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NJ Spotlight: Funding to cover a McGreevey-era debt takes a hit. How state plans to cover the shortfall
By John Reitmeyer
New Jersey must come up with new funding out of the state budget to keep from defaulting on a long-term debt obligation that dates to the tenure of former Gov. Jim McGreevey.
Legislation introduced in the Senate last week seeks approval for a supplemental appropriation of up to $30 million to cover the debt payment on a controversial state bond issue that was used to sustain the annual budget nearly two decades ago. The payment is due July 1.
Surcharges levied for certain driving offenses that are collected through the New Jersey Motor Vehicle Commission are supposed to be the main source of funding for the debt service, but that revenue is coming up short during the ongoing coronavirus pandemic, according to a recent analysis by the nonpartisan Office of Legislative Services.
This is the first time since the bonds were issued in 2004 that a general appropriation has been requested to help cover the debt payments, the analysis said.
Less traffic, fewer citations
Officials from the Murphy administration attribute the shortfall to several factors, including a general reduction in road traffic during the pandemic that, in turn, triggered a decline in motor-vehicle citations.
It remains to be seen how long the shortfalls could last, but in his budget proposal for the 2022 fiscal year, which begins July 1, Gov. Phil Murphy has included another $10 million to cover debt service for the same bond issue. (Approval of a supplemental spending bill is required to fund the debt service out of the budget during the current fiscal year because no money was allocated for that purpose when the 2021 fiscal year budget was approved last year.)
“We are closely monitoring collection of these surcharges to determine what level, if any, of shortfall may occur in the future,” Treasury spokeswoman Melinda Caliendo said.
Coming up with the funds needed to keep McGreevey’s bond issue afloat should be no problem for a state whose fiscal outlook has improved dramatically in recent months, despite the ongoing pandemic.
Still, the supplemental spending request comes as Murphy, a Democrat who faces reelection later this year, has faced criticism for borrowing money last year to sustain annual spending, just as McGreevey, a Democrat who was in office from January 2002 to November 2004, did nearly two decades ago to help cover his own spending.
Read the full report here.