New Jersey’s credit rating climbed Monday as S&P Global Ratings boosted the state’s general obligation bonds from A to A+, marking the eighth upgrade under Gov. Phil Murphy.
The agency cited continued full pension contributions, a $6.7 billion surplus, and investments in cybersecurity as factors in its decision. It is the third S&P upgrade for the state since 2022. The budget surplus is the largest in state history.
Murphy, a Democrat, leaves office in January at the end of his second term. The improvement comes after decades of downgrades that saw New Jersey’s credit score fall 22 times between the 1960s and late 2020.
Higher credit ratings generally lower borrowing costs by reducing the interest rates the state must pay on bonds.
S&P pointed to recent budget policy, including annual pension payments exceeding $7 billion, as evidence of fiscal stability. Still, New Jersey’s pension system remains among the most underfunded in the nation, trailing only Illinois. Years of missed payments beginning in the 1990s left the system with a shortfall that could take decades to resolve.
The state expects annual pension payments near current levels until at least 2050, with certain law enforcement and judicial retirement plans recovering more slowly. That long-term burden, along with other debts, may limit the potential for further upgrades.
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.