Illinois, which already has the lowest credit rating in the United States, managed to drop lower Thursday.
Moody's Investors Services downgraded the state and its $27 billion general debt obligation from A3 from A2, according to Reuters. It was the second ratings agency in one week to downgrade Illinois, with a third poised to follow suit.
"Our rating now assumes the government will not take action to reduce the state's pension liabilities any time soon," Moody's said in a statement.
"The legislature's political paralysis to date shows not only the magnitude of Illinois' unfunded benefit liabilities, but also the legal and political hurdles to legislation that would make pensions more manageable long term," the statement said.
Illinois also suffered a ratings downgrade by Fitch Ratings earlier in the week. Standard & Poors may do the same, claiming the state is on a "credit precipice" after failing to resolve its public pension funding woes, Reuters reports.
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