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Failure to Enact Fully-Funded Budget Results in Downgrades

In yet another blow to Illinois, Moody’s and S&P have both lowered their Illinois general obligation bond rating by one level – with Moody’s ranking just two steps above “junk bond” status.

Moody’s notes that the downgrade reflects a “continuing budget imbalance due to political gridlock that for more than one year has kept Illinois from addressing revenue lost due to income tax cuts that took effect in January 2015.”

Indeed, as the Voices’ Fiscal Policy Center pointed out just yesterday, inadequate resources after last year’s income tax cut is the main driver of Illinois’ current financial crisis. Just to provide state services at Fiscal Year 2015 levels, the FPC estimates Illinois needs $7.1 billion in new revenue.

Lawmakers and Governor Rauner need to come together to enact a budget and billions of dollars in new revenue. Failure to act will only increase the state’s debt, lead to more devastating cuts, and result in further downgrades.

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Posted to Blog, Budget, Revenue, Taxes

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