Jersey City’s Bond Rating Downgraded by S&P Due to Financial Strain

S&P Global Ratings downgraded Jersey City’s general obligation bond rating from ‘A+’ to ‘A’ on June 26, citing increased expenses, deferred charges, and a weakened reserve position that limit the city’s financial flexibility.

The outlook remains stable, reflecting expectations that the city will achieve balanced operations in fiscal year 2025, grow its reserves, and continue repaying special emergency authorizations. The rating action followed the criteria outlined in S&P’s “Methodology For Rating U.S. Governments,” issued September 9, 2024.

S&P stated that while Jersey City’s tax base and ongoing development may support future revenues, the city’s capacity to manage cost pressures remains constrained. The agency evaluated environmental, social, and governance (ESG) factors as neutral, noting local investments in stormwater infrastructure and a formal climate energy action plan. Systemic issues, such as the state’s pension governance and lack of OPEB prefunding, continue to affect all New Jersey municipalities similarly.

S&P warned that further credit downgrades are possible if the city fails to sustain balanced operations or control fixed costs. Conversely, a return to positive financial performance and reserve growth could lead to an improved rating.

In response to the downgrade, Councilmember James Solomon issued a statement criticizing the city’s fiscal management. “For the second time in three years, the credit rating agencies have clearly expressed a lack of faith in the City’s ability to budget,” he said. Solomon, who has opposed the administration’s budgets, called for a new budget team and long-term financial planning. “This decision will directly affect the families and taxpayers of our city by raising our bond costs,” he added.