Credit ratings agency Moody’s says the state’s public schools and local municipalities walk away as the biggest winners from Illinois’ newly enacted budget and coming infrastructure spending but make no mention of any potential upgrade to the state’s near-junk credit rating.
The short report released Thursday breaks down the “flurry” of legislation recently enacted by who benefits and to what extent.
“For the third straight year, the state budget prioritizes K-12 education funding by exceeding the aggressive funding targets called for by the evidence-based school funding formula, which the state introduced in 2017,” it read.
The state will send an additional $375 million in funds to schools that will be divvied up based on the tiers established in the 2017 funding formula overhaul.
Local municipalities, mired in firefighter and police pension debt, will see an influx of cash as well, largely due to the doubling of the state’s 19 cent motor fuel tax.
“The rate hike is projected to yield an additional $1.2 billion in revenue each year, approximately 32 percent of which will go to local governments,” it said, adding that many counties and towns will be able to impose their own local gas taxes if they agree to adopt “responsible bidder” rules for their subsequent public works spending.
Moody’s analysts say the six municipalities that will be seeing new casinos open are likely to benefit from the influx of gambling revenue, but even the best expectations of gambling money will fall short of the amount each would have to pay to begin paying down their public retiree debt.
“If the new casinos were to generate revenues even at the low end of that range, that could have a meaningful impact in comparison with pension contribution gaps using reported assumptions. However, the revenues produced by existing locations have steadily declined over the last five years,” it read.
Gov. J.B. Pritzker said on June 2nd that he hoped that the legislative moves the state was making would be looked upon favorably by credit ratings agencies.
“We’re beginning to address our pensions,” he said. “We’re doing things that I think move us in the right direction from a financial perspective, a fiscal perspective, and I think the rating agencies will recognize that.”
The report didn’t give any indication that a ratings change would result from the legislation although it did call the influx of money for schools “credit positive.”