The leaders of New Jersey’s Senate Budget Committee have mixed reactions to a downgrade in the state’s bond rating.
The Standard & Poor’s credit rating agency cited overly optimistic revenue estimates, pension costs, and a high level of state debt as reasons for downgrading the state’s general obligation rating from AA-minus to A-plus.
And that’s troubling, said Sen. Paul Sarlo, D-Bergen, budget committee chairman.
“The downgrade hurts us when we need to go out to the bond market to borrow money for long-term capital projects and other investments we need to make in the state of New Jersey,” he said. “It’s costing you more for long-term capital dollars.”
But the panel’s ranking Republican said he is not as concerned.
“It’s a little disturbing, but I think we can pull out of it,” said Sen. Anthony Bucco, R-Morris. “With the economy starting to pick up, it’s a little bit slow. I think you’ll see things turn around.”
Lawmakers aren’t sure just how much higher borrowing costs will offset future revenues and add to budgetary pressures.
The new rating means the state is still considered to have a strong capacity to meet debts but it is more susceptible to changes in economic conditions.