Both houses of the General Assembly met in Springfield during the week for a rare fall session day, amid the ongoing budget impasse now well into its fourth month.
Meanwhile, the real-world impact of that impasse – and the majority Democrats’ refusal to embrace pro-jobs reforms – are more evident every day. Two of the three credit rating agencies officially downgraded the state’s credit during the week, and new jobs figures highlighted the vital importance of approving the Governor’s commonsense reforms and cutting through the logjam to get Illinois’ economy back on track.
Illinois credit woes continue: Fitch and Moody’s downgrade
On October 19, credit rating agency Fitch officially downgraded its rating on $26 billion in Illinois general obligation bonds from A- to BBB+, the worst rating of any state in the country. On October 22, Moody’s followed suit, downgrading Illinois bonds from A3 to Baa1. Moody’s had warned earlier in the week that a skipped pension payment planned for November could affect their rating of Illinois’ debt further.
In downgrading the state’s debt, Fitch cited Illinois’ weak economic recovery compared to the rest of the country – long-term liabilities, ongoing budget gaps, and reduced flexibility as a result of the budget impasse. Fitch also lowered the rating from BBB+ to BBB for bonds on the Illinois Sports Facilities Authority, McCormick Place, and Chicago’s motor fuel revenue bonds.
Moody’s also lowered its rating of sales-tax bonds from A3 to Baa1 and lowered the Metropolitan Pier and Exposition Authority and Civics Center bonds from Baa1 to Baa2. Moody’s outlook for Illinois and each additional obligation bond remains negative.
Illinois economy continues to struggle: Change needed
So why do I continue to push for much-needed reforms in Springfield, especially those that would improve Illinois’s struggling economy? According to the Illinois Department of Employment Security (IDES), Illinois lost nearly 7,000 jobs in the month of September, the fourth straight month of statewide job losses.
IDES anticipates that Illinois employment will not recover from the recession until April 2017 – a year and a half from now – while our neighboring states have already surpassed their pre-recession jobs totals.
Compared to the pre-recession peak for employment, jobs nationwide are up 2.9 percent, but Illinois is still more than 3 percent below its peak.
In downgrading the state’s credit during the week, Fitch specifically cited Illinois’ lagging economic performance:
“Employment growth has been well below the national average through the recovery/expansion period and has weakened relative to the U.S. in recent months. Non-farm employment grew at just a 0.5 percent year-over-year rate in August 2015. Through August 2015, the state has recovered only 71 percent of jobs lost in the downturn, among the weakest of the states at less than half the national recovery rate. Both GDP and personal income declined at a steeper rate in Illinois during the recession and have been increasing at a slower rate during the expansion.”
These aren’t just abstract numbers. These numbers represent people trying to find work, families struggling to make ends meet, and businesses coming to the conclusion that Illinois is not a place to grow. 77