Standard & Poor’s rating services downgraded Illinois’ credit rating today to A-, with a negative outlook, making it the lowest rating of all 50 states.
State Treasurer Dan Rutherford blamed the negative rating on inaction on the public pension system by Gov. Pat Quinn and the general assembly, at a press conference today. Illinois has a $96 billion pension deficit.
Rutherford pointed out numerous instances in which the state had set a deadline to address pension reform and did not meet the deadline, which was followed by a downgrade in the state’s credit rating.
“Every time a deadline is set and nothing happens substantively, there is a negative action by rating agencies, Rutherford said.
Rutherford explained that the poor credit rating affects the state the same as a poor credit rating would affect an individual.
“If you went out to borrow 500 dollars, because you have such bad credit, it will cost 95 dollars more in interest than better rated states,” Rutherford said.
“This is absolutely bad news of for taxpayers; this affects what we are paying in interest as opposed to principal,” he said. He said the poor credit rating will have an effect on state universities, road construction and other public institutions because as projects are paid for, more will go to interest than principal.
Rutherford said state leaders need to cut the budget and address pension reform.
Standard & Poor's credit analysts say the downgrade reflects what the agency sees as the state's "weakened pension-funded rations" and lack of action on reform measures to improve the state's worst-in-the-nation pension crisis, according to AP.