S&P Global Ratings on Thursday cut Illinois' credit rating by one notch to BBB-minus and warned that the nation's fifth-largest state could sink into "junk" status unless it passes a budget that addresses a gaping structural deficit. With legislative inaction this week, Illinois, already slapped with the lowest credit rating of any U.S. state, on July 1 enters its third fiscal year without a budget. A political impasse between the state's Republican governor and Democrat-controlled legislature has perennially stalled work toward a fiscal plan, leaving the state to operate under court-ordered spending, stopgap budgets and ongoing appropriations mandated by law. "The rating actions largely reflect the severe deterioration of Illinois' fiscal condition, a byproduct of its stalemated budget negotiations," S&P analyst Gabriel Petek said in a statement, adding that "unrelenting political brinkmanship" poses a threat to on-time payments for core state priorities. Unpaid bills have now topped $14 billion. This latest rating downgrade marks the seventh for Illinois since January 2015 by major credit-rating agencies.
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