Fitch downgrades NJ’s credit rating once again, citing pension shortfalls

SEPTEMBER 5, 2014, 5:12 PM LAST UPDATED: SATURDAY, SEPTEMBER 6, 2014, 12:16 AM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD

New Jersey’s credit rating has been cut in Wall Street’s first official reaction to the move by Governor Christie to scale back legally mandated payments to New Jersey’s pension fund, a move he made to balance the state budget.

Fitch Ratings announced Friday afternoon that it lowered the state’s credit rating one step to A, citing a “repudiation” of the pledged pension payments.

The downgrade announcement also cited “the absence of long-term, fiscally sustainable solutions” to close recent budget gaps, “overly optimistic revenue forecasts” and a state economy that “continues to lag that of the nation.”

The ratings action comes as public employee unions are challenging the pension payment reductions — which total $2.4 billion over two fiscal years — in state Superior Court. It also puts New Jersey’s credit rating in a tie with California’s, and above only Illinois among U.S. states.

The downgrade is the second this year from Fitch, which had already lowered the credit rating to A+ after the Christie administration announced in April that tax collections had fallen $807 million short of projections.

Two other major ratings agencies, Moody’s Investors Service and Standard & Poor’s, also lowered New Jersey’s credit rating around the same time.

The credit rating is an important factor in determining how cheap and easy it is to borrow money for capital projects such as schools and bridges that cannot be funded in one budget year.

The latest downgrade is also a blow for Christie, a Republican who has tried to make the case that his fiscal policies and reforms have rescued the state from years of mismanagement under Democratic leadership. And though the state’s unemployment rate has improved in recent months, the loss of roughly 5,000 jobs from the closure of two Atlantic City casinos earlier this week signals that more bad economic news could be coming.

– See more at: https://www.northjersey.com/news/fitch-downgrades-nj-s-credit-rating-once-again-citing-pension-shortfalls-1.1082031#sthash.9mSK3Y9w.dpuf

Another ratings agency drops New Jersey’s credit outlook to ‘negative’

MARCH 21, 2014, 3:32 PM LAST UPDATED: FRIDAY, MARCH 21, 2014, 4:40 PM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD

Another Wall Street ratings agency is warning investors about the credit outlook for New Jersey, citing the state’s slow recovery from recession and a state budget that remains structurally imbalanced.

Fitch Ratings on Friday maintained New Jersey’s “AA-” credit rating, but lowered the state’s credit outlook from “stable” to “negative.” The action follows a similar warning issued in December by Moody’s Investors Service, which also affirmed the state’s credit rating but changed the outlook from “stable” to “negative.”

Standard & Poor’s, another Wall Street rating agency, has held a negative outlook for New Jersey since September 2012

Fitch attributed its change in New Jersey’s credit outlook to both state economic conditions and issues with the state budget.

“The state’s economic performance has lagged the nation in recovery from the recent recession, with improvement in 2013 trailing off at the close of the year,” Fitch said Friday.

“Minimal cash balances have been maintained in recent years, providing limited flexibility to absorb unforeseen needs or revenue under-performance from overly optimistic forecasting,” Fitch said.

But the ratings agency cited as positives New Jersey’s wealthy population and Governor Christie’s strong executive powers, as well as the state’s “consistent history” of making spending reductions when necessary. Recent improvement in New Jersey’s unemployment rate was also noted.

– See more at: https://www.northjersey.com/news/another-ratings-agency-drops-new-jersey-s-credit-outlook-to-negative-1.748156#sthash.29qP7Tn9.dpuf