David Frum

01.28.13

What's the Matter with Illinois?

The home state of the president drops to the worst credit rating in the nation.

Illinois received its bottom-of-the-pack ranking when it fell from an “A” rating to “A-minus.” That’s the same rating as California, but California has a positive outlook. Illinois’ fragile overall financial status netted it a negative outlook, putting it behind California overall. The ratings came out now because Illinois plans to issue $500 million in bonds within days.

Exactly how much Illinois’ credit-rating slide ultimately will cost taxpayers is unknown until the demand for the state’s bonds is measured in the markets. But Rutherford estimated the state will pay $95 million more in interest than if Illinois had a AAA rating …

The culprit? The state's woefully underfunded pension obligations.