If Illinois’ credit ratings decline much further, it could trigger $155 million in penalties on bonds sold in 2003.

Illinois sold $600 million in bonds in 2003 with the stipulation that the state would keep its credit rating above a certain level or pay a penalty to financial institutions if it didn’t. The state is two downgrades from the Moody’s Investors Service threshold and three from the S&P 500 limit. Gov. Bruce Rauner’s administration has hired experts to try to avoid the extra $155 million cost.

State Rep. David McSweeney, R-Barrington Hills, is also an investment specialist. He said the best way to avoid those fines is reform.

Click here for summary

“If we are downgraded, which we will be unless we get a permanent budget, there will be a big cost to Springfield,” McSweeney said. “We need a pro-growth budget without tax hikes or we’re going to face a lot of exposure even beyond these interest rate transactions.”

Rauner spokeswoman Catherine Kelly said the governor hired an adviser to help the state mitigate some of the risks associated with its debt and reduce the state's payments and likelihood of more fees.

Reuters reported that AIG Financial Products Corp., Bank of America, Merrill Lynch Capital Markets, JP Morgan Chase and Loop Capital Markets, with credit support from Deutsche Bank AG, are the parties involved with the bond-related agreements.

Two financial firms were hired at the two-year cost of $525 thousand. The state plans to sell another $550 million in bonds next week. Illinois has one of the worst bond credit ratings in the country, which makes borrowing money more expensive.