NJBIA Statement on State Borrowing Legislation
NJBIA Vice President of Government Affairs Christopher Emigholz issued the following statement regarding today’s announcement by Gov. Phil Murphy and Senate President Stephen Sweeney of concurrence on a bill authorizing up to $9.9 billion to address New Jersey’s budget deficit.
“NJBIA recognizes that borrowing has a place in government fiscal policy and we are indeed upon extraordinary times where it may be appropriate in a limited manner.
“However, we find today’s announcement concerning as it appears to stop short of some of the necessary limits that would make for responsible borrowing.
“We do support the additional approval that would now be required by the new Legislative panel for this legislation and appreciate legislators’ efforts to add this potential limit to the borrowing. We also view the potential of 15% cuts in department budgets, as noted by Governor Murphy today, as a positive.
“But at the same time, we have continually urged our policymakers about the importance of waiting to borrow anything beyond short-term bonds for cash flow.
“This restraint is critical until we have a better understanding of what our State’s needs are — including the strength of the 2019 tax returns arriving on July 15 and what support we can expect from the federal government — until we do more to reduce spending and until we embark on significant reforms.
“A total of $9.9 billion in bonds with 35-year maturity will cost New Jersey taxpayers at least many hundreds of millions of dollars in additional debt service costs for the next 35 state budgets. New Jersey already is one of the most indebted states in the nation and this makes our state less affordable now and into the future.
“Ultimately, today’s borrowing will just mean more of our budget will go toward paying debt instead of programs that benefit our residents.
“As we have previously stated, borrowing should never be a first option. It should instead only be pursued after serious and permanent spending cuts are found to pay for the new debt service, and that should include structural reforms. These are essential steps that should be taken first to bridge our great budget challenges.”