Rating agencies just rewarded New Jersey for a habit, not a balance sheet. On June 30, Gov. Mikie Sherrill signed a $60.7 billion budget built around the state's sixth consecutive full pension payment, $7.3 billion this year. Moody's upgraded New Jersey to Aa3 in September and S&P moved it to A+ the month before that, the ninth and eighth ratings upgrades of Gov. Phil Murphy's tenure. What neither upgrade mentions is that New Jersey's pension system still ranks 48th of 50 states by the ratio of assets to what it owes, an estimated 55% funded, and the state's own actuaries don't project full funding until roughly 2050. A government can write this year's check and still be insolvent by any honest measure. Rating agencies have stopped distinguishing between the two, and the municipal bond market has followed them.
Read Full Article »
