Illinois has the worst credit rating of any state in the union. They earned the ranking with their reckless deficit spending. Illinois currently has $14.6 billion in overdue payments to vendors and service providers.
They have a solution and it’s quite unique. After the “longest fiscal standoff since the Great Depression”, they have a plan. They will engage in more deficit spending!
Illinois is run by Democrats and only recently elected Republican Governor Rauner.
Usually, states borrow for long-term projects, but they will borrow to reduce their late-fees. Bills that are 60 or more days past due incur 12 percent in late-payment fees. By paying off a chunk of that at a time with the sale of bond proceeds, the state could cut that rate in half. It currently takes Illinois about 200 days to pay a bill, but his plan would reduce that to about 90 days.
The Democratic-controlled General Assembly endorsed the budget — and a $6 billion borrowing scheme — over Republican Gov. Bruce Rauner’s vetoes.
They’re almost at junk status
Three major agencies threatened a downgrade of the Prairie State’s creditworthiness to “junk” status without a swift remedy, but published positive messages since this budget action July 6.
While not unprecedented, borrowing to pay bills is “not a good sign of fiscal stability,” said Alan Schankel, municipal bond strategist for Janney Capital Markets. Schankel noted that Connecticut borrowed to bridge a deficit several years ago. But Connecticut’s credit rating, like Illinois’, is in the tank.