Christie’s Jersey Downgraded Again
Fitch has downgraded New Jersey’s bond rating for the second time this year citing the state’s poor economic performance and the governor’s decision to fill a budget gap by cutting $2.4 billion from the pension fund.
Fitch said Christie’s decision to cut the pension payments this year marked a “repudiation” of a bipartisan plan he signed to fix the beleaguered retirement system for public workers, which is underfunded by nearly $40 billion, according to state estimates.
Instead of pumping bigger cash infusions every year into workers’ retirement accounts to save them from collapse — as Christie and lawmakers agreed to do in his first term — New Jersey is now stepping away from its plan, Fitch said.
“Following significant revenue underperformance, the state relied upon the repudiation of its statutory contribution requirements to the pension systems to return to budgetary balance, exacerbating a key credit weakness,” the Fitch analysts wrote in a note to investors, lowering their rating on the state’s debt from A+ to A.
Fitch previously downgraded New Jersey by one step in May, while Christie was negotiating the new $32.5 billion budget with the Democrats who control the Legislature, which took effect July 1. Today’s downgrade means the Wall Street analysts did not like the finished product, calling it a return to one-shot budget Band-Aids and “extremely narrow financial reserves.”[su_csky_ad]