Moody’s Ratings upgraded Illinois’ credit rating to A2 from A3 on October 23, marking the state’s tenth credit rating improvement since Governor JB Pritzker took office in 2019 and bringing Illinois to its highest credit rating in more than 20 years.
The upgrade, which applies to the state’s general obligation bonds and Build Illinois sales tax bonds, reflects what Moody’s described as “realized and expected improvement in the state’s financial metrics” and Illinois’ continued efforts to build reserves and strengthen its fiscal position.
Between 2015 and 2017, Illinois suffered eight consecutive credit rating downgrades and was ranked among the worst-managed states in the nation, with its bill backlog reaching nearly $17 billion at its peak.
During the budget impasse under former Governor Bruce Rauner, both Moody’s and S&P downgraded Illinois to just one notch above junk status in June 2017 – the lowest rating on record for any U.S. state. The downgrades were driven by prolonged political gridlock that prevented balanced budget passage for multiple years.
Moody’s cited several factors contributing to the upgrade, including Illinois’ success in rebuilding financial reserves, maintaining balanced budgets, and improving overall fiscal management. Under Pritzker’s tenure, the state has achieved seven consecutive balanced budgets, eliminated a massive backlog of unpaid bills exceeding $16 billion, and increased the rainy-day fund to $2.4 billion from just $60,000.
“The latest Moody’s upgrade reflects how Illinois continues to increase its financial standing. Our tenth credit upgrade speaks volumes to the state’s commitment to consistent fiscal discipline – even as the Trump Administration creates widespread economic uncertainty,” said Governor JB Pritzker. “With each credit upgrade, Illinois saves taxpayers millions of dollars in interest payments and further demonstrates the benefits of long-term improvements to our fiscal position.”
Despite the positive rating action, Illinois continues to face significant fiscal challenges that keep it as the lowest-rated state in the nation. The state’s unfunded pension obligations remain a critical concern, with liabilities totaling approximately $144 billion and representing only 46 cents on hand for every dollar owed.
“Illinois remains an outlier among states for exposure to unfunded pension obligations that contribute to high leverage and fixed costs,” Moody’s noted in its assessment. The rating agency emphasized that the state’s constitutional provisions protecting post-employment benefits limit operational flexibility.
