TRENTON, N.J. — Kroll Bond Rating Agency has upgraded New Jersey’s credit rating from A+ to AA-, citing the state’s pension funding, reduction of long-term liabilities and improved budget management, Gov. Mikie Sherrill’s administration announced.
The upgrade is the first under Sherrill’s administration and marks the first time New Jersey has received a credit rating upgrade during a governor’s first year in office, according to the administration.
KBRA cited the state’s “increasingly well-established track record of full actuarial pension funding, substantial progress in reducing long-term liabilities, and adherence to improved budget management.”
“This is great news for New Jersey. In just 7 months, we’ve taken on the tough challenges and the status quo, and that work is being recognized. This upgrade to AA-, the highest rating KBRA has given New Jersey since it began rating the state in 2015, reflects how we’ve tackled our fiscal challenges head on, and already delivered real results for New Jerseyans,” said Governor Sherrill. “We enacted the most fiscally responsible budget in decades, cutting the structural deficit by more than half while delivering record property tax relief and school funding, making a full pension payment, expanding the child tax credit, and maintaining a $6 billion surplus. We will keep building on that progress—protecting taxpayers, expanding opportunity, attracting investment, and ensuring that New Jersey continues to be a state people can count on.”
It is KBRA’s second upgrade of New Jersey’s rating and gives the state its highest rating from the agency since KBRA began rating New Jersey in 2015.
“This upgrade from KBRA is recognition of the hard work by this administration to craft a fiscally sound FY 2027 budget,” said Treasurer Aaron Binder. “In reducing the structural deficit while still making the full pension payment and maintaining a healthy surplus, we’ve shown that governing responsibly and maintaining the state’s fiscal health go hand in hand.”
KBRA also cited the state’s “maintenance of considerable financial flexibility” in its upgrade report.
“The FY 2027 Budget continues this discipline, providing for a full actuarially determined pension contribution (ADC) for a sixth consecutive year and a projected year-end undesignated fund balance equivalent to 10.0% of appropriations,” KBRA stated in its upgrade report.
The AA- rating puts KBRA’s assessment of New Jersey one level above the state’s A+ ratings from S&P and Fitch and in line with Moody’s Aa3 rating, according to the administration.
Higher credit ratings can reduce the interest rates governments pay when borrowing money, potentially lowering borrowing costs for taxpayers.
The Sherrill administration said the action represents New Jersey’s 10th consecutive rating upgrade from the four major credit rating agencies since the state was downgraded during the COVID-19 pandemic.
