Gov. Pritzker Celebrates Illinois' Third Ratings Upgrade in 10 Months After 20 Year Drought
CHICAGO - Governor JB Pritzker celebrated the state's improved bond rating from Moody's Investor Service on Thursday, the second such upgrade by Moody's in less than a year and third overall in two decades. Since taking office, Gov. Pritzker has tirelessly focused on strong and responsible fiscal management, working with the General Assembly to hold the line on spending while making key investments to strengthen Illinois' outlook.
Moody's last upgraded the state's bonds in June of 2021 and today's upgrade credited the state's "solid tax revenue growth over the past year" which expanded the state's ability to rebuild financial reserves and increase payments toward unfunded liabilities. Moody's noted that Illinois is "on track to close the current fiscal 2022 with its strongest fund balance in over a decade," its progress in repaying its debts, and its increased pension contributions, taken as an indication of the state's increased commitment to paying its pension debt.
"Illinois was in a deep hole in the years before I was sworn into the governorship, and together with the General Assembly, step by step, we are putting Illinois on firm fiscal footing," said Governor JB Pritzker. "This credit upgrade means Illinois will likely pay a lower interest rate, saving taxpayers hundreds of millions of dollars in the coming years. I would like to especially thank Speaker Welch, President Harmon, Leader Greg Harris, Senator Elgie Sims, Comptroller Susana Mendoza and Treasurer Michael Frerichs for their partnership. There's more work to be done, but step by step, rung by rung, we are steadily climbing the ladder out of a hole that was dug over decades. Illinois' future is bright."
The upgrade follows the enactment of the state's fourth balanced budget in a row, while providing $1.8 billion in tax relief to the working families of Illinois and marked Illinois' first contribution to a Rainy-Day Fund in 18 years, as well as a $500 million overpayment toward the state's pensions. The historic budget places Illinois it its strongest financial position in a generation while funding key investments for education, human services, law enforcement and violence prevention.
Moody's upgraded Illinois' rating on its General Obligation bonds to Baa1 stable outlook from Baa2 stable outlook, and also upgraded Build Illinois sales tax bonds to Baa1 from Baa2 while maintaining their stable outlook. Moody's affirmed the Baa3 rating and stable outlook on outstanding Metropolitan Pier and Exposition Authority bonds that are partially paid with state appropriations.
The rating of a state's bonds is a measure of their credit quality. A higher bond rating generally means the state can borrow at a lower interest rate, saving taxpayers millions of dollars.
Between 2015 and 2017, the State of Illinois suffered eight credit rating downgrades and sat at the top of many analysts' lists of the worst managed states in the nation. At its worst, Illinois' bill backlog hit nearly $17 billion.
Key Actions - Responsible Fiscal Management
Fiscally responsible choices over the last three years have resulted in historic progress toward financial stability in Illinois.
Illinois' FY2023 budget:
- Deposits $1 billion to the Budget Stabilization Fund (BSF) across FY2022 and FY2023 - the first deposits in 18 years. Also creates ongoing, permanent funding for BSF for the first time.
- Contributes an additional $500 million directly towards state unfunded pension liabilities, reducing long-term liabilities by an estimated $1.8 billion
- Pays down $4 billion in debts across FY2022 and FY2023, including eliminating the payment delays in the employee and retiree health insurance program through $898 million in FY2022 supplemental appropriations.
- Keeps pace with payment of the state's bills, with estimated bill payment delays at the lowest levels since before the Great Recession, saving taxpayers hundreds of millions in unnecessary interest costs