Fitch Ratings, Standard & Poor’s Respond Negatively to Pritzker Budget Proposal

Only one week after Governor Pritzker presented a FY20 budget plan to the Illinois General Assembly, the plan got a thumb’s down rating from two of the “Big Three” credit-monitoring agencies that oversee U.S. debts. Fitch Ratings and Standard & Poor’s Global Ratings (“S&P”) both characterized the Governor’s budget proposal as imprudent and unlikely to persuade them to raise Illinois’ troubled credit rating. Illinois has the worst credit score of any of the 50 states, ranked only one or two notches above “junk bond” status.

In explaining their negative judgements, both credit-rating entities pointed to the Pritzker budget’s dependence on temporary, one-time-only budget fixes. Examples of these non-repeatable acts of budget magic include the sale of the James R. Thompson Center, the sale of licenses to offer sports betting books, and the sale of licenses to sell marijuana. All three of these moves are supposed to bring in millions of dollars to cover the FY20 version of what has become the State of Illinois’ annual structural “budget hole,” the moneys required to cover annual exponential increases in the costs of Medicaid, public-sector pensions, and other mandated expense items. However, even assuming the Pritzker budget is enacted, after FY20 ends the “budget hole” will stretch on and the money will no longer be there.

S&P called the Pritzker budget “dubious” and said enacting it could ”weaken the state’s credit trajectory,” which is already at a junk-bond-skirting BBB- in the S&P credit-rating table. Fitch Ratings explicitly warned Illinois that enactment of the Pritzker budget will place the state in risk of a credit downgrade.

A third major credit-rating office, Moody’s Investors Service, has also ranked the State of Illinois only one notch above junk-bond level. The General Assembly has the constitutional duty of examining and scrutinizing the budget proposal submitted to it by Gov. Pritzker.

House Appropriations Committees begin to meet, consider FY20 budget. The General Assembly must pass a budget for the fiscal year beginning July 1, 2019. A budget passed before June 1, 2019 will require only a simple majority (60 votes in the House) to pass. The Appropriations Committees began meeting this week to hear budget requests and announcements of fiscal priorities from the various State departments.

Springfield faces many challenges, and testimony indicates that the FY20 budget will be seen by many people as disappointing for a wide variety of ways. It is possible that the Illinois House, led by the majority Democrats, could find itself looking at the enactment of significant new taxes. It is also quite possible that even with one of the highest tax burdens borne by any state in the U.S., many advocates will say that Illinois is not spending enough money on their favorite issue area or program and is morally obligated to spend even more.

The meetings of House Appropriations Committees are open to the public and are posted on the General Assembly committee website. Many of the committee meetings are held in rooms that are wired to present live audio or video feeds to the public through the General Assembly website. In addition, users of the website can file slips of support or opposition to the budget bills and other bills before each committee.

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