Several ratings agencies tasked with monitoring the fiscal health of Illinois have given poor marks to Illinois Governor J.B. Pritzker’s budget proposal, noting a dependence on one-shot revenues, an uncertain pension proposal and punting on real fiscal progress.
Late last week, S&P Global Ratings issued a statement saying the plan’s reliance on nearly $1.3 billion in new revenue “precariously balances the current budget, but punts measures to address fiscal progress to future years.”
Fitch Ratings warned the proposed budget could lead to yet another downgrade for Illinois, saying “The fiscal 2020 executive budget plan recently introduced by Illinois’ governor would not materially address the state’s structural budget issues in the current fiscal year or the next.”
Fitch advised that the plan, “relies heavily on non-recurring revenues and large savings from an uncertain pension proposal that poses risks for the state.” An analyst also noted about one-third of the new revenue sources contained in the budget are one-shot revenues.
S&P raised concerns that the Governor’s plan for long-term stability “hinges largely on a tough campaign to pass a progressive income tax that requires a constitutional amendment.” A progressive income tax is a non-starter for many Senate Republican lawmakers who view plans to implement such a structure as a tax hike on middle-class families.
“This revenue stream is far from certain, and there is no detail yet on rates, brackets, or the amount of revenue it is supposed to generate,” S&P cautioned. “Despite the potential for a more collaborative budget process with single-party control of state government, Illinois has yet to prove its ability to make politically difficult decisions in favor of structural balance and sustainability. If it adopts the budget in its current form, it remains at risk of repeating a pattern of putting off hard choices while eroding pension funding.”
Senate Republicans have said this proposal must be a starting point for further negotiation, urging Gov. Pritzker to make good on his promises to work across the aisle to tackle the issues facing Illinois.