Gov. Phil Murphy is asking lawmakers to put another more than $ 1 billion into a special government account set up less than a year ago to ease debt, administration officials told NJ Spotlight News ahead of a budget message Tuesday.
New Jersey is one of the nation’s most borrowed states, and if lawmakers adopt Murphy’s new debt reduction plan, it will mean that $ 5 billion will be set aside over the past two fiscal years specifically to reduce bond debt or finance capital projects. on a pay basis instead of taking more.
Meanwhile, the governor also plans to close the next fiscal year with a budget surplus of more than $ 4 billion. That would almost double Murphy’s surplus, and lawmakers approved in late June to support the budget for the current fiscal year, administration officials said before Murphy’s budget appeal at 2 p.m.
The two budget proposals came just days after New Jersey received a credit rating boost from Moody’s Investors Service, the state’s first boost in nearly two decades. In a statement to investors, Moody’s analysts last week highlighted “improved governance and financial governance” during Murphy’s administration, which began in early 2018.
On top of the last inears debt relief
Last month, the Murphy administration announced that it had officially resigned or “passed away” about $ 2.2 billion in bond debt, using funds set aside last year to repay the debt. The move is expected to save New Jersey taxpayers $ 600 million over the next decade, according to the Treasury Department.
Funding for the debt repayment initiative came from a $ 3.7 billion debt repayment account created by Murphy and lawmakers last year. They agreed to the bill just months after allowing emergency borrowing worth nearly $ 4 billion to offset revenue losses that they predicted would be caused by a coronavirus pandemic; these losses did not materialize in full.
Instead, tax collections increased last year, allowing the state to accumulate a significant budget surplus. According to the latest data from the Ministry of Finance, in the first seven months of the current financial year from July to June the total tax collection exceeded $ 4 billion for the same period last year.
Amid rising revenues, Murphy is asking lawmakers to approve another $ 1.3 billion deposit in the debt repayment fund before the end of the current fiscal year in late June, administration officials said. The deposit can be made as part of an additional expense account or through separate legislation, officials said.
The historical shortcomings of the pandemic did not occur
If lawmakers adopt Murphy’s plan, administration officials stressed that it would mean that over two fiscal years more money would be contributed to the debt repayment fund than was borrowed during the pandemic when Murphy was preparing for historic shortcomings.
Republicans have widely criticized emergency borrowing; emergency bonds cannot be repaid early due to the way the sale of the debt was arranged by Treasury officials.
In addition to concerns about bond debt, the small size of the state budget surplus over total spending over the years has also been a problem raised by major credit rating agencies on Wall Street and the fact that Murphy, a second-term Democrat, sought an address. The surplus is used to hedge against unforeseen loss of income or expense needs.
Over the past decade, New Jersey has cut its planned pension contributions for government employees and restrained the funding of direct property tax benefits, among other measures, when budget shortfalls overflowed with the amount of money hidden in excess.
According to budget documents, the expenditure plan for the current fiscal year provides for a surplus of $ 2.35 billion, which is approximately 5% of total planned expenditures.
The surplus will increase to $ 4.23 billion under the budget that Murphy will present to lawmakers this afternoon, which will be about 8% of planned spending, administration officials told NJ Spotlight News before the appeal.