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$500M in New State Debt on November Ballot: Will Voters Be as Giving as Ever?

General-obligation bonds would fund expansion of vo-techs and other upgrades to educational facilities

vo-tech

New Jersey voters have been more than willing to authorize several major state borrowing initiatives in recent years, and they will soon decide whether the state should take on another $500 million in new debt to fund a wide range of education-facility upgrades.

The only public question on the November ballot this year asks voters whether they want $500 million in general-obligation bonds to be issued that would be used to pay for the expansion of career-training facilities at both the high school and county college level, and to also fund improvements to K-12 school security and drinking-water systems across the state.

The proposed borrowing has widespread support in the Legislature, including from key leaders in both parties. It’s also been endorsed by a number of business-lobbying groups and the state’s leading advocates for vocational-technical high schools. But concerns have also been raised about how the bond issue could impact the state’s already significant debt burden, especially as more than $1 billion in new borrowing has been authorized in recent months without any voter approval.

The original proposal for the bond issue came out of a yearlong review of state policies related to the manufacturing industry, which lawmakers are trying to revive as a leading sector of New Jersey’s economy. During a series of hearings, industry leaders told legislators they have a number of job openings but not enough qualified applicants to fill them. Officials from the New Jersey Council of County Vocational-Technical Schools testified that more than 30,000 students filed applications last year to attend a vocational-technical high school, but only a little more than 12,000 students statewide were accepted, primarily due to space constraints.

$350 million of it would go to vo-techs

In response, the proposed bond issue would raise $350 million to fund facility upgrades at the vocational-technical schools, and to also pay for school-security upgrades in K-12 districts, something that lawmakers added to the borrowing measure in the wake of the deadly school shooting earlier this year in Parkland, Florida that left 17 dead. Another $50 million from the bond issue would be made available to county colleges to expand facilities used by their career-training students. The remaining $100 million would fund water-infrastructure improvements at K-12 schools throughout the state.

Assembly Speaker Craig Coughlin (D-Middlesex) said the bond issue “offers a real chance to advance things that I think are important for the future (and) things that are important for the economy.”

“I’m proud to say that I’m going to support that public question,” Coughlin said during a news conference in the State House yesterday. Joining him were Senate President Steve Sweeney (D-Gloucester) and several other lawmakers from both parties who back the $500 million bond issue.

“It’s important that we expand the capacity of vocational schools so that we don’t turn kids away,” Sweeney said.

Mike Wallace, the New Jersey Business & Industry Association’s vice president of government affairs, said supporting the new borrowing issue is “an easy one” for his organization since it will help get more students trained to fill existing openings in the job market.

Governor halved the size of the bond issue

“We hear regularly from our employer members that they can’t find the workforce with the necessary technical skills needed to fill these jobs,” Wallace said.

Judy Savage, executive director of the New Jersey Council of County Vocational-Technical Schools, also suggested the spending on the school facilities would bring a return to the broader state economy. “When we prepare more people for well-paying jobs, that’s going to produce higher income-tax receipts for the state,” she said.

Even though the public question received widespread, bipartisan support in the Legislature earlier this year, Gov. Phil Murphy cited broader concerns about the state’s already significant debt burden as he used a late-August conditional veto to cut the overall size of the bond issue from the $1 billion that was originally approved by lawmakers down to $500 million.

“While I certainly endorse the priorities established in this bill, I also believe that their long term fiscal implications must be carefully considered,” Murphy said in the CV.

As of the most recent official state-debt report from the Department of Treasury, New Jersey was carrying a total of $46.1 billion in bonded debt, easily outpacing the size of the current, $37.4 billion annual budget. Annual payments needed to pay off the state’s bonded debt are also over $4 billion in the current fiscal year.

Then there’s debt issued without voter approval

Meanwhile, the Murphy administration in recent months has also signed off on $600 million in new borrowing for a key commuter-rail bridge near Secaucus Junction and allowed for the refinancing of $300 million in long-term debt to fund the ongoing renovation of the State House in Trenton. That follows some $400 million in new debt that was issued in the final days of former Gov. Chris Christie’s tenure to fund state building upgrades earlier this year. And all that debt was issued through the state Economic Development Authority in a way that doesn’t require voter approval.

The state’s already large amount of borrowing was cited in a recent post on the conservative website Save Jersey that urged voters to reject the ballot question when they go to the polls on November 6. Website founder Matt Rooney wrote that lawmakers and the governor made no effort to “cut spending or reallocate funds to free up the cash for school improvements” as they moved the $500 million bond issue onto the November ballot.

“The politicians are hitting New Jersey taxpayers up for more money since it’s easier than doing their jobs,” Rooney wrote.

Still, New Jersey voters in recent years have a record of generosity when it comes to approving proposed bond issues, including last year when $125 million in new borrowing for local library facility upgrades was approved by a large margin. In 2012, voters also authorized $750 million in new debt to help fund improvements at colleges and universities throughout the state. In 2007 and 2009, voters also approved bond issues worth $200 million and $400 million, respectively, to support land-preservation efforts.

Sen. Steve Oroho (R-Sussex) said it’s “very critical” that voters can weigh in on the latest proposed borrowing issue, and he suggested it deserves support based on what the proceeds would be used for.

“There’s nothing more important than the security of our children. There’s nothing more important than making sure that they’re not drinking water with lead in it,” Oroho said.

“The voters I hope will recognize that this important for our economy, and very important for our children,” he said.

Meanwhile, Murphy spokesman Matthew Saidel issued a statement yesterday that reaffirmed the governor’s support for the scaled-down version of the borrowing issue.

“Governor Murphy applauds the Legislature for identifying critical priorities in our education system in need of further investment,” Saidel said.

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