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Report Shows Increase in State Debt

1-21-13

By Chief Political Correspondent Michael Aron
NJ Today

Rich Keevey has looked at many of these state debt reports going back 30 years. He is director of the Office of Management and Budget in the Kean and Florio era and now teaches at Rutgers Newark..

The report came out late Friday and showed total state debt in 2012 rising to $38.8 billion, an increase of just under 2 percent. We asked Keevey if that means New Jersey has a debt problem.

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“We have a large amount of debt. We are, I think, the third highest debt per capita and the third highest debt per personal income wise behind California and New York,” Keevey said. “So we do have a large amount of bonded debt. But most of the debt has been issued in my opinion for legitimate capital purposes for the state. We want to issue debt for transportation construction. And that debt, incidentally, is offset by motor vehicle fees and gasoline tax. We want to be a player in the building of local school buildings that were ordered under the Abbott decision.”

It costs the state $3 billion a year just to service the debt. That’s 10 percent of the state budget going to pay for past borrowing. But Keevey says it’s all part of investing in the future.

New Jersey owes $3,964 for every man, woman and child in the state. Borrowing has slowed under Gov. Chris Christie, who campaigned against all borrowing. From 2003 to 2006 it went up by double digits. In Christie’s first three years, debt has risen 3.9, 3.1 and now 1.9 percent. Keevey compares it to what happens at the federal level.

“When the president talks about he wants to raise the debt limit because he needs to raise the money to pay for commitments that have already been made, well each time this governor or any governor issues new debt, it ties in with what has already been authorized and approved by the voters. We’re now issuing the debt to pay for it,” Keevey said.

Rich Keevey says he can only think of two ill-advised bond issues — the 1997 pension bond and the 2003 borrowing against tobacco settlement money. Other than that, he sees nothing alarming about New Jersey’s debt load.

“Most people, I think, in the state would look at the lion’s share of the debt and say, transportation, local school construction, we understand the need for that. We understand the need for sewer, we understand the need for water. They’re necessary for this state.”

Next up, the recently voter-approved borrowing for higher education facilities.