During the fourth month of the budget impasse in Illinois, Fitch Ratings has lowered the state's credit rating by one notch.
The move from an 'A-" to a "BBB+" rating, which is three levels above junk, was due to the budget stalemate and "continued deterioration of the state's financial flexibility," the ratings agency said Monday. Fitch Ratings also pointed to the state's debt and unfunded pension obligations in lowering the rating, which impacts $26.8 billion in general obligation bonds.
Republican Gov. Bruce Rauner and Democratic legislative leaders remain at odds over a budget for the 2016 fiscal year, which began July 1.
Rauner is trying to install items on his controversial "turnaround agenda" through the budgeting process. Some of those items include workers' compensation reforms, a property tax freeze and limits on collective bargaining in the public sector.
"Governor Rauner continues to fight for structural reforms that will put the state on a path to fiscal health, but the legislature continues to protect the failed status quo," Rauner spokesman Catherine Kelly said in a statement upon news of the credit downgrade. "It's time the legislature recognizes Illinois needs transformational change."
House Speaker Michael Madigan (D-Chicago) issued this statement in response to the downgrade:
As I've been telling Governor Rauner for several months, the number one problem facing Illinois is the state budget. The lack of a resolution on the state budget and today's downgrade are direct results of the governor's continued focus on issues other than solving our budget crisis. It's time we put aside the governor's list of issues that Democrats and Republicans believe will hurt middle-class families and instead focus on a budget that helps all Illinoisans.
Fitch Ratings agrees with my view. Nowhere in Fitch's statement does it suggest that the state needs to follow the governor's agenda by weakening collective bargaining rights, reducing workers' wages and hurting the middle class.
I continue telling the governor we need to take a balanced approach to the state's financial challenges, one that includes some cuts, like those included in the budget passed by the Legislature in May, and new revenue. Today's news is another reminder to the governor that it's time to focus on our budget.