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Wed April 9, 2014
S&P: Next Two Months 'Critical' For Illinois Finances
A major credit rating agency says the next two months will be "critical" for the future of Illinois' finances. The key question is whether to make a temporary tax hike permanent.
Like most of the big credit rating agencies, Standard & Poor's has been bearish on Illinois finances — lowering the state's credit rating four times in recent years.
But S&P says that could soon begin to turn around. A big part of that depends on whether last years cuts in pension benefits are upheld by the courts. Then there's the question of the temporary tax hike — the current 5 percent individual income tax rate is scheduled to drop at the end of the year.
S&P says it won't tell a government how to balance its budget. But it does say that if Illinois' tax rates aren't kept where they are, the magnitude of the cuts "could be difficult to achieve and might lead to year-end budget deficits."
This is what passes for strong wording in this kind of document.
Democrats are already using S&P's statement to support their plan for making the five percent tax rate permanent. That's the path favored by Gov. Pat Quinn and both legislative leaders.