Illinois’ credit rating was downgraded one notch to BBB by Fitch on Wednesday, leaving the state two rungs above junk territory.
Analysts with the rating agency, who left their rating on review for a further downgrade within the next six months, attributed the cut to the state spending “far in excess of available revenues” and its failure to enact a full budget, reports Eric Platt in New York.
“Illinois has failed to capitalize on the economic growth of recent years to bolster its financial position,” said Karen Krop, an analyst with Fitch.
“Rather, the decision to allow temporary tax increases to expire and the subsequent failure to develop a budget that aligns revenues with expenditures have resulted in a marked deterioration in the state’s finances during this time of recovery,” she added.
The downgrade affects nearly $26bn of general obligation bonds issued by the state.
Fitch also cut its opinion on $431m of Illinois Sports Facilities Authority sports facilities bonds, $2.6bn of Metropolitan Pier and Exposition Authority McCormick Place expansion project debt, and $268m of Chicago motor fuel tax revenue bonds to triple-B minus from triple B.