The 11th New Jersey credit downgrade under Gov. Chris Christie led state lawmakers to question State Treasurer Ford Scudder about possible higher borrowing expenses.
Scudder appeared Wednesday at a hearing of the Assembly Budget Committee about the financial consequences of the state’s deteriorating ratings.
Moody’s Investors Service dropped New Jersey's general obligation bonds one notch to A3 from A2 on March 27 citing rising pension liabilities marking the state's 11th downgrade since Christie took office in 2010. S&P Global Ratings lowered the Garden State one notch in November to A-minus.
“Of the downgrades themselves, I don’t see any particular impact,” said Scudder during the hearing. “Investors are looking at the state of the state budget as a whole, its trajectory.”
Assemblyman John Burzichelli, D-Gloucester, questioned the Christie administration’s apparent lack of concern about the series of downgrades. Scudder has pressed since the Moody’s downgrade for lawmakers to approve Christie’s proposed plan to use state lottery revenues to the pension system for a $13 billion infusion that he says would increase the state’s pension funded ratio from 49% to 64%.
“This record 11th credit downgrade has many of us concerned about how it will affect the state’s expenses in relation to borrowing money,” said Burzichelli. “Compounding these worries is the fact that the neither the Governor nor the Treasurer have been able to clarify how the Hail Mary plan to use the lottery to fund the pension system would be carried out.”
Willem Rijksen, a spokesman for the New Jersey Department of Treasury, said Thursday that the rating downgrades under Christie have occurred due to sins of past administrations, noting that not once from 1997 to 2010 did the state make its normal pension cost contribution. Rijksen said the lottery transfer plan is the latest initiative from Christie to focus on enhancing the pension system and he hopes lawmakers support the measure before the close of the fiscal year on June 30.
