Office of the Governor: CORZINE RECEIVES STATE FINANCE ASSESSMENTS FROM RATING AGENCIES
- Agencies praise New Jersey for “significant progress” in restoring fiscal stability

FROM THE OFFICE OF THE GOVERNOR

August 13, 2008

Contact: Sean Darcy
Robert Corrales
609-777-2600


TRENTON -- Gov. Jon S. Corzine said today that he was gratified that fiscally responsible steps taken by the administration have been recognized by Wall Street’s ratings agencies, all of which issued ratings reports highlighting the State’s progress toward restoring fiscal stability,  restoring structural balance to the budget and easing the debt burden on State finances.    

“While we still have a lot of work ahead of us, it is good to see that Wall Street recognizes New Jersey’s continued efforts to put our finances back on solid footing,” Corzine said.  “These assessments affirm that we have made significant strides employing unprecedented measures of fiscal responsibility to try and reverse the state’s deep-seated fiscal problems and restore long term stability.”

  In a ratings report issued yesterday for the New Jersey Transportation Trust Fund Authority’s $345 million remarking transaction,  Standard and Poor’s cited the State’s “significant progress in balancing its budget and restoring reserves” in affirming the State’s ‘AA’ GO rating.

  “In recent years New Jersey has made significant progress in balancing its budget and restoring reserves.  Since fiscal 2006 the state has adopted annual budgets that made strides toward structural balance. Improvement in the financial position is evident since the low point in fiscal 2005, when the state had to borrow $2.0 billion to balance operations, to fiscal 2007, which ended with a…fund reserve of $1.41 billion…its highest level since fiscal 2001.”

  “The fiscal 2009 budget cuts spending by $600 million, representing the largest reduction in budget spending in New Jersey’s history,” S and P said.    

Along with the reduction in spending, the Governor’s FY ‘09 budget also reduced the size of government by up to 3,000 workers through early retirement and attrition; cut the operating budgets of every state department by an average of five percent and eliminated altogether the Department of Personnel and the Commerce Commission.  

In another report, Fitch Ratings also opined on the FY ‘09 budget:  “Fitch recognizes recent positive and decisive actions to correct a chronic structural imbalance and begin addressing the state’s long term liabilities;” The report went on to note the Corzine Administration’s “absolute reduction in year over year spending” and the use of excess surplus for the newly created debt reduction and capital expenditure fund. Fitch also affirmed New Jersey’s General Obligation bond rating of AA-.

  Yesterday, Governor Corzine announced that the New Jersey Economic Development Authority (EDA) approved resolutions to use $650 million in excess surplus to retire or defease all or a portion of certain EDA outstanding bonds.  This was part of the larger effort to achieve debt service savings of approximately $130 million in each of the next five fiscal years.

  In its report, Moody’s affirmed its AA3 rating of New Jersey’s General Obligation debt, noting that the State has “addressed the structural gap” and also pointing out that the State’s “debt burden has moderated in recent years, ending a pattern of sizable increases.”