S&P Global Ratings downgraded the state’s bond rating from “A” to “A-” because of New Jersey’s severely underfunded pension system and a recent deal between Governor Christie and Democratic lawmakers to cut more than $1 billion in taxes at a time when the state lacks the revenue to cover its bills.
Although its bonds are still considered “investment grade,” New Jersey is the second worst-rated state after Illinois. Each downgrade could drive away investors and make it more difficult for New Jersey to borrow money.
Hours after S&P announced its downgrade, Senate President Stephen Sweeney told reporters that he will reintroduce legislation mandating that the state make quarterly payments into the pension system for 800,000 public workers and retirees. Christie vetoed a similar bill last year.
Sweeney, D-Gloucester, said he was confident the governor would sign the bill this time around, and he added that he will fast-track the legislation. A vote in the full Senate is expected Monday, he said.
The three top credit-rating agencies -- S&P, Fitch Ratings and Moody’s Investors Service – have downgraded New Jersey a combined 10 times under Christie, repeatedly citing the pension woes. No governor in the United States has ever amassed that many downgrades.
