Moody’s Investors Service revised the outlook on Illinois’ A1 general obligation debt rating to negative from stable, citing intensified financial stress facing the state.
“The state reported a very large negative fund balance for fiscal 2009 and has faced fragile economic conditions and continuing uncertainty over its ability to meet pension funding obligations,” Moody’s said in a statement.
The negative outlook covers about $25 billion of General Obligation debt and follows Moody’s last downgrade of Illinois’ rating on June 4. That was due in part to the state’s failure to enact “significant recurring measures” to address a fiscal 2011 structural budget imbalance, the rating agency said.
With the latest downgrade, Illinois joined California as having the lowest state GO rating from Moody’s.
Since the downgrade, Moody’s said “signs of financial stress have emerged or intensified,” including escalating debt issuance for capital projects and to meet pension obligations.
Illinois ended fiscal 2010 on June 30 with a $7.7 billion general fund deficit, while the state continues to pile up unpaid bills and has delayed payments to schools and other governmental units, the rating agency said.
The state has issued more than $7 billion of long-term debt so far in 2010, with $3.8 billion of pension fund bonds expected by year end, according to Moody’s.
Illinois officials were not immediately available for reaction to the outlook change.
(Reporting by Karen Pierog; Editing by Kenneth Barry and Dan Grebler)
Aweful is a better word, capice’
Where are the esteemed Illinois legislators who are all touting their “fiscal acountability”….why do we the tax payers still have the burden of IMPF….when the state (Springfield) just renigs???