Illinois received its second credit upgrade in a week Tuesday when S&P Global Ratings bumped the state’s general obligation bond rating. 

The increase brings the state’s rating to an A with a stable outlook, the state’s highest S&P rating in more than a decade. The increase is Illinois’ fifth from the agency in the past decade but still leaves Illinois with the lowest rating among the states.  

The agency also raised Illinois’ moral obligation-supported debt to BBB, the Build Illinois senior- and subordinate-lien sales tax bonds to A+, and the Metropolitan Pier and Exposition Authority’s (MPEA) expansion project bonds to A+. 

This is the state’s 12th credit upgrade across the three major rating agencies since 2021.  

Moody’s upgraded the state’s general obligation bonds to A1 last week, Illinois’ highest Moody’s rating since 2011.  

“Achieving two back-to-back credit upgrades is a powerful confirmation that Illinois is building financial progress to last,” said Gov. JB Pritzker in a statement. “Working alongside the General Assembly, we have transformed Illinois from a state defined by fiscal instability into one earning recognition for responsible fiscal management. Even as the Trump Administration creates uncertainty and new challenges for states, we are strengthening our reserves, confronting our pension obligations and putting Illinois on a path toward long-term financial security.” 

According to S&P’s report, the rating increase is due to progress on several factors since the agency last upgraded Illinois’ credit in January 2023, including “the state’s record of capable fiscal management evident in consecutive balanced budgets and intrayear actions to counter imbalances, and the ongoing build-up of operating reserves and liquidity sufficient to offer adequate protection against an economic downturn.”  

The rating could decrease if economic or revenue performance is weaker than projected or if the state fails to address potential budget pressures, according to the report.  

Illinois is expected to continue to face tight budget years, especially as more provisions of H.R. 1 go into effect, drastically cutting federal support for some programs.  

Due to its error rate, Illinois could have to pay $550 million annually in Supplemental Nutrition Assistance Program benefits, according to a Civic Federation report. The state has taken steps to lower the error rate.  

Read more: Illinois could have to pay $550 million in SNAP benefits if error rate is not lowered, Civic Federation report finds 

The state could also lose billions in Medicaid funding. The governor has said the state would not be able to make up all of the federal funding it loses.  

The state legislature passed several new revenue streams this year, including taxes on digital advertising, prediction markets, digital assets like cryptocurrency, social media and fantasy sports. Many of the revenue streams are expected to be challenged in the courts but, if found legal, could prove essential to balancing future budgets.  

New revenue streams could help the state receive another credit upgrade, according to the S&P report, if they help lower the state’s pension liability. The report says further improving the state’s financial resilience could also lead to another credit upgrade.