State Treasurer Acknowledges Moody's Credit Warning

State Treasurer Dan Rutherford agreed Thursday with financial observers after Moody’s Investors Service warned the Legislature’s failure to enact pension reforms last week " will further strain this lowest-rated US state’s finances.” “It looks like Illinois could be heading for another credit downgrade, which will only cost taxpayers more," said Rutherford.

Bond rating agency Standard & Poor’s Ratings Services, also says it is evaluating the state’s status. S&P warned in June that it considers the pension deadlock a negative for the state. The lower the agencies rate Illinois as a credit risk, the more interest the state has to pay when it borrows money. 

“Revenues realized from the 2011 income tax increase have already been consumed by the large, escalating cost of the state’s pension systems," said Rutherford. "Illinois’ available resources can neither pay off its massive debt nor cover the cost of providing needed state services to all of its citizens. Comprehensive, constitutional, and fair pension reforms are required to reverse this situation.”

Moody's analysts weren't sanguine about that, however.  "There are six legislative session days in late November and early December, but Illinois may not agree on an approach to pension funding until early 2013," they said in Thursday's warning.

In the pic:  State Treasurer Dan Rutherford