Moody’s hits Illinois with credit downgrades

Major ratings agencies are weighing in on the dismal state of the state.

Just three days after Fitch Ratings hit the state of Illinois with credit downgrades, Moody’s Investors Service has followed suit.

Moody’s downgraded $26.8 billion of the state’s general obligation bonds to Baa1 from A3 on Oct. 22.

Illinois is home to the lowest credit rating in the nation, and the state hasn’t had a AAA rating since February 1979. In contrast, neighboring Indiana has maintained its AAA credit rating from all three major credit agencies (Fitch, Moody’s and Standard & Poor’s) since 2010.

Moody’s cited the state’s current $6 billion budget deficit, an enormous and ballooning unpaid bill backlog, and gridlock in Springfield as reasons for the downgrade.

“[B]arring unexpectedly strong and swift corrective actions,” Moody’s officials wrote in a press release, the state’s poor fiscal health will leave it “more vulnerable to the next economic downturn.”

When it comes to budgetary issues, Illinois’ No. 1 problem is taxpayers fleeing the state, not to mention a General Assembly in which Democratic supermajorities in the House and Senate have refused to pass a balanced budget.

Moody’s also lowered ratings on the state’s sales-tax bonds and bonds issued by the Metropolitan Pier and Exposition Authority. The outlook for both obligations, as well as for the state’s general obligation bonds, remains negative.