Origanalist
03-21-2014, 07:00 PM
TRENTON — A major credit-rating agency on Wall Street lowered its outlook on New Jersey's debt from stable to negative today, citing a perfect storm of rising debt, ballooning costs, questionable budgeting practices by Gov. Chris Christie and an economic recovery that has lagged the rest of the country in recent years.
In a report to investors, Fitch analysts also panned Christie's new $34.4 billion budget because, like previous ones, it "relies on one-time measures" instead of stable funding sources and includes only a small cushion of cash reserves, $301 million, to absorb the shock of any unexpected costs.
Fitch is the first credit-rating agency to weigh in on the Republican governor's new budget proposal, which he unveiled last month and which the Democratic-controlled Legislature has until July 1 to modify and approve.
"Although New Jersey has a history of taking steps necessary to maintain budget balance, the state's ongoing reliance on one-time budget solutions to achieve and maintain balance and its insufficient annual pension contributions are evidence of a significant structural imbalance, in Fitch's view," the analysts wrote.
"Further, the state's narrow fund balance position provides little budgetary flexibility. The governor has strong powers to implement expenditure reductions to balance the budget, and Fitch expects those powers to be exercised as necessary, but options have become more limited as its fixed cost burden increases."
In December, another agency, Moody's Investors Service, also lowered its New Jersey debt outlook to negative for many of the same reasons.
continued...http://www.nj.com/politics/index.ssf/2014/03/fitch_lowers_nj_debt_outlook_to_negative.html#inca rt_river_default
In a report to investors, Fitch analysts also panned Christie's new $34.4 billion budget because, like previous ones, it "relies on one-time measures" instead of stable funding sources and includes only a small cushion of cash reserves, $301 million, to absorb the shock of any unexpected costs.
Fitch is the first credit-rating agency to weigh in on the Republican governor's new budget proposal, which he unveiled last month and which the Democratic-controlled Legislature has until July 1 to modify and approve.
"Although New Jersey has a history of taking steps necessary to maintain budget balance, the state's ongoing reliance on one-time budget solutions to achieve and maintain balance and its insufficient annual pension contributions are evidence of a significant structural imbalance, in Fitch's view," the analysts wrote.
"Further, the state's narrow fund balance position provides little budgetary flexibility. The governor has strong powers to implement expenditure reductions to balance the budget, and Fitch expects those powers to be exercised as necessary, but options have become more limited as its fixed cost burden increases."
In December, another agency, Moody's Investors Service, also lowered its New Jersey debt outlook to negative for many of the same reasons.
continued...http://www.nj.com/politics/index.ssf/2014/03/fitch_lowers_nj_debt_outlook_to_negative.html#inca rt_river_default