How bad are the state’s finances? Consider this report from The Star-Ledger:
New Jersey’s state debt swelled by almost $2.2 billion last year even as Gov. Jon Corzine campaigned to rein in borrowing, state officials have confirmed.
The additional borrowing pushes the state’s debt load to $32.9 billion. Including $3.6 billion in bonds being repaid with payments from a national settlement against cigarette manufacturers — which the state Treasury does not count in its debt calculations — the state’s total debt load is $36.5 billion, nearly triple the level of a decade ago.
State bond documents show that the bulk of the new debt run up last year was attributable to the state’s $8.6 billion school construction program and transportation projects.
The problem with debt, of course, is not debt itself. Some debt is inevitable — it simply makes no sense to upgrade or build new roads using general operating funds (most people don’t do that with their homes), or to build new schools or purchase parkland. These are longterm expenditures that will be of benefit not only to us but to future generations.
The problem is that the state’s debt also includes an array of borrowing designed to do little more than balance the budget.
The upshot of all of this, of course, is that debt repayment pinches other areas of spending.
Repaying the state’s debt is scheduled to cost about $2.8 billion this year, a jump of about $115 million over last year’s debt costs. But Corzine said his debt retirement plan will cut that tab by at least $130 million.
That’s $115 million that had to go to debt repayment in a flat budget that could have gone to other programs — or to tax relief.
That makes debt our No. 1 fiscal issue, one that has to be tackled to allow the state to do the other things that need to be done.
Hank Kalet 