Gov. Pritzker Hails Two-Notch Bond Rating Upgrade From Fitch Ratings Illinois' Fifth Ratings Upgrade in Less Than A Year
SPRINGFIELD -- Governor JB Pritzker hailed a two-notch bond rating upgrade from Fitch Ratings, Illinois' fifth notch upwards in less than a year, saying it validated the strong and responsible fiscal management he's implemented since taking office.
The Fitch upgrade is the first for Illinois' GO bonds since June 2000 and follows an upgrade by Moody's Investor Service last month, the second such upgrade by Moody's in 10 months.
"Balanced budgets four years in a row, paying the state's bills on time, early repayment of pandemic-related borrowing, clearing out debts left by previous administrations, making higher-than-required pension payments, setting aside $1 billion in savings for a rainy day -- this is what responsible fiscal management looks like," said Governor JB Pritzker. "Working with the General Assembly and my fellow constitutional officers, with dedication and determination we have turned Illinois from a deadbeat state into a fiscally responsible state that is attracting business from around the globe."
"The upgrade to 'BBB+' reflects fundamental improvements in Illinois' fiscal resilience including full unwinding of pandemic-era and certain pre-pandemic non-recurring fiscal measures, meaningful contributions to reserves and sustained evidence of more normal fiscal decision-making," the Fitch Ratings release stated, noting a steady reduction in accounts payable and retirement of many of the state's lingering debts.
In its rating action, Moody's 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 Illinois' progress in repaying its debts and its increased pension contributions as an indication of the state's increased commitment to paying its pension debt.
The Governor thanked House Speaker Chris Welch, Senate President Don Harmon, Leader Greg Harris, Senator Elgie Sims, Comptroller Susana Mendoza and Treasurer Michael Frerichs for their ongoing commitment to Illinois' fiscal well-being.
The upgrades follow 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 extra payment 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.
Fitch upgraded Illinois' rating on its General Obligation bonds to BBB+ (stable outlook) from BBB- (positive outlook), and also upgraded Build Illinois sales tax bonds to A (stable outlook) from BBB+ (positive outlook).
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.
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.