Any little bit helps.
A thirsty man wandering in the desert would never turn down a pint of water to demand a gallon.
So, in that context, why wouldn’t — or shouldn’t — Illinoisans be pleased and somewhat relieved to get a bit of good news involving Illinois’ fiscal status?
Citing a “material improvement in state finances,” Moody’s Investor Services recently raised the state’s bond rating by one notch — up to Baa2 from Baa3.
Ordinary mortals won’t know what that means. But Illinois has climbed the ladder from being one notch above junk bond status to two notches.
It’s the first time Illinois’ bond rating has been raised in 20 years. The improvement comes after a steady spiral downward.
That’s good news, and it should be treated as such, because the higher a state’s ratings are, the lower the interest rates it must pay on bonds it issues.
Gov. J.B. Pritzker was so pleased by the news that he about busted his buttons at a news conference he held to lavish praise on himself.
“I promised to restore fiscal stability to Illinois, and Moody’s rating upgrade demonstrates that Illinois’ finances are heading in the right direction for the first time in two decades,” he said, almost certainly previewing his 2022 re-election campaign rhetoric.
The governor clearly forecast continued rating improvements. But in doing so, Pritzker’s position is akin to the fellow with severe hemorrhoid problems who argues vehemently that his problems are all behind him.
What’s past isn’t necessarily a permanent part of the past. Illinois remains in a heap of financial trouble.
Its bond ratings are the lowest of the 50 states. While Moody’s praised the new state budget for increasing public pension contributions — the costs are up about 25 percent of the state’s operating budget — it also noted the pensions are “routinely shortchanged under the state’s funding statute.”
Strong revenue increases generated by the private sector have eased Illinois’ cash flow problems, as have the multiple federal bailouts authorized by Congress and President Biden. Although the economy is growing steadily, continued large revenue increases aren’t guaranteed, and no one expects the national government to approve future bailouts on top of past bailouts.
Financial analysts the governor likes to characterize as “carnival barkers” offered a different explanation for the bump upward in Illinois’ bond rating.
Wirepoints’ Mark Glennon attributed the state’s improved standing to $138 billion in federal bailout payments that were outlined in a report prepared by the Committee for a Responsible Federal Budget.
THE CRFB said that amount was “committed or disbursed to public and private sector recipients” and that “another $24 billion is allowed for Illinois under federal legislation already passed.”
Dismissing claims that state officials had anything to do with Illinois’ improved bond rating, Glennon wrote “the direct aid alone, to most states, including Illinois, exceeded any fiscal harm caused by the pandemic.”
As is often the case, the argument is boiling down to who gets the credit for whatever improvements there are in Illinois finances. The good news is that there’s an improvement for which some are vying for credit.