Today Standard & Poors cut New Jersey’s credit rating from AA to AA-. While this is not a huge cut in the rating, it will have a clear impact on the state’s ability to borrow money, which will not be more expensive for the taxpayers. This news comes just a year after another agency, Moody’s, lowered New Jersey on their rating scale as well.
The reason for the cut should be obvious to everyone, unless of course you are living in the same bubble that Steve Sweeney and the Democrat caucuses seem to be. Health benefit and pension system liabilities, both short and long term, are clearly unsustainable and are seen as a big enough danger to knock our credit down an entire degree. The Democrats, as everyone knows, have been stalling on getting any reforms through any time soon. They refuse to accept that the current system is unsustainable and almost completely unfundable without unconscionable tax increases. Of course, the latter “solution” seems to be completely fine with Sweeney and Co. despite any concerns about unemployment, the recession, and the ability for New Jersey to attract any sort of business growth.
S&P also cited the massive debt taken on by the Corzine administration and our state’s long term ability to rectify those horrible decisions. If we do not get the pension system under control, there is no way we are going to be able to keep up with the payments on our debt, which thanks to Corzine, has risen to be among the highest among the 50 states. For some perspective, the per capita debt is roughly $4,000.
The bottom line is that Governor Christie introduced a solid reform package for the pension system in September of last year. A reform plan like this could show the credit rating agencies that New Jersey is serious about solving its financial problems and not just punting down to our children and their children by taking on more and more debt. Sweeney has no interest. He and his majority are too deep in the pocket of the unions and other special interests who stand to lose a little from any sort of reform. Unfortunately what the fail to understand is that without these reforms they stand to lose far more. There is no such thing as a “guaranteed benefit.” If that money does not exist, then it certainly will not come in a monthly check.
It is now past time for the legislature to get its act together and make this reform a reality. It wont be long before we go from AA- to something worse.