Illinois’ brutal political campaigns may have distracted attention from the reality of the state’s crumbling finances, but an upcoming $500 million bond borrowing by the state will remind investors and Illinoisans alike how little has improved.
Both Moody’s and S&P recently affirmed Illinois’ one-notch-above-junk rating in preparation for the state’s upcoming bond, even as Moody’s continues to maintain a negative outlook on Illinois’ rating. That means a downgrade by the agency is more likely than an upgrade in the next year.
The reasons for the rating agencies’ pessimism are obvious. It’s not just what lawmakers have failed to do, it’s what lawmakers continue to do that’s dragging the state down.
The state continues to operate at a deficit despite nearly $5 billion in new taxes in 2018. And the shortfalls aren’t being compensated with spending reforms. Instead, the state continues to primarily use interfund sweeps to make the general budget balance. And the agencies don’t expect any big reforms this year – not with a stalemate that might ensue during this campaign season.
Bond investors are demanding a heavy price from Illinois for the increased risk they are being asked to take.
According to Municipal Market Data, Illinois will pay yearly interest rates that are 2.1 percentage points higher than the states with the best credit ratings – states that include Indiana, Iowa and Missouri. By comparison, states like Connecticut and New Jersey, states with severe pension crises, only pay about 0.85 percentage points more than the best-rated states. Illinois and its taxpayers are being heavily penalized for the state’s fiscal and governance mess.
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DelMarVa's Premier Source for News, Opinion, Analysis, and Human Interest Contact Publisher Joe Albero at alberobutzo@wmconnect.com or 410-430-5349
7 comments:
Good, give the state to illegals.
Anyone know why Wyoming is not rated out of curiosity?
A vote for Democrats is a vote against America.
If every person in the U.S. purchased $1 in stock in Illinois, it wouldn't make a bit of difference except for that down-the-drain sucking sound it would make before it disappeared forever.
639
That would raise about $300 million - so yes, you are correct. It would not help at all.
Thank you
Love it deserve what they voted to run that sorry state. You paying attention MD annapolis commies
One of the most corrupt governments in the USA.
THAT would be a good place to start hanging politicians.
What else should happen when they tell everyone who's been PAYING for retirement that politicians have already spent it (on vacations, "fact-finding" trips to Greece and Israel, no-bid contracts for their families, translation service for illegal immigrants, etc.). NONE OF IT went to any "retirement fund".
Again, if "we, the people" don't go along with FORCED "contributions" to a political fund, we (based on laws THEY put in place) will go to prison. THEY spend it on lavish living and tell "we, the people" there isn't any money left.
And expect to live happily ever after.
Start passing out "consequences".
It worked for Jefferson and Washington.
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