>Posted by dmurphy
August 20, 2008 19:55PM
New Jersey’s state debt swelled by almost $2.2 billion last year even as Gov. Jon Corzine campaigned to rein in borrowing, state officials have confirmed.
The additional borrowing pushes the state’s debt load to $32.9 billion. Including $3.6 billion in bonds being repaid with payments from a national settlement against cigarette manufacturers — which the state Treasury does not count in its debt calculations — the state’s total debt load is $36.5 billion, nearly triple the level of a decade ago.
State bond documents show that the bulk of the new debt run up last year was attributable to the state’s $8.6 billion school construction program and transportation projects.
At a news conference Tuesday, Corzine touted a new initiative to pay down $650 million in outstanding state debt. That initiative, which uses unexpected tax revenues to cover the debt payments due on a host of outstanding bonds, is expected to save taxpayers about $130 million a year in bond payments, the governor said.
Asked today about the growth in overall state debt, Corzine said he remains committed to limiting new borrowing, but acknowledged there will be some under approved plans to finance transportation improvements and schools.
“I would like to do more, we just don’t have the capacity to do it,” Corzine said. “It doesn’t mean that when we have capital needs such as protecting people from roads and bridges crashing and killing people that we’re not going to take those steps to have those kinds of investments made.”
Repaying the state’s debt is scheduled to cost about $2.8 billion this year, a jump of about $115 million over last year’s debt costs. But Corzine said his debt retirement plan will cut that tab by at least $130 million.
“What we’re doing is when we have a chance to pay down debt, we’re taking it,” the governor said. “And that is very unusual by any comparison with any state.”
Wall Street firms that assess New Jersey’s creditworthiness applauded the governor’s effort to pay down debt early. Fitch Ratings, for instance, commended the state for “recent positive and decisive actions to correct a chronic structural imbalance and begin addressing the state’s long-term liabilities,” including the $650 million debt paydown.
Last year’s $2.2 billion jump in debt is about half the pace at which debt grew between 2002 and 2006. During those years, New Jersey’s debt grew by $16.1 billion, or an average of better than $4 billion a year.
Later this year, the state is scheduled to borrow another $1.7 billion for highway and mass transit projects. But Corzine is scheduled this fall to unveil a new plan that would head off future borrowing by raising billions of dollars for transportation improvements through increased highway tolls or other means. That would replace a proposal Corzine floated unsuccessfully earlier this year that would have used steep toll hikes to raise the funds needed to pay down half of New Jersey’s outstanding debt.
Star-Ledger writer Claire Heininger contributed to this report.