New Jersey’s bond rating was downgraded Friday, its second downgrade this year and the seventh since Gov. Chris Christie (R) took office, a state record.
Fitch Ratings, which issued the latest downgrade, said the state’s decision to cut pensions to make up for underperforming revenue was one reason for the new rating. This one-time, short-term solution showed “the fiscal pressure the state faces,” the report said.
“New Jersey’s economic performance continues to lag behind that of the nation, and a multitude of long-term spending demands are expected to prolong the achievement of sound financial operations,” the report said.
Fitch noted that New Jersey has high levels of debt for a U.S. state, and large commitments to fund school construction, environmental protection and transportation.
New Jersey’s rating was last downgraded by Fitch in May, by Standard & Poor’s in April and by Moody’s in December.
Christie announced that New Jersey was facing an $807 million budget shortfall in April and had to make cuts. The state’s budget was overly optimistic following an influx of income tax revenue from residents cashing in stock in 2012 to pay a lower tax rate before George W. Bush-era tax cuts were set to expire in 2013. Without that anomaly in this year’s tax filings, the state’s income tax revenue was $700 million below projections.
The downgrade came just after Revel, a $2.4 billion Atlantic City casino Christie called a “game changer” when it opened in 2012, and Showboat, an older neighboring casino, closed their doors. The shuttered casinos mean a loss of about 5,000 jobs for the city.