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Tom Cross: Hit to State Bond Rating 'Embarrassing'

The next step might mean the state's credit rating is downgraded.

With the Illinois General Assembly failing to act on pension reform earlier this week, the State of Illinois’ bond rating took a hit on Friday as Fitch Ratings put Illinois’ bond obligations on negative watch.

The next step could mean Fitch's downgrading of the state’s credit rating, which would only add to the state’s financial woes.

“The Rating Watch Negative reflects the ongoing inability of the state to address its large and growing unfunded pension liability, most recently through the failure to pass pension reform in the 'lame duck' portion of the 97th general assembly legislature that ended on Jan. 8,” Fitch Ratings said in a news release Friday.

Illinois State Treasurer Dan Rutherford reacted Friday to the negative watch announcement.

“Failure to enact pension reforms will eventually bring Illinois to its financial breaking point, and it will be worse than any fiscal calamity we have seen thus far in this state,” Rutherford said in a news release.  “Our state’s credit rating cannot afford to take another hit.”

Fitch Ratings said that Illinois’ long-term liabilities, particularly pension liabilities, are very high for a state. As of June 30, 2012, the unfunded actuarial accrued liability was reported at $94.6 billion, resulting in a 40.4 percent reported funded ratio, Fitch Ratings said.

Illinois House of Representatives Minority Leader Tom Cross of Oswego also responded to the downgrade announcement.

“Fitch’s downgrade of our bond rating is embarrassing and may cost the state more money—money that we clearly do not have.  How many more times do we have to be downgraded to prompt action in the General Assembly?  I have worked and will continue to work with other members in the House and Senate to pass meaningful pension reform.”

Rutherford criticized Gov. Pat Quinn, noting that it’s been two years since a 66 percent income tax increase was passed at Quinn’s request. The income tax increase was billed as a way to solve the state’s financial woes, but Rutherford said money matters have only gotten worse.

“In the past decade, the state’s bonded debt has nearly tripled.  Illinois’ debt is colossal and growing-- our debt obligations now exceed $200 billion. It is estimated that the failure to address the state’s pension liability is costing the state at least $17 million per day.  It is beyond irresponsible to let this continue.  The state needs to reign in the pension escalation and not use long-term borrowing as a ‘solution’ to this problem.” 

Editor's note: Patch Editor Mary Ann Lopez is the author of this report. 

Dad January 14, 2013 at 03:39 AM
CS, after 34 years you were making $100K plus. Wouldn't that make you near the 1% that all the liberal rail against? Look at the difference between Publicly employed and the average citizen? You do very well regardless of your Insurance contributions. At any rate Obama care will save us all, isn't that the propaganda line? Ask you Union to sign you on with the rest of us!
CS January 14, 2013 at 03:54 AM
I wish I made $100,000 when I retired. I made 1/2 that! That is the problem with a bill on pensions that fit all. You hear about those making $100,000, but that is now, not 12 years ago. The real reason, legislators need to talk with union leaders, so they work out a pension plan that is fair for all. Oh, and my medical insurance premiums go up yearly and I don't get social security. I began 30 years ago making $8,500. Not all pensioners are the same! I wish I were one of the 1%.
Dad January 14, 2013 at 04:26 AM
CS, in 1982 a an E-4 In the US navy I made $518 a month. I decided at that point that the government couldn't support me. I'll never be able to retire. If you have good for you. Why do you think you should be able to have a hand in my pocket. You made your decision I made mine and now we have to live with it. Don't blame the tax payers blame the politicians that took your money spent elsewhere and now leave you out to dry. Call Mike Madigan he has the handle on the finance's and has for many years. Oh yes, your Union gave him that power.
SonofJohn January 16, 2013 at 04:16 AM
!950 wow you live on more than me, I was private sector retired Lucky you..... enjoy.
John Tips January 16, 2013 at 02:57 PM
SonofJohn, We don't know where you worked, for how long or what retirement other then social security you are receiving. Many retired people live on more than I receive per month as well. My good friend from high school "lee" went into the service at 19. Today, Lee is retired from the Military, after serving on active duty for 24 years, he went to work for the railroad and vested in with railroad retirement benefits. Together with both retirements, Lee is taking home almost $5000.00 per month - now that is a good retirement! Sadly I never had the drive to do the military thing for as many years (I am a vet though) as Lee, but such is life - you get out of it what you invest in!

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