Moody’s: Illinois avoids ‘junk’ credit, but risks remain

Jul 20, 2017

CHICAGO (AP) — A major credit rating agency says Illinois’ rating won’t be lowered to “junk” but warns the state still faces serious financial challenges and long-term risks.

Moody’s Investors Service on Thursday affirmed Illinois’ current rating with a negative outlook, saying a downgrade remains possible in the next two years.

Moody’s put Illinois under review for a downgrade earlier this month, after the state entered its third fiscal year without a budget. That would’ve made Illinois the first U.S. state to have a rating below investment grade, and cost taxpayers millions of dollars more.

Moody’s says the budget legislators approved July 6 over Gov. Bruce Rauner’s objections moved Illinois “closer to fiscal balance.”

But the agency warns the budget doesn’t reduce Illinois’ unfunded pension liability, which is larger than any other state.

Update 

From Illinois Senate President John Cullerton’s office:

“It’s hard to disagree with many of the points Moody’s makes. Our balanced budget highlights our ability to self-govern and the strengths of Illinois’ diverse economy. What Moody’s seems to ask is: What took you so long? That’s a valid criticism. Looking forward, the Senate President knows more work is needed to continue to shore up our financial stability and keep Illinois moving in a positive direction.”

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