Illinois already has the worst credit rating in the nation, and it only got worse this week.
The credit rating agency Fitch downgraded Illinois’s credit rating because of the ongoing budget stalemate and the recent decision to delay the state’s monthly pension payments.
University of Illinois-Springfield College of Business and Management Dean Ron McNeil said each downgrade comes at a cost.
“Every time the state finances something through a bond, we have to pay more interest than other states,” McNeil said.
McNeil said the credit agencies are sending Illinois a message.
“The credit agencies are really telling us you haven’t straightened out your problems,” he said. “You didn’t do it last year, you didn’t do it the year before, and you’re not doing it this year.”
He said the state can’t continue the path of downgrades and debt.
“It’s come to a critical point where our debts right now are about three times what our revenues are,” McNeil said.
The change means it will be more costly for the state to take out loans on capital projects like roads and bridges. But he said it also inches Illinois closer to a doomsday scenario of when investors choose to walk away.
“Until the investor says there’s a possibility we won’t get our money back,” McNeil said.
Illinois House Speaker Michael Madigan (D-Chicago) said Tuesday the downgrade could have been avoided if the governor signed at least some of the budget passed in May.
“We passed a spending plan that would have provided there would not have been this collateral damage,” Madigan said.
Governor Bruce Rauner (R-Illinois) said Fitch points out the need for structural changes in Illinois. But he also said last month, he works for the people of Illinois, not the credit agencies. He said he will do what’s best for them.