Financial analysts at Standard & Poor’s downgraded New Jersey’s debt rating today, flagging Gov. Chris Christie’s budget practices as something that should give pause to investors.
While noting that the state economy has been growing steadily in recent years and has several bright spots that could help in the long run, the Wall Street rating house had tough words for the Republican governor, saying he has a habit of building budgets on rosy economic forecasts.
As a result, tax collections tend to lag by hundreds of millions of dollars every year, punching holes into the state budget and forcing Christie to use stopgap fixes, the analysts aid.
"Almost five years after the official start of the economic recovery, New Jersey continues to struggle with structural imbalance and stands in stark difference to many of its peers who registered sizeable budgetary surpluses in fiscal 2013," the S&P analysts wrote in a note to investors today.
S&P downgraded New Jersey’s debt by one notch, from AA- to A+. The agency previously downgraded the state’s bond rating in 2011. Each time it goes lower, it drives up the cost of borrowing for major projects such as schools and roads.