CHICAGO — Illinois’s rating took its second hit this week when Standard & Poor’s Thursday knocked it down into the high single-A category and assigned a negative outlook based on the state’s deteriorating liquidity and fiscal position.
The rating was lowered to A-plus from AA-minus. “The downgrade reflects what we view as the state’s deteriorating liquidity and financial position,” wrote analyst Robin Prunty. “Illinois failed to address its fiscal 2009 deficit, which was carried into fiscal 2010. Similar to many other states, revenues are performing below originally forecast levels.”
The rating agency also criticized illinois for its use of one-time revenues like debt restructuring and a pension borrowing in the fiscal 2010 budget, as well as the state’s limited progress in the current fiscal year to bring down its budget gap.
The action follows Moody’s Investors Service’s downgrade of the state earlier in the week to A2 from A1.
