Wall Street’s Not in the Mood
On July 5, the day before the Illinois House voted to override the Governor’s veto, Moody’s announced they were continuing to review the state's current Baa3 level for a possible downgrade despite "legislative progress toward a fiscal recovery plan based on permanent income tax rate increases." Of particular note, Moody’s states that the plan “appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities.”
Senate Republicans continue to reiterate that a tax increase alone won't solve Illinois’ fiscal problems. The state needs a balanced budget, with reforms, which will help pay down the $15 billion in unpaid bills and address Illinois' mountain of pension liability. Lawmakers should return to the negotiating table and continue working toward a bipartisan compromise that was so close to being reached before the Speaker ran his 32 percent tax increase and budget. To celebrate what passed last week is premature.