Budget-stymied Illinois could be first state with ‘junk’ credit
ing London, Manchester, Plymouth and Portsmouth. Communities Secretary Sajid Javid said further testing “is running around the clock.”
So far, Camden Coun- cil has been the only local authority to have asked residents to leave as a precau-
The council said resi- dents would be out of their home s for three to four weeks while it completes fire-safety upgrades.
Conservative Prime Minister Theresa May, who has been criticized for her slow response to the Grenfell tragedy, said Saturday that the government was supporting Camden officials to ensure residents have somewhere to stay while the work is done.
In response, Jeremy Corbyn, leader of the opposition Labour Party, said May needed to “get a grip” and lead a stronger response to what is now a “national threat.”
Residents trooped out of the buildings late Friday night with suitcases and plastic bags stuffed with clothes. Council workers guided dozens to a nearby gym, where they spent the night on inflatable mattresses.
Many residents complained about a lack of information and confusion. Officials first announced the evacuation of one building and then expanded it to five before reducing it to four. Some residents said they learned about the evacuation from the television news.
Renee Williams, 90, who has lived in Taplow Tower since 1968, told Britain’s Press Association: “No official came and told us what’s going on. I saw it on the TV, so I packed an overnight bag.
“It’s unbelievable. I understand that it’s for our safety but they can’t just ask us to evacuate with such short notice. There’s no organization and it’s chaos,” she said. ing here. One day everybody will wake up and say ‘What happened? Why are my taxes CHICAGO — Illinois is on going up so much?’” track to become the first Ratings agencies have been U.S. state to have its credit downgrading Illinois’ credit rating downgraded to “junk” rating for years, though they status, which would deepen have accelerated the proits multibillion-dollar deficit cess as a stalemate over how and cost taxpayers more for to address the state’s budyears to come. get deficits has dragged on
S&P Global Ratings has between Republican Gov. warned the agency will likely Bruce Rauner and the Dem- lower Illinois’ creditworthi- ocrats who control the Genness to below investment eral Assembly. grade if feuding lawmakers The agencies are confail to agree on a state budcerned about Illinois’ mas- get for a third straight year, sive pension debt, as well increasing the amount the as a $15 billion backlog of state will have to pay to borunpaid bills and the drop row money for things such as in revenue that occurred building roads or refinanc- when lawmakers in 2015 ing existing debt. allowed a temporary income
The outlook for a deal tax increase to expire. wasn’t good Saturday, as “In our view, the unre- lawmakers meeting in Spring- lenting political brinkmanfield for a special legislative ship now poses a threat to session remained deadlocked the timely payment of the with the July 1 start of the state’s core priority paynew fiscal year approaching. ments,” S&P stated when
That should alarm everyit dropped Illinois’ rating one, not just those at the Cap- to one level above junk just itol, said Brian Battle, direcafter lawmakers adjourned tor at Performance Trust their regular session on May Capital Partners, a Chica31 without a deal. go-based investment firm. A junk rating means the
“It isn’t a political show,” state is at a higher risk of he said. “Everyone in Illinois not repaying its debt. At that has a stake in what’s happen- point, many mutual funds and individual investors — who make up more than half the buyers in the bond market — won’t buy the state’s bonds. Those willing to take a chance, such as distressed debt investors, will only do so if they are getting a higher interest rate.
While no other state has been placed at junk, counties and cities such as Chicago, Atlantic City and Detroit have. Detroit saw its rating return to investment grade in 2015 as it emerged from bankruptcy — an option that, by law, states don’t have.
Battle says the cost to taxpayers in additional interest the next time Illinois sells bonds, which it inevitably will need to do, could be in the “tens of millions” ofdollars or more.
The more money the state has to pay in interest, the less is available for things such as schools, state parks, social services and fixing roads.
“For the taxpayer, it will cost more to get a lower level of service,” Battle said.
Comptroller Susana Mendoza, who controls the state checkbook, agreed.
“Our reputation really can’t get much worse, but our state finances can,” she said.