| NEW YORK, March 27
NEW YORK, March 27 New Jersey's credit rating
was cut on Monday, affecting $37 billion of debt, the 11th time
Wall Street has downgraded the state's bonds since Governor
Chris Christie took office in January 2010.
Persistent underfunding of the state's public pension system
and weak budgetary position contributed to the rating cut. So
did the $1.1 billion of annual revenues the state will lose by
2021 because of sales and estate tax cuts passed last year in
conjunction with a gasoline tax hike, Moody's Investors Service
Christie, once a Republican presidential candidate, will
leave office at the end of the year when his second term
His fiscal 2018 budget proposal last month included a $2.5
billion contribution to the state's retirement system for public
employees, a $647 million increase from this year.
Moody's said the bigger contributions under Christie were
still not meeting actuarial recommendations and unfunded
liabilities were mounting.
"This rating action confirms what the Governor has been
saying since 2009," said Willem Rijksen, spokesman for the New
Jersey Department of the Treasury, in a statement. "The pension
system must be reformed or it will fail and continue to damage
the entire state budget."
Christie and the Democrats who control the legislature
passed bi-partisan reforms in 2011. Christie has since said more
changes are needed to halt ballooning costs, but Democrats
soured on Christie's suggestions after he failed to fund the
system the way he had agreed to under the prior reforms.
Christie signed a 23 cent gas tax hike in October, the first
such increase since 1988, to help raise more money for road,
bridge and transit projects. He only agreed after striking a
deal with Democrats to trim other taxes.
Moody's cut its rating on the state's general obligation
bonds one notch to A3, while its outlook was revised to stable.
Most of the state's debt, however, is appropriation backed,
meaning lawmakers must set aside funds for debt service payments
every year. Those various bonds were also downgraded one notch
to either Baa1 or Baa2, putting them in the lowest investment
grade category of triple-B.
(Reporting by Hilary Russ; Editing by David Gregorio)