New Jersey’s credit rating was cut on Monday, affecting $37 billion of debt, the 11th time Wall Street has downgraded the state’s bonds since Governor Chris Christie took office in January 2010.
Persistent underfunding of the state’s public pension system and weak budgetary position contributed to the rating cut. So did the $1.1 billion of annual revenues the state will lose by 2021 because of sales and estate tax cuts passed last year in conjunction with a gasoline tax hike, Moody’s Investors Service said.
Christie, once a Republican presidential candidate, will leave office at the end of the year when his second term expires.
His fiscal 2018 budget proposal last month included a $2.5 billion contribution to the state’s retirement system for public employees, a $647 million increase from this year.
Moody’s said the bigger contributions under Christie were still not meeting actuarial recommendations and unfunded liabilities were mounting.
“This rating action confirms what the Governor has been saying since 2009,” said Willem Rijksen, spokesman for the New Jersey Department of the Treasury, in a statement. “The pension system must be reformed or it will fail and continue to damage the entire state budget.”
Christie and the Democrats who control the legislature passed bi-partisan reforms in 2011. Christie has since said more changes are needed to halt ballooning costs, but Democrats soured on Christie’s suggestions after he failed to fund the system the way he had agreed to under the prior reforms.
New Jersey’s downgrade history under Christie:
2/9/11 S&P Downgrade: AA- from AA
4/27/11 Moody’s Downgrade: AA3 from AA2
8/18/11 Fitch Downgrade: AA- from AA
4/9/14 S&P Downgrade: A+ from AA-
5/1/14 Fitch Downgrade: A+ from AA-
5/14/14 Moody’s Downgrade: A1 from AA3
9/5/14 Fitch Downgrade: A from A+
9/10/14: S&P Downgrade: A from A+
4/16/15: Moody’s Downgrade: A2 from A1
11/14/16: S&P Downgrade: A- from A
3/27/17: Moody’s Downgrade: A3 from A2