Fitch upgrades Illinois’ credit outlook to ‘positive’
By PETER HANCOCK
Capitol News Illinois
phancock@capitolnewsillinois.com
SPRINGFIELD – Fitch Ratings, one of three credit rating agencies that grade Illinois bonds, has upgraded its credit outlook for the state from “negative” to “positive.”
Although the state’s overall rating remains at near-junk status at BBB-, the agency said the state’s economic outlook coming out of the pandemic, combined with the recently-enacted budget, are moving the state in the right direction.
“The Outlook Revision to Positive from Negative, reflects Illinois’ preservation of fiscal resilience given the quick and sustained economic recovery since the start of the pandemic, coupled with the state’s unwinding of certain nonrecurring fiscal measures,” the agency said in a statement Wednesday. “Recent fiscal results and the enacted fiscal 2022 budget suggest further improvements in operating performance and structural balance in the near and medium-term that could support a return to the pre-pandemic rating or higher.”
The change in outlook is not the same as a change in the state’s immediate credit worthiness, but instead reflects the agency’s view of its credit trajectory, indicating the possibility of a credit upgrade in the future.
The continuing BBB- rating is the result of what Fitch called “a long record of structural imbalance and irresolute fiscal decision making” that has resulted in a credit position well below what the state’s broad, but slow-growing economy would otherwise suggest. It also reflects the state’s large, long-term liabilities such as pension obligations that will continue to put stress on the state’s finances.
But the agency also said that the state’s revenue base, primarily income and sales taxes, are expected to grow as the state’s economy grows, while recent improvements, such as paying down the state’s bill backlog and its plan to pay off its federal pandemic borrowing early, are signs of improved budget management.
The action by Fitch follows similar moves earlier this year by the state’s other two rating agencies, Moody’s and S&P, which revised their outlooks from “negative” to “stable.”
Democratic leaders in Illinois, including Gov. JB Pritzker, quickly seized on the news
“Fitch’s improved outlook for Illinois is yet another sign of positive momentum for our state’s fiscal condition, a testament to strong financial management and responsible actions by the General Assembly and my administration, and a product of the state’s economic resilience,” Pritzker said in a statement Wednesday. “The story of Illinois in 2021 is that in the face of a crisis, fiscal discipline and smart economic policy pays off.”
House Speaker Emanuel “Chris” Welch, D-Hillside, called the revised outlook “proof we can support families, invest in underserved communities, and be fiscally prudent at the same time,” while Comptroller Susana Mendoza said the move “vindicates” her office’s effort to pay down the state’s bill backlog.
“My administration has been committed and vocal about the need to show fiscal discipline and accountability,” Mendoza said in a statement. “Fitch notes the responsible approach we have taken with the General Assembly and the Governor’s office to target better-than-expected revenues to paying down debt.”
In its announcement, Fitch listed a number of things Illinois could do that might lead to a credit upgrade. Those include continuing to pay down the bill backlog, continuing the recent pattern of passing balanced budgets on time and narrowing what Fitch called a “structural budget gap” by matching recurring revenues with recurring expenses, including funding its pension obligations at actuarially determined levels.
Recent budgets have included the pension payments required by statute that are otherwise short of the actuarially determined payments that would prevent the state’s unfunded liability from increasing. The state’s statutory pension payment, which it made in full for the upcoming fiscal year, was about $9.8 billion, or 23 percent of the state’s General Revenue Fund budget for the year.
However, the agency also noted factors that could lead to a credit downgrade, such as failing to follow through on plans for early retirement of federal pandemic loans and repayment of interfund borrowing, or using one-time federal aid for recurring expenses in the future.
Meanwhile, Fitch said, bonds issued as part of the Rebuild Illinois capital improvements plan continue to be rated BBB+, a slightly higher rating than the state’s general obligation bond rating, because the capital plan bonds are backed by dedicated sources of revenue.
Fitch said it believes those revenue sources, which include motor fuel tax revenue and license plate fees among others, would remain sufficient even in the event of an economic downturn.
Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
Local News
Worth Public Library kicks off summer reading program
Spread the loveBy Kelly White Patrons at the Worth Public Library welcomed in the summer season earlier this month. The library, 6917 W. 111th St., hosted its annual celebration on June 1 to bring patrons of all ages out to sign up for its summer reading program. “We love any excuse to celebrate reading with…
Fire knocks out Orland’s UFC Gym
Spread the loveFrom staff reports A fire last Thursday afternoon practically destroyed an Orland Park gym and knocked out neighboring businesses, as well. Orland Park firefighters received a call at 2:31 p.m. June 20 for a reported fire in the UFC Gym located at 66 Orland Square Drive Unit C. Multiple 911 calls were received for a…
Chicago Ridge Fire Chief Bonnar retires
Spread the loveStarted his 50-year career as Orland Park cadet By Dermot Connolly Chicago Ridge Fire Chief William Bonnar officially announced his retirement from a nearly 50-year career at the June 18 Village Board meeting. Mayor Jack Lind made the announcement “with great regret,” joking that “he doesn’t have the age to retire but he…
Stagg tabs Allee Hernandez to guide girls hoops
Spread the loveBy Randy Whalen Correspondent Allee Hernandez has accrued many years of basketball experience as a player and as an assistant coach. She will soon embark on a new experience as a head coach at Stagg, where she will be the Chargers first new head coach in 16 seasons. She succeeds Bill Turner, who…
Shepard’s yearbook wins national recognition
Spread the loveBy Kelly White Shepard High School students have worked tirelessly to create a yearbook for this academic year that was nationally recognized. The high school, 13049 S. Ridgeland Ave. in Palos Heights, was chosen as a Yearbook Excellence Contest recipient from Walsworth Publishing Company, a family-owned printing company based out of Marceline, Missouri.…
Hickory Hills man charged in grandfather’s murder
Spread the loveBy Nuha Abdessalam A 32-year-old Hickory Hills man has been charged with first-degree murder in the June 21 death of his 90-year-old grandfather. Dean J. Faulk was charged on June 22 with the June 21 murder of Dean L. Faulk. Police said they responded to a call at 9:45 a.m. June 21 at…
Orland Park Public Library kicks off summer
Spread the loveBy Kelly White Summer is nearly here and the Orland Park Public Library is ready for it. On June 8, the library, 14921 S. Ravinia Ave., hosted its second annual Summer Reading Challenge Kick-Off event themed, Read, Renew, Repeat. “There are multiple interpretations to this theme,” Jackie Boyd, Communications Manager at the Orland…
llinois VFW names Porfirio Senator of the Year
Spread the loveIllinois Veterans of Foreign Wars recently selected state Senator Mike Porfirio as the Senator of the Year. “I’m deeply honored to receive this prestigious award from the Illinois VFW,” said Porfirio (D-Lyons Township). “I am committed to ensuring our veterans receive the protections, care and dignity they deserve. This recognition is a testament…
Niego Real Estate salutes America again
Spread the love. Popular flag program underway . By Tim Hadac Clearing and Garfield Ridge residents who want to decorate their blocks in red, white and blue this Independence Day are encouraged to contact Niego Real Estate and reserve a supply of U.S. flags at no charge. The popular program to promote patriotism and community…
Neighbors
Palos Heights: Business owners must choose whether to comply with mandates
Spread the loveBy Jeff Vorva Palos Heights is not cracking down on businesses that violate Cook County COVID-19 mandates regarding proof of vaccinations. But the city will help if asked. Among the mandates, which started Monday, businesses including restaurants and gyms must have patrons show proof of vaccinations, which is a controversial topic for some.…
College Report: Division I schools listening to Heard
Spread the loveBy Jeff Vorva Staff Writer Tadriana Heard is ready for a second round of Division I basketball. The former Argo star is playing her second season for Morton College, and heading into this week’s action was first in the nation among National Junior College Athletic Association players with 64 3-pointers. She was also…
Mayor reads hate mail before diving into COVID and crime issues
Spread the loveBy Jeff Vorva Before Tuesday’s village board meeting, Orland Park Mayor Keith Pekau said he received a disturbing email. The mayor, who shoots from the hip when it comes to his beliefs is a controversial public figure and figures to get hate mail. This one was especially nasty. “I figured that since I…
Boys Basketball: Evergreen Park riding out toughest stretch of schedule
Spread the loveBy Jeff Vorva Staff Writer So, how did Evergreen Park get to 9-6 over in its first 15 games? The Mustangs took a rollercoaster ride. In a nutshell: They started the season with four consecutive wins, lost the next three, won five straight and then dropped three in a row. The latest three-game…
Loving the Archer Heights Library
Spread the loveBy Mary Stanek Your correspondent in Archer Heights and West Elsdon 3808 W. 57th Place • (773) 284-7394 Well, that’s it, folks. The holidays are over. Next up in the market are Valentine’s Day candy, paczki, corned beef, Guinness and Peeps. Easter this year is on April 17. I will have to mention…
New year, old challenges
Spread the loveBy Peggy Zabicki Your correspondent in West Lawn 3633 W. 60th Place • (773) 504-9327 It’s a new year and a time for new beginnings. Many of us will be starting a new diet program. I plan to do this as soon as I’m done eating the remaining Christmas candy and cookies at my house. Wish me luck!…
Two ladies gone, but not forgotten
Spread the loveBy Kathy Headley Your correspondent in Chicago Lawn and Marquette Manor 6610 S. Francisco • (773) 776-7778 Guessing you have already read the sad news about the passing of Mary Ellen St. Aubin. For those of you that didn’t know, she grew up right here in Chicago Lawn, on 63rd and Richmond, and…
Stepson charged in Evergreen Park murder
Spread the loveBy Bob Bong A 24-year-old Chicago man has been charged with first-degree murder in the New Year’s Eve shooting of his stepfather in Evergreen Park. Brandon K. Kizer, 24, of the 8100 block of South Loomis in Chicago, was charged Sunday with first-degree murder in the death of Anthony Young, 52, on the…
Honored for service to business
Spread the loveFabis earns UBAM award By Dermot Connolly The United Business Association of Midway recently honored founding member Mary Fabis with a Lifetime Membership Award for Outstanding Service for her 35 years of work with the business organization she continues to serve as a board member. Fabis, now 92, has owned and operated Archer…