Credit Rating Agency Fitch Downgrades NJ, Citing Unfunded Pension, Benefit Liabilities
As reported by nj.com, the credit rating agency Fitch has lowered New Jersey’s general bonds, citing unfunded pension and employee benefit liabilities. The agency wrote that making an increased pension payment, which Governor Chris Christie has said he will do, will “conflict with other long term challenges, such as property tax relief, school funding, and infrastructure needs.”
“The state’s budget remains structurally imbalanced inclusive of unfunded pension contributions,” the agency said in the downgrade announcement. “Reserve balances are expected to remain narrow, offering limited flexibility to absorb unforeseen needs.” Fitch dropped the state’s rating from “AA” to “AA-.”
Christie said last week Treasurer Andrew Sidamon-Eristoff and Chief of Staff Richard Bagger had traveled to New York to meet with some of the credit rating agencies and try to persuade them to increase the state’s rating in the wake of passage of pension and health benefit overhauls. “It was received very well by the agencies,” Christie said.
When the state’s rating was downgraded in February by Standard & Poor, Christie blamed Democrats in the Legislature for not passing the public employee benefit overhaul he had proposed. The package has since been passed, but in a different form then he initially proposed.
“The sky started to fall in today,” Christie said of the change in credit rating. He added, “You’ve already seen this morning what the Legislature’s inaction has cost the State of New Jersey.”
