Illinois is back on track, but the state is still facing an uphill climb. The state legislature overrode the governor’s veto on the $36 billion budget, making this the first time since fiscal 2015 the state has a spending plan in place. Illinois is $15 billion behind on bills but took the step this week toward resolving that issue.
Illinois isn’t the only state dealing with this problem. Connecticut, Pennsylvania, Oregon, Rhode Island, Wisconsin and Massachusetts are without budgets, but the latter is getting set to remedy that soon. All the states except for Illinois face no immediate credit rating implications, according to a new release from Fitch Ratings.
In Illinois’ case, the new budget includes a permanent income tax increase and recurring expenditure reductions, as well as “a plan to issue bonds to pay down a portion of the state’s significant accounts-payable backlog,” added Fitch. The budget impasse also caused the state Department of Transportation to suspend construction projects, but they have since resumed following the lawmakers’ override. Roughly 900 projects valued at more than $3 billion were in jeopardy.
“His tax-and-spend plan is not balanced, does not cut enough spending or pay down enough debt, and does not help grow jobs or restore confidence in government,” said Illinois Gov. Bruce Rauner on Facebook referring to state House Speaker Mike Madigan. The new budget is estimated to generate about $5 billion in revenue. “It proves how desperately we need real property tax relief and term limits. Now more than ever, the people of Illinois must fight for change that will help us create a brighter future,” the governor added.
Even with the new budget, Moody’s Investors Service said earlier this week, Illinois could face a credit rating downgrade. Moody’s has Illinois one step above a junk rating.
-Michael Miller, editorial associate