and borrowing to pay down a $10.7 billion unpaid bill pile.
The legislation also includes items like workers’ compensation changes and legislative term limits that Governor Bruce Rauner has insisted on during budget deliberations.
The credit rating agency chastised Illinois for a fiscal crisis it called “a man-made byproduct of policy ultimatums placed upon the state’s budget process.”
“We believe Illinois’ distressed fiscal condition and dysfunctional budget politics now threaten to erode the state’s long-term economic growth prospects,” S&P Managing Director Gabriel Petek said in a statement.
Illinois, already the lowest rated U.S. state, was downgraded last week to BBB by Fitch Ratings, which cited the state’s “unprecedented failure” to act on budgets. (Reporting by Karen Pierog and Dave McKinney; Editing by Jeffrey Benkoe)
Originally posted on Reuters