Citing a "meaningful improvement in the state's balance sheet," S&P Global Ratings Monday upgraded New Jersey to A-plus from A.
The improved balance sheet reflects the state government's commitment "to rein in its comparatively large debt and pension liabilities while striving to achieve a structural budget balance longer-term," S&P said in the news release announcing the upgrade. "Coupled with the maintenance of a healthy reserve balance, we believe the state has transitioned to an operating environment that is more predictable and stable, which strengthens management's ability to address budgetary challenges as they arise."
The rating outlook is stable, S&P said, because New Jersey's overall debt, pension, and OPEB liabilities are likely to remain comparatively high for the foreseeable future, leading to high fixed-cost carrying charges.
The rating agency noted the state government's full funding of the actuarially determined contribution to state pension funding in every year since fiscal 2022, breaking a long streak of underfunding that had weighed on the state's credit quality.
"From making five consecutive full pension payments to narrowing our structural deficit to building a strong, reliable surplus to help weather economic volatility, we have made enormous strides to turn New Jersey's fiscal ship around after decades of mismanagement from both sides of the aisle," Gov. Phil Murphy said in a statement.
"This eighth upgrade in just over three years is further independent confirmation that our continued efforts to strengthen New Jersey's financial health have been a success," said New Jersey State Treasurer Elizabeth Maher Muoio, who noted the state experienced
New Jersey most recently received upgrades
S&P also raised certain bonds secured by state appropriations to A from A-minus, upgraded the New Jersey Economic Development Authority's DHS pooled financing program bonds to A-minus from BBB-plus, and raised its rating on South Jersey Port Corp.'s state moral obligation debt to BBB-plus from BBB.
The Gateway Development Commission loan from the U.S. Department of Transportation under its Railroad Rehabilitation and Improvement Financing program for the Hudson Tunnel Project was lifted to A from A-minus.
