Christie Scoffs, But Here’s Why NJ’s Credit Downgrades Might Matter to You
Gov. Chris Christie grumbles that too much attention is paid by reporters to Wall Street analysts repeatedly lowering their assessment of the state’s credit worthiness.
“Every economic story starts with 11 credit downgrades as if that means a thing to people in terms of their everyday life,” Christie said at a recent news conference.
But it really does matter, said Ralph Albert Thomas, chief executive officer and executive director of the New Jersey Society of CPAs. Its members work with and advise thousands of businesses, and its most recent survey shows the state’s credit is the CPAs’ top public policy concern.
“When clients are looking to make a decision whether they’re going to invest in expanding their business, they’re going to look to their CPA and get his or her opinion on that,” Thomas said. “And so for them to have that kind of concern, what that would translate to potentially is a caution for them in terms of suggesting to them that they may want to invest or expand their business here.”
New Jersey’s credit rating is currently the second-lowest among the 50 states, having been downgraded three or four notches by each of the three major rating agencies since 2011. Beyond just making it a bit more expensive for the state to borrow money, businesses wonder if the state will be a reliable, stable partner, Thomas said.
“Companies are concerned when they come here because if you’re having downgrades, it costs the state more to do what it does,” Thomas said.
“When organizations or companies think about whether they want to relocate here, or even invest here, they pause and ask themselves if the state isn’t going to be able to make its investment in the infrastructure and things of that nature, why should we invest?” he said.
To address the state’s pension debt, last month the state committed to put 30 years of lottery profits into the retirement funds, but that hasn’t prompted Wall Street analysts to upgrade their outlook for New Jersey’s finances.
Thomas was surprised the state’s finances and credit ranked as CPAs’ top public policy concern, ahead of things such as taxes and health care.
“Typically they weigh in on tax issues and things of that nature, so that was kind of revealing for us that they felt that was a big, big issue that had an impact on New Jersey’s business economy,” said Thomas.