This Is What Low Credit And High Unemployment Get Us

More bad news for Illinois taxpayers as Merrill Lynch is saying that things can get worse for the State's financial prospects:

While Illinois has “over the last decade, experienced severe fiscal stress,” the findings of the study “suggest that the investors in the municipal secondary markets demand a risk premium for Illinois general obligation debt that is greater than the financial, economic, and fiscal conditions warrant…due to concerns related to the budgetary politics enveloping the state.” This translates, according to the study, to a 7-21-basis-point premium over non-Illinois general obligation debt. “Specifically, all held equal, Illinois general obligation bonds carried interest rates 21, 12 and seven basis points higher for bonds maturing in 5, 10 and 20 years, respectively.”

And...they offer some advice.  Will it be heeded?  We're not so sure:

The article argues that “the only way to change investors’ minds toward Illinois debt is to get the state’s fiscal house in order.” The article also warns that “it is wholly possible and probably likely that state workers and suppliers demand a similar risk premium in their transactional compensation with the state…[and] that such additional compensation could be many times as high as the reputational risk premium on the state’s debt.”

Illinois Ranks Worst For Pension Debt Rate (Look Around Folks)

The bad news about the fiscal-shape of Illinois continues to roll in.  Now, Moody's rates Illinois pension date rate the worst in the country.  By a mile.

Let's all remember who is in charge here in Illinois, ok?  Those three up there in the top photo?  Speaker Mike Madigan (and his Super Majority), Senate President John Cullerton (and his Super Majority) and Governor Pat Quinn.  They *control* Illinois.  And...this is what we get:

Illinois’ pension liability as a percentage of state revenue is far and away the nation’s highest, according to a new report from a major credit-rating agency. 

The state’s three-year average liability over revenue is 258 percent, Moody’s Investors Service says. 

The next closest? Connecticut, at about 200 percent.

The Moody’s report averaged the Illinois percentage from 2010 through 2012. In 2012 alone, the state’s rate was 318 percent. 

The state has a $100 billion deficit in the amount of money that should be invested in the portfolios of five state-employee pension accounts. Lawmakers adopted an overhaul plan last fall that cuts benefits and increases worker contributions to significantly cut that debt.

But the law has been challenged in court. A Sangamon County judge indicated last week he wants the case moved swiftly to appellate courts, suggesting the Illinois Supreme Court’s rejection in July of a law affecting retiree health insurance could prove a model for the pension challenge. 

Moody’s points out that even if the pension overhaul gets constitutional approval from the state’s high court, it still will take decades for Illinois government to dig out of its financial hole.