The Moody's credit rating agency has downgraded $26.8 billion in Illinois' general obligation bonds, saying the move was due to the state's weakening financial position during the year.
In lowering the bond rating to Baa1 from A3 on Thursday, Moody's Investors Service said its expectation is that the ongoing stalemate on the budget due July 1 will lead to further deterioration of the state's finances.
Fitch Ratings on Monday downgraded its rating on the state's outstanding bonds for the same reason.
The lower a state's credit rating, the tougher — and more expensive — it is to borrow money.
In its announcement, Moody's said Illinois' structural budget imbalance, accounts payable, and other obligations "are back-tracking, despite a favorable economic climate, leaving the state more vulnerable to the next economic downturn," barring swift corrective actions.