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As a result, bond
payments are dependent on Chicago's "ability and willingness" to
tap available revenue, according to the credit rating agency,
which warned the rating could fall further.
A standoff between Illinois' Republican governor and Democrats
who control the legislature over a budget for the fiscal year
that began July 1 has left Chicago without its monthly state
distribution of motor fuel tax revenue since August, according
to S&P. Those taxes are subject to annual appropriation by the
legislature.
Chicago Mayor Rahm Emanuel's office issued a statement urging
state officials to pass a budget.
"Until then, the city will continue to responsibly fund our
infrastructure maintenance with general operating funds for the
safety of our residents with the expectation that the state
budget impasse will eventually be resolved and the city will be
reimbursed,” the statement said.
Unspent tax revenue was used by Chicago to make August and
September payments on the bonds and is expected to be tapped for
October and November payments as well, the rating agency
reported. Chicago projects that available motor fuel tax cash
could be exhausted by January, but intends to use other revenue
to avert a default on the bonds.
S&P's downgrade also affects Chicago's $101 million drawdown
loan under the federal Transportation Infrastructure Finance and
Innovation Act that also relies on motor fuel tax revenue.
Fitch Ratings, which rates Chicago's motor fuel tax bonds
BBB-plus with a negative outlook, also raised concerns last
month about the state budget battle's impact on the bonds.
(Reporting by Karen Pierog; Editing by Matthew Lewis and Tom
Brown)
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