Newspaper article The Record (Bergen County, NJ)

Standard & Poor's Cuts N.J. Debt Rating

Newspaper article The Record (Bergen County, NJ)

Standard & Poor's Cuts N.J. Debt Rating

Article excerpt

The ratings agency, which had already lowered New Jersey's credit rating by one step in April, also cited "a trend of structurally unbalanced budgets."

Another Wall Street ratings agency has downgraded New Jersey's credit rating as a response to Governor Christie's decision earlier this year to cut funding for the public employee pension system.

Standard & Poor's said in an announcement released Wednesday that the lowering of New Jersey's credit rating by one step to "A" is in response to recent contributions into the pension system that are well below what actuaries say is needed to keep the system solvent.

"The downgrade reflects our view that New Jersey will face increased long-term pressures in managing its long-term liabilities and that the revenue and expenditure misalignment will grow based on reduced funding for the state's unfunded actuarial accrued liability," said Standard & Poor's credit analyst John Sugden.

The ratings agency, which had already lowered New Jersey's credit rating by one step in April, also cited "a trend of structurally unbalanced budgets."

The announcement from Standard & Poor's follows a similar ratings downgrade put out Friday afternoon by Fitch Ratings. 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.

Other problems

Christie, a Republican who has tried to make the case that his fiscal policies have rescued the state from years of mismanagement under Democratic leadership, responded to a more than $1 billion budget shortfall earlier this year by cutting nearly $900 million from the payment into the pension system. He also lowered the planned payment for the current fiscal year, which began on July 1, by $1.57 billion, citing similar budget concerns.

Both moves reversed course on the governor's prior promise to begin ramping up contributions into the pension system, which covers the retirements of roughly 770,000 current and retired workers. The bigger payments were designed to help shore up a nearly $40 billion gap between the value of the $80 billion fund and what it has promised to current and retired workers. …

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