A Wall Street credit rating agency upgraded Illinois’ rating outlook from negative to positive on Wednesday, a move it said reflects the state’s “preservation of fiscal resilience” and “sustained economic recovery” since the start of the pandemic.
Fitch Ratings pointed to the state’s economic recovery as well as the “unwinding of certain nonrecurring fiscal measures” as reasons for the change in outlook, though it affirmed its actual issuer default bond rating of BBB- — an “investment grade” ranking just one notch above “junk bond” status.
The 2022 state budget as well as other financial moves “suggest further improvements in the state’s operating performance and structural balance in the near and medium-term that could support a return to the pre-pandemic rating or higher,” according to a Fitch Ratings statement on the improved outlook.
In his own statement, Gov. J.B. Pritzker thanked the state lawmakers and the Democratic legislative leaders of both chambers. He said the improved outlook is “yet another sign of positive momentum for our state’s fiscal condition, a testament to strong financial management and responsible actions by the General Assembly and my administration, and a product of the state’s economic resilience.
“The story of Illinois in 2021 is that in the face of a crisis, fiscal discipline and smart economic policy pays off,” Pritzker’s statement continued. “Together, in the face of a deadly global pandemic, we enacted a balanced budget for the third straight year of my administration, demonstrating fiscal responsibility works with a vision of governance focused on working families.”
The state could see other positive upgrades if officials continue the “recent pattern of more normal fiscal decision-making, including on-time budgets that address fiscal challenges primarily with sustainable measures” and can narrow the state’s structural budget gap, according to Fitch Ratings’ statement.
Illinois could see a downgrade in its outlook if officials fail to implement plans for the “early retirement of federal pandemic loans and repayment of interfund loans in fiscal 2022” or if the state depends on one-time federal aid for its recurring expenditures in the future, the ratings agency wrote.