Gov. Christie and Democratic legislative leaders are fighting over the state's Transitional Aid program.
Clik here to view.
Gov. Chris Christie, shown in this September file photo, and Democratic legislative leaders have been locking horns over a Transitional Aid program, and Paterson and Passaic have been warned their credit ratings may be lowered as a result. TRENTON — Paterson and Passaic could see their credit ratings downgraded due to the four-month partisan impasse in Trenton over an aid program for New Jersey’s neediest cities.
Gov. Christie and Democratic legislative leaders remain gridlocked over the state’s Transitional Aid program, and Moody’s Investors Service announced earlier this week that six New Jersey cities are still under the threat of a credit ratings downgrade as a result.
A city’s credit rating helps determine how cheap and easy it is for the government to borrow money for larger capital projects that cannot be funded in a single budget year.
Moody’s first issued its downgrade warning to the cities — Camden, East Orange, Passaic, Paterson, Trenton and Union City — back in July. That followed Christie’s veto of the $140 million earmarked for the cities in the state budget.
The Democrats who control both the Assembly and Senate tried to override the governor’s veto, but were unable to muster any Republican votes. No action on the issue has been taken since, even as the cities have continued to struggle with recession and, more recently, the flooding caused by Hurricane Irene.
“We are continuing to review the potential implications for these New Jersey cities of the loss of Transitional Aid from the fiscal 2012 budget,” Moody’s said in its warning to investors this week.
The governor, a Republican, bragged during a speech in California last month about “divided government that is working” in New Jersey even as Democrats back home were stonewalling a bill sponsored by Sen. Kevin O’Toole, R-Cedar Grove, that would hold back $1.5 million of the aid to pay for the oversight sought by Christie.
The Democrats have maintained that all of the Transitional Aid funding should go directly to the cities.
And the state Department of Community Affairs, which oversees the aid program, offered last week to provide $117 million in aid to five cities – including $21 million for Paterson – but the funding would also require legislative approval.
With all 120 legislative seats on the November ballot this year, no action is expected in Trenton until at least after the election, something Moody’s recognized in its new warning to investors this week.
“We will monitor this legislation as well as any adverse liquidity effect on issuers that could result from a possible delay in receiving aid,” Moody’s said.
Related coverage:
• Christie, Democrats to discuss restoring up to $139M in aid to N.J. cities
• Transitional aid down $5 million — but is enough, with cuts, to fill gap
• Paterson is hiring dozens of employees without getting necessary state approval
