A second major rating agency is downgrading Illinois' credit worthiness.
Moody's Investors Service lowered the state's $27 billion in outstanding bonded indebtedness to A3 from A2. The new rating's three levels above junk status. Fitch Ratings downgraded Illinois' credit on Monday.
Both firms blame lawmakers' lack of action on a $97 billion shortfall in its public-employee pension systems.
The Legislature adjourned its spring session without adopting a plan to make up the difference over 30 years. Moody's says its rating "assumes the government will not take action to reduce the state's pension liabilities any time soon.'' A credit-rating downgrade means it costs the state millions more to borrow money when it sells future bonds to finance long-term construction projects. Illinois already has the worst credit rating in the nation.
In a related announcement Thursday, Governor Pat Quinn has called a special session for lawmakers later this month to focus on finding a solution to the nearly $100 billion pension crisis. Lawmakers adjourned last week without agreeing on a pension reform plan. The Senate rejected a bill sponsored by House Speaker Michael Madigan that cuts benefits across-the-board. Meanwhile, Senate President John Cullerton sponsored a plan that gives employees and retirees a choice in benefits. It was never called for a House floor vote. Quinn backs Madigan's plan.
The special session is June 19th.