Tags: S&P | Illinois | Credit | Rating

S&P Cuts Illinois Credit Rating Over Pensions

Wednesday, 29 Aug 2012 02:06 PM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
Continuing pension problems and government gridlock earned Illinois another reduction in its credit rating Wednesday.

Standard & Poor's Ratings Services said it lowered Illinois' rating a notch because of "weak pension funding levels and lack of action on reform measures." The firm also said the financial outlook for Illinois is negative, in part because the state's temporary income tax is scheduled to expire in 2015.

Lower ratings can raise the interest rate Illinois must pay when borrowing money.

The downgrade, from A+ to A, leaves Illinois with the nation's second-lowest rating from S&P. California is rated A-, but it has earned a "positive outlook" from the firm.

Moody's rating service has also warned that it may lower Illinois' rating.

Gov. Pat Quinn said in a statement that the downgrade is no surprise but still serves as evidence that state leaders must fix public pension systems. Illinois' retirement systems have a huge gap between the money available and what they will eventually pay out in pensions. The roughly $85 billion shortfall is the largest in the country.

Quinn called legislators into special session earlier this month, but they couldn't agree on what to do, largely because of a dispute about whether to transfer some pension costs to school districts. The Chicago Democrat said he's asking legislative leaders to meet with him early next month to resume talks.

"The only thing standing between Illinois and comprehensive pension reform is politics," Quinn said. "We must put politics aside."

Trying to close the gap costs the state more money each year, leaving less for other government needs. Pension payments this year will make up 20 percent of state government's general spending, compared with 13 percent three years ago.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved