Bond Buyer: Coronavirus brings New Jersey finances into danger zone

By Andrew Coen

New Jersey’s financial future, already fragile before the COVID-19 pandemic, is now at a potential breaking point.

The state is staring at large-scale revenue losses from lost sales tax collections after non-essential businesses were shut down under a state of emergency Gov. Phil Murphy declared March 21 to fight the virus.

The Garden State will also take revenue hits from drops in income tax receipts amid rising unemployment, with jobless claims reaching a record 429,000 in mid-April.

Fitch Ratings downgraded New Jersey’s general obligation bonds to A-minus from A on April 21 citing past persistent imbalanced budgets that weakens the state’s ability to combat a serious recession.

“We’ve entered this crisis with a fiscal peashooter, given the decades — and by the way, both sides of the aisle — decades of fiscal mismanagement of this state in one form or another,” said Murphy about the Fitch downgrade during his April 21 press briefing. “I would love to have a stronger arsenal financially going into not just our administration, but more importantly into this crisis.”

At this point, the state’s fiscal problems still take the backseat to the health emergency — according to state data as of Thursday afternoon, COVID-19 had killed 5,368 people in New Jersey, a toll second in the U.S. only to New York’s.

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