SPRINGFIELD – The credit rating agency S&P Global Ratings upgraded Illinois’ bond rating on Thursday, citing the state’s improved financial condition. It’s the second upgrade from a major credit rating agency to move the state away from the brink of “junk” status.
“The upgrade reflects our view of improved liquidity, demonstrated operational controls during the pandemic, and an improved economic condition,” S&P credit analyst Geoff Buswick said in a news release.
The upgrade moved the rating on Illinois’ general obligation bonds to BBB from BBB-, the lowest investment-grade rating available. The state’s long-term credit outlook was rated as stable.
S&P’s decision came one week after Moody’s Investors Service raised its rating to Baa2 from Baa3.
In its announcement, S&P noted that state tax revenues held up stronger than expected during the recession brought on by the pandemic as well as the receipt of federal stimulus money “to help bridge the gap to a fully functioning economy.
It also cited as a reason for the upgrade Gov. JB Pritzker’s decision during the pandemic to cut more than $700 million in spending and freezes, though not all of those were related to the state’s general revenue fund.
And it noted that the political gridlock that led to a two-year budget stalemate during former Republican Gov. Bruce Rauner’s term had dissipated.
S&P also said it now views the COVID-19 pandemic as a “social factor” affecting public health and safety, but said the risk is abating “and is not viewed as a material credit factor.”
Like Moody’s, however, S&P said Illinois still faces a number of financial pressures, including its poorly-funded public pension systems and constraints under the state constitution that prevent the state from changing pension benefits.
But S&P also did not rule out the possibility of another credit upgrade in the future if the economy continues to recover and the state continues to manage its budget responsibly.
“The state’s economic base can already support a higher rating,” S&P said. “Any upside to the state’s creditworthiness, however, remains somewhat constrained by the poorly funded pension systems and other outsize liabilities. If Illinois were to make sustainable progress toward structural balance, including meeting its pension obligations, further reducing its bill backlog, and increasing reserves, we could raise the rating.”
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MEDICAID EXPANSION: Illinois residents who have health coverage through Medicaid now have access to a broad range of services including mental health counseling, substance abuse treatment, smoking cessation and dental services.
Gov. J.B. Pritzker on Tuesday signed Senate Bill 2294, which passed unanimously out of both chambers during the spring legislative session.
“This legislation that I’m signing into law today is a product of our passionately dedicated, bipartisan, bicameral group of legislators who are part of the Medicaid legislative working group,” Pritzker said at a bill signing ceremony in suburban Chicago. “… For all the naysayers that always seem to bad-talk the state of Illinois, few other states can say that they have an annual commitment shared across both sides of the aisle to hash out how to make health care access for millions of Illinoisans who rely on Medicaid even better.”
Among many provisions, the bill provides that people covered under Medicaid will continue to be eligible throughout the COVID-19 public health emergency and for up to 12 months after the emergency expires.
It also calls on the Department of Healthcare and Family Services to establish a program for implementation of certified community behavioral health clinics by Jan. 1, 2022, and to develop a “comprehensive behavioral health strategy” that is to be submitted to the governor and General Assembly by July 1, 2022.
Other provisions include recognizing veteran support specialists as mental health professionals under the state’s Medicaid plan; coverage of both individual and group tobacco cessation programs; requiring in-patient treatment for anyone experiencing an opioid overdose or withdrawal if it’s determined to be medically necessary; coverage of kidney transplant medications regardless of a patient’s U.S. residency status; and providing a 10 percent increase, through March 31, 2022, in reimbursement rates for supportive living facilities, to be paid for with federal funds from the American Rescue Plan Act.
House Majority Leader Greg Harris, a Chicago Democrat and member of the Medicaid working group, said this year’s bill is aimed at addressing many of the health care disparities that have existed in Illinois for years but which were exacerbated by the COVID-19 pandemic.
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BLOOD SHORTAGE: Gov. Pritzker’s July 6 bill signing took place at Advocate Good Samaritan Hospital in Downers Grove, a southwest suburb of Chicago, where health care officials were also conducting a blood drive to address a critical shortage that’s being experienced throughout the state and the country.
Bill Rhoades, chief medical officer at the hospital, said blood usage nationwide has risen about 10 percent recently, due largely to increased visits to emergency rooms.
Joy Squier, regional communications officer for the American Red Cross in Illinois, said the shortage is especially critical as the nation heads into the peak of summer activity.
“While summer is traditionally a time when blood donations do decline, this year is particularly challenging as many Americans receive their vaccinations, resume summer activities, and after more than a year of limited interactions, are doing what’s fun and what we all want to do,” she said. “But it’s leading to lower turnout.”
She said people can schedule an appointment to donate at a blood bank in their area by visiting the website RedCrossBlood.org, or by calling 1-800-RED CROSS (1-800-733-2767).
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REVENUES INCREASE: Revenues flowing into state coffers surged in the fiscal year that ended June 30, spurred largely by an influx of federal funds, the delayed deadline for filing income tax returns last year and an economic recovery that boosted income and sales tax collections beyond what had been estimated.
A report from the Commission on Government Forecasting and Accountability, a legislative agency that monitors the budget and state revenues, showed base receipts to the General Revenue Fund jumped nearly $6.8 billion, or 17.8 percent, during the fiscal year, fueled by big increases in personal and corporate income taxes and retail sales taxes.
That growth does not include money the state borrowed from the Federal Reserve last year or any of the money the state routinely borrows on a short-term basis from other state funds.
Combined net income tax receipts, both individual and corporate, grew by more than $5.5 billion over the previous year, to a total of just over $26 billion. That was more than $1 billion more than CGFA had estimated as recently as May, and it was over $1.7 billion more than the Governor’s Office of Management and Budget had estimated.
Part of that growth, about $1.3 billion, was the result of the 2020 tax filing deadline being pushed back to July due to the pandemic, but the rest was the result of economic growth as life gradually started returning to what the report called “post-COVID normalcy.”
Sales tax receipts also grew by $1.1 billion as consumer demand, boosted by federal stimulus payments as well as an improved job market, helped lift retail spending. That was $179 million more than CGFA had forecast and $250 million more than GOMB’s estimate.
All other sources of revenue, totaling about $3.1 billion, came in lower than the previous year and below what forecasters had expected.
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ENERGY EQUITY: The language in a comprehensive energy bill aimed at moving Illinois to a carbon-free future has undergone a multitude of revisions, yet the foundation of equity within the bill has remained mostly untouched throughout the process.
It’s still unclear if, or when, a finalized version of the energy bill will be reached, but many equity advocates are cautiously optimistic that a compromise will be made before the end of the calendar year, while businesses groups are calling on the governor to slow the process down.
Rep. Kam Buckner, a Chicago Democrat and chair of the House Black Caucus, is one of four other caucus members involved in the energy negotiations.
Buckner said the pandemic has highlighted the disparities that Black, indigenous and people of color, or BIPOC, communities face considering the disproportionate deaths and joblessness related to COVID-19.
The main focus of the equity provisions that are being considered include creating programs to promote economic opportunity and job growth for communities that have historically been left behind when it comes to the skilled labor industry, Pierce said.
The topic of prevailing wages continues to be a sticking point between labor unions and equity advocates as an agreement on how this will be addressed in the omnibus energy bill has yet to be met.
Delmar Gillus, chief operating officer of Chicago-based Elevate, is one of the lead negotiators on the equity portion of a potential energy bill.
While language in the latest draft of the comprehensive energy bill is subject to change, equity advocates said they believe for the most part that the equity provisions will go mostly untouched.
It is the intention of equity advocates to ensure the creation of climate workforce hubs, where nonprofit organizations are selected to participate in intermediary job training programs in the renewable energy industry. These workforce hubs would help potential workers not only access good jobs, but receive the training, education, transportation, supplies and proper equipment necessary to achieve this.
Efforts to increase and diversify investment for contractors and ownership opportunities for BIPOC communities can be seen through contractor incubators and accelerator programs.
Demographic data will be collected across all of the programs within the bill which will allow for policymakers to assess how the programs are working. If the intended goals and targets are not being met, Gillus said, then they will work on adding more definitive measures.
Equity advocates also want annual reporting from companies to ensure that their renewable energy credit proposals are consistent.
There could also be a dedicated block of incentives, or renewable energy credits, specifically for equity eligible companies, which primarily include BIPOC businesses and persons.
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ENERGY BILL PUSHBACK: The equity provisions, renewable energy investments, nuclear subsidies and low-income assistance programs, among other provisions in a massive energy bill being considered in Illinois are largely funded through added charges to ratepayer bills. Cost breakdowns in some of the past public bill language show added costs of $3-4 monthly for the average residential ratepayer.
But a coalition of business groups and labor unions that are involved with maintenance at coal plants held a news conference last week questioning the transparency of ongoing energy negotiations and how extensive the impact will be on businesses. Illinois Manufacturers’ Association President and CEO Mark Denzler said businesses fear there may be a cost shift in future drafts of the bill, charging businesses $12 more monthly, with industrial charges increasing possibly over $1,900 monthly.
“Despite repeated requests, the governor’s office has failed to provide rate cost estimates, studies on reliability, or the impact on job loss from companies who will be asked to pay significantly higher electric bills,” Denzler said at a news conference.
In a statement, Jordan Abudayyeh, a spokesperson for Pritzker, cited Site Selection magazine’s recent ranking of Illinois as the top-ranked state in the nation for sustainability, based on a number of environmental factors.
Site Selection magazine publishes “information for expansion planning decision-makers,” according to its website, and Abudayyeh said the top ranking is “an important selling point to potential businesses looking to put roots down in a state that demonstrates its commitment to the environment and provides them opportunities to contribute to a clean energy future.”
“Bipartisan working groups have met dozens of times over the last year and convened key stakeholders to negotiate the various proposals made in the current draft of the energy bill,” Abudayyeh said. “The Governor has been clear that any energy legislation must address climate change by making meaningful progress toward moving Illinois to a renewable energy future while also protecting consumers, particularly low income consumers.”