![]() “Thanks to responsible and balanced budgets, as well as sound economic policy decisions, we continue to move our state toward financial stability,” House Speaker Emanuel “Chris” Welch, a Hillside Democrat, said in a statement. The General Assembly drew up plans to spend only about $2.8 billion of the more than $8 billion the state is receiving from Biden’s American Rescue Plan, leaving more time to decide how to use the funds, which can be used to cover certain expenses - but not to pay off debt - through 2024. The state plans to pay off a $2 billion emergency coronavirus loan it took out from the Federal Reserve in the coming year, well ahead of schedule. Republicans have decried those changes as tax hikes on businesses in the midst of their recovery from a pandemic-induced economic slowdown. The budget for the year that begins Thursday included no general tax or fee increases to bring more revenue into the state coffers, though it does rely on an estimated $655 million in anticipated new revenue from a series of tax law changes that Democrats have said amount to closing corporate loopholes. The state has unfunded liabilities totaling $141 billion across its five pension systems, and Moody’s and other analysts argue that the contributions required by law fall short of what actuaries say is necessary to ensure long-term health. In the coming year, pension contributions total $9.8 billion, nearly a quarter of the state’s operating budget. “These liabilities could exert growing pressure as the impact of federal support dissipates, barring significant revenue increases or other fiscal changes.” ![]() “Illinois still faces longer-term challenges from unusually large unfunded pension liabilities, which are routinely shortchanged under the state’s funding statute,” Moody’s said in announcing its decision. ![]() If a bond is sold before it reaches maturity, any downgrades or upgrades in the bond's rating can affect the price others are willing to pay for it.The long-term question remains whether Illinois can maintain forward progress in light of the mammoth unfunded liabilities in its pension funds and a widely acknowledged structural imbalance in its budget. It is important to monitor a bond's rating regularly. Because the financial health of an issuer can change-no matter if the issuer is a corporation or a municipality-ratings agencies can downgrade or upgrade a company's rating. You need to have a high risk tolerance to invest in high-yield bonds.
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