S&P downgrades N.J. credit rating

chris_christie.gi.top.jpgGov. Chris Christie wants to reform New Jersey's public pension system. By Tami Luhby, senior writer


NEW YORK (CNNMoney) -- Standard & Poor's lowered its credit rating on New Jersey's debt to AA- from AA, citing concerns about its massive retirement obligations.

"The lower rating reflects our concern regarding the stresses from the state's poorly funded pension system, substantial post-employment benefit obligations, and above-average debt levels," said Standard & Poor's Credit Analyst Jeffrey Panger.

The state has nearly $33 billion in debt, among the highest in the nation, according to S&P, which rates the state's outlook as stable because it believes it will "continue to manage its structural budget imbalances proactively."

New Jersey has long skimped on funding its pension, leaving it with a current unfunded liability of $54 billion.

Gov. Chris Christie, who took office in 2010, has taken an aggressive approach to handling the Garden State's financial problems. He closed a fiscal 2011 deficit of $11 billion, which was equal to 37% of the budget, by deeply cutting spending and suspending a property tax rebate. He also deferred $3.1 billion in pension funding.

The state faces a budget gap of $10.5 billion for fiscal 2012, which starts July 1, according to the Center on Budget and Policy Priorities. The governor is expected to release his budget in coming weeks.

Responding to the S&P downgrade, Christie called on lawmakers to overhaul the state's retirement system. He wants to raise the retirement age, require workers to contribute to their pensions and curb the annual cost-of-living increases that retirees receive.

"Governor Christie's pension and benefit reforms are necessary to manage the state's pension liability and ensure long-term stability," said Press Secretary Michael Drewniak in a statement responding to the downgrade. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,862.63 -49.48 -0.29%
Nasdaq 4,455.34 12.64 0.28%
S&P 500 1,967.55 -2.40 -0.12%
Treasuries 2.55 0.09 3.66%
Data as of 3:12pm ET
Company Price Change % Change
Bank of America Corp... 15.58 0.23 1.53%
Facebook Inc 74.72 1.01 1.37%
Genworth Financial I... 13.97 -2.29 -14.08%
Pfizer Inc 29.22 -0.25 -0.87%
Apple Inc 98.20 -0.18 -0.18%
Data as of 2:57pm ET

Sections

French toast with enough saturated fat to last a week, a burger with more than three days worth of sodium and a stack of seafood with more than a day's worth of calories top this year's Xtreme Eating list. More

The economy is strengthening but the Federal Reserve is sticking to its plan to gradually cut back on stimulus. There were no hints about when a rate hike may be coming. More

Restrictive immigration policies prevent talented entrepreneurs from launching businesses in the U.S. So, they're moving to Canada. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.