It's looking very likely that S&P will be downgrading Illinois' credit to "Junk" status in the very near future. Not due to any sort of economic crisis, but simply prolonged, egregious financial mismanagement. Chicago is in similar shape. From what I hear from colleagues and in the press, there is simply a refusal on the part of politicians, the public, unions, etc. to face the reality of the situation.
A lot of people will suffer for this. I'm surprised we haven't been hearing more about it. I assume at some point they'll be looking for some sort of federal bailout.