For the 11th time in recent years, Moody’s Investor Services has downgraded the State’s credit rating by one level from A2 to A3. The continued plummeting rating, albeit several levels about junk status, makes New Jersey’s rating one of the worst in the nation.
The agency attributed the downgrade to the continued significant underfunding of the State’s pension system and tax cuts that the State enacted as part of the Transportation Trust Fund deal. The agency also pointed to the Garden State’s overly optimistic growth targets it uses in balancing the budget.
According to Moody’s, “the downgrade is based on the state’s weak budgetary condition and liquidity position, structural imbalance due to large pension contribution shortfalls, a moderately growing economy, and high debt position.”
Shortly after the downgrade was announced, Willem Rijksen, a spokesman for the state Treasury Department, said in a statement to Politico Pro that “this rating action confirms what the Governor has been saying since 2009; the pension system must be reformed or it will fail and continue to damage the entire state budget.”