Credit rating agencies issued warnings yesterday on both Illinois and Chicago finances.
National credit rating agency Fitch Ratings listed Illinois as one of three states to watch in 2020, primarily due to the proposed graduated tax that will be on the ballot in the upcoming year.
NPR Illinois is reporting that Fitch says if the constitutional amendment passes, it’ll be watching what Illinois does with the extra money. And if voters say no, it wants to see if state government can “adjust its budget” — which likely means cutting its budget — to cope with structural fiscal problems.
Democratic Gov. J.B. Pritzker campaigned on the change where the wealthy pay a higher tax rate, and argues it’s crucial to securing Illinois’ fiscal future. Republicans argue it would pave the way for future tax increases.
Also announced yesterday, Moody’s Investors Services declared both Chicago and Detroit as notably “weaker” following there analysis of whether America’s 25 largest cities were prepared for a recession.
Moody’s says that Chicago is “one of the cities least prepared for a near-term recession” citing high pension debt and pension costs, funds that were not included in the recently passed pension reform bu the state General Assembly.
Moody’s said that although the city is in poor shape for recession preparedness, the city’s diverse tax base and broad legal authority would allow the windy city to tap into the tax base to raise taxes, in the event of another recession.