SPRINGFIELD, Ill. -- The state of Illinois has been warned if it doesn't come to a solution on pensions, it will not bode well for its bond rating.
On Friday, Fitch Ratings announced that the agency has placed Illinois' general obligation bonds rating on a negative watch. The agency explained the reasoning behind that was "to address its large and growing unfunded pension liability".
In a statement, Illinois State Treasurer Dan Rutherford said that the next step could involve the downgrading of Illinois'' credit rating.
"Failure to enact pension reforms will eventually bring Illinois to its financial breaking point, and it will be worse than any fiscal calamity we have seen thus far in this state," said Rutherford. "Our state’s credit rating cannot afford to take another hit.”
According to Rutherford's release, Illinois' debt obligations now exceed $200 billion, and he estimates that the failure to address the state’s pension liability is costing the state at least $17 million per day.
"It is beyond irresponsible to let this continue," said Rutherford. "The state needs to reign in the pension escalation and not use long-term borrowing as a ‘solution’ to this problem.”