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California now has company in the Standard & Poor's credit basement.

S&P lowered Illinois' rating to A-minus, the same as California's. But the Midwest state is heading in the opposite direction, as the ratings house added a negative outlook. On the contrary, S&P gave California a positive outlook last year and indicated the state could eventually earn an upgrade if its finances get back on track.

S&P dinged Illinois for ever-growing pension liabilities that are unfunded.

"The downgrade reflects what we view as the state's weakened pension funded ratios and lack of action on reform measures intended to improve funding levels and diminish cost pressures associated with annual contributions," said Standard & Poor's credit analyst Robin Prunty in a statement.

Moody's Investors Service dropped Illinois below California last year for similar reasons. A third agency, Fitch Ratings, still ranks California one notch below Illinois but has warned that Illinois could face a downgrade in the next six months.


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