Standard and Poor's lowered its rating on New Jersey bonds to AA- on Wednesday.  The change is expected to increase the state's cost to borrow.  S&P attributed the decrease to its underfunded pension and health benefits plans. The rating agency has changed its approach to give more weight to those issues.

AA- is S&P's fourth lowest rating.  Two states - California and Illinois --have lower ratings, and four others are also rated AA-. New York and Connecticut are rated AA.

Gov. Chris Christie (R) and Democrats traded blame for the situation. Last month, the governor mused publicly about the state filing bankruptcy -- while the state was marketing a bond issue. Christie had to walk back the comments ten days later after massive criticism from state Democrats who control the state legislature.  Christie claimed vindication from S&P's action Democrats, while  pointed out that Christie skipped a $3 billion dollar pension payment last year, while they had agreed to reduced pension and benefit costs for new state hires.

The truth is that both parties share the blame with the New Jersey electorate.  Gov. Jim Florio (D) raised taxes in 1991 to cover rising costs, and Republicans rode that to power for 10 years.  During those ten years, Republicans failed to control costs and covered deficits with borrowing, including $6 billion to partially fund the pension shortfall.  Democrats - stung from the 1992 rebuke- were returned to power in 2001 and followed the Republican play book.  It's been roughly 15 years (including Republican and Democratic administrations) since New Jersey last properly funded the state employee pension, and the state is reaping the results.