S&P

A major credit agency raised debt ratings and affirmed others for seven Illinois universities in response to the state finally passing an annual budget.

S&P Global Ratings raised its debt ratings for Southern Illinois University, Governors State University, Northeastern Illinois University and Eastern Illinois University. It also affirmed ratings for the University of Illinois, Illinois State University and Western Illinois University.

A credit ratings agency has removed Illinois from a credit watch since legislators approved a budget and ended a more than two-year impasse.

S&P Global Ratings said Wednesday the outlook on debt ratings is stable. 

Illinois has the lowest credit rating of any state and agencies had warned of another downgrade to “junk'' status if lawmakers didn't approve a budget. The stalemate between Republican Gov. Bruce Rauner and the Democrat-controlled Legislature began in 2015. This month, legislators approved a budget with an income tax increase over Rauner's vetoes. 

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One day after the Illinois General Assembly ended its spring session without passing a budget, two bond-rating agencies have downgraded the state’s credit. The actions by S&P Global Ratings and Moody's Investors Service leave state government debt just one step above “junk” status.

S&P says Illinois is at risk of a negative credit spiral because of what it calls "unrelenting political brinkmanship." This means the agencies think there’s a real possibility state government could run out of cash and default on its debt.

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Illinois has gone 19 months without a budget, and a credit rating agency says that's further deteriorating the state's fiscal status.  

Analysts at S&P Global Ratings say the American economy had about eight years of growth since the recession. Many states have used that time to pay off debt and build up reserves.  But S&P’s Gabe Petek says Illinois has gone in the opposite direction, letting its debt balloon.

S&P Lowers State Rating Once Again

Aug 29, 2012

Illinois’ large budget imbalance and an $83 billion unfunded pension liability have led Standard & Poor's Ratings Services to lower the state’s credit rating from A-plus to A.

Today’s announcement also gives Illinois a negative outlook for the future.

The action on the state's general obligation bonds comes less than two weeks after a special Illinois legislative session on pension reform ended with no resolution on reining in the pension costs.