Illinois Chamber looks for fiscal discipline in state budget

[October 10, 2022]  By Trina Thomas | The Center Square contributor

(The Center Square) – Fitch Ratings last month assigned a BBB+ rating to three Illinois general obligation bonds totaling $700 million, and Illinois Chamber of Commerce President and CEO Todd Maisch is hoping to see fiscal discipline.

According to Fitch Ratings, the following GO bonds received the BBB+ ratings: $175 million taxable series of Oct. 2022A, $245 million series of Oct. 2022B and $280 million series of Oct. 2022C. Fitch said the rating reflects "adequate and materially improved operating performance with a long record of structural imbalance primarily related to pension underfunding and recent trends toward more sustainable budgeting practices."

Additionally, Fitch said the rating reflects the long-term elevated liability position as well as spending pressure as the state's diverse economy slowly grows.

"What we already know is that there have been substantial gains, and we've given the governor and the comptroller great credit for utilizing the federal funds in a responsible way to stabilize state finances," Illinois Chamber President and CEO Todd Maisch told The Center Square. "But as we all know, those federal funds have pretty much run out."

According to Fitch Ratings, the economic recovery for the state is picking up but continues to lag behind the nation. Additionally, the enacted fiscal 2023 budget reflects an improvement in the operating profile. Fitch said the rating also measured the initial use of federal aid spending like the American Rescue Plan Act state fiscal recovery fund.

"There's a tipping point between off-utilizing excess federal funding in an effective manner to actual fiscal discipline on the legislature, on the governor's behavior," Maisch said.

Fitch Ratings reports that $2.8 billion of Illinois' $8.1 billion federal tax funds went toward infrastructure and other one-time needs like COVID-19 relief. Maisch said the next fiscal year will be very telling for the Democratic majority of Illinois.

"If we come out of this next fiscal year and the majority party cannot demonstrate that they can have sustainable fiscal discipline, I'd say at least half of what Fitch writes about goes out the window," Maisch said.

According to Fitch Reports, the 2023 enacted budget shows year-on-year increases in education, human services, healthcare and additional pension contributions "over the statutorily defined level."

Per Fitch Reports, the state recovered 90% of jobs lost at the beginning of the pandemic compared to the national recovery rate of 100% through the same period.