Fitch Downgrades Illinois’ Debt Rating, Maintains Negative Outlook

Fitch’s ratings agency has downgraded Illinois’s general obligation bonds over the state’s failure to address pension reform. Illinois already has the worst debt rating in the United States.

Fitch downgraded the state’s bonds from an ‘A’ rating to ‘A-‘ and maintains a negative outlook, meaning the state could be downgraded again unless something changes.

The main reason for the downgrade is the state’s failure to address its pension problem:

Fitch believes thatthe burden of large unfunded pension liabilities and growing annualpension expenses is unsustainable, and that failure to achieve reformmeasures despite the substantial focus on this topic exacerbates concernabout management’s willingness and ability to address the state’snumerous fiscal challenges.

The decision by Fitch follows a warning issued last Friday by Moody’s which also expressed concern about the state’s ability to deal with its pension problem. Lawmakers attempted to pass a comprehensive pension reform bill in early May but failed. The state’s unfunded pension liability is now approaching $100 billion.