Bipartisan legislative concern is brewing over the self-inflicted crisis that lies ahead for New Jersey. Governor Phil Murphy’s (D) proposed budget would increase spending by 7.2% above this year. Sen. Paul Sarlo (D), Chair of the Appropriations and Budget committee, echoing comments made by legislative Republicans, warned that reliance “on federal aid with a limited lifespan and on long-term borrowing” may trigger a “fiscal cliff” once that revenue disappears. Senate President Steve Sweeney (D) expressed remorse about agreeing to borrow $4.3 billion and adding to the debt burden. He previously called the state’s penchant for borrowing a “financial death spiral.”
Unless New Jersey’s legislature translates these “concerns” into action to reduce debt and curb spending, the state has little chance to avoud going over the cliff.
Today however, in spite of the state having enormous cash available from both federal aid and robust revenues of our own, early repayment of the $4.3 billion is not an option; these bonds were issued as non-callable, meaning they cannot be refunded until they mature in 13 years.
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