Governor Signs Debt Reduction Bill to Trim State Debt

TRENTON – Gov. Jon S. Corzine on June 25 signed legislation to pay down the state’s debt by $650 million, an action that, according to a release, “marks another clear turning point in the management of the state’s finances and saves taxpayers $135 million in interest and debt service payments each of the next five years.”
“In past years, surplus funds generated by unexpected revenue growth have gone toward operation expenditures and avoided hard choices on budget reductions. Failure to make those reductions led to carry over gaps in succeeding years,” Corzine stated. “This payment on debt is in keeping with the administration’s goal to match recurring revenues with recurring expenses.”
The legislation was sponsored by Sen. Ray Lesniak (D-Union), Assemblymen John Wisniewski (D-Middlesex) and Louis Greenwald (D-Camden), and co-sponsored by Assemblywoman Pamela Lampitt (D-Camden).
“No longer can we afford to just get by year after year by only focusing on the short-term finances of New Jersey,” Lesniak stated. “Quite frankly, we need to start paying down our state debt in order to free up funds for much needed investment in our infrastructure. This legislation creates the mechanism for us to do just that”
“The need to finance the interest on New Jersey’s debt has begun to have a harmful budgetary crowding-out effect on vital and worthy programs,” Wisniewski stated. “By paying down our debt, we are freeing millions of taxpayer dollars for a higher and more preferable calling – helping to build a better New Jersey.”
The debt reduction bill (S2052) establishes the Long Term Obligation and Capital Expenditure Fund and makes an appropriation to pay down the state’s debt load. Funded primarily by the surplus from the Fiscal Year 2008 budget, the bill dedicates $650 million toward the repayment of long-term obligations.
This is the most recent measure in Corzine’s strategy to shore up the state’s finances. This year’s budget also includes:
• $1.1 billion toward paying down the state’s pension obligation and marks the third straight year of significant contributions to the pension fund, totaling $3.3 billion – more than the previous 16 years combined.
• $260 million from the surplus dedicated to replenishing the Unemployment Insurance Trust Fund – a move that will prevent the triggering of a $350 million payroll tax increase on New Jersey employers.
The bill also appropriates $34 million in funding for capital construction projects at various state facilities, including the Katzenbach School for the Deaf and Ancora Psychiatric Hospital, as well as capital projects dealing with flood control and similar projects.