Standard & Poor’s downgraded Illinois’ credit rating on Wednesday, citing “weak pension funding levels and lack of action on reform measures.” S&P also gave the state a “negative outlook.”
The agency lowered Illinois’ rating from A+ to A. This is the 10th time Illinois’ credit has been lowered during Democratic Gov. Pat Quinn’s tenure and will potentially cost Illinois taxpayers because the state may have to pay more when borrowing money.
S&P noted Illinois’ pension system has a gap of nearly $85 billion of money that is available and money that will be owed. It is the largest such shortfall of any state.
Further complicating matters, pension payments will make up 20 percent of the Illinois’ general government spending compared with 13 percent just three years ago.
Wisconsin Gov. Scott Walker, who has often compared the reforms enacted in his state to the lack of reforms in Illinois, noted the difference between the two states. “Political leaders in Illinois kicked the can down the road,” Walker said. “Now, they’re realizing the consequence of their actions.”
Walter Russell Mead, a scholar who is one of the foremost critics of the so-called “blue state” model, wrote Democrats who defend such an unsustainable governance model — like the one in Illinois — should not be taken seriously.
“With public-sector unions fighting tooth and nail to preserve their cushy benefits and expensive pension plans, old style Dems like FDR, Harry Truman and Fiorello LaGuardia–all of whom thought that public sector unionism was a terrible idea–are looking smarter and smarter all the time, Mead wrote. “The combination of collective bargaining and the power of a focused voting lobby and campaign finance machine has unbalanced the budgets of too many cities and states to retain much appeal to the general public.”