Downgrade of Illinois’ Credit Rating Unlikely Amid Budget Passage

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Credit ratings agency S&P announced Wednesday that it has removed Illinois from a credit watch list since legislators approved a budget last week.

Illinois has the lowest credit rating of any state in the nation and investor service Moody’s had warned that they could downgrade the state even further to “junk” status if a budget wasn’t approved. S&P now says the odds of Illinois’ credit rating falling that low has “substantially diminished.”

Moody’s has not yet said they share that opinion. They had indicated that they may still cut Illinois’ rate even if a budget was passed.

Illinois House Speaker Mike Madigan spearheaded the budget proposal that was eventually passed after votes to override Governor Bruce Rauner’s veto of it. He released the following statement in response to S&P’s announcement:

S&P’s action today is a strong signal that the balanced budget enacted by Republicans and Democrats is an important step in the right direction. At the end of June, I wrote to the rating agencies and asked that they temporarily withhold judgment and give legislators more time to enact a budget, and I’m grateful for the legislators on both sides of the aisle who used this time to work together and make the difficult decisions needed to start getting Illinois back on track.

There is more work to be done, and it’s clear from S&P’s statement that rating agencies, like all Illinois residents, are hoping Governor Rauner will work in good faith with legislators to address these challenges rather than rejecting compromise by turning further to the extreme right.

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