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March 13 (Bloomberg) -- New Jersey Governor Chris Christie’s budget proposal is “structurally imbalanced” for a second year because it’s based on revenue goals that may not be met even after recent revisions, Standard & Poor’s said today.
The $32.9 billion plan for fiscal 2014 relies on “new and untested revenues” and a recovery from Hurricane Sandy whose timing and financial impact is uncertain, S&P said in a report. The company has had a negative outlook on New Jersey’s debt since September because of concerns about Christie’s forecasts.
The governor, a 50-year-old Republican seeking a second term, is counting on a 4.9 percent revenue gain to balance his budget for the fiscal year that begins July 1. That’s a smaller increase than he projected last year, when his forecast for more than 8 percent growth was challenged by Democrats and S&P.
“Although fiscal 2014 revenue growth projections are more moderate than we observed for the fiscal 2013 budget, they rely on meeting revised revenue baselines for fiscal 2013 that might not materialize,” said John Sugden, an S&P analyst in New York.
The report maintained an AA- rating, S&P’s fourth-highest investment grade, on New Jersey’s general-obligation debt and the negative outlook. The rating could be lowered if revenue falls short of projections, Sugden said.
Bill Quinn, a spokesman for New Jersey Treasurer Andrew Sidamon-Eristoff, declined to comment because he hadn’t seen the report. Kevin Roberts and Michael Drewniak, spokesmen for Christie, didn’t reply to e-mails seeking comment.
S&P said there is the potential for “above-average” income-tax collections and a “very aggressive reconstruction effort” to help Christie meet his revenue forecast.
“However, in our view, future budgets could be pressured, absent sustainable economic growth, as fixed costs continue to climb and the revenue impacts of one-time economic events fade,” S&P said.
Christie’s budget reduces the state’s reliance on one-time measures to $1 billion, about 3 percent of the budget, from 4 percent. Assemblyman Vincent Prieto, a Democrat from Secaucus and chairman of his house’s budget committee, said that’s still cause for concern.
“Next year you still have the same amount you need and you don’t have the one-shot again,” Prieto said by telephone.
Assemblyman Declan O’Scanlon, a Republican from Little Silver who serves as his party’s budget officer, said the report repeats concerns from last year that proved unfounded.
“We’re going to be within striking distance of the governor’s numbers when it’s all said and done” in the current budget year, O’Scanlon said. “I’m going to continue to put my faith in the governor and in the treasurer because they’re the ones who’ve been the closest all along.”
The average yield on New Jersey state and local bonds maturing in 10 years rose yesterday to 2.58 percent, the highest since Sept. 24, according to data compiled by Bloomberg.
--With assistance from Terrence Dopp in Trenton. Editors: Stacie Sherman, William Glasgall
To contact the reporter on this story: Elise Young in Trenton at firstname.lastname@example.org
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