TRENTON — Another Wall Street rating agency — Moody's Investors Service — has downgraded New Jersey's debt and is sounding the alarm about the state's "lagging economic performance."

It was the third ratings cut this year for New Jersey, the sixth downgrade since Gov. Chris Christie took office, and the latest sign that the Garden State's ailing fiscal condition is taking a turn for the worse.

Moody's action comes two weeks after the Christie administration disclosed an $807 million shortfall in the state budget, which the Republican governor is scrambling to plug before the fiscal year ends June 30.

The agency said revenue shortfalls have been a persistent problem over the last three years, placing New Jersey in a "weakened financial position." Even before the current $807 million shortfall came to light, state revenue growth in the last three years had come in short of Christie’s projections by billions of dollars.

Covering up those budget holes every year with one-shot moves, instead of finding stable sources of revenue, doesn’t help, Moody’s added, and New Jersey residents can expect the financial strain to increase in the coming year.

"With the ongoing pressure of … pension contribution increases and lagging economic performance, the state will be challenged to improve its weak liquidity position," the analysts wrote.

Following downgrades by Fitch Ratings earlier this month and Standard & Poor's in April, Moody's lowered its credit rating for New Jersey by one step, from Aa3 to A1, on Tuesday night.

At an economic forum in Washington today, Christie blamed New Jersey’s budget problems on several of his predecessors and on expensive commitments to public workers’ retirement and health care plans.

"I'm trying over the last five years to fix problems we've accumulated over the last 20," he said, name-checking former Govs. Christie Whitman, Jim McGreevey, Richard Codey and Jon Corzine for neglecting to make yearly contributions to the pension fund, which now faces a staggering unfunded liability of $52 billion.

Christie said the latest budget gap of $807 million came because his administration’s economists did not accurately predict that taxpayers would shift capital gains and bonus payments into the 2012 tax year, to avoid paying higher federal tax rates that Congress approved at the beginning of 2013.

The governor will present a plan to deal with the shortfall next week, he said. For New Jersey residents, it may mean painful cuts to schools or hospital funding, or delaying key payments to the strained pension system for public workers.

Legislative leaders and Christie have only a few weeks to find the $807 million needed to balance the $33 billion budget before the end of the fiscal year on June 30.

Adding to the problem, New Jersey’s two-year budget shortfall is closer to $2 billion because, for the fiscal year beginning July 1, there is an estimated $1.1 billion gap.

And each time New Jersey is downgraded, investors are more likely to increase the state’s borrowing costs for major projects such as school construction or bridge repairs. Only California and Illinois have lower ratings from the major Wall Street rating houses.

Administration officials responded to the Moody’s downgrade by saying that the high cost of retirement and health care benefits has to be tackled anew.

Any proposal to overhaul state workers’ benefits is likely to meet some resistance in the Democratic-controlled Legislature, which already helped Christie extract union concessions in his first term.

Under a pension and health benefits overhaul Christie signed in his first term, the state is scheduled to make a $1.6 billion payment to the pension fund for public workers before June 30, and then a $2.25 billion contribution in the following fiscal year.

Those would be the two largest payments the state has ever made into the pension fund. Public workers also began to pay more for their benefits in 2011, and their retirement age rose to 65. Christie now says more changes need to be made, but has not made any specific proposals.

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