In spite of tax hike, ratings agency eyes change that could junk Illinois
SPRINGFIELD (Illinois News Network) — Illinois could be on the fast track to a junk credit rating, despite lawmakers assuring that a tax hike in July would keep the state from the infamous designation.
“If we don’t get this done we will become the first state in the history of the United States of America to be in junk bond status,” state Rep. Mike Unes, R-East Peoria, said this summer. He and several other Republicans joined Democrats in overriding Gov. Bruce Rauner’s veto of a budget that included a $5 billion income and corporate tax hike.
It might happen anyway.
Moody’s Investor’s Services announced this week that they’re thinking about weighing pension debt more heavily when they rate states for credit worthiness. Considering Illinois is one grade away from a junk-bond status, financial watchdog Wirepoints President Ted Dabrowski predicts the change would mean Illinois is placed firmly into speculative status.
“Illinoisans may be stuck with not only a $5 billion tax hike, but we may end up being junk anyway,” he said.
The designation, Dabrowski said, would not only mean that Illinois would have to pay higher interest rates than it already does to borrow money, but it will also serve as a negative message to businesses and individuals considering setting roots in the state.
The Center Square -- formerly known as Watchdog.org and the Illinois News Network -- and their reporters represent 18 states across the United States as the taxpayers' watchdog, exposing the way government really works.
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