SPRINGFIELD -- The state legislature's inability to deal with the pension crisis has brought a credit warning from a ratings service and a dire warning from the State Treasurer.
The credit warning was issued by Fitch Ratings, which announced they have
placed Illinois' general obligation bonds rating on negative watch. Fitch noted the state's inability 'to address its large and growing unfunded pension liability.'
State Treasurer Dan Rutherford warns that the next step could be Fitch downgrading the state's credit rating. He believes that failure to enact pension reforms will eventually bring Illinois to its financial breaking point, calling that, "worse than any fiscal calamity we have seen thus far in this state. Our state's credit rating cannot afford to take another hit."
In a news release, Rutherford further warns that, "Furthermore, it has now been two years since Governor Pat Quinn's 66% income tax hike was passed, and though it was billed as a measure that would help solve the state's financial problems, money matters in Illinois have only gotten worse. On January 11, 2011, the state's backlog of bills was reportedly $8.5 billion. Today the state owes vendors nearly $9 billion dollars."
"In the past decade, the state's bonded debt has nearly tripled. Illinois' debt is colossal and growing-- our debt obligations now exceed $200 billion. It is estimated that the failure to address the state's pension liability is costing the state at least $17 million per day. It is beyond irresponsible to let this continue. The state needs to reign in the pension escalation and not use long-term borrowing as a 'solution' to this problem."