The credit rating of New Jersey’s second largest city took a bit of a hit over the last year but remains historically strong despite some issues that may need attention in the coming years.
Per the Jersey Journal, all three major credit agencies downgraded Jersey City’s credit rating during 2023. Moody’s, S&P Global and Fitch all lowered the city’s bond ratings at least once last year amid an audit that was released that showed the city carrying $27.3 million in debt due to overspending and inaccurate financial reporting.
Fitch cited the city’s “reduced level of financial flexibility due to the impact of pandemic-related operating deficits” when lowering Jersey City’s rating from AA- to A+. The agency noted that while the city’s reserve levels are projected to remain adequate, rising costs will need to be managed to match both revenues and the limits on its tax levy raising authority.
The analysis from Fitch did note the city’s strong long-term revenue growth and moderate long-term liabilities. “Revenue growth [in Jersey City] has exceeded both inflation and national GDP, reflective of significant new development and population growth in the city the last several years,” the agency concluded in their report.
Elsewhere, Moody’s downgraded Jersey City’s rating from Aa3 to A1 last April while maintaining their outlook of the city’s finances as “stable.” For their part, S&P brought the city’s rating down early last year before restoring it to its previous AA status.
The moderate credit downgrades for Jersey City come at a time when credit agencies appear bullish on the financial outlook of the Garden State. Fitch upgraded New Jersey’s overall credit rating to A+ last year, which matches Jersey City’s current rating with the agency.
Both Moody’s and S&P followed suit in raising the state’s rating, citing factors included a diverse economic base, additional reserves, and increased contributions to the state’s pension fund.
