Only a few days after news broke that New Jersey Governor Chris Christie may punt on a $1.58 billion pension payment, the GOP star and presidential hopeful incurred his state’s sixth credit downgrade in four years. Moody’s has lowered New Jersey’s rating to A1, matching downgrades by two other rating agencies and sticking it with the third-lowest rating among states. Bloomberg reports that further downgrades loom:
“The downgrade to A1 reflects the weakened financial position resulting from recurring revenue shortfalls and ongoing reliance on non-recurring resources that have deferred structural imbalances into future years,” Moody’s analyst Baye Larsen said in the report. She said the state’s outlook was negative, meaning it may face a further downgrade. […]“Recent actions from the rating agencies make it clear that long-term issues must be addressed,” Joseph Perone, a spokesman for Sidamon-Eristoff, said in a statement, citing the rising costs of public-employee pension and health benefits, and debt service. “This should serve as a clear warning and call for the Legislature to join the governor in taking on the cost of these entitlements in a real way to secure our long-term fiscal health.”
It’s hard not to sympathize with Christie. He was not the one who created this mess; he was elected in part to fix it. He won an unlikely legislative victory in 2011, forcing a Democratic legislature to swallow bitter pension reforms. His forthcoming budget is the largest in state history, includes a record $2.5 billion pension payment, and directs nine cents on every dollar of new spending to pensions, health benefits, and debt payments, as Bloomberg reports.One problem is that many more reforms are needed, and this blue legislature is neither willing to lead nor to go along with the governor’s narrative that New Jersey must make painful but necessary sacrifices. Another problem is that New Jersey already has some of the highest taxes in the country, and a Republican governor less than two years removed from a White House bid is not eager to fix revenue shortfalls by raising them even higher.It’s hard to see how New Jersey gets out of this mess. As always, it’s important to remember that those with the most to lose here are the public employees and taxpayers who were told for decades that the system they relied on and paid for was being responsibly run.