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Kirk, Garrett Sound Off on Illinois Bond Downgrade

Moody’s devalues Illinois debt rating to lowest among all 50 states. Biss and Nekritz also voice concerns.

Local elected officials reacted with criticism and others with potential solutions when Moody’s downgraded Illinois’ debt to A2 from A1 Friday, making an investment in the state’s bonds potentially the riskiest of all 50 states’ securities. 

Illinois had been tied with California at the bottom of the list, according to the Bloomberg News Service, until Friday’s action put it alone at the bottom. 

, who is retiring at the end of her term in a year, called for the entire Illinois General Assembly to work together to do something about getting the rating higher again. 

“This is somber news and a very great challenge for Illinois,’ Garrett said. “We’ve come to a crossroads and must find a solution in a bipartisan and fair way for our taxpayers.” 

The effect on Illinois taxpayers was foremost on the mind of U.S. recognizing citizens must pay higher interest on money Gov. Patrick Quinn plans to borrow later this month. 

"Moody's decision to downgrade Illinois debt echoes the judgment of my Sovereign Debt Advisory Board report last year,” Kirk said in a prepared statement. “We are reaping the results of years of irresponsible spending and debt." 

and recognize years of neglect to the state’s pension liabilities are a major part of the problem demanding immediate attention. 

“It’s unfortunate,” Nekritz said of the downgrade. “We can and will take steps to correct it. At the top of the list is our pension debt. It’s unfortunate all of our new revenue will be tied up in the next year’s pension liability and it will be up to us to make cuts necessary to accommodate the issue.”

Biss considers Medicaid liability as well as pension responsibility areas requiring immediate attention. “This strengthens our resolve to put in place workable and sustainable budgets that take into account all liabilities including our pension and Medicaid liabilities,” he said.

While the state’s debt has been downgraded, a number of suburban communities like Deerfield, Lake Forest, Highland Park, , Wilmette, Winnetka and Glenview have AAA bond ratings, the highest possible.

Just like the reduction of the federal government’s bond status by Standard & Poor’s over the summer, the action by Moody’s Friday should not affect the local ratings. Highland Park Corporation Counsel Steve Elrod made that clear in August in the face of the federal action.

Gary January 10, 2012 at 06:07 PM
Ellen, "DB plans can work if they are managed properly..." The people of Illinois (and the people of Greece) want to hear how to properly manage defined benefit programs. In particular, how can you honor promises made when the economy slows down, revenues drop, and taxpayers begin running away from the increasing burden... causing a downward spiral leading to increasing taxes on those left paying for everything? You have the floor.
Deadcatbounce January 10, 2012 at 07:28 PM
Ellen, I'm not understanding the following ... "DB plans can work if they are managed properly and not raided from time to time" When it comes to the state of Illinois. Did you mean "enhanced" each year instead of "raided"?
Ellie January 10, 2012 at 10:37 PM
Democrat Elaine Nekritz is part of the problem, having held office for ten years. I'm looking forward to voting for Republican Jonathan Greenberg, so we can change direction. The Bloomberg News article pointed out Illinois' 2010 unfunded pension liability was a whopping $85 billion! The system has assets to pay 45% of promised benefits - lowest so-called funded ratio of all U.S. states.
lucas January 11, 2012 at 02:18 AM
WE the People of Illinois allowed one political party to control the state offices far far to long. As the President Said three plus years ago in his forst campaign 'ITS TIME FOR A CHANGE"
The Q January 12, 2012 at 02:52 PM
Vote them all out......anyone that supports Madigan and his Clan must go!

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