All Three Rating Agencies Have Upgraded Illinois’ Outlook
Fitch Ratings revised the outlook on Illinois’ General Obligation bonds from negative to positive.
With this action, Illinois’ GO bond rating moves from BBB- with a negative outlook to BBB- with a positive outlook. Fitch is the third rating agency to upgrade the state’s outlook.
“Fitch’s improved outlook for Illinois is yet another sign of positive momentum for our state’s fiscal condition, a testament to strong financial management and responsible actions by the General Assembly and my administration, and a product of the state’s economic resilience,” said Governor JB Pritzker. “The story of Illinois in 2021 is that in the face of a crisis, fiscal discipline and smart economic policy pays off. I want to thank the General Assembly, especially Speaker Chris Welch and President Don Harmon and their budget negotiators for their partnership in our common purpose of bringing about long-term fiscal strength for Illinois. Together, in the face of a deadly global pandemic, we enacted a balanced budget for the third straight year of my administration, demonstrating fiscal responsibility works with a vision of governance focused on working families.”
Highlights from Fitch’s analysis:
- “The state is prudently applying the gains to fully retire federal deficit borrowing undertaken just a few months ago, repay outstanding interfund loans used as budget balancers in prior years and drive down the bills backlog.”
- “Recent fiscal results and the enacted fiscal 2022 budget suggest further improvements in operating performance and structural balance in the near and medium-term that could support a return to the pre-pandemic rating or higher.”
- “Recent improvements including reduction in accounts payable and enacting plans for early retirement of federal pandemic loans, signal improvement in budget management.”
- “The May Debt Transparency Act (DTA) report also notes $191 million in reported pending late payment interest penalties, down 40% from February 2020 ($319 million) and down 78% from the first DTA report from December 2017 ($887 million).”
- “Broadly, the state reports a $1 billion reduction in total general fund spending for fiscal 2022 ($42.3 billion) versus the current services estimate provided in November 2020. General fund base operating spending remains flat in the fiscal 2022 enacted budget versus fiscal 2021 at $30.8 billion. Funding for K-12 and higher education is up 3%, including a $350 million increase for K-12.”
- “Unlike recent years, the budget includes no interfund loans or sweeps.”