New Jersey faces a structural budget gap of as much as $3 billion next fiscal year as Governor Chris Christie juggles rising costs and less-than-projected revenue, according to Moody’s Investors Service.
The imbalance includes about $1 billion of one-time measures in Christie’s proposed spending plan and $1.2 billion of potential shortfalls. It also takes into account the gap for this fiscal year, as much as $807 million, which Christie may close with short-term fixes, Moody’s said in a report today.
Moody’s downgraded New Jersey’s credit May 13. It was the sixth rating cut since Christie took office in 2010, leaving the Republican tied with Democrat James McGreevey for the most reductions for a New Jersey governor. The three major rating companies have all cited recurring deficits as revenue fails to meet Christie’s projections.
“Three consecutive years of revenue shortfalls, driven by optimistic assumptions and a lagging economic recovery, have created recurring mid-year budget gaps and will continue to pressure the budget,” Baye Larsen, a Moody’s senior analyst, wrote in the report.
Treasurer Andrew Sidamon-Eristoff goes before the Assembly budget committee tomorrow to explain how the administration plans to fill the shortfall for the year ending June 30. Christie altered his schedule for today to include a budget update and news conference at 2 p.m. in Trenton.
The governor has blamed this year’s revenue miss on federal tax increases that led top earners to accelerate payments.
“Given that the new $807 million unresolved budget gap is equivalent to 14.5 percent of the remaining budget, any structural cuts would have to be very deep to balance the shortfall,” Larsen said.
Michael Drewniak and Kevin Roberts, spokesmen for Christie, didn’t immediately respond to e-mails for comment on the Moody’s report. Neither did Joseph Perone or Chris Santarelli, spokesmen for Sidamon-Eristoff.
The three ratings companies rank New Jersey’s general-obligation debt at fifth-highest. The A1 grade from Moody’s ties New Jersey with California and leaves it above only Illinois. Moody’s and Fitch assigned a negative outlook, meaning more cuts are possible.
Christie, 51, a potential 2016 presidential candidate, said when he introduced the $34.4 billion budget for next fiscal year that pension and debt payments threaten to crowd out spending on services such as schools and public safety.