New Jersey’s revenue projections for fiscal 2013 pose a “notable downside risk” and its pension-funding level will continue to deteriorate even after cost-saving changes to retirement benefits, Fitch Ratings said.
“While we believe the need to address revenue underperformance is important, we expect the state’s significant and growing unfunded pension and employee benefit liabilities, combined with its above-average debt burden, to remain the key challenges for New Jersey,” Fitch said in a report today.
Governor Chris Christie has projected revenue growth of 7.9 percent in the fiscal year that began July 1, helped by gains in personal income, sales levies and corporate-tax receipts, Fitch said. The projection may be optimistic given “the level of economic uncertainty and recent modest growth in actual revenues,” the credit-rating company said.
New Jersey’s unemployment rate climbed to a 35-year high of 9.9 percent in August from 9.8 percent in July and 9.4 percent a year earlier, the state Labor Department said today. The figures are preliminary and can change once more thorough surveys have been conducted.
Christie, 50, a first-term Republican, has said a tax cut will help create jobs. Democrats, who control the Legislature, want to delay any reduction until they see whether revenue meets the governor’s targets.
“Their analysts wanted to reiterate that the real fiscal problems facing the state are the same legacies of past administrations that Governor Christie has worked to address since his first day in office,” Andy Pratt, a spokesman for Treasurer Andrew Sidamon-Eristoff, said of the Fitch report in an e-mail.
Kevin Roberts, a spokesman for Christie, didn’t respond to an e-mailed request for comment.
The state in recent years has raised the retirement age, required public workers to pay more toward their benefits and barred municipal contractors from enrolling in the pension fund.
New Jersey’s pension plan was 60.8 percent funded as of June 30, 2011, according to Fitch. As of June 30, 2012, debt outstanding was 7.8 percent of preliminary 2011 personal income. When combined with the pension obligations, that figure increases to 16.3 percent, above the 6 percent median for states rated by Fitch, the company said.
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