During today’s Capital Budgeting and Planning Commission meeting, NJ State Senator Doug Steinhardt (R-23) warned that New Jersey’s finances are not in a good place to meet our capital needs in the coming years and our budget’s finances are on shaky ground, leaving a mess behind for the next administration to clean up.
Sen. Steinhardt’s full remarks are below:
The Office of Public Finance did fine work in presenting audited debt information to us in the debt report. Thank you to the professional staff for what they provided.
Though these comments may come across as very negative, I appreciate that the Administration dealt with some difficult COVID issues and did the best they could. However, fact later showed that $4.3 billion of borrowing undertaken during COVID wasn’t necessary. I hope this State never goes through something like that again.
Our role as a commission is to better prepare for future capital spending needs and address our capacity to issue debt for those needs. I don’t want anyone leaving this meeting today thinking this state is in a good place to meet our capital needs in coming years. Consider the following;
Nonpartisan OLS warns that the Governor’s current budget proposal has a $3 billion structural imbalance being left to the next Governor to fix – primarily because of three things.
it spends down the surplus,
it raids the last dollars of the Debt Defeasance and Reduction Fund and relies on other one-shot funding sources for ongoing operating expenses; and
it leaves the next Governor with a $1.2 billion unfunded increase in the appropriation needed for STAYNJ which becomes fully payable after the Governor leaves office.
Our outstanding debt per capita is still the worst or second worst in the country.
Our debt rating was downgraded under this administration before it was upgraded. When our debt rating was finally upgraded, respectfully, it was because of federal largesse and revenue windfalls, almost every other State’s credit rating was also upgraded for the same reasons. Today we have the worst credit rating in the country according to one rating agency – Fitch – and the second worst credit rating of all the States according to Moody’s and S&P. That’s almost exactly where we were before this administration took office.
Federal COVID largesse that helped control new debt issuances is gone.
There are large, planned debt issuances for TTF right around the corner and constitutionally required school funding capital projects in the coming years that have no funding source -- and will likely require more debt.
Spending has increased annually by more than $20 billion under this administration and though making full pension payments is a good thing, you need to appreciate only 20% of that annual spending increase is attributable to increased pension payments. The other 80% of increases have gone towards an unsustainable spending binge.
The State’s defeasance of $4 billion of debt came only after the needless $4.3 billion of COVID debt. And for the record, though he didn’t say it today, Senator Sarlo helped create the Debt Defeasance and Avoidance Fund. Former Senate President Sweeney did too. Republicans strongly supported the concept and proposed even more for that purpose. We all faced opposition and only lukewarm support.
Make no mistake, this budget’s finances are on shaky ground. There’s a mess being left to the next administration. Our ability to fund capital projects – whether though cash or debt - is in a weaker place going forward than most people realize.
No comments:
Post a Comment