For the second time in less than a month, the Garden State’s credit rating was upgraded.
The boost comes from S&P Global Ratings, which raised its rating on New Jersey’s general obligation bonds to A- from BBB+ with a stable outlook. It is the first S&P upgrade for New Jersey since 2005.
It follows last month’s decision by Moody’s Investor Services to move New Jersey’s credit rating from A3 to A2. That was the first overall upgrade the state had received since 2005, and the first from Moody’s in more than 45 years.
S&P also raised its long-term and underlying ratings to BBB+ from BBB on various bonds secured by annual appropriations from the state.
S&P acknowledged the state’s “material improvement in the structural deficit and near term liquidity, with recent surplus revenues being used to promote what we view as longer-term financial stability and an improved commitment to pre-funding liabilities.”
Gov. Phil Murphy touted his administration’s efforts to build New Jersey’s credit rating back up after a long stretch of downgrades.
“S&P’s decision affirms that the path we chose four years ago is indeed the wise one,” Murphy said. “We are turning the page on decades of downgrades and doing what others had only talked about for years — delivering on our commitment to fully fund the pension system, saving for a rainy day fun, and paying down the debt — proving that investing in New Jersey and its people can go hand-in-hand with fiscal responsibility.”
The ratings announcements come on the heels of Murphy’s record-high $49 billion budget, which was introduced last month, and includes a new property tax relief program and satisfies pension payment obligations. Murphy has promised to not raise taxes, especially as the state moves forward economically beyond COVID.
Recently, the Garden State has been flush with cash due to stronger than expected tax revenues and billions of federal dollars from COVID-relief funds.
“This is not only welcome news for the state and our taxpayers, it reaffirms that the steps we have been taking, up to and including the Governor’s newly proposed budget, are the right ones,” said Treasurer Elizabeth Maher Muoio. “In reaching this decision, S&P noted our efforts to reduce debt by roughly 10%, along with our prudent revenue estimates that will better position us to weather any future economic slowdowns or downturns.”
S&P noted that credit pressures do remain, including the state’s previous history of underfunding pensions, which puts strain on future budgets, and the structural deficits that could increase again during such an economic downturn.
During WBGO’s “Ask Governor Murphy,” program on March 31, the governor trumpeted the two credit rating upgrades, again highlighting that combination of pension payments, debt payments and budget surplus as the main drivers.
“That doesn’t happen unless you do the things that you commit you’re going to do,” he said.