Early in October the Republican members of the state Senate Budget Committee threatened to file a complaint with the Securities and Exchange Commission arguing that the state was not fully disclosing a $4 billion deficit in documents prepared for potential investors in a planned $1.5 billion bond issue.
In an Oct. 10 letter to Gov. Phil Murphy, the senators, including the 1st Legislative District’s Michael Testa, said, “Full and fair disclosure is required under federal law to ensure that buyers and sellers of bonds in the marketplace are fully informed.”
The Republicans argued that the current state budget includes $2.3 billion in one-time funding used to balance the record-high $58.8 billion budget. They also point to a $1.2 billion spike in appropriations in order to fund the Stay NJ tax relief program and the depletion of the Defeasance and Prevention Fund.
On Oct. 21 state treasury officials did release updated disclosure forms that showed some of the deficit areas Republicans had commented on. In a second letter the senators announced they would not file a complaint with the SEC, although they continued to urge more of what they claim should be required disclosures.
The state has prioritized debt repayment under Murphy. In April reports showed New Jersey’s bond debt at its lowest level in a decade. In August Standard and Poor’s Global Ratings raised the state’s general obligation rating from A to A+. One month later Moody’s gave the state an upgrade from A1 to Aa3.
Both sides in what has become a political debate have credible arguments to make. The state did revise some of its disclosures following the Oct. 10 letter from Senate Republicans. The rating agencies have given the state upgrades due in part to its prioritization of debt repayment.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
