Citing the state's ongoing financial problems, Moody's Investor Service on Friday downgraded Illinois's credit rating to the lowest of any state in the country.
According to the Associated Press, Moody's blamed the low rating of "A2" on "weak management practices" and the most recent legislative session which "took no steps to implement lasting solutions" on issues such as an increasingly severe pension funding shortfall.
Further detailing the downgrade, Moody's said Illinois's "chronic use of payment deferrals to manage operating fund cash" presented a major challenge to its financial wellbeing.
"It remains to be seen whether the state has the political willingness to impose durable policies leading to fiscal strength," Moody's explained in a statement, before it pointed to the state's decision to temporarily increase its income tax rates as a step in the right direction. California has the second-worst credit rating in the U.S.
At the same time Moody's downgraded Illinois's credit rating, Standard & Poor's left its rating for the state unchanged, though it warned of a negative outlook, according to the AP. The same week, Fitch Ratings also left Illinois's rating unchanged and said the state's outlook has stabilized.
Gov. Pat Quinn's office responded to news of the Moody's rating by calling it an "outlier decision," Fox Chicago reports.
"Although the state has taken positive steps toward fiscal stability, swift bipartisan action to implement further cost reductions and reforms in the upcoming legislative session are needed to stabilize the budget," Kelly Kraft, a Quinn spokeswoman, said in a statement, Bloomberg reports.
State Republican leadership described the downgrade as "very bad news," AP reports. Senate Minority Leader Christine Radogno and House Minority Leader Tom Cross noted that "obviously the practice of nibbling around the edges ... has not convinced these bond rating agencies that we are on the road to recovery."
Last week, Quinn signed into law a pension reform law aimed at preventing "double dipping" -- cases where public employees rely on pension payouts from both their union jobs and city jobs. The law does not, however, address the bigger issue at hand -- how to trim the state retirement system's $85 billion unfunded pension liability.
And pension liabilities are only part of the state's financial challenges. Quinn's three-year budget projection, also released last week, said more cuts lie ahead for all state operations -- as much as 9 percent across the board -- in order to offset a state budget deficit that most recently stood at $500 million and could grow by 2015.