BOND RATING DOWNGRADED AGAIN

This week, Illinois’ credit rating was downgraded again based primarily on the state’s continuing budget deficit.

Fitch Ratings recently downgraded Illinois, which now has the second-lowest rating in the nation after California. The downgrade comes on the heels of a Moody’s Investors Service downgrade, which tied Illinois with California for the worst-rated state in the nation.

The two downgrades bring the total number of downgrades since early 2009 to eight. Illinois has only been downgraded 17 times in its history, and almost half of those occurred during the last one-and-a-half years.

Credit downgrades serve as independent “report cards” of the state’s finances. The lower the state’s credit rating, the more it costs when the state tries to borrow money. It’s likely that these downgrades will lead to hundreds of millions of dollars in higher interest costs in the future.

Senate Republicans noted that the common theme in the downgrades reflects a lack of political will to take action on the state’s budget problems. Fitch noted that the Fiscal Year 2011 budget failed to address the state’s massive operating deficit and “relied almost exclusively on borrowing to close its sizeable budget gaps.”

The Fitch analysis also refutes the argument that the national recession is the primary cause of Illinois’ current budget deficit. Instead it points to the state’s failure to build a nest egg when the economy was robust: “Illinois entered this economic cycle with little financial flexibility to handle a downturn. It came out of the last recession relatively late and did not take actions to build its reserves or restructure its finances as its economy and the national economy grew over the five years leading into this recession.”

Despite the downgrades by Fitch Ratings and Moody’s, Standard and Poor’s has retained Illinois’ rating—also second worst in the nation—but said that the rating could be lowered if structural changes to the budget are not made soon.

OVERHAULING TELECOMMUNICATIONS ACT

Two new laws will overhaul the state’s archaic telecommunications act and put Illinois’ residents to work.

Senate Bill 107 (P.A. 96-0927) will modernize Illinois’ existing telecommunications law, which had been implemented before the prevalent use of cell phones. The law will continue to safeguard consumers by extending affordable package options to those who still use landline services, while also lifting unnecessary regulations to promote companies’ investment in wireless and broadband technology.

The measure also encourages market competition by allowing telephone companies to alter price and phone package details without approval from the Illinois Commerce Commission, which often took weeks.

Another measure, House Bill 6349 (P.A. 96-0929), puts Illinoisans to work when they need it most. The bill requires that at least 90 percent of workers hired for construction and hazardous waste clean-up on public works projects must be workers from Illinois, if the state unemployment rate is over 5 percent for two consecutive calendar months.

The measure seeks to create job opportunities for Illinoisans during tough economic times and instances of significant unemployment.

ROAD CONSTRUCTION UPDATES

The Illinois Department of Transportation has announced that pavement patching on I-39 from the intersection with I-55 to the Woodford County Line is expected to be complete June 30.

Weather permitting, work is scheduled to begin June 21 on the rehabilitation of Interstate 55 beginning at the interchange with Veterans Parkway in Normal and ending at the interchange at Lexington. This project will include 10 miles of cold milling, patching, resurfacing and pavement striping. The anticipated completion is October 10.

Motorists are advised to slow down and drive carefully through all work zones.

A reminder—as of January 1, it is illegal in Illinois for drivers to talk on their cell phones while driving through a highway construction zone or school zone.

The new law also prohibits drivers from writing, sending or reading text messages, instant messages and e-mail, as well as surfing the Web while driving.