Of the state’s federal pandemic stimulus, $133.5 million has been spent, according to the state Treasurer. The total allocated, though not necessarily spent, is $2.97 billion. Another $3.3 billion remains. Murphy has said the state shouldn’t be so quick to commit or spend that remainder while Covid-19 variants remain a threat.
Republicans, the legislature’s minority party, say the state would be in a better position if it weren’t sitting on so much Covid cash. Last year they proposed a spending plan that includes $2.5 billion to help replenish the unemployment insurance fund, which is insolvent, and repay $560 million in federal advances for jobless claims. Instead, the administration will collect an estimated $1 billion more in business taxes over three years.
“Replenishing the unemployment trust fund should have been the first thing, rather than go with a tax increase on businesses,” said Assemblyman Hal Wirths, a Republican from Hardyston and former state labor commissioner.
High Expectations
In addition to upgrading New Jersey’s general obligation bonds, Moody’s upgraded the state’s related subject-to-appropriation bond ratings also by one notch, to A3 from Baa1 for bonds financing essential-purpose projects and to Baa1 from Baa2 for bonds financing less-essential projects.
“The stable outlook is based on expectations the state will maintain recently improved governance practices and continue to benefit from a more proactive liability management approach,” Moody’s said.
Bondholders have been demanding less additional yield to hold New Jersey’s general obligations as the state works to reduce its debt and boost pension contributions. A general obligation bond maturing in June 2028 traded Wednesday at a yield of 1.86%, or 48 basis points above top-rated municipal debt, according to data compiled by Bloomberg. That’s down from 131 basis points above benchmark munis when New Jersey first sold the debt in November 2020 at a 1.85% yield.
“We’ve seen marked improvement in the state’s credit profile amidst unprecedented challenges,” said Dora Lee, director of research at Belle Haven Investments, which has $15 billion under management with $326 million in state obligations for New Jersey. “We still remain vigilant for the state’s outlook over the coming year.”
--With assistance from Michelle Kaske and Natalia Lenkiewicz.
This article was provided by Bloomberg News.