New Jersey’s outstanding general obligation debt of roughly $2.4 billion was downgraded Thursday by Fitch Ratings, which said the state’s outlook remains negative.The downgrade to A from AA- was driven partly by Monday’s announcement by Gov. Chris Christie’s administration that the state faces a tax revenue shortfall of more than $800 million for the current fiscal year and the expected “one-time measures” that are likely to be used to close the gap.
Also considered by Fitch was the state’s “ongoing budget strain created by overly optimistic revenue forecasts” and a number of “long-term spending pressures.”
As for the negative outlook, Fitch notes New Jersey’s consistently “lagging economic performance” and the increased difficulty expected in passing a budget for Fiscal Year 2015 with revenues well off from their projections.
“Fitch believes these challenges are likely to persist over the next several fiscal years,” the report concluded.
Fitch’s downgrade follows another downgrade last month by Standard & Poor’s and a Moody’s report this week that described the shortfall as a “credit negative development.”
In a news conference Tuesday, Christie said he had not made any decisions regarding what may or may not be cut from the budget.
“I’m going to use every tool at my disposal to get a balanced budget,” Christie said.
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