For the first time in more than 20 years, Moody’s recently upgraded Illinois’ bond rating, but not everyone is convinced of a fiscal turnaround.
Moody’s Investment Service upgraded Illinois’ rating on general obligation bonds from Baa3 with a stable outlook to Baa2 with a stable outlook, according to a press release. That is two notches above junk bond status. Moody’s had previously downgraded Illinois’ rating on bonds on three occasions.
Gov. J.B. Pritzker hailed the move as an endorsement of the state’s “strong and responsible fiscal management” in recent years.
“After eight credit downgrades our state suffered under my predecessor, I say with full certainty Illinois’ fiscal condition is heading in the right direction,” Pritzker said.
Ted Dabrowski, president of the nonprofit fiscal watchdog Wirepoints, said the upgrade is deceiving.
“The only reason that we got an upgrade from Moody’s is because we were flooded with almost $150 billion in money from the federal government,” Dabrowski said. “That is the reason we got an upgrade, not because the government is doing anything better today.”
Higher bond ratings mean that Illinois can borrow money at lower interest rates, potentially saving taxpayers millions of dollars, state officials have said.
Pritzker has emphasized his administration’s commitment to balanced budgets, calling the FY 2022 budget the state's third consecutive balanced plan.
Last year, Moody’s raised its estimation of Illinois’ pension debt at its five state-run funds to $313 billion, up from $260 billion the previous year, according to Wirepoints. By comparison, the state puts its official shortfall for its five state-run pension funds at $141 billion.
The watchdog group Truth in Accounting ranked Illinois among the least fiscally transparent states in the country. Only New Jersey got worse marks.
Dabrowski said, in the end, the upgrade means little to ordinary Illinoisans, as lawmakers have done little to address Illinois’ structural problems such as unfunded pension liabilities and high property taxes.
“While the free money is here, at the same time those debts are just growing, taxes are growing, and people will, at some point, get hit really hard when the free money is gone,” Dabrowski said.