There was a widely read Chicago Tribune op-ed written a few days ago outlining an approach to dissolve the entire state and apportion the geography to Wisconsin, Indiana, Kentucky, Missouri and Iowa. –SEE HERE– It was written tongue-in-cheek, but with an uncomfortable level of reality behind it.
Illinois has been struggling with its finances for a long, long time.
The Illinois long-term labor pension liabilities are ridiculous in the extreme. However, things just went from bad to jaw-droppingly, gobsmackingly, unbelievably worse.
According to the latest financial media reports, Standard and Poors Global Ratings agency has positioned Illinois bonds to drop below “investment” grade; that would make Illinois the first state in the nation to achieve “junk bond” status.
(Via ABC) Illinois is on track to become the first U.S. state to have its credit rating downgraded to “junk” status, which would deepen its multibillion-dollar deficit and cost taxpayers more for years to come.
S&P Global Ratings has warned the agency will likely lower Illinois’ creditworthiness to below investment grade if feuding lawmakers fail to agree on a state budget for a third straight year, increasing the amount the state will have to pay to borrow money for things such as building roads or refinancing existing debt.
The outlook for a deal wasn’t good Saturday, as lawmakers meeting in Springfield for a special legislative session remained deadlocked with the July 1 start of the new fiscal year approaching.
That should alarm everyone, not just those at the Capitol, said Brian Battle, director at Performance Trust Capital Partners, a Chicago-based investment firm.
“It isn’t a political show,” he said. “Everyone in Illinois has a stake in what’s happening here. One day everybody will wake up and say ‘What happened? Why are my taxes going up so much?'” (read more)