Thursday, April 21, 2022
SPRINGFIELD—For the second time in less than a year, Moody’s Investors Services, one of the “Big Three” credit rating agencies in the United States, announced Thursday that it upgraded Illinois’ credit rating.
Moody’s cited the state’s use of tax revenue growth to rebuild its financial reserves (Rainy Day Fund) and the increase of pension contributions among reasons for the upgrade. Moody’s also noted the state’s shrinking accounts payable, which stands at $2.7 billion today, a massive reduction compared to the $16.7 bill backlog in 2017.
Proof of the state’s commitment to shoring up its Rainy Day Fund comes today as Comptroller Susana A. Mendoza transfers the first installment – $400 million from the General Revenue Fund – into the Budget Stabilization Fund (Rainy Day Fund). She is also sending $300 million to the Pension Stabilization Fund. Under the budget passed by the General Assembly and signed by Governor JB Pritzker, the state will commit $1 billion to the Rainy Day Fund, as well as an additional $500 million to the Pension Stabilization Fund, saving Illinois taxpayers $1.8 billion – similar to homeowners making an extra payment to reduce the principal on a mortgage.
This is exactly the kind of responsible budgeting Comptroller Mendoza and the credit rating agencies have called for.
“I knew that through our smart fiscal management, this upgrade was on the horizon,” Comptroller Mendoza said. “This is not by chance. Even before a penny of American Rescue Plan Act (ARPA) federal stimulus dollars came to Illinois, the Illinois Office of Comptroller methodically paid down the state’s bills and shortened the bill payment cycle. I thank Moody’s for continuing to recognize this remarkable progress with their second upgrade in less than a year, and I look forward to more good news ahead as Illinois continues to gain solid financial footing. This is a great day for Illinois.”
Today’s news follows an upgrade from Moody’s on June 29, 2021, which was the first upgrade the state had earned in more than two decades. The next week, on July 8, S&P Global also upgraded the state’s credit rating.
This means the state has now earned three credit rating upgrades in less than a year, all while managing to come back from the 2015-2017 budget impasse and astutely maneuver the financial challenges wrought by the COVID-19 pandemic.
In addition to the transfers into the Rainy Day and Pension Stabilization Funds, Comptroller Mendoza on Thursday also directed $230 million to protect funds invested by families into the College Illinois! pre-paid college tuition program.
All told, within two days of the Governor signing the fiscal year 2023 budget earlier this week, the Illinois Office of Comptroller already made significant movement by making $1 billion of essential payments toward the recovery of Illinois’ finances into the Rainy Day, Pension Stabilization, College Illinois, and Group Health Insurance funds.