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