A bond rating agency has announced that Illinois’ financial rating could take a hit if lawmakers don’t extend an income tax increase scheduled to roll back in January.
Moody’s Investors Service released a statement that says allowing the tax rate to drop might force more borrowing and continued overdue bills.
The state’s income tax is set to decrease from 5 percent to 3.75 percent this winter, leaving a $1.8 billion revenue hole. State lawmakers failed to pass a tax extension before finishing their spring session last week.
The report also says it would reverse much of the financial progress made in the state with the nation’s worst credit rating. Since 2011, the state has used a $26 billion increase in revenues to address pension payments and unpaid bills.