SPRINGFIELD, Ill. (AP) – Two of the nation’s top credit-rating houses smiled favorably on Illinois’ financial outlook Monday following votes the previous day in the House of Representatives to end the nation’s longest budget standoff.
Fitch Ratings and S&P Global each issued encouraging notices despite Republican Gov. Bruce Rauner’s immediate threat to veto the 32 percent tax hike approved to finance the budget. And they came despite a slowing of momentum Monday to resolve the ongoing budget deadlock. Only Democrats attended a meeting of legislative leaders and Senate President John Cullerton was noncommittal about when he’d begin budget concurrence action.
But the credit agencies, which had warned that inaction before the July 1 start of the fiscal year would mean downgrading the Prairie State’s creditworthiness to “junk” status, were cautious in announcing no immediate action.
“If a budget is enacted, the degree to which it closes the state’s structural deficit, provides a pathway for addressing the backlog of unpaid bills, and its impact on cash flows, will be important factors in our review of its effect on Illinois’ credit quality,” the S&P analysis read.
Illinois has been without an annual budget for two years, the longest of any state in at least 80 years. The state is carrying a $6.2 billion annual deficit and $14.7 billion in overdue bills. The state has crept along on spending ordered by courts, but a federal judge last week ordered that the state pay nearly $300 million more a month to managed-care Medicaid billers.