Downgraded

by Kristina Rasmussen You read last week about Illinois’s dubious race to the bottom with California, Iraq, and Iceland for the status of “riskiest borrower.” Have we always been such a fiscal basket case? No. Senate Republican staff took a closer look at our state’s history of rating downgrades. It turns out that Illinois has only been downgraded...

by Kristina Rasmussen

You read last week about Illinois’s dubious race to the bottom with California, Iraq, and Iceland for the status of “riskiest borrower.”

Have we always been such a fiscal basket case? No. Senate Republican staff took a closer look at our state’s history of rating downgrades. It turns out that Illinois has only been downgraded 17 times in its entire history, most coming in the last 8 years of Democrat leadership.

According to their analysis, “the two recent downgrades bring the total number of Illinois rating downgrades during Governor Quinn’s 18 months in office to eight – almost triple the three downgrades under former Governor Blagojevich in his six years in office. Ouch.

Why does this matter? Downgrades increase the cost of borrowing (let’s not forget that Governor Quinn and Democratic leadership are pushing a massive pension borrowing scheme).

Lest you think that the nationwide recession is hitting most states’ credit ratings, consider this: rating agencies have not downgraded most states (43 states), and some have even received upgrades (4 states).

The argument that Illinois’s troubles are the result of a recession doesn’t explain how most states have managed to avoid downgrades in the face of an economic downturn. Mismanagement clearly plays a role. Here’s what we can do about it.