Illinois’ credit rating could get downgraded to “junk” status even if the General Assembly overrides Governor Rauner’s veto and passes a state budget.
Moody’s Investors Service issued a statement, saying that the state’s general obligation rating is under review for a possible downgrade after failing to fully enact a timely budget by July 1st. The statement also cites Illinois’ failure to generate broad political consensus on how to move toward balanced financial operations.
According to Moody’s, the state of Illinois has a compiled an outstanding debt of about $32 billion dollars, 82 percent of which falls under general obligation. In their statement, Moody’s says, “The decision to place the state’s ratings under review for downgrade incorporates our expectation that the legislature will implement revenue increases, overriding the governor’s vetoes.”
The bond credit rating business goes on to say that the review will “provide a limited amount of time for the Illinois General Assembly to finish voting on the measures, and for assessment of the plan’s credit implications. The review process will also address the likelihood of further deterioration in Illinois’ most pressing credit challenges: its severely underfunded pensions and a backlog of unpaid bills, which has doubled during the past year.”