Quinn owns 11 of Illinios' 20 credit downgrades


Share
Posted Online: Feb. 03, 2013, 6:00 am
Comment on this story | Print this story | Email this story
By Scott Reeder
SPRINGFIELD -- I remember my consumer education teacher at Galesburg High School explaining how to achieve a good credit rating.

We learned that the worse your credit rating, the harder it is to borrow. And when people with bad credit do borrow, they pay a much higher interest rate.
Here are my teacher's tips on having good credit:

-- Pay your bills on time.
-- Don't spend more than you earn.
-- Don't borrow too much.
-- Don't make financial promises you can't keep.

If only our current state leadership could have sat through that class 30 years ago.

They might have learned something.

Standard and Poor's Rating Services just dropped Illinois' credit rating to A- from A. There is not another state in the union with credit as lousy as ours. We are worse off than California.

We got in this predicament the same way a person with bad credit would.

Just consider:

-- Illinois doesn't pay its bills on time.
-- Last year the state spent $738 million more than it took in.
-- The state is dripping with debt.
-- Under new accounting rules, the state's unfunded pension liabilities exceed $200 billion.

Since Gov. Pat Quinn took office in 2009, the three major rating agencies have downgraded the state's credit worthiness 11 times.

Because of this Illinois now pays 1.45 percentage points more than the nation's top-rated states on 10-year bonds.

"It really important to remember that we have had 20 downgrades in the entire history of the state and 11 of them have been under Pat Quinn," said state Senate GOP leader Christine Radogno. "We have seen a period of time here that we have been woefully lacking in leadership and the ability to get something done. I think that has led to the downgrade."

It's easy to dismiss percentage points and terms like "junk-bond status" as Wall Street concerns of little importance to the rest of us.

But paying higher interest rates on bonds may mean less money for schools, fewer state troopers patrolling highways and even longer lines when you renew your driver's license.

More importantly, the feedback from rating agencies provides an independent voice giving a prognosis on our state's financial health.

And that prognosis is clear. Illinois is CTD -- circling the drain.
Illinois politicians like to trot out familiar bromides such as:
"There are no easy solutions."

There may not be easy solutions, but it's worth noting that 49 states have found better ways to manage their finances than Illinois has.

Places like Kansas are actually considering eliminating state income taxes.
Illinois lawmakers, on the hand, jacked up our tax rates 67 percent two years ago. Rhode Island has embraced pension reform while Illinois has dithered.
And before we start hearing that Illinois needs to raise its taxes again to improve its credit, please note that the state is taking in more tax revenue now than it has at any time in its 195-year history.

Yeah, you read that right.

We are taking in money at a steady clip, but still heading toward bankruptcy.
Illinois' problems are on the spending front.

The credit rating agencies know it, and you should, too.
Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy Institute; sreeder@illinoispolicy.org.














 



Local events heading








  Today is Thursday, July 31, the 212th day of 2014. There are 153 days left in the year.

1864 -- 150 years ago: A corps of surgeons now occupies the new hospital quarters at the Garrison Hospital on the Rock Island Arsenal. A fence has been installed to enclose the prison hospital.
1889 -- 125 years ago: B. Winter has let a contract to Christ Schreiner for a two story brick building with a double store front on the south side of 3rd Avenue just west of 17th Street. The estimated cost was $4,500.
1914 -- 100 years ago: Germany sent simultaneous ultimatums to Russia and France, demanding that Russia suspend mobilization within 12 hours and demanding that France inform Germany within 18 hours. In the case of war between Germany and Russia, France would remain neutral.
1939 -- 75 years ago: Civil service offices at the post office and the Rock Island Arsenal were swamped as more than 700 youths sought 15 machinist apprenticeships at the Arsenal.
1964 -- 50 years ago: Last night, American Legion Post 246 in Moline figuratively handed over the trousers to a female ex-Marine and petticoat rule began. Olga Swanson, of Moline, was installed as the first woman commander of the post .
1989 -- 25 years ago: The Illinois Quad City Civic Center captured the excitement and interest of a convention of auditorium managers this weekend in Reno, Nev. Bill Adams, civic center authority chairman, said the 10,000-seat arena planned for downtown Moline has caught the eye of construction firms, suppliers, management teams and concession groups.








(More History)