Kroll Bond Rating Agency (KBRA) has upgraded New Jersey’s credit rating from A+ to AA-, marking the highest rating the agency has assigned to the state since it began issuing ratings in 2015.
The upgrade represents a historic milestone, making it the first time in New Jersey history that a state credit rating has been elevated during a governor’s first year in office under Gov. Mikie Sherrill’s administration.
In its report, 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.” The rating agency specifically highlighted the state’s commitment to providing a full actuarially determined pension contribution for the sixth consecutive year, maintaining a projected year-end undesignated fund balance of 10.0%, and preserving considerable financial flexibility.
“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,” Sherrill said. “This upgrade to AA-… reflects how we’ve tackled our fiscal challenges head on, and already delivered real results for New Jerseyans. 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.”
State Treasurer Aaron Binder echoed the sentiment, emphasizing the collaborative work behind the newly crafted FY 2027 budget. “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,” said Binder.
The new AA- rating places KBRA one step above ratings from S&P (A+) and Fitch (A+), bringing it in line with Moody’s rating of Aa3. Improved credit ratings lower the borrowing costs for the state, generating taxpayer savings and reflecting continued long-term fiscal recovery following pandemic-era downgrades.
