The Bond Houses Might Be Watching the Wrong Actors

I found this chart in COGFA's 2015 Capital Plan Analysis: 

The chart compares the bond ratings among the ten states that have the highest net tax supported debt in the U.S. As you can see, Illinois has the worst rating. This isn't any kind of news flash, but it makes for an interesting visualization. And it's most decidedly not good!

The analysis includes the following quote from Standard and Poors: 

After the legislature passed comprehensive pension reform legislation, Standard & Poor's took the unusual step of assigning a  developing outlook to Illinois' general obligation bonds in December 2013…(T)he developing outlook was a first; it reflects our assessment of the magnitude and scope of issues facing Illinois. We believe the final outcome of legislative deliberation on the budget and judicial deliberation on the pension reform will cement the state's credit direction and could have a profound effect on its budgetary performance and liquidity.  A developing outlook indicates that we could raise, lower, or affirm the rating during our two-year outlook horizon. We believe Illinois' ability to affect change to revenues and spending programs is well-established, so its credit direction will largely hinge on the willingness of policy makers to decisively address chronic budget issues. The outlook suggests that we think there could be progress on this front. (emphasis mine)

This analysis was written prior to the Kaverva decision and its possible implications for an eventual Illinois Supreme Court ruling concerning the constitutionality of the pension reform law. The bond houses were certainly keeping an eye on the legislators. Unfortunately, it may be the judges that throw a wrench into the budgetary reforms by limiting options for reigning-in health insurance and pension costs.   

Nothing comes easy in Illinois politics and government.