The Illinois pension saga just keeps getting worse. In response to the state legislature’s failure to pass a pension reform bill before adjourning, Fitch downgraded Illinois’s bonds from A to A- earlier this week. On Thursday Moody’s joined the party, lowering the state’s rating from A2 to A3. S&P is now the only agency not to have downgraded the state, but it is issuing its own dire warnings. As Reuters notes, Illinois now has the lowest credit rating of any state in the country even without the S&P downgrade, and the worst rating in its history.
The higher borrowing costs that accompany credit downgrades are bad news for a state already struggling with its finances. This fact is not lost on Governor Pat Quinn, who has called lawmakers back to Springfield for a special session to get something passed before the state is hit with another downgrade.
The Governor is right to be anxious for a budget fix. Illinois has allowed this problem to drag on far too long; each day of delay is costing taxpayers. Unfortunately, there’s still no reason to be optimistic that the special session will succeed where past efforts failed. The legislature has been trying to get a bill through for well more than a year now. Three different plans have come up for a vote in the last 12 months alone. If there’s a compromise solution out there somewhere, it has hidden itself very well.
Maybe that explains why House Speaker Michael Madigan isn’t answering his phone: after the reform bill failed last Friday, Quinn called a special meeting with legislative leaders to formulate a plan to address the crisis; Madigan, however, was reportedly unreachable by phone, despite being made aware of the call in advance.
If Illinois wants to stanch the bleeding, it needs to get serious, and fast. Unfortunately, it may take another credit downgrade to do that.
[State Capitol of Illinois image courtesy of Shutterstock]