Fitch Ratings revised New Jersey's credit outlook to stable from negative saying that "the state's near-term budget risks have abated."
Fitch also affirmed its A rating of New Jersey general obligation bonds, Fitch's second-lowest rating for a state government.
Fitch analysts Marcy Block and Karen Krop said in their Aug. 18 report that the state's $33.8 billion 2016 fiscal budget "is based on a more realistic revenue forecast than in the past" and is in line with projected revenue growth.
However, Fitch emphasized that "a multitude of factors leave the state's credit quality well below most of its peers for the foreseeable future including spending pressures, structural budget imbalance, underfunding of liabilities and weak liquidity.
The revised outlook took into account a June New Jersey Supreme Court decision that sided with Gov. Chris Christie in his 2015 budget veto of the full actuarially based $1.57 billion pension contribution. Block and Krop noted that the court decision would help the New Jersey's budget challenges in the short-term, but that it leaves the state "more exposed to future underfunding" of its pension systems.
The action came ahead of a $2.234 billion issuance expected later this month from the New Jersey Economic Development Authority, which Fitch rated A-minus.
New Jersey is rated A by Standard & Poor's and A2 by Moody's Investors Service. Since Gov. Christie took office in 2010 there have been nine credit downgrades.
