Gov. Chris Christie’s administration borrowed another $1.4 billion during the state’s last fiscal year, pushing New Jersey’s total debt to a record $43.23 billion, according to new figures from the state Department of Treasury.
The state has also already borrowed more than $1 billion in the current fiscal year, with a good portion of that debt issued for transportation projects despite Christie’s earlier promise to finance more of that spending with money from the annual state budget.
What all the borrowing means for New Jersey residents once the numbers are crunched is a $4,138 per-capita debt bill, which ranks fourth-highest among all U.S. states. And even those calculations don’t factor in the more than $110 billion health and pension liabilities that are also on the books as a long-term state obligation.
The new debt report did offer some positive news, showing the rate of growth in state borrowing has at least slowed over the last decade after exploding in the early 2000s.
The state’s $43.23 billion overall debt includes $2.37 billion in general-obligation debt backed by the full faith and credit of New Jersey’s residents, according to the official report for the 2015 fiscal year, which was released Friday morning during a meeting of the New Jersey Commission on Capital Budgeting and Planning.
Another $34 billion is borrowing that is “subject to appropriation” each year by the governor and lawmakers. Also on the books is another nearly $7 billion that is indirectly backed by the state, largely through other agencies.
And the state is also on the hook for $110.3 billion in pension liabilities, retiree health costs and other state employee benefits. That figure, listed in the debt report as a “non-bonded” obligation, increased by roughly $8 billion.
To address that growing problem, Christie and Democratic legislative leaders have proposed competing reform plans, with the governor seeking freeze the current pension system and force employees and retirees to accept less costly healthcare benefits.
Democrats have, in turn, proposed a constitutional amendment that, if approved by voters this fall, would require the state in a few years to make the full pension contributions calculated by actuaries. The Democrats say they will also encourage new healthcare reforms to help lower costs.
But the new debt report shows the state’s more immediate problem is the Transportation Trust Fund, which pays for more than $3 billion in annual road, bridge and rail network improvements counting federal matching dollars.
The fund’s primary source of state revenue, New Jersey’s 14.5-cent gas tax, will only generate enough cash to pay for older projects — and the borrowing that funded them — as of June 30. And the state can’t borrow any more money for new transportation projects unless lawmakers agree to raise the fund’s debt ceiling, which was hit back in December.
“As of today, there is no additional bonding capacity for the TTF,” explained James Petrino, director of the New Jersey Office of Public Finance, during Friday’s meeting.
In early 2011, Christie said he would ease the state’s reliance on debt for transportation spending by using more “pay-as-you-go” funding out of the annual state budget.
But he reneged on that promise after only one year, relying instead on new borrowing and other fiscal maneuvers to pick up the slack over the last five years.
To keep the transportation fund alive beyond June 30, Democratic legislative leaders say the gas tax should be increased and the debt limit moved up again, but Christie has yet to say what the administration’s plan will be this time around.
The $34.8 billion budget for the next fiscal year that Christie put forward earlier this month doesn’t include any new revenue from a tax increase or new borrowing for the trust fund, although he did encourage lawmakers to work with him to strike a bipartisan deal.
“Clearly, the Legislature and (Christie’s administration) have some serious decisions to make in the coming months,” said Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Wood-Ridge) during Friday’s meeting.
The latest fiscal report also shows Christie’s tenure has coincided with an overall reduction in the rate of growth in state borrowing, increasing less than 3 percent since Christie took office in early 2010. That includes the 3.35 percent hike during the last fiscal year.
During the four-year tenure of Christie’s Democratic predecessor, Gov. Jon Corzine, overall borrowing increased by just under 4 percent each year, according to figures in the report.
And the $10.07 billion that’s been borrowed by the state over the last decade is much less than the more than $16 billion borrowed between the 2002 and 2006 fiscal years, when former Democratic Gov. Jim McGreevey and, briefly, acting Gov. Richard J. Codey, were in office.
“(Christie’s) administration has been a responsible steward of New Jersey’s fiscal situation, limiting debt growth to just a fraction of past levels,” said Assemblyman Declan O’Scanlon (R-Monmouth), who is also a member of the capital-planning commission.
But thanks to all the combined borrowing issued since 2000, New Jersey now ranks as one of the nation’s most indebted states based on several different methods of measurement. In per-capita debt, New Jersey sits behind only Connecticut, Massachusetts and Hawaii. New Jersey also has the fourth-highest amount of debt as a percentage of the state’s gross domestic product, behind the same three states.
And New Jersey’s bond rating remains the second-worst among all U.S. states, behind only Illinois.