New Jersey borrowed another $4.1 billion during the last budget year, running total state debt to a recordNew Jersey borrowed another $4.1 billion during the last budget year, running total state debt to a record $33 billion, according to a report presented today to the State Commission on Capital Planning and Budgeting. According to the report, taxpayers already face $2.9 billion in loan payments during the budget year that will start July 1, 2007, a bill of at least $150 million above the amount in the current state budget.
The debt total includes more than $8.5 billion borrowed to cover revenue shortfalls in annual state budgets over the past decade. Five years ago, state debt stood at $15.2 billion, less than half the current total.
ÂThis is sobering and it indicates the problem of doing two things: borrowing for operating costs and the sheer scale of borrowing,Â said Joseph Seneca, professor at RutgersÂ Edward J. Bloustein School of Planning and Public Policy. ÂThe first practice is clearly inappropriate. Such problematic use of borrowing means we will be paying for those state operating budgets for the next 25 to 30 years. And the other issue is the total debt service is consuming an increasing share of the state budget.Â
According to the report, another $11 billion in debt already has been authorized for items like highway construction and school building. However, the administration of Gov. Jon Corzine has taken steps to reduce debt for noncapital projects, Seneca said. Corzine has eliminated the practice of borrowing to pay for business-incentive programs, for example, and his administration is considering generating revenue to pay down the stateÂs debt by selling or leasing state assets like the lottery and the New Jersey Turnpike.
ÂBorrowing is important when it is used is to pay for infrastructure, such as schools and roads,Â Seneca said. ÂDebt is important as long as you make sure those investments have significant return to the state.