And then there were nine — New Jersey debt-rating downgrades, that is, since Gov. Chris Christie took office. And all for the same reason: the Garden State’s seemingly hopeless, endless public-pension crisis.
Moody’s Investors Service lowered its rating a notch on $32.2 billion worth of state bonds, following last September’s similar downgrade by Standard & Poor’s.
The agency cited Trenton’s “weak financial position and structural imbalance, primarily related to continued pension contribution shortfalls.”
New Jersey’s public-pension system is bankrupt, the state can’t afford its scheduled payments, and paying off the accumulated debt will take decades — if it’s even possible.
No surprise: It took decades of unaffordable promises by state leaders to create the crisis.
Meanwhile, that debt takes a mounting toll on New Jersey’s ability to fund basic operations — as the Legislature resists Christie’s efforts to impose serious long-term reforms.
The reforms enacted in 2011 were a good first step. But they didn’t come close to fixing the problem. And hiking taxes to make up the difference — the traditional Democratic response — is just as destructive.
A new Manhattan Institute report on California’s pension crisis underscores the problem New Jersey — and, quite possibly, New York — faces. In the Golden State, public-pension costs are rising at four times local revenue. So Californians are seeing sharp cuts in core government services at the state and local levels — even in more affluent locales. And these “crowd-outs” grow more drastic when the economy turns south.
New Jersey hasn’t fallen over the fiscal precipice yet — but the red flags keep on coming.