N.J. Bond Rating Downgraded After Fuel Tax Hike
The deal between Republican Gov. Chris Christie and the leaders of the Democratic-controlled Legislature will not only raise the price of diesel by 27 cents per gallon and gas by 23 cents per gallon, but reduce sales taxes and retirees’ taxes, phase out the state’s estate tax and raise its Earned Income Tax Credit.
During Christie’s nearly seven years in office, the three leading credit-rating agencies — S&P, Fitch Ratings and Moody’s Investors Service — have downgraded New Jersey’s bonds 10 times among them, the most for any governorship.
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On Nov. 9, Moody’s had assigned an A3 grade to New Jersey’s $1.4 billion appropriation bonds with a negative outlook.
In August, Fitch Ratings said it was "cautious" on the state's ability to meet its revenue forecasts.
According to Bloomberg, New Jersey’s pension system was the nation’s poorest-funded in 2015 with unfunded liabilities of $135.7 billion.
“Additional risks to the rating include the possibility of significantly below-budgeted revenue growth in fiscal 2017 … and increasing revenue loss in later years as a result of the recent transportation trust fund tax cuts,” S&P analysts wrote.
New Jersey Democratic lawmakers reacted to the downgrade by blasting the tax deal.
“One of the many reasons why I voted against the gas tax hike [was that] it put the state behind a fiscal eight ball to give a huge tax break to the 1% most wealthy [people] in New Jersey,” Sen. Ray Lesniak wrote in an e-mail.
Assemblyman John Wisniewski, who announced Nov. 15 that he’s running to succeed the term-limited Christie, saw the bad news coming.
“When I spoke on the floor of the Assembly against the gas tax legislation that included a $12 billion revenue giveaway, I predicted that it would result in a 10th downgrade and here it is,” Wisniewski told Transport Topics. “We gave away $12 billion in that vote that we didn’t have. It will now cost our state additional debt service costs, further draining our already meager resources.
"It’s not just an issue that affects the state of New Jersey. The state’s bond rating translates into bond ratings for countless municipalities, and it makes the cost of borrowing more expensive. We made New Jersey a more expensive place to do business.”
Wisniewski followed with shots at Christie and the legislative leadership.
“The administration of Chris Christie has taken us to the precipice of financial ruin through improvident decisions and bad management,” Wisniewski said. “On too many occasions, the Legislature has enabled the governor on bad policy choices under the guise of saying, ‘What else are we going to do?’ We cannot afford to have that continue in New Jersey.”
Christie’s spokesman didn’t return a request for comment.
