It’s the beginning of Month No. 3 of the new fiscal year and no budget in place and a report from Moody’s Investors Services says the state could find relief by a combination of budget cuts and tax increases. The report published Monday says the current impasse underscores the state’s governance weaknesses.
Moody’s says the state’s pension funding pressures continue to grow and Illinois can’t reduce liabilities through benefit cuts. The report also says Illinois still has options to address the current-year deficit by offsetting the estimated $5 billion deficit with combination of spending cuts and revenue increases, including reinstating the higher income tax rates. Governor Bruce Rauner’s office says the state needs structural reforms and the Governor is open to new revenue but only in combination with reforms. Moody’s says any eventual agreement will matter far more to the state’s fiscal situation than the long delay that has already occurred.