Just as Night Follows Day, Gov. Murphy Borrows $4.5 Billion and S&P Downgrades NJ to BBB+

Bond-rating agency S&P Global downgraded NJ’s debt rating from A- to BBB+, making NJ one of only two states (along with broke IL) to have a BBB-rating, which is only one notch above “junk” ratings.  When bond ratings go down, bond borrowing costs go up, so this is bad news for NJ.  S&P cited NJ’s “significant structural deficit” (meaning our state government spends more than it takes in) combined with “high and increasing debt,” including its pension and retiree healthcare liabilities.  That describes Murphy’s fiscal governance perfectly: deficit spending funded by more debt.

This was all very predictable once Gov. Murphy decided to borrow $4.5 billion to fill budget gaps caused by COVID-related revenue shortfalls and Murphy’s keeping spending largely unchanged.  Worst of all, Murphy is making a record $4.7 billion payment into NJ’s broken and unreformed public pension system.  Not only is this a waste of money we need for COVID relief, but it leaves intact a pension system desperately in need of restructuring.  Ignoring this unpleasant reality means that NJ’s pension crisis will continue to get worse.

Rather than get NJ’s pension system on firmer footing, Murphy chose to take care of his public sector union pals who in turn support his political ambitions.  Once again, NJ, its citizens and its future generations will lose out.  S&P’s action just confirms this fact.