Illinois now has the lowest credit rating of all 50 states. Standard & Poor’s rating services downgraded Illinois’ credit rating last week to A-, with a negative outlook.
State Treasurer Dan Rutherford, who blamed the negative rating on inaction on the public pension system by Gov. Pat Quinn and the General Assembly, said Illinois is headed for "fiscal disaster."
He said the lower rating will force the state to fork over more money on interest payments. This will affect state universities, road construction and other public institutions because more will go to interest than principal as these projects are paid for.
“If you went out to borrow $500 because you have such bad credit, it will cost $95 more in interest than better-rated states,” Rutherford said.
The state's elected officials have done little to address their "worst-in-the-nation" public pension problem. Not only has the state not adequately funded the pension funds over the years, it has gambled with the funds themselves.
Jonathan Ingram, director of pension reform at the Illinois Policy Institute, points out that more than $1.6 billion of the money in the public pension funds is invested in junk bonds. On Reboot Illinois, he writes:
"More than $1 billion of the money invested in junk bonds is from the Teachers’ Retirement System – the pension fund for suburban and downstate K-12 teachers. Altogether, junk bonds make up more than 12 percent of the state pension systems’ bond portfolios."
And how does this affect you? Scott Reeder at the Reeder Report cuts to the chase:
"In 2011, the Illinois Legislature jacked up income taxes by 67 percent – and nearly every dime of it went to cover pensions. That’s the equivalent of an extra week of pay being taken away from every working Illinoisan.
"Taxpayers are finding it hard to save for their own retirements because they are busy paying for someone else’s."
Want to know more? Michael T. Carrigan, president of the AFL-CIO, says employees deserve a say in their retirement security. On Reboot Illinois.
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