As reported by, New Jersey’s credit rating was downgraded by a major Wall Street rating agency, whose concerns over state debt and obligations for public retirees’ benefits now mean higher costs for the state to borrow money. Standard & Poor’s moved New Jersey’s bond rating down a notch to its fourth highest level. The move ignited an immediate partisan skirmish over which party is to blame and upped the pressure for pension and health benefit changes.

“The clock is ticking away on a pension and benefit bomb that can damage the health of the finances of our state,” Governor Chris Christie said at a town-hall meeting in Union City. Democrats said Christie aggravated the situation by not putting any money into the pension fund in the current budget year, when $3 billion was due. This coming year $3.5 billion is due, though a state law says that roughly $500 million will be required.

Gov. Christie inflicted severe damage last year when he skipped the state’s pension payment,” said Assemblyman Louis Greenwald. “It was reckless and made the problem much worse. It was so short-sighted, in fact, that it wiped out all the benefits from the bipartisan pension reforms ushered into law early last year.” 

Standard & Poor’s said in its report that pension funding “remains the most significant risk to the state’s long-term credit quality.” Christie and fellow Republicans want to increase the retirement age, reduce benefits and boost employees’ contribution to the pension fund. Democratic leaders have a counterproposal that would reduce benefits and give unions input over managing pension investments.

The change is expected to have little immediate impact on state costs, as the state’s financial difficulties have been well documented and taken into account in recent borrowings. One recent bond sale was reduced in size because the rates were not meeting expectations.

Credit ratings for various state agencies dependent on appropriations from the state budget were also lowered by Standard & Poor’s. “We understand that Gov. Chris Christie has recently announced various reform initiatives that, if approved, could help begin to manage the state’s pension liability,” said the report. “We will continue to monitor this, but in our view progress on this front is likely to be gradual and we expect the state’s debt and liability profile to remain weak and continue to be a source of budget pressure.”

Standard & Poor’s said New Jersey’s pension system was 56 percent funded as of last June and that it expects the “pension funding ratio will weaken further as a result of the failure to fund” the required payment this budget year, though solid growth in investment income could offset that. The State’s long-term obligation for health benefits for retirees, which it finances on a year-by-year basis, is estimated at close to $57 billion.

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Photo of Donald C. Barbati Donald C. Barbati

Donald C. Barbati is a shareholder of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of numerous public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues…

Donald C. Barbati is a shareholder of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of numerous public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues litigated before the courts and administrative tribunals throughout the State of New Jersey. In addition, Mr. Barbati also routinely represents individuals in various types of public pension appeals, real estate transactions, and general litigation matters. He is a frequent contributor to the New Jersey Public Safety Officers Law Blog, a free legal publication designed to keep New Jersey public safety officers up-to-date and informed about legal issues pertinent to their profession. During his years of practice, Mr. Barbati has established a reputation for achieving favorable results for his clients in a cost-efficient manner.

Mr. Barbati has also handled numerous novel legal issues while representing New Jersey Public Safety Officers. Most notably, he served as lead counsel for the Appellants in the published case In re Rodriguez, 423 N.J. Super. 440 (App. Div. 2011). In that case, Mr. Barbati successfully argued on behalf of the Appellants, thereby overturning the Attorney General’s denial of counsel to two prison guards in a civil rights suit arising from an inmate assault. In the process, the Court clarified the standard to be utilized by the Attorney General in assessing whether a public employee is entitled to legal representation and mandated that reliance must be placed on up-to-date information.

Prior to becoming a practicing attorney, Mr. Barbati served as a judicial law clerk to the Honorable Linda R. Feinberg, Assignment Judge of the Superior Court of New Jersey, Mercer Vicinage. During his clerkship Mr. Barbati handled numerous complex and novel substantive and procedural issues arising from complaints in lieu of prerogative writs, orders to show cause, and motion practice. These include appeals from decisions by planning and zoning boards and local government bodies, bidding challenges under the Local Public Contract Law, Open Public Records Act requests, the taking of private property under the eminent domain statute, and election law disputes. In addition, Mr. Barbati, as a certified mediator, mediated many small claims disputes in the Special Civil Part.

Mr. Barbati received a Bachelor of Arts degree in history, magna cum laude, from Rider University in Lawrenceville, New Jersey. Upon graduating, Mr. Barbati attended Widener University School of Law in Wilmington, Delaware. In 2007, he received his juris doctorate, magna cum laude, graduating in the top five percent of his class. During law school, Mr. Barbati interned for the Honorable Joseph E. Irenas, Senior United States District Court Judge for the District of New Jersey in Camden, New Jersey, assisting on various constitutional, employment, and Third Circuit Court of Appeals litigation, including numerous civil rights, social security, and immigration cases.