The $32 billion budget plan New Jersey Governor Chris Christie proposed this week fails to solve a structural imbalance and relies on rosy assumptions for revenue increases, Standard & Poor's Ratings Services said on Friday.

While New Jersey revenues might rebound, partly due to its progressive income tax rates, John Sugden-Castillo, S&P credit analyst, said in a report: "In our view, the economic assumptions that underpin the state's revenue forecast appear to be optimistic based on current and projected economic conditions at the state and national levels."

The Republican governor, now viewed as a possible presidential contender in 2016, has proposed cutting all income tax rates by 10 percent over three years.

Assuming that Christie's tax relief measures are enacted, S&P said the revenue estimates that underpin the budget reflect a 7.3 percent increase. But Christie will have to persuade the Democratic-led legislature to approve the income tax cuts and they have said reducing property taxes is more important.

While Christie proposed doubling the state's pension contribution to $1.1 billion in the fiscal year that starts on July 1, S&P said this will only fund 29 percent of the actuarial amount required.

Spending would rise by $1.16 billion, or 3.7 percent, from the current fiscal year, under the governor's plan, according to S&P. Christie said his budget would spend less than the state did in 2008, the last year of Democratic Governor Jon Corzine's four-year term.