S&P, Moody’s lower Illinois’ credit rating over budget mess

CHICAGO (AP) — A second major credit rating agency has downgraded Illinois’ rating, citing financial “mismanagement” by state leaders amid a yearlong budget impasse.

S&P Global Ratings lowered the rating Thursday from BBB+ to BBB, while rival Fitch Ratings placed the state’s ratings under review for a potential downgrade. S&P says the lack of a budget for the current fiscal year has “left Illinois with unmanaged spending” that could go on for another year.

Illinois had the worst credit rating of any state even before the current impasse between Republican Gov. Bruce Rauner and majority Democrats.

Moody’s Investors Service lowered Illinois’ rating to two levels above “junk” status on Wednesday.

Moody’s noted Illinois has a multibillion-dollar budget gap and its bill backlog is likely to exceed a previous record of $10 billion.

The lower rating means taxpayers pay more when Illinois borrows money.

Fitch, meanwhile, also placed the state’s $550 million bond issue that is expected to sell June 16 on ratings watch negative and rated it at triple-B-plus, or three notches above junk territory. Fitch says it expects to make a decision on the rating with six months, based on the progress of the state’s budget process.