Moody's Investors Service confirmed its Aa1 rating of New Jersey on Friday.
The rating agency said the state's reliance on nonrecurring revenues in its fiscal 1995 budget may increase gaps in future budgets but not enough to immediately jeopardize the state's credit strength.
Moody's warned, however, that "maintenance of credit standing over the long term will depend on the implementation of effective measures to close, on a recurring basis, a fiscal gap which can be anticipated in 1996 and beyond."
Gov. Christine Todd Whitman, elected on a platform to cut taxes 30%, has announced further tax cuts over the next few years, creating the expected gaps.
The rating agency indicated that nonrecurring items in the 1995 budget total $887 million, with more than $500 million related to pension funds and retiree health benefits.
The current savings will require the state to make larger contributions in the future, but "they do not pose a threat soon enough to endanger, by themselves, the state's credit standing," Moody's said.
In addition, the state continues to benefit in fiscal 1995 from a debt restructuring in 1992. In 1996, debt payments are expected to rise by $349 million.
The state also faces growing spending demands from double-digit increases in Medicare spending, the assumption of local court costs of over $300 million in 1995 and 1996, and the opening of a new prison in fiscal 1996.
Moody's also gave an A1 rating to $100 million of higher education equipment leasing fund program revenue bonds, Series 1994A. The bonds, expected to be priced Aug. 10, are the first issue by the New Jersey Educational Facilities Authority.
