Thursday, August 30, 2012
Credit Downgrade Calls For Pension Reform Says Quinn
The rating agency Standard & Poor’s reduced Illinois’ credit rating Wednesday, citing the state’s underfunded pension systems and continued budget worries. The agency moved Illinois from an “A+” to an “A” rating. The rating agency also gave the state a “negative” outlook for the future.
“The downgrade reflects the state's weak pension funding levels and lack of action on reform measures intended to improve funding levels and diminish cost pressures associated with annual contributions,” Standard & Poor's credit analyst Robin Prunty said in a prepared statement.
A lower bond rating can lead to a higher interest rate for Illinois when it looks to borrow, something it does regularly to fund capital projects. Higher rates means borrowing will cost more. However, Moody’s rating agency in January gave Illinois its lowest credit rating of any state, and on a bond sale later that same month, the state got the best interest rates it had seen since the 1970s.”
"Eliminating our $83 billion unfunded pension liability is vital to getting our financial house in order. Today’s action by Standard & Poor’s is more evidence that we must act,” the governor said in a prepared statement. Quinn said Wednesday that he plans to invite the four legislative leaders to a meeting to discuss pensions in September.
You can read Jamey's full report at: http://illinoisissuesblog.blogspot.com/2012/08/quinn-credit-downgrade-bolsters-calls.html