CHICAGO (Reuters) - Illinois Governor J.B. Pritzker’s announcement on Tuesday that a higher revenue forecast will put off a controversial plan to decrease fiscal 2020 pension contributions could be a positive step for the financially shaky state, Wall Street credit rating analysts said on Wednesday.

FILE PHOTO: lllinois Governor J.B. Pritzker delivers remarks at the North America's Building Trades Unions (NABTU) 2019 legislative conference in Washington, U.S., April 9, 2019. REUTERS/Jeenah Moon/File Photo

State lawmakers were notified by Pritzker administration officials that based on a $1.5 billion revenue surge in April, the fiscal 2020 revenue forecast was boosted by $800 million, enabling the state to make the full $9.1 billion payment to its five retirement systems in the fiscal year that begins on July 1.

A fiscal 2020 budget the Democratic governor unveiled in February included a seven-year extension of Illinois’ current 50-year pension payment schedule that would have reduced the state’s contribution by more than $800 million.

The plan also included the issuance of $2 billion of pension bonds. The governor’s office said on Wednesday the March 2020 bond sale is not on tap “at this time.”

The proposal raised concerns with credit rating agencies, which rate Illinois a notch or two above junk due to its huge $133.5 billion unfunded pension liability and chronic structural budget deficits.

Carol Spain, an analyst at S&P Global Ratings, which rates Illinois BBB-minus, said the stronger revenue projections and the decision not to extend the pension amortization period “increases the likelihood of near-term credit stability.”

“However, the state still faces rising pension costs beyond fiscal 2020, and we expect that the state will continue to struggle to structurally balance its budget while making progress on its bill backlog absent any significant revenue increase or cuts,” she added.

Ted Hampton, an analyst at Moody’s Investors Service, which rates Illinois Baa3, said, “putting more money into Illinois’ pensions sooner, in our view, would prove better for the state’s credit than any form of financial engineering that reduces near-term contributions.”

Eric Kim, an analyst at Fitch Ratings, which rates Illinois BBB with a negative outlook, said that lowering or delaying payments under the current inadequate pension schedule “was going to be negative from our perspective.” Suspending the plan for at least a year “is a good step,” he added. He also welcomed news that the higher April revenue will help address a $1.6 billion deficit in the state’s current budget.

But Kim cautioned that many states are experiencing revenue volatility in the wake of major federal tax changes that took effect in 2018 and that Illinois’ situation required scrutiny.

“What is actually driving this revenue growth, and the key question here is how sustainable is it?” Kim said.

Illinois’ personal income taxes climbed by 35.5 percent last month compared with April 2018. The state legislature’s Commission on Government Forecasting and Accountability reported preliminary findings attributing the increase to “the more volatile capital gains and dividends components.”

“As a result, this significant one month over performance cannot safely be extrapolated into future underlying growth,” the report said.