CHICAGO – Moody's Investors Services has revised Illinois' credit outlook from stable to negative, citing the state's pension funding shortfall and money management practices.
Illinois Treasurer Dan Rutherford said Friday the move will affect taxpayers.
"What this outlook means is if we do not act then they will continue to take us down," Rutherford said on a conference call with reporters. "The thing I want to make real clear is this does have impact on the taxpayers of Illinois."
Moody's cited the state's "severe pension funding shortfall" in revising the credit outlook.
Gov. Pat Quinn's assistant budget director, Abdon Pallasch, reiterated that Friday, saying Moody's changed the outlook because lawmakers haven't acted on pension reform proposals.
"Members of the General Assembly have a clear opportunity to enact comprehensive pension reform and Illinois cannot afford to waste it," Pallasch said. "We continue to work with legislators every day on this pressing issue."
Quinn has set a Jan. 9 deadline to overhaul the state's pension system, which is underfunded by an estimated $96 billion.
The ratings agency said Illinois has long-term weak management practices that are reflected in the underfunded state pension and bill payment delays. Moody's also said Illinois chronically uses payment deferrals to manage operating fund cash.
Thousands of vendors that provide state services are owed $9 billion in back-due payments.
Moody's said Illinois' rating could fall if the state fails to enact pension reforms.
Rutherford said lawmakers need to address the state's pension problems and curtail spending. State lawmakers are due in Springfield in early January.
"We're just basically making it harder and harder for tomorrow's generation," Rutherford said.