NJ bond outlook lowered to NEGATIVE

From Marketwatch this morning:

Moody's Investors Service lowered its outlook on the State of New Jersey, reflecting challenges to the state's financial operations and repeated use of nonrecurring revenue to plug budget gaps. The outlook was lowered to negative from stable. The outlook affects about $2.5 billion in outstanding general obligation bonds and $28.5 billion in annual appropriation debt. The revision comes as the state plans to sell $200 million in school-construction bonds in the coming week, rated A1 by Moody's. The state's GO rating is Aa3. Moody's also noted the state has one of the highest debt burdens and, like many states, has depleted its reserves. "It is anticipated that economic recovery in New Jersey will be at a slower pace than the nation as a whole," Moody's said in a release late Monday.

When a State continues to avoid addressing key fiscal issues and instead pursues a policy of tax and spend, this is what happens. The result will be increased interest on borrowing which will eventually create problems all its own. Remember when Corzine said he was cutting the budget and we documented here at njtaxrevolution that he was actually increasing borrowing by 3.9 billion for school construction? Well guess what, the cost of that just went up.

Congratulations Jon! You have one again demonstrated your fiscal prowess.

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