Fitch Rates Illinois' $150MM GOs 'AA'; Outlook Negative.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned an 'AA' rating to the State of Illinois' approximately $150 million general obligation bonds (GOs), series of April 2007. The bonds, expected for bid on April 12, will be due April 1, 2008-2032 and optionally callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. Oct. 1, 2017 at par plus interest. In addition, Fitch also affirms the 'AA' rating of $20.5 billion outstanding Illinois (the state) long-term GOs. The Rating Outlook remains Negative. The state's 'AA' rating is based on the breadth and wealth of its economy, which has gained momentum, its moderate debt burden, and improving revenue performance. The Negative Rating Outlook reflects continued financial constraints, as evidenced by a large, but declining GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). deficit that has persisted for many years. The current statutory plan to address Illinois' massive unfunded and long-standing pension liability calls for the state's contribution to grow from $1.4 billion now to $3.4 billion in 2010; the increase is over 8% of the present total expenditure level. This intractable problem, including cash flow pressures, has direct credit implications. The governor's fiscal 2008 budget offers an ambitious and expansive plan to address pension under-funding, while also boosting education funding and expanding health care insurance. More recently the governor amended the plan to alleviate property taxes as well. The decisive budget proposes a new gross receipts tax A gross receipts tax, sometimes referred to as a gross excise tax, is a tax on the total gross revenues of a company, regardless of their source. It is similar to a sales tax, but it is levied on the seller of goods or services rather than the consumer. on the sale of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. by businesses to replace the state's corporate income tax and foregone fore·gone v. Past participle of forego1. adj. Having gone before; previous. Usage Note: The word foregone has recently developed a new meaning as a truncation of the phrase lottery revenue. Among other purposes, the additional revenue will also pay for $1.5 billion in increased state aid to primary and secondary schools, $1 billion in property tax relief, and expanded health care coverage for the uninsured. A new payroll assessment for certain businesses will partly subsidize costs of the expanded health care access. Meanwhile, proceeds from issuing nearly $16 billion in pension obligation bonds and from leasing the state lottery A game of chance operated by a state government. Generally a lottery offers a person the chance to win a prize in exchange for something of lesser value. Most lotteries offer a large cash prize, and the chance to win the cash prize is typically available for one dollar. would deposit $26 billion into the state's pension system and are estimated to raise the system's funded ratio to 83% from 60.5%. The pension bonds would raise the state's tax-supported debt to a projected 7.9%, from 4.6%, of 2006 estimated personal income. While the governor's budget would improve the state's ending general fund balance on a budgetary basis, the position remains deficit on a budgetary basis, although continues to be positive on a cash basis. The state legislature A state legislature may refer to a legislative branch or body of a political subdivision in a federal system. The following legislatures exist in the following political subdivisions: Although total employment is significantly below the 2000 peak, the state' economy has gradually gained momentum since it began posting year-over-year job gains in the summer of 2004. Total non-farm employment rose 1.2% in 2006 over 2005, versus the national expansion of 1.8%. February 2007 employment was 1% over 12 months ago, compared to the U.S. growth rate of 1.5%. Job growth has been strong in the Chicago region and in the service sectors (leisure, education and health, and professional and business services), as well as the financial sector. Manufacturing continues to decline. Income growth improved in 2006, at 95% of the U.S. rate. Per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. personal income in Illinois is 105% of the U.S., ranking the state 13th among the states. As the economy has improved, so have state revenue collections. Fiscal 2005 collections were 8% above 2004 and fiscal 2006 were up 5.9%, both led by strong personal and corporate income taxes. Through February 2007, fiscal 2007 state revenue growth is 5.5%, with net corporate and individual income taxes up 20% and 8.1%, respectively, while the sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. up is up an expected 3.2%. Cash balances, including the stabilization fund Stabilization fund may refer to:
Medicaid payables, a long-time problem for the state, remain high although the fiscal 2006 supplemental budget addressed this in part by appropriating from special funds to reduce the payables balance by approximately $500 million including the federal match. The Medicaid payables ended fiscal 2006 at about 59 days and are estimated to improve to 50 days by June 30, 2007. Large accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. have created a large GAAP undesignated general fund balance deficit, which equaled $2.4 billion, or 8.4% of annual general fund revenues, at the end of fiscal 2006. Although still large, well over half of the deficit reflects appropriations for the following year special education requirements, which uniquely Illinois must accrue without comparable recognition of applicable revenues. The pension bonds, issued in 2003, increased the state's tax-supported debt to a moderate level. Tax-supported debt, at $22.7 billion following this issue, equals 4.6% of 2006 estimated personal income. Excluding pension debt not used for budgetary purposes, debt equals a more modest 3% of personal income, reflecting disciplined debt issuance for capital purposes. Still, one of the state's challenges remains the funding of its pensions. As of June 30, 2006, unfunded accrued actuarial liability was $40.7 billion, resulting in a 60.5% funded ratio. While this ratio improved after the 2003 financing and the benefit reforms of 2005, partial pension funding holidays have constrained further funding improvement. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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