Moody's Lowers New Jersey's Debt Outlook to Negative
Wall Street analysts at Moody’s Investors Service today lowered their outlook on New Jersey’s debt from stable to negative, saying the state remains hamstrung by rising costs and “a sluggish economic recovery” despite Gov. Chris Christie’s efforts.
The analysis by Moody’s warns that public workers’ retirement benefits and other costs are climbing rapidly, and that revenue is not growing fast enough to bridge the gap.
Although Moody’s gives Christie credit for taking a “proactive approach” to control pension and health benefit liabilities, the overall assessment was dire for the Republican governor at a time when his advisers are pushing for a 10 percent tax cut.
“The state will face challenges in improving its very weak liquidity position, due to the state's sluggish economic recovery, which has hindered revenue performance,” Moody’s analysts wrote in a note to investors today.
The state will have little flexibility in coming budgets because Christie and state lawmakers agreed to increase the state’s contribution to the insolvent pension and health benefits funds for public workers, the report notes. This year’s budget included a $1.7 billion payment; next year it is set to rise to $2.4 billion.