New Jersey downgraded again: Christie “miracle” debunked
New Jersey downgraded again
Yesterday Fitch joined Moody’s and S&P in downgrading the state of New Jersey to AA-, the fourth lowest investment-grade rating. This places New Jersey in the lowest 10% of states in terms credit quality and deflates the story of Governor Chris Christie’s repair of the state’s unfunded pension liabilities. From Bloomberg:
A bill putting more of the pension and health-care burden on employees, signed by GovernorÂ Chris Christie in June, wonâ€™t prevent the need for increased state contributions, Fitch said yesterday in a report. Other negatives were a weak economic recovery, persistent deficits and high debt, the company said.
Christie, a 48-year-old Republican, signed a $29.7 billion budget in June in which he vetoed about $1 billion in spending added by Democrats who control both the state Senate and the Assembly. The spending included a pension payment of about $480 million, below the $3 billion recommended by actuaries. The state hasnâ€™t made full payments into its pension system for most of the past decade.
My beef with with Governor Christie was that he did more blustering about the state pension fund than repairing. When the legislature agreed to changes proposed by the governor, his team trumpeted savings of $120 billion for the pension fund and stability for the state employees. But Fitch says that budgetary matters in New Jersey are still stressed. Here is Governor Christie on Meet the Press claiming other administrations did not make payments into the pension fund:
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